Burcon NutraScience Corp (TSX:BU, NASDAQ:BRCN) has reported sales of C$2.3 million for the fiscal first quarter of 2022, including royalty revenue of $91,000 from its pea and canola protein joint venture company, Merit Functional Foods Corporation.
During the quarter, the company entered into a secured loan agreement with its major shareholder of up to $10 million that will be made available to Burcon in two $5 million tranches, with the first tranche currently available to Burcon. If fully drawn, management believes it has sufficient resources to fund its expected level of operations and working capital requirements to February 2024, the company said.
The developer of plant-based proteins for foods and beverages said it had a cash balance of $1.6 million as of June 30, 2022.
READ: Burcon NutraScience says JV company Merit Functional Foods achieves significant innovation in protein-based solution to replace methylcellulose in meat alternatives
Burcon said Merit continued to ramp up production and sales of its pea and canola protein ingredients during the quarter, including undergoing process improvements to increase output and yield for its dual protein process.
This resulted in a net loss of $6.3 million for the quarter ended June 30, 2022, compared to $5.2 million in the same year-ago quarter, reflecting its stage of development, the company said. Burcon’s share of the loss amounted to $2.0 million for the quarter, widening its own loss to $4.0 million from $3.2 million in same period last year.
However, as previously announced, Merit optimized a new process for the production of a uniquely different pea protein ingredient, Peazazz C, which is expected to win market share in the ready-to-drink sector for its exceptional solubility and smooth, grit-free texture in the coming quarter.
Potential partnerships
Burcon said it built on the previous quarter’s strong momentum to further advanced the due diligence process with potential partners on additional plant-based protein opportunities.
“Our team in Winnipeg has been working diligently to support all aspects of the partnership discussions and due diligence process. We are encouraged by the pace with which all parties are moving forward and are motivated to work towards reaching a partnership agreement to bring to market Burcon's innovative plant-based protein technologies,” it added.
On its intellectual property portfolio, the company noted that it added nine issued patents and allowances covering its unique and proprietary process for pulse, soy and other oilseed protein production. Through careful cost-benefit analysis of its IP portfolio, Burcon has been reorganizing its patent portfolios, filing high-value patent applications and abandoning those that provide minimal monetization value. Its IP portfolio now consists of 330 issued patents, of which 72 are US patent grants.
CEO search continues
The company said it continues to search for a new CEO, having interviewed a number of high calibre food industry professionals. In the meantime, the chairman of Burcon’s board of directors, Peter H. Kappel will continue to serve as interim CEO.
Burcon also informed investors that it “may be eligible” for additional time to regain compliance with Nasdaq’s minimum closing bid price of at least US$1.00 for a minimum of 10 consecutive business days, when the compliance period expires on September 28, 2022.
The company said its share price fell below US$1.00 for 30 consecutive days due the market downturn, resulting in the letter from the stock exchange regulator on April 6, 2022.
Contact the author at jon.hopkins@proactiveinvestors.com