Burcon NutraScience Corporation (TSX:BU) (NASDAQ:BUR), a leader in
functional and renewable plant proteins, reported results for the
year ended March 31, 2017.
Fiscal 2017 Operational Highlights
- Burcon’s exclusive manufacturing and marketing partner for
CLARISOY™, Archer Daniels Midland Company (ADM) commissioned its
first full-scale commercial CLARISOY™ production facility.
- Issued a convertible note for the principal amount of $2.0
million, with net proceeds of $1.9 million.
- Completed an over-subscribed rights offering for gross proceeds
of $5.1 million, with net proceeds of $5.0 million.
- Advanced discussions with certain multi-national food
ingredient providers for a royalty or a joint operations agreement
for Peazazz®.
- Burcon’s Winnipeg Technical Centre undertook Peazazz®
applications work and provided significant quantities of samples
throughout the year in response to requests from and in support of
analytical work conducted by potential commercialization partners
as well as for food and beverage companies who have expressed an
interest in Peazazz® and Peazac™.
- Received two U.S. patent grants during the fiscal year.
Subsequent to the year-end, received two additional U.S. patent
grants, including Burcon’s first Peazazz® pea protein technology
patent grant. Burcon received a further two patent allowances
subsequent to the year-end, bringing the company’s patent portfolio
to 216 issued patents in various countries, including 64 in the
U.S., as well as more than 350 active patent applications,
including 47 additional U.S. patent applications.
Management Commentary
During fiscal 2017, Burcon’s CLARISOY™ soy protein license
partner, Archer Daniels Midland (NYSE:ADM) completed the
construction and commissioning of the first full-scale CLARISOY™
production facility. The new production facility, located at
ADM’s global processing headquarters in Decatur, Illinois, was
commissioned in November 2016.
Unique to any other proteins on the market, ADM’s CLARISOY™ line
of soy proteins comprises the world’s only vegetable-based proteins
that offer exceptionally high solubility, clean flavor and complete
protein nutrition for low pH and neutral pH beverage systems.
ADM’s current CLARISOY™ product portfolio includes: CLARISOY™ 150;
CLARISOY™ 170: and CLARISOY™ 180, and this product line is
well-positioned to help beverage manufacturers meet the
ever-growing demand from health and wellness-minded consumers for
great-tasting, nutritionally enhanced beverages with natural
ingredients and clean labels.
ADM is actively engaged with a number of existing CLARISOY™
customers, as well as numerous potential CLARISOY™ customers, at
various stages of the typical protocol food and beverage companies
utilize when investigating and adopting a novel new ingredient for
use in their food and beverage products. CLARISOY™ is
currently available in a limited release in a few consumer
products, which are already on store shelves in Europe and in North
America. We expect ADM’s current sales and development
campaign to bear fruit in the form of expanded distribution of
CLARISOY™ in the coming quarters.
Also, during fiscal 2017, Burcon continued its efforts toward
commercializing its other unique plant protein extraction
technologies. Burcon has focused in particular on working
with a select group of potential partners for the commercialization
of our Peazazz® pea protein. Burcon’s team at the
Winnipeg Technical Centre continues to support these ongoing
discussions with: due diligence visits; applications work on
potential consumer products; and sample production, both for the
potential partners as well as for food and beverage companies who
have expressed an interest in Peazazz® and Peazac™. The
potential partners’ activities have included undertaking
applications work, detailed market analyses and the investigation
of production logistics.
Subsequent to the fiscal year end, Burcon was granted a U.S.
patent, covering technology for the production of its Peazazz® pea
protein: U.S. patent no. 9,635,875, was granted on May 2,
2017. This patent is important and represents the first
patent to be granted for Burcon’s pea technology by the U.S. Patent
and Trademark Office and confirms that our approach is unique,
distinct and defensible. Burcon has a number of additional
pea protein patent applications and we are confident that, in due
course, we will be granted additional patents.
Since the beginning of fiscal 2017, Burcon has been granted two
U.S. patents covering technologies for the production of CLARISOY™,
and also has received two notices of allowance from the United
States Patent and Trademark Office for a third and fourth patent
for the production of CLARISOY™ soy protein. A notice
of allowance from the United States Patent and Trademark Office is
a written notification that a patent application has cleared
internal review, is pending issuance and will grant in the near
future. CLARISOY™ soy protein patents: U.S. patent no.
9,629,381 granted April 25, 2017; and U.S. patent no. 9,603,377 was
granted on March 28, 2017; and U.S. patent application 15/094386
was allowed on March 14, 2017, and U.S. patent application
14/117384 was allowed on March 29, 2017.
