Burcon NutraScience Corporation (TSXV - BU) ("Burcon") today reported financial results for the fiscal year ended March 31, 2009 and provided a review of the year's operations.
A summary of the highlights of the past year include:
- Compiled the dossier of scientific data including the key toxicology studies completed for the U.S. GRAS (Generally Recognized as Safe)
- Announced in October 2008 that Puratein(R) and Supertein(TM) canola protein isolates are self-affirmed GRAS for their intended use in a
variety of food and beverage applications;
- Introduced in November 2008 a revolutionary soy protein isolate, Clarisoy(TM), which is 100% soluble and transparent in acidic solutions;
- Entered into materials transfer agreements ("MTAs") and non-disclosure agreements with a number of globally recognized food,
beverage and nutritional product companies for the evaluation of Clarisoy(TM);
- Filed several patent applications over the newly developed novel processes for the production of, functional and nutritional applications of, and functional attributes of Clarisoy(TM);
- 23 patents covering 7 distinct inventions were granted in a number of countries;
- Filed several patent applications over new inventions on the production of canola protein isolates; and
- Raised $1.1 million through the exercise of stock options.
In October 2008, Burcon announced that its canola protein isolate products, Puratein(R) and Supertein(TM), are GRAS for their intended use in a variety of food and beverage applications. The products have been self-affirmed GRAS through an independent evaluation by a panel of qualified experts in the fields of food safety, toxicology, nutritional sciences, food allergies and pediatric nutrition. Burcon's Puratein(R) and Supertein(TM) are the first canola protein isolates to have attained GRAS status in the United States. GRAS status permits Puratein(R) and Supertein(TM) to be marketed and used in a variety of mainstream foods and beverages for human consumption. To enhance consumer acceptance, Burcon and ADM have chosen to pursue GRAS notification for Puratein(R) and Supertein(TM). GRAS notification is a voluntary procedure whereby a company informs the Food and Drug Administration ("FDA") of its determination that the use of a substance is GRAS. A substance is GRAS Notified when, after reviewing the GRAS notification, the FDA responds with a no-objection letter if it is satisfied with the submission. Before submitting the GRAS notification, Burcon and ADM will submit the scientific studies which were incorporated into the GRAS dossier (the toxicology studies) to a peer reviewed journal for publication. The parties are in the process of submitting these studies. Once published, Burcon and ADM will proceed to submit the GRAS notification. The FDA's goal is to respond in writing within 180 days after receiving the notice by either identifying a problem with the GRAS notice or by indicating that it has no questions. Although Burcon and ADM have decided to take steps towards obtaining GRAS notification, Puratein(R) and Supertein(TM) are already self-affirmed GRAS and may be marketed and sold for human consumption in the United States now.
In November 2008, Burcon announced that it has developed a soy protein isolate, Clarisoy(TM) that is 100% soluble and transparent in acidic solutions, enabling applications down to pH 2.5. Clarisoy(TM) is heat stable permitting hot-fill applications and has neutral flavour and odour, giving beverages a cleaner flavour. The solubility and transparency of Clarisoy(TM) allows for its use in a wide variety of beverages where traditional soy protein isolates are not appropriate. Clarisoy(TM) is expected to be price competitive with existing proteins and should be of particular interest to food and beverage manufacturers seeking an alternative to high dairy protein prices. Burcon expects that the addition of Clarisoy(TM) will expand Burcon's portfolio of commercializable products.
In the coming year Burcon will pursue two simultaneous development paths for its canola and soy protein technologies as well as its novel protein ingredients: Puratein(R), Supertein(TM) and Clarisoy(TM).
Canola proteins: Burcon, in conjunction with ADM, will continue to pursue GRAS notification for Puratein(R) and Supertein(TM) with the FDA with the intention of obtaining a no objection letter from the FDA. Burcon's main objective is to reach an agreement with ADM for the development and construction of a first commercial production facility as well as to initiate product development programs and marketing and sales strategies for Puratein(R) and Supertein(TM).
Soy protein: Burcon's intent is to pursue product development agreements with major food, beverage and nutritional product companies to develop improved or novel applications for Clarisoy(TM) into their products. Burcon will also pursue a strategic alliance with a potential partner in connection with the development of a commercial facility for the production, marketing and sale of Clarisoy(TM). The Winnipeg Technical Centre will continue to produce Clarisoy(TM) samples for product application trials by potential strategic alliance partners.
