Mr. Steve Campbell reports

BURCON REPORTS FISCAL 2024 SECOND QUARTER RESULTS

Burcon NutraScience Corp. has released its results for the fiscal second quarter ended Sept. 30, 2023.

Operational highlights for the second quarter ended Sept. 30, 2023:

During the quarter, Burcon:

• Partnered with HPS Food and Ingredients to launch the world's first high-purity hempseed protein isolate;
• Successfully launched its 95-per-cent hempseed protein isolate at IFT FIRST 2023 in Chicago, Ill.;
• Unlocked additional value for its new-to-the-world hemp and sunflower protein technologies;
• Showcased its 95-per-cent hempseed protein isolate at Natural Products Expo East trade show;
• Advanced market development initiatives for its hempseed protein through sample production and technical due diligence with prospective customers;
• Expanded its scope of strategic partnership opportunities for each of its innovative plant-based protein technologies;
• Extended the first tranche maturity date of its loan agreement with its largest shareholder to July 1, 2025;
• Received $184,000 in royalty revenue from Merit's receiver for the sale of pea and canola proteins.

Subsequent to the quarter-end, Burcon:

• Continued to receive significant customer interest from hempseed protein launch;
• Continued to engage the market with its 95-per-cent hempseed protein at SupplySide West trade show.

Management commentary

Burcon's fiscal 2024 second quarter was off to a tremendous start with the announcement of a hemp partnership as the first of many proof points for Burcon 2.0. The company believes its partnership with HPS Food and Ingredients Inc. (HPS) perfectly aligns with its three strategic imperatives of Burcon 2.0, which are to identify additional revenue sources, get closer to customers and gain more influence over the production of its proteins. Through a capital-light partnership approach, Burcon expects that it can rapidly develop the market, begin commercial production and achieve sales in 2024, bringing the world's first high-purity 95-per-cent hempseed protein isolate to market.

According to Research and Markets, the global hemp-based food market is projected to double in the next five years, growing at a rate of over 15 per cent. Based on market data and internal estimates, there is potentially a multibillion-dollar addressable market for its hempseed protein with over $100-million potential for Burcon. Since the company's successful launch of its 95-per-cent hempseed protein at IFT FIRST, Burcon and HPS have prioritized customer engagement to develop the market for this novel protein. A large number of samples for evaluation and testing have been sent out, with prospective customers moving forward on product development and pilot testing trials. Subsequent to quarter-end, the company announced that Burcon has received significant customer interest for its 95-per-cent hempseed protein. The market reception has far exceeded its expectations and, as a result, Burcon and HPS are accelerating their plans to commercialize hempseed protein. The company expects to complete the process validation trials and begin commercial production in early 2024 to meet the overwhelming customer demand.

During the quarter, the company unlocked value in its new-to-the-world sunflower proteins and hemp protein isolate. Burcon uncovered additional value, particularly in its sunflower process, which it believes could drastically improve the economics of the offering. Where traditional ingredient processing yields a lead product and byproducts or waste streams, Burcon's sunflower process yields two valuable protein ingredients each with its own unique functionality and target applications. The company is very encouraged with its sunflower technology and is in the process of exploring additional routes to market.

Burcon continues to pursue non-dilutive government funding sources that could help offset its R&D (research and development) and commercialization expenses. The company's funding application to Protein Industries Canada is currently in the final stages and, if successful, the company could receive a co-investment on a $7-million project to commercialize hemp and sunflower. Additional non-dilutive funding, which is available to Burcon if we meet certain conditions, includes Burcon's previously announced second $5-million tranche of the total $10-million loan from the company's largest shareholder. In aggregate, these funding sources could extend Burcon's cash runway into 2025.

The comapny's team set out to execute its Burcon 2.0 strategy and it delivered its first of many proof points with a direct line of sight to revenue in 2024. The market outlook for its hempseed protein is promising while the company seeks to commercialize Burcon's full suite of high-purity, next-generation protein ingredients. The company anticipates that 2024 can be a transformative year for Burcon and looks forward to creating additional value for Burcon and its shareholders.

Financial results (in Canadian dollars)

During the current quarter, Burcon recorded $184,000 in royalty from the sale of Merit's protein products from the receivership process. During the same year-ago quarter, Burcon recorded $112,000 in royalty from Merit's sale of protein products.

Net loss totalled $1.4-million or one cent per basic and diluted share for the current quarter, as compared with $3.2-million or three cents per basic and diluted share in same period last year. The lower loss this year, as compared with last year's, is due mainly to the share of loss in Merit recorded during the second quarter of fiscal 2023 and to lower operating expenses.

Research and development totalled $909,000, as compared with $1,076,000 in the same year-ago quarter. The decrease of $167,000 is due to lower intellectual property expenses, as well as to lower stock-based compensation expense.

General and administrative expenses totalled $803,000, as compared with $987,000 in the same year-ago quarter. The decrease of $184,000 is a result of cash conservation measures the company has undertaken, which have resulted in reductions in investor relations expenses, as well as expenses that related to the U.S. listing.

Over all, cash operating expenditures have decreased 16 per cent this quarter over the same period last year, with G&A and IP expenses down by 24 per cent this quarter over the same year-ago quarter. The company continues to implement cost-cutting measures, where appropriate.

At Sept. 30, 2023, cash balances totalled $2.2-million compared with $1.5-million at March 31, 2023. During the current quarter, Burcon and Large Scale entered into an agreement to extend the maturity date of the first tranche of the secured loan from July 1, 2024, to July 1, 2025. Burcon expects its cash resources to finance its operations to February, 2024, and further to February, 2025, if conditions for advance under the second tranche are satisfied. These dates may potentially be extended if the company receives funding or generates revenues from other sources including, not limited to, government assistance, pilot plant processing and scale-up validation services.

Conference call details

Burcon will hold an investor conference call and webcast on Tuesday, Nov. 14, 2023, at 5 p.m. ET.

A link to the webcast of the conference call is available on Burcon's website under presentations. The webcast will also be archived for future playback.

Investors interested in participating in the live call can dial in using the details below:

Date:   Tuesday, Nov. 14, 2023

Time:  5 p.m. Eastern Time (2 p.m. Pacific Time)

Toll-free dial-in (North America):  1-855-327-6837

Dial-in (toll/international):   1-631-891-4304

Conference ID:   10022578

About Burcon NutraScience Corp.

Burcon is a global technology leader in the development of plant-based proteins for foods and beverages. Its proteins exhibit superior functionality, taste and nutrition, making them ideal ingredients for food formulators. With over two decades of experience, Burcon has amassed an extensive patent portfolio covering its specialty plant-based proteins derived from pea, canola, soy, hemp and sunflower seeds, among other plant sources. Burcon is striving to become a vertically integrated provider of specialty plant-based protein solutions that deliver on health, nutrition and sustainability. Supporting the growing trend toward a plant-based diet, Burcon is developing premium protein ingredients that it believes are better for you and better for the planet.

We seek Safe Harbor.