These patent grants and allowances bring the company’s patent
portfolio to 216 issued patents in various countries, including 64
in the U.S., as well as more than 350 active patent applications,
including 47 additional U.S. patent applications.
According to the “2016 Food & Health Survey” from the
International Food Information Council Foundation in Washington,
DC, protein is the single most sought out nutrient by U.S.
consumers. Burcon anticipates continued acceleration of the
demand for protein ingredients globally and even more so for plant
proteins. Analyzing the demand for plant proteins further,
there is a clear signal from the market for alternatives to soy:
the traditional dominant plant protein ingredient.
Burcon believes it is well-positioned to profit from this trend
with its Peazazz® pea protein as well as with Supertein® and
Puratein® and Nutratein® canola proteins. In the coming year,
Burcon will continue to focus our efforts on securing a
commercialization partnership or partnerships for our other
alternative plant protein technologies.
Financial Results (in Canadian
dollars)
Revenues totaled $88,000 for the year, as compared
to $106,000 in the same year-ago period. Cash royalty
revenues accounted for just over one-half of this year’s royalty
revenues, as compared to last year’s where they were derived mainly
from the recognition of deferred royalty payments. The
nominal revenues reflect the company’s development phase
status as it transitions to the commercial stage.
Net loss totaled $5.8 million or $0.16 per basic
and diluted share for fiscal 2017, as compared to a net loss of
$6.6 million or $0.18 per basic and diluted share in fiscal
2016.
Research and development expenses totaled $2.2
million for the year, as compared to $2.7 million in fiscal
2016. Most of the decrease is due to deferred development
costs being fully amortized during fiscal 2017. Lower repairs
and maintenance expenses and salaries expenses from the termination
of an employee last year also contributed to the decrease.
Intellectual property (IP) expenses decreased to
$1.4 million in fiscal 2017 from $1.6 million in fiscal 2016.
The lower IP expenses are due to the temporary deferral of the
prosecution of patent applications and the payment of maintenance
fees, where possible, to conserve cash resources while Burcon was
undergoing the financing period. In addition, there were
fewer patent applications that entered national phase this year
than in fiscal 2016.
General and administrative expenses decreased to
$2.3 million in fiscal 2017 from $2.6 million in the fiscal 2016.
The decrease is mostly attributed to decreases in stock based
compensation and non-cash financing expenses.
At March 31, 2017, cash balances totaled $4.7 million compared
to $2.5 million at March 31, 2016. Management believes it has
sufficient resources to fund its expected level of operations and
working capital requirements until at least February 2018.
This estimate does not take into account potential proceeds
from outstanding convertible securities, royalty revenues from the
sale of CLARISOY™, or any other potential revenue from product
sales or licensing.
The company’s complete financial statements, along with
management’s more detailed discussion and analysis, are available
from the company’s Investors section at www.burcon.ca or from
www.sedar.com.
About Burcon NutraScience
CorporationBurcon NutraScience is a leader in developing
functionally and nutritionally valuable plant- based proteins. The
company has developed a portfolio of composition, application, and
process patents originating from a core protein extraction and
purification technology.
Burcon’s CLARISOY™ soy protein offers clarity
and high-quality protein nutrition for low pH beverage systems and
excellent solubility and exceptionally clean flavor at any pH;
Peazazz® is a uniquely soluble and clean-tasting pea protein; and
Puratein®, Supertein® and Nutratein® are canola protein isolates
with unique functional and nutritional attributes. For more
information about the company, visit www.burcon.ca.
The TSX has not reviewed and does not accept
responsibility for the adequacy of the content of the information
contained herein. This press release contains forward-looking
statements or forward-looking information within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995 and
applicable Canadian securities legislation. Forward-looking
statements or forward-looking information involve risks,
uncertainties and other factors that could cause actual results,
performances, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking statements.
