Burcon Announces Fiscal 2018 Results and Reviews Operations

VANCOUVER, British Columbia, June 18, 2018 (GLOBE NEWSWIRE) — Burcon NutraScience Corporation (TSX:BU), a leader in natural product extraction, purification and isolation technologies, reported results for the year ended March 31, 2018. 

Fiscal 2018 Operational Highlights

  • Completed a rights offering for gross proceeds of $3.5 million, with net proceeds of $3.4 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 four U.S. patent grants during the fiscal year, including three for soy and one for the production of Peazazz®.  The grant of the Peazazz® patent is the first to be granted for Burcon’s pea protein technology by the U.S. Patent and Trademark Office (“USPTO”).  In addition, Burcon received a notice of allowance from the USPTO for a patent for the production of Peazazz® pea protein.  The company’s patent portfolio comprises 247 issued patents in various countries, including 65 in the U.S., as well as more than 270 active patent applications, including 41 additional U.S. patent applications.
  • Burcon filed for an accreditation license from Health Canada’s Office of Controlled Substances to conduct research for the future commercial production of purified cannabinoid extracts.  If Burcon receives the license, it expects to apply its extensive experience in phytochemical extraction technologies to develop technologies for the production of highly-purified cannabis-derived compounds.
  • Subsequent to the year-end, Burcon’s Peazazz® and Peazac® pea proteins received self-affirmed Generally Recognized As Safe (“GRAS”) status and the Company has submitted to the United States Food and Drug Administration (“FDA”) a formal GRAS Notification dossier.

Management Commentary

During fiscal 2018, ADM has been 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.

Unique to any other proteins on the market, ADM’s CLARISOY® line of soy proteins comprise the world’s only vegetable-based proteins that offer exceptionally high solubility, clean flavor and complete protein nutrition.  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.

Among the variations of CLARISOY® that ADM has developed, ADM is currently focusing on marketing CLARISOY® as an economical, high-quality plant-based dairy alternative that provides greater cost stability and comparable nutrition.  ADM’s team has developed and demonstrated products to showcase CLARISOY®’s ability to deliver reliable performance in a wide range of applications, including fortifying vegan applications with a dairy-free protein source without compromising taste. 

Also, during fiscal 2018, 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 market analyses, product applications work and a detailed investigation of the logistics and economics associated with: building; commissioning; and operating a commercial protein production facility. 

During the year, Burcon was granted a U.S. patent, covering technology for the production of its Peazazz® pea protein:  U.S. patent no. 9,635,875, which 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.  In addition, Burcon received a notice of allowance from the USPTO for a patent for the production of Peazazz® pea protein.  A notice of allowance from the USPTO is a written notification that a patent application has cleared internal review, is pending issuance and will grant in the near future.  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 2018, Burcon has been granted three U.S. patents covering technologies for the production of CLARISOY®.  

These patent grants and allowances bring the company’s patent portfolio to 247 issued patents in various countries, including 65 in the U.S., as well as more than 270 active patent applications, including 41 additional U.S. patent applications.

Subsequent to the year-end, Burcon’s Peazazz® and Peazac® pea proteins received self-affirmed GRAS status and the Company has submitted to the FDA a formal GRAS Notification dossier.  Obtaining GRAS status is important for the acceptance and use of these proteins ingredients by leading food and beverage companies.  GRAS status removes regulatory barriers for food innovators, ingredient buyers, and mass-market food service buyers to use Burcon’s Peazazz® and Peazac® pea proteins in their product offerings.

Financial Results (in Canadian dollars)

Revenues totaled $49,000 for the year, as compared to $88,000 in the same year-ago period.  Prior year’s revenues included the recognition of $39,000 in deferred revenues.  The nominal revenues reflect the company’s development phase status as it transitions to the commercial stage.  

Net loss totaled $5.6 million or $0.15 per basic and diluted share for fiscal 2018, as compared to a net loss of $5.8 million or $0.16 per basic and diluted share in fiscal 2017.

Research and development expenses totaled $1.9 million for the year, as compared to $2.2 million in fiscal 2017.  Most of the decrease is due to deferred development costs being fully amortized during fiscal 2017.  Lower salaries expenses from the termination of an employee during the year also contributed to the decrease.   

Intellectual property expenses increased to $1.7 million in fiscal 2018 from $1.4 million in fiscal 2017.  The increase is due mainly to higher maintenance fees for the soy and canola portfolios due the patent prosecution activities being temporarily suspended during the fiscal 2017 financing period.  In addition, we incurred higher European registration fees this year from two soy patent applications that were granted in Europe. 

General and administrative expenses decreased to $2.0 million in fiscal 2018 from $2.3 million in the fiscal 2017.  The decrease is mostly attributed to decreases in stock based compensation and non-cash financing expenses. 

During the year, Burcon completed a rights offering that provided gross proceeds of $3.5 million, with net proceeds of $3.4 million.  At March 31, 2018, cash balances totaled $3.4 million compared to $4.7 million at March 31, 2017.  Management believes it has sufficient resources to fund its expected level of operations and working capital requirements to October 2018.  This estimate does not take into account potential proceeds from outstanding convertible securities or royalty revenues from the sale of CLARISOY®.

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 Corporation

Burcon 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 18, 2018 filed with the Canadian securities administrators on www.sedar.com.  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.

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

     
 Burcon NutraScience Corporation     
 Consolidated Balance Sheets     
 As at March 31, 2018 and 2017     
 (Prepared in Canadian dollars)     
  2018   2017  
  $   $  
 Assets     
     
 Current assets     
 Cash and cash equivalents    3,420,865     4,701,108  
 Amounts receivable    154,289     163,668  
 Prepaid expenses    230,605     178,998  
    3,805,759     5,043,774  
     
 Property and equipment    378,294     494,666  
 Goodwill    1,254,930     1,254,930  
     
    5,438,983     6,793,370  
     
 Liabilities     
     
 Current liabilities     
 Accounts payable and accrued liabilities                                            804,001     516,883  
 Derivative liabilities    59,288     197,613  
    863,289     714,496  
     
 Convertible note    1,905,807     1,818,473  
 Accrued interest    324,871     146,696  
    3,093,967     2,679,665  
     
 Shareholders’ Equity     
 Capital stock    73,361,133     70,000,001  
 Contributed surplus    7,599,389     6,778,227  
 Options    10,329,057     10,379,989  
 Warrants    4,723     281,989  
 Deficit    (88,949,286 )   (83,326,501 )
    2,345,016     4,113,705  
     
    5,438,983     6,793,370  
     

 Burcon NutraScience Corporation         
 Consolidated Statements of Operations and Comprehensive Loss     
 For the years ended March 31, 2018 and 2017       
 (Prepared in Canadian dollars)         
         
     Years ended March 31,    
    2018   2017    
    $   $    
         
         
 Revenue         
 Royalty income      49,014     87,839    
         
 Expenses         
 Research and development      1,936,325     2,245,220    
 Intellectual property      1,739,254     1,363,121    
 General and administrative      1,962,963     2,308,766    
         
      5,638,542     5,917,107    
         
 Loss from operations      (5,589,528 )   (5,829,268 )  
         
 Interest and other income      172,774     154,257    
 Interest expense      (265,509 )   (225,163 )  
 Foreign exchange (loss) gain      (30,030 )   29,024    
 Change in fair value of derivative liability      89,508     94,813    
         
 Loss and comprehensive loss for the year                                                                                              (5,622,785 )   (5,776,337 )  
         
 Basic and diluted loss per share      (0.15 )   (0.16 )  
         

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