Burcon NutraScience Q4 2024 Earnings Report

Burcon NutraScience EPS Results

• Actual EPS: -C$0.40
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Burcon NutraScience Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Burcon NutraScience Announcement Details

• Quarter: Q4 2024
• Date: 6/26/2024
• Time: N/A
• Conference Call Date: Wednesday, June 26, 2024
• Conference Call Time: 5:00PM ET

Burcon is a global technology leader in the development of plant-based proteins. With over 285 issued patents and more than 250 additional patent applications, that have been developed over a span of more than twenty years, Burcon has grown an extensive portfolio of composition, application, and process patents covering novel plant-based proteins derived from pea, canola, soy, hemp, sunflower seed and more. In 2019, Merit Functional Foods Corporation was established in a joint venture by Burcon and three veteran food industry executives. Merit Foods is building a state-of-the-art protein production facility in Manitoba, Canada, where it will produce, under license, Burcon's novel pea and canola protein ingredients.

Burcon NutraScience Q4 2024 Earnings Call Transcript

Key Takeaways

• Fiscal 2024 was a transformative year with Birkon validating a $40 billion addressable market, refining its plant protein value propositions, and establishing a capital-light contract manufacturing supply chain to enable commercial-scale production.
• Subsequent to year-end, Birkon launched the world’s first hemp protein isolate and a high-purity canola protein, achieved its first direct commercial sale of hemp protein within nine months of launch, and expects recurring revenue from both products in the coming quarters.
• The company bolstered its balance sheet by raising $7.7 million in equity, securing $6.9 million in non-dilutive government funding, accessing a $5 million loan tranche (with $1 million drawn), and closing FY2024 with $4.2 million cash—providing a fully funded path to cash-flow positivity.
• Birkon’s three strategic imperatives—identifying alternative revenue streams via contract research services, getting closer to customers (with nearly 100% of former-customer interest), and gaining influence over protein manufacture—drive its growth plan, with sunflower protein next in the pipeline.
• Financially, Birkon narrowed its net loss to $7.5 million (US$0.06 per share) from $25.4 million (US$0.23 per share) last year, reduced operating expenses by $0.7 million, and optimized R&D and IP spending through strategic portfolio reviews.

Presentation

[Operator]

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Burcon NutraScience Corporation's fiscal year and 2024 results ended March 31, 2024. Joining us today are Kip Underwood, Burcon's Chief Executive Officer, and Jade Cheng, the company's Chief Financial Officer. Following the remarks, we will open the call for your questions. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press then star one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. Then, before we conclude today's call, I'll provide the company's Safe Harbor statement with important cautions regarding the forward-looking statements made during this call. Now, I would like to turn the call over to CEO of Burcon, Mr. Kip Underwood. Sir, please go ahead.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Thank you, operator, and thank you everyone for joining us today. Fiscal 2024 was a transformative year for Burcon. We started the year with a strategic deep dive to determine how best to create value from our highly differentiated, best-in-class plant protein portfolio. We validated the overall market opportunity and confirmed through market data and internal estimates that we have a $40 billion addressable market for our high purity proteins. We worked with industry experts to confirm and enhance our value propositions, answering a simple question: Why would someone buy a Burcon product over other choices in the marketplace? With the opportunity defined and product differentiation developed, we determined our route to market, establishing a capital-light business model as a goal. This supply model enables speed to market and agility, which are both critical to our overall success. Plans are only plans until they are executed.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Here is where Burcon has grown as a company. In the last half of the fiscal year, we completed several critical milestones, building a foundation for future growth. These included building a contract manufacturer supply chain by placing proprietary process assets into an existing manufacturing facility. We completed multiple commercial-scale production runs, validating commercial-scale capability. We launched the world's first hemp protein isolate. We refined our sunflower protein value proposition, and in doing so, discovered a protein possibility that could redefine or disrupt the plant-based protein market. We built a balance sheet to fund the execution of our business plan through a blend of equity, debt, and non-dilutive government funding. Subsequent to 2024 fiscal year, we leveraged the foundation we built to move forward on becoming the company Burcon has always aspired to be, a market-leading plant protein innovation company.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