Forward- looking statements or forward-looking information can be
identified by words such as “anticipate,” “intend,” “plan,” “goal,”
“project,” “estimate,” “expect,” “believe”, “future,” “likely,”
“may,” “should,” “could”, “will” and similar references to future
periods. All statements other than statements of historical fact
included in this release are forward-looking statements, including,
without limitation, statements regarding expectations, intentions
and plans contained in this press release. There can be no
assurance that such statements will prove to be accurate and actual
results and future events could differ materially from those
anticipated in such statements or information. Important factors
that could cause actual results to differ materially from Burcon’s
plans and expectations include the actual results of business
negotiations, marketing activities, adverse general economic,
market or business conditions, regulatory changes and other risks
and factors detailed herein and from time to time in the filings
made by Burcon with securities regulators and stock exchanges,
including in the section entitled “Risk Factors” in Burcon’s annual
information form dated June 21, 2017 filed with the Canadian
securities administrators on www.sedar.com and contained in
Burcon’s 20-F filed with the U.S. Securities and Exchange
Commission on www.sec.gov. Any forward-looking statement or
information only speaks as of the date on which it was made and,
except as may be required by applicable securities laws, Burcon
disclaims any intent or obligation to update any forward-looking
statement, whether as a result of new information, future events or
otherwise. Although Burcon believes that the assumptions inherent
in the forward-looking statements are reasonable, forward-looking
statements are not guarantees of future performance, and
accordingly, investors should not rely on such statements.
CLARISOY is a trademark of Archer Daniels
Midland Company.
Burcon
NutraScience Corporation |
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Consolidated
Balance Sheets |
|
|
|
As at March 31,
2017 and 2016 |
|
|
|
(Prepared in Canadian
dollars) |
|
|
|
|
|
2017 |
|
2016 |
|
|
|
$ |
|
$ |
|
Assets |
|
|
|
|
|
|
|
Current
assets |
|
|
|
Cash and cash
equivalents |
|
4,701,108 |
|
2,479,862 |
|
Amounts receivable |
|
163,668 |
|
152,143 |
|
Prepaid expenses |
|
178,998 |
|
171,209 |
|
|
|
5,043,774 |
|
2,803,214 |
|
|
|
|
|
Property and
equipment |
|
494,666 |
|
514,203 |
|
Deferred financing
costs |
|
- |
|
58,376 |
|
Deferred development
costs |
|
- |
|
222,343 |
|
Goodwill |
|
1,254,930 |
|
1,254,930 |
|
|
|
|
|
|
|
6,793,370 |
|
4,853,066 |
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
Accounts payable and
accrued liabilities |
|
516,883 |
|
701,748 |
|
Derivative
liabilities |
|
197,613 |
|
- |
|
|
|
714,496 |
|
701,748 |
|
|
|
|
|
Convertible note |
|
1,818,473 |
|
- |
|
Accrued interest |
|
146,696 |
|
- |
|
Deferred revenue |
|
- |
|
39,097 |
|
|
|
2,679,665 |
|
740,845 |
|
|
|
|
|
Shareholders'
Equity |
|
|
|
Capital stock |
|
70,000,001 |
|
64,936,947 |
|
Contributed
surplus |
|
6,778,227 |
|
6,487,975 |
|
Options |
|
10,379,989 |
|
9,779,276 |
|
Warrants |
|
281,989 |
|
458,187 |
|
Deficit |
|
(83,326,501 |
) |
(77,550,164 |
) |
|
|
4,113,705 |
|
4,112,221 |
|
|
|
|
|
|
|
6,793,370 |
|
4,853,066 |
|
|
|
|
|
Burcon
NutraScience Corporation |
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|
|
Consolidated Statements of Operations and Comprehensive
Loss |
|
For
the years ended March 31, 2017 and
2016 |
|
|
(Prepared in Canadian
dollars) |
|
|
|
|
|
|
|
|
|
Years ended March 31, |
|
|
2017 |
|
2016 |
|
|
|
$ |
|
$ |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
Royalty income |
|
87,839 |
|
106,390 |
|
|
|
|
|
Expenses |
|
|
|
Research and
development |
|
2,245,220 |
|
2,653,585 |
|
Intellectual
property |
|
1,363,121 |
|
1,602,936 |
|
General and
administrative |
|
2,308,766 |
|
2,635,032 |
|
|
|
|
|
|
|
5,917,107 |
|
6,891,553 |
|
|
|
|
|
Loss from
operations |
|
(5,829,268 |
) |
(6,785,163 |
) |
|
|
|
|
Interest and other
income |
|
154,257 |
|
153,157 |
|
Interest expense |
|
(225,163 |
) |
- |
|
Foreign exchange
gain |
|
29,024 |
|
62,230 |
|
Change in fair value of
derivative liability |
|
94,813 |
|
- |
|
|
|
|
|
Loss and
comprehensive loss for the
year |
|
(5,776,337 |
) |
(6,569,776 |
) |
|
|
|
|
Basic and
diluted loss per share |
|
(0.16 |
) |
(0.18 |
) |
|
|
|
|
Media & Industry Contact:
Paul Lam
Manager, Business Development
Burcon NutraScience Corporation
Tel (604) 733-0896, Toll-free (888) 408-7960
plam@burcon.ca
www.burcon.ca
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