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Attention Business/Financial Editors
Burcon announces year-end results, updates on activities
VANCOUVER, June 28 /CNW/ - Burcon NutraScience Corporation (TSX - BU)
("Burcon") today reported financial results for the fiscal year ended March
31, 2010 and provided a review of the year's operations.
A summary of the highlights of the past year includes:
<<
- Raised gross proceeds of $16.9 million through a public offering of
2,942,950 common shares at $5.75 per share in June 2009;
- Graduated to the Toronto Stock Exchange ("TSX") on June 18, 2009;
- Obtained publication in peer-reviewed journals of research reports
summarizing the design and conclusions of the toxicology studies
conducted on Puratein(R) and Supertein(TM) canola protein isolates;
- Filed a formal GRAS notification with the U.S. Food and Drug
Administration ("FDA") in January 2010 in support of a cruciferin-
rich canola protein isolate: Puratein(R) and a napin-rich canola
protein isolate: Supertein(TM);
- Entered into materials transfer agreements ("MTAs") and non-
disclosure agreements ("NDAs") with a number of globally recognized
food, beverage and nutritional product companies to evaluate
CLARISOY(R) soy protein isolate for the purpose of pursuing a
strategic alliance;
- Held discussions, supported due diligence activities, and negotiated
possible business structures with various entities for the
commercialization of CLARISOY(R) soy protein isolate. These
activities are ongoing as of the date of this news release;
- Completed a pre-feasibility study for the construction and
commissioning of an initial CLARISOY(R) production facility;
- Filed several patent applications over newly developed novel
processes for the production, functional and nutritional applications
of, and functional attributes of CLARISOY(R) soy protein isolate;
- Filed several patent applications over new inventions on the
production of canola protein isolates;
- Received notices of allowances from the U.S. Patent and Trademark
Office on ten separate patent applications filed on our canola
protein isolate extraction technology, of which five have proceeded
to grant as United States patents;
- Appointed three independent directors; and
- Raised $446,000 through the exercise of incentive stock options and
agents' compensation options.
>>
On June 18, 2009, Burcon completed a public offering of 2,942,950 common
shares at $5.75 per common share, including 333,950 common shares pursuant to
the partial exercise of the agents' over-allotment option. The agents received
a cash commission of 6% of the gross proceeds and compensation options
entitling the agents to purchase up to 117,718 common shares (equal to 4% of
the common shares sold pursuant to the offering). Each compensation option is
exercisable to acquire one common share of the Company at an exercise price of
$5.75 per share at any time before and including December 18, 2010. As of
today's date, 94,874 of the compensation options remain outstanding. Burcon is
using the net proceeds from the offering for continued research and
development of Burcon's soy protein isolate extraction and purification
technology (CLARISOY(R)), further refining of Burcon's canola protein isolate
extraction and purification technology (Puratein(R) and Supertein(TM)), filing
new patent applications and expanding Burcon's intellectual property
portfolio, and for general working capital purposes. The net proceeds will
also be used towards legal fees for the negotiation of agreements for
CLARISOY(R) soy protein isolate, Puratein(R) and Supertein(TM) canola protein
isolates.
Concurrent with the completion of Burcon's public offering, the Company's
common shares were listed on the TSX.
During the year, scientists from Burcon and ADM collaborated to prepare
manuscripts summarizing the design of and results of the toxicology studies
conducted in fiscal 2008 as part of the GRAS self-affirmation process. The
manuscripts were prepared for submission to and ultimately publication in
peer-reviewed journals. The publication of these scientific studies forms an
important part of the GRAS notification process which Burcon and ADM have
chosen to pursue after Burcon's Puratein(R) and Supertein(TM) canola protein
isolates achieved U.S. self-affirmed GRAS status in October 2008.
A formal GRAS notification was filed with the FDA in January 2010 and, in
response to comments from the FDA, it was modified and resubmitted in February
2010. In a letter dated April 1, 2010, the FDA has formally acknowledged
receipt of the GRAS notification. Burcon estimates the timing for the GRAS
notification process to take approximately 180 days following submission of
the notification letter to the FDA.
Over the past year, Burcon entered into additional MTAs and NDAs with
major food, beverage and pharmaceutical companies to enable Burcon to provide
these companies with large quantity samples of CLARISOY(R) soy protein isolate
for their evaluation. Burcon also entered into a series of MTAs and NDAs with
a number of the world's largest protein ingredient companies including major
plant protein producers as well as dairy protein ingredient companies and
others. These agreements were put in place to facilitate the evaluation of
CLARISOY(R) soy protein isolate by potential strategic alliance partners.
The process of pursuing a strategic alliance partner or partners for the
development of Burcon's CLARISOY(R) soy protein isolate has been focused on
partnering for both the production of CLARISOY(R) as well as the marketing and
sale of CLARISOY(R) to food and beverage manufacturers. Burcon has held
discussions with a number of entities who have expressed an interest in
partnering - in most cases exclusively - for the sale of Burcon's CLARISOY(R)
soy protein isolate to food and beverage manufacturers and nutritional
supplement companies. Certain parties have also expressed an interest in
partnering for the production of Burcon's CLARISOY(R) soy protein isolate.
