Mr. Johann Tergesen reports
BURCON REPORTS FISCAL 2015 FIRST QUARTER RESULTS
Burcon NutraScience Corp. has released its results for the fiscal first quarter ended June 30, 2014.
Fiscal 2015 first quarter operational highlights:
- Burcon completed an oversubscribed rights offering for $5.25-million, with net proceeds of $5-million.
- Burcon received a patent grant from the U.S. Patent and Trademark Office for Clarisoy's first
composition-of-matter patent. This composition-of-matter patent provides protection over the commercially
valuable attributes of Clarisoy, which include, amongst others, its unique solubility and
transparency in solution, and absence of taste or smell.
- Burcon advanced discussions with a number of key potential multinational food ingredient providers about a
royalty or a joint operations agreement for Peazazz.
- Burcon's exclusive manufacturing and marketing partner for Clarisoy, Archer Daniels Midland
Company, facilitated Clarisoy development activities in the global food and beverage market
while operating the world's first Clarisoy semi-works plant to produce samples of the Clarisoy soy protein line for market development purposes.
- Archer Daniels launched Clarisoy 170 at the 2014 Institute of Food Technologist annual meeting and food
expo. Clarisoy 170 is formulated to be ideal for dairy protein replacement, which could include
neutral beverage applications with a pH of 7.0 or higher.
- Burcon received patent grants for three U.S. patents, bringing the company's patent portfolio to 192 issued
patents in various countries, including 55 in the United States, as well as more than 360 active patent
applications, including 60 additional U.S. patent applications.
Management commentary
The first quarter of fiscal 2015 saw continued progress in Archer Daniels's commercial rollout of the Clarisoy line of proteins, advancement of the Peazazz partnership discussions and the successful completion of Burcon's rights offering. This included continued marketing efforts by Archer Daniels to promote Clarisoy soy protein and the patent grant from the U.S. Patent and Trademark Office for Clarisoy's first composition-of-matter patent.
The company has now been granted the Clarisoy composition-of-matter patent from the U.S. Patent and Trademark Office. This commercially important patent marks the first Clarisoy composition-of-matter patent to be granted and protects the unique commercially valuable attributes of Clarisoy, rather than for the method by which it is produced.
During the quarter Burcon completed an oversubscribed rights offering of 1.8 million common shares for a total of $5.25-million, with net proceeds of $5-million. There was overwhelming demand for the common shares and the rights offering was oversubscribed by approximately $9.8-million.
Discussions with potential partners for the production and marketing of Peazazz progressed well during the past quarter. The Peazazz semi-works plant continues to support these continuing discussions and due diligence. These partnership discussions will be a main area of focus for Burcon in the coming quarters.
Archer Daniels launched yet another version of Clarisoy soy protein at this year's IFT annual meeting and food expo in New Orleans. Archer Daniels branded this new version as Clarisoy 170 -- a soy protein that is ideal for dairy protein replacement in applications such as neutral beverage systems with a pH of 7.0 or higher.
With the launch of Clarisoy 170 and with Clarisoy 180 under development, there will be a total of six versions of Clarisoy soy protein. The Clarisoy platform now offers the choice of high- and low-protein concentrations, a transparent option, high- and low-pH applications, and coffee creamer and dairy proteins substitutes.
Archer Daniels recently announced its intention to acquire Wild Flavors GmbH for $3.1-billion (U.S.), which, if completed, will significantly expand Archer Daniels's specialty food ingredient offering. In Archer Daniels's latest earnings call, it has also announced the start of construction of its Campo Grande, Brazil, specialty protein complex.
"In this quarter the largest value creation for Burcon's business came from outside operations," said Johann Tergesen, president and chief operating officer of Burcon. "Following recent merger-and-acquisition activity, analysts have become more confident in the top end of their valuation analysis, particularly around the stand-alone value of the company's value-added ingredients segment.
"It has been a consumer-led 'demand pull' drive to the health and wellness trend, and now specialty ingredient processors and food and beverage companies are catching up," added Mr. Tergesen. "We continue to see specialty ingredient companies driving to broaden their portfolio offerings in an effort to provide more of a one-stop formulation experience, especially in regard to taste, nutrition and texture.
"Broadening of the distribution channels means more demand for content," remarked Mr. Tergesen. "We believe Burcon is extremely well positioned and protected through the royalty arrangement with Archer Daniels on Clarisoy, the partnership discussions for Peazazz, and with ongoing research at the Winnipeg technical centre to capitalize on the global trend in health and wellness."
Fiscal first quarter financial results
Revenues totalled $25,000 in the fiscal first quarter, which was consistent with the prior quarter and the same year-ago period, and were derived mainly from deferred royalty payments from Archer Daniels for Clarisoy sales. The nominal revenues reflect the company's development phase status as it transitions to the commercial stage.
Royalty revenues from the sale by Archer Daniels of Clarisoy as produced from its semi-works facility in Decatur, Ill., have been marginal. The main purpose of the semi-works plant has been to provide commercial samples for market development purposes and to facilitate other product development work.
The first quarter net loss totalled $1.4-million, or four cents per basic and diluted share, as compared with a net loss of $1.6-million, or five cents per basic and diluted share, in the same year-ago quarter.
Research and development expenses totalled $604,000 in the first quarter, decreasing from $617,000 in the same year-ago quarter. The decrease is due mainly to a decrease of $26,000 in plant operating costs, offset by an increase of $13,000 in R&D salaries.
General and administrative expenses in the first quarter decreased to $841,000 from $1.01-million in the year-ago quarter. The decrease in G&A expenses for the quarter is due mainly to a decrease in patent legal fees and legal fees. During the year, Burcon abandoned certain non-core canola patents that it deemed to be unessential for the purposes of achieving its strategic objectives in non-U.S. countries.
At June 30, 2014, cash and short-term investments totalled $5.4-million, compared with $1.4-million at March 31, 2014. In April, 2014, Burcon completed a rights offering that provided net cash proceeds of $5-million. Management believes it has sufficient resources to finance its expected level of operations and working capital requirements until at least July, 2015. This estimate does not take into account potential proceeds from outstanding convertible securities, anticipated increases in 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 of its website or from SEDAR.
Conference call
Burcon will host a conference call later today, Thursday, Aug. 14, 2014. Company management will host the presentation, followed by a question-and-answer period.
Date: Thursday, Aug. 14, 2014
Time: 5 p.m. (Eastern Time)(2 p.m. (Pacific Time))
Dial-in number (toll/international): 1-719-325-2464
Toll-free dial-in number (North America): 1-888-481-2877
Conference ID: 7526856
A replay of the call will be available after 8 p.m. (Eastern Time) on the same day through to Sept. 14, 2014.
Replay dial-in number (toll/international): 1-858-384-5517
Toll-free dial-in number (North America): 1-877-870-5176
Replay conference ID: 7526856
A transcript of the call will be available after Aug. 18, 2014.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the three months For the three months
ended June 30, 2014 ended June 30, 2013
Revenues
Royalty income $ 25,290 $ 23,899
Expenses
General and administrative 841,042 1,009,836
Research and development 604,437 617,275
------------ ------------
1,445,479 1,627,111
(Loss) from operations (1,420,189) (1,603,212)
Interest and other income 26,828 22,382
(Loss) and comprehensive (loss)
for the period $ (1,393,361) $ (1,580,830)
Basic and diluted (loss) per share $ (0.04) $ (0.05)
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.