Burcon will continue to refine its protein extraction and purification technologies, develop new technologies and related products and further
strengthen and expand its intellectual property portfolio.
Financial Results and Highlights
Burcon reported a loss of $4,811,331 ($0.19 per share) as compared to $4,042,376 ($0.16 per share) in the prior year. Of the loss amount reported, $1,495,436 (2008 - $1,186,336) is a non-cash stock-based compensation cost. Other non-cash items included in the loss amount include amortization of about $170,000, services received and settled in capital stock of $30,000 and loss on disposal of property and equipment of about $19,000.
Research and Development expenses decreased by approximately $67,000 from fiscal 2008. After deducting stock-based (non-cash) compensation expense of about $476,000 (2008 - $383,000), salaries and benefits increased by approximately $67,000, excluding a $25,000 bonus payment made during fiscal 2008. About two-thirds of the increase can be attributed to annual salary increases, with the balance relating to the net addition of an employee at the Winnipeg Technical Centre. Burcon made payments totaling $203,000 (2008 - $397,000) during the year relating to the toxicology trials and GRAS self-affirmation process that were completed during the year.
Of the total General and Administrative expenses, approximately $920,000 (2008 - $720,000) relate to stock-based compensation. Investor relations expenses increased by approximately $77,000, after taking into account the effect of stock-based compensation of about $272,000 (2007 - $231,000). The increase is due primarily to higher expenses relating to a European conference and advertising expenses in Europe as well as a Canadian publication supplement featuring Burcon. Other expenses contributing to the increase this year include increased public relations services, news releases and stock exchange sustaining fees.
Professional fees increased by about $515,000 from 2008. Of the increase, about $442,000 is attributable to patent legal fees and disbursements. Two patents entered National Phase during the last quarter of the fiscal 2008 and the significant fees related to this process continued into the first two quarters of fiscal 2009. From December 2008 to February 2009, Burcon incurred an average of $125,000 each month in patent legal fees and disbursements attributable mostly to foreign agency fees expended in the registration of patents granted in Europe in various European countries. From inception to March 31, 2009, Burcon has expended approximately $3.8 million on patent legal fees and disbursements to strengthen its patent portfolio worldwide and file patent applications for new inventions.
At March 31, 2009, the Company's cash position was $2,241,976, as compared to $4,220,679 at March 31, 2008. During the year, the exercise of options provided proceeds of about $1.1 million, as compared to last year during which option exercises provided proceeds of approximately $831,000. To-date, Burcon has incurred US$582,000 related to the regulatory recognition process and expects to incur a further US$35,000. The total cost of the regulatory process is currently estimated at US$977,000, with Burcon's share estimated at US$617,000.
About Burcon NutraScience
Burcon is a leader in nutrition, health and wellness in the field of functional, renewable plant proteins. Since 1999, Burcon has developed a portfolio of composition, application, and process patents originating from our core protein extraction and purification technology. We are developing the world's first commercial canola proteins, Puratein(R) and Supertein(TM) with unique functional and nutritional attributes, and CLARISOY(TM), a revolutionary soy protein isolate which is 100% soluble and completely transparent in acidic solutions. Our team of highly specialized scientists and engineers work from our own research facility to develop and optimize environmentally sound technologies. To-date, our patent portfolio consists of 84 issued patents worldwide, including 8 issued U.S. patents, and well in excess of 200 additional pending patent applications, 55 of which are U.S. patent applications.
The TSX Venture Exchange 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 that involve risks and uncertainties. These forward-looking statements relate to, among other things, plans and timing for the introduction or enhancement of our products, statements about future market conditions, supply and demand conditions, and other expectations, intentions and plans contained in this press release that are not historical fact. Our expectations regarding the prospect for future success depend upon our ability to develop and sell products, which we do not produce today and cannot be sold without further research and development. When used in this press release, the words "goal", "intend", "believes" and "potential" and similar expressions, generally identify forward-looking statements. These statements reflect our current expectations. They are subject to a number of risks and uncertainties. In light of the many risks and uncertainties surrounding the development of a source of protein from canola meal, you should understand that we cannot assure you that the forward looking statements contained in this press release will be realized.