As a further part of this process of pursuing a strategic alliance
partner, Burcon has entered into NDAs to facilitate due diligence activities
with certain companies including providing access to such items as patent
filings as well as scientific and engineering data.
In order to evaluate the various potential alternative alliance
structures, Burcon engaged the engineering firm AECOM in the second quarter of
fiscal 2010, a global provider of professional engineering and management
support services. In consultation with AECOM, Burcon completed a
pre-feasibility study for the construction and commissioning of an initial
CLARISOY(R) production facility. Given the encouraging conclusions of this
pre-feasibility study, Burcon is now also investigating one or more potential
strategic alliances, as noted above, aimed solely at the marketing and sale of
CLARISOY(R) soy protein isolate to food and beverage manufacturers.
Burcon will continue to explore all strategic alliance opportunities,
both with fully-integrated potential partners that have protein production
capabilities and sales capabilities as well as with partners whose interest is
solely in partnering for the sale of CLARISOY(R) soy protein isolate. Burcon's
intention is to identify an alliance that is the most beneficial to the
Corporation and with the greatest potential to enhance shareholder value.
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) canola protein isolates and
CLARISOY(R) soy protein isolate.
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 commercial production facility as well as to initiate
product development programs and marketing and sales strategies for
Puratein(R) and Supertein(TM). In addition, Burcon intends to pursue approval
of Puratein(R) and Supertein(TM) canola protein isolates as novel foods from
the Food Directorate, Health Products and Food Branch of Health Canada. Burcon
is also pursuing Canadian government financial assistance to partially cover
the cost of certain scientific research projects aimed at establishing the
potential health benefits of Supertein(TM) canola protein isolate.
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(R) 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(R). The Winnipeg Technical Centre will continue to
produce CLARISOY(R) 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 $6,660,322 ($0.24 per share) as compared to
$4,811,331 ($0.19 per share) in the prior year. Included in the loss amount
reported is stock-based compensation (non-cash) costs of $2,649,297 (2009 -
$1,495,436). The other non-cash costs included in the loss for the year are
amortization of $163,969 (2009 - $169,868), services received and settled in
capital stock of $nil (2009 - $30,010) and loss on disposal of property and
equipment of $924 (2009 - $18,574).
Research and development expenses increased by approximately $10,000 from
fiscal 2009. After deducting stock-based (non-cash) compensation expense of
about $565,000 (2009 - $476,000), salaries and benefits increased by
approximately $76,000. About $30,000 of the increase can be attributed to
annual salary increases, with the balance relating to the addition of an
employee at the Winnipeg Technical Centre and another having returned from
personal leave at the end of the last fiscal year. Laboratory operation costs
increased by approximately $92,000, as did repairs and maintenance expenses by
about $48,000 due to ageing equipment and higher maintenance supplies,
increased ingredients and supplies of about $30,000 for the refinement and
production of CLARISOY(R) soy protein isolate samples for evaluation by
potential strategic alliance partners.
General and administrative expenses increased by about $1,623,000 over
the prior year. Included in salaries and benefits is stock-based compensation
expense of approximately $1,928,000 (2009 -$648,000). During 2010, 990,000
options were granted to employees, directors and a consultant of the Company.
The 850,000 options granted to employees and the consultant vest over a 2 year
period and therefore their aggregate fair value of about $6,221,000,
determined using the Black-Scholes model, is being charged to earnings as
stock-based compensation expense over that period. The 140,000 options granted
to directors vested immediately and therefore their aggregate fair value of
about $1,059,000 was recorded as stock-based compensation during the period.
The cash portion of salaries and benefits increased by about $96,000 over last
year due to the appointment of a new Director of Corporate Development early
this fiscal year, a new employee in the fourth quarter and also due to
increased directors' fees including the appointment of two new directors and
additional meetings held by sub-committees of the Board.
Included in investor relations expenses is approximately $104,000 (2009 -
$272,000) of stock-based compensation expense. The cash portion of investor
relations expense increased by approximately $52,000. Fees and travel expenses
paid to a U.S. investor relations consultant and production of videos for our
website contributed about $58,000 to the increase, as did increased annual
report expenditures of about $14,000 and news releases of $9,000, offset by
expenditures for European roadshows in fiscal 2009 of about $34,000. Burcon
also incurred higher expenses for travel and meals due to conference
attendances and also to meetings with parties interested in CLARISOY(R) soy
protein isolate. Other expenses include higher transfer agency and regulatory
filing fees subsequent to the Company's listing on the TSX in June 2009.
Patent legal fees and expenses account for a significant portion of
Burcon's professional fees. Burcon's patent strategy is to aggressively seek
protection for new technologies as well as further protecting current
technologies. During this year, Burcon filed several new patent applications
relating to CLARISOY(R) soy protein isolate and also incurred higher foreign
agency fees for the registration in various European countries of patents
granted in Europe.
Excluding stock-based compensation, consulting expenses increased by
$19,000. The increase is due to the engagement of AECOM during the year to
complete a pre-feasibility study for the construction of an initial
CLARISOY(R) production facility.
At March 31, 2010, the Company's cash and short-term investment totalled
approximately $13,982,000, as compared to approximately $2,242,000 at March
31, 2009. During this year, Burcon raised net proceeds of $15.4 million from
the public offering, as well as $446,000 from the exercise of options, as
compared to last year during which option exercises provided proceeds of
approximately $1,055,000. Management believes it has sufficient resources to
fund its expected level of operations and working capital requirements to at
least March 2014, excluding proceeds from outstanding convertible securities.
Depending on the nature of the strategic alliance it may enter into for the
commercialization of CLARISOY(R), it may need to raise additional capital in
the nearer term.
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
Puratein(R) and Supertein(TM) canola protein isolates 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 127 issued patents in various
countries, including 18 issued U.S. patents, and in excess of 200 additional
pending patent applications, 65 of which are U.S. patent applications.
<<
ON BEHALF OF THE BOARD OF DIRECTORS
"Johann F. Tergesen"
Johann F. Tergesen
President and Chief Operating Officer
>>
Burcon NutraScience Corporation is a publicly listed on the Toronto Stock
Exchange under the symbol "BU". For more information on Burcon, visit
www.burcon.ca.
This press release contains forward-looking statements that involve risks
and uncertainties. These forward-looking statements relate to, among other
things, the Corporation's, 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", "potential", "expected", "anticipates", "will be", 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.
<<
Burcon NutraScience Corporation
Consolidated Balance Sheets
As at March 31, 2010 and 2009
2010 2009
$ $
Assets
Current assets
Cash and cash equivalents 11,661,745 2,241,976
Short-term investments 2,320,372 -
Amounts receivable 25,052 35,621
Prepaid expenses 109,566 138,172
----------------------------
14,116,735 2,415,769
Property and equipment 749,455 626,673
Goodwill 1,254,930 1,254,930
----------------------------
16,121,120 4,297,372
----------------------------
----------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 401,179 346,730
----------------------------
Shareholders' Equity
Capital stock 44,236,390 28,268,997
Contributed surplus 3,762,983 3,705,549
Options 5,236,268 3,003,446
Warrants 171,972 -
Deficit (37,687,672) (31,027,350)
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15,719,941 3,950,642
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16,121,120 4,297,372
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Burcon NutraScience Corporation
Consolidated Statements of Operations, Comprehensive Loss, and Deficit
For the years ended March 31, 2010 and 2009
2010 2009
$ $
Expenses
Research and development 2,101,159 2,090,775
General and administrative 3,177,036 1,553,600
Professional fees 1,296,863 1,115,191
Management fees and services 169,496 127,250
Amortization 3,379 2,462
----------------------------
Loss from operations (6,747,933) (4,889,278)
Interest income 87,611 77,947
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Loss and comprehensive loss for the year (6,660,322) (4,811,331)
Deficit - Beginning of year (31,027,350) (26,216,019)
----------------------------
Deficit - End of year (37,687,672) (31,027,350)
----------------------------
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Basic and diluted loss per share (0.24) (0.19)
----------------------------
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Burcon NutraScience Corporation
Consolidated Statements of Cash Flows
For the years ended March 31, 2010 and 2009
2010 2009
$ $
Cash flows from operating activities
Loss for the year (6,660,322) (4,811,331)
Items not affecting cash
Amortization 163,969 169,868
Loss on disposal of property and
equipment 924 18,574
Stock-based compensation expense 2,649,297 1,495,436
Services received and settled in
capital stock - 30,010
----------------------------
(3,846,132) (3,097,443)
Changes in non-cash working capital items
Amounts receivable 10,569 (19,728)
Prepaid expenses (23,542) 3,758
Accounts payable and accrued liabilities 54,449 130,402
----------------------------
(3,804,656) (2,983,011)
----------------------------
Cash flows from investing activities
Increase in short-term investments (2,320,372) -
Acquisition of property and equipment (288,503) (51,070)
Proceeds from disposal of property
and equipment 828 -
----------------------------
(2,608,047) (51,070)
----------------------------
Cash flows from financing activities
Issue of capital stock - net of issue costs 15,832,472 1,055,378
----------------------------
Increase (decrease) in cash and cash
equivalents 9,419,769 (1,978,703)
Cash and cash equivalents - Beginning of year 2,241,976 4,220,679
----------------------------
Cash and cash equivalents - End of year 11,661,745 2,241,976
----------------------------
----------------------------
Cash and cash equivalents consist of
Cash 61,554 30,145
Cash equivalents 11,600,191 2,211,831
----------------------------
11,661,745 2,241,976
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>>
-30-
/For further information: Jade Cheng, Chief Financial Officer, Burcon
NutraScience Corporation, (604) 733-0896, (888) 408-7960 toll-free,
jcheng@burcon.ca, www.burcon.ca; AXINO AG, Wolfgang Seybold, Investor
Relations Europe, AXINO AG, Konigstrasse 26, 70173 Stuttgart, Germany, Tel.
+49-711-25 35 92-40, Fax +49-711-25 35 92-55, wolfgang.seybold@axino.de,
www.burcon.net/
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