We launched our highly differentiated canola protein offering, addressing direct prospective customer requests and needs. We achieved Burcon's first direct commercial sale of hemp protein in less than nine months from product launch, which, in my experience, is truly best-in-class industry performance. We will continue to execute our plan, focusing on ramping up production to meet both hemp and canola protein demand. We anticipate recurring revenue from these efforts over the next couple of quarters. We have built a real momentum in the marketplace and are determined to bring our technologies to market. Before we review our financial results, I'd first like to take this opportunity to welcome Robert Peets to our team, as well as thank our CFO, Jade Cheng, for her decades of service to Burcon.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Robert, who will be appointed Chief Financial Officer of the company effective July first, is a seasoned financial and strategic executive who has spent a career spanning corporate and financial management, strategic investments, and venture capital. Rob has extensive experience in capital markets on both equity and debt transactions. I am confident that Burcon will benefit from Rob's decades of knowledge and experience as we transition to a revenue-generating company. We were patient in finding Jade's successor. Rob is the right person to take over as CFO. The CFO transition will be seamless as we continue to execute our business plan. Jade has decided to turn the page on this chapter of her life. In my short time here with Burcon, Jade has been nothing short of excellent, both in her work and as a colleague.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

We cannot thank her enough for her commitment and dedication to building Burcon into the company it is today. She will be sorely missed. I believe I speak on behalf of everyone at Burcon when I say we wish her nothing but the best in all her future endeavors. Coming back to our call. We are excited about the year ahead and confident in our ability to execute our business plan. We look forward to sharing some of our excitement with you on our call today. With that, I'd like to turn the call over to our Chief Financial Officer, Jade Cheng, to provide one last overview of the financial results for fiscal 2024. After which, I will return to provide my remarks and discuss our positive business outlook for our current fiscal year. We will open the call to questions following our remarks.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Jade, whenever you're ready, please go ahead.

[Jade Cheng, CFO at Burcon NutraScience Corporation]

Thank you, Kip. Earlier today, our financial results for the year ended March 31, 2024, were issued in a news release and filed with SEDAR, as well as posted to the investor relations section of our website. During fiscal 2024, we recorded royalty revenue of CAD 184,000 from the sale of Merit's protein products by the receiver, as compared to CAD 364,000 recorded in fiscal 2023 from Merit's sale of protein products. Burcon reported a net loss of CAD 7.5 million, or CAD 0.06 per basic and diluted share for fiscal 2024, as compared to CAD 25.4 million or CAD 0.23 per basic and diluted share last year. The decrease in the loss is attributed to impairment losses and share of loss in Merit recorded in fiscal 2023.

[Jade Cheng, CFO at Burcon NutraScience Corporation]

Our total operating expenses in fiscal 2024 decreased by CAD 686,000 over fiscal 2023. Research and development expenditures went down by CAD 546,000, with intellectual property expenses decreasing by CAD 356,000. Following a strategic patent portfolio review undertaken during the year, Burcon focused its intellectual property spend on patents that are essential to its strategic objectives and ceased maintenance payments on non-core patents, resulting in a decrease in IP expenses. Other R&D expenditures decreased due to lower stock-based compensation expenses, which were partially offset by Burcon's launching of commercial validation trials for its hemp protein isolate.

[Jade Cheng, CFO at Burcon NutraScience Corporation]

G&A expenditures in fiscal 2024 decreased by CAD 139,000 over the previous year, due mostly to lower investor relations and legal expenses, which were partially offset by higher professional fees in respect of strategy and business development activities. During fiscal 2024, Burcon recorded funding from Protein Industries Canada of about CAD 0.5 million, which has been applied to reduce R&D expenses, G&A expenses, inventory, and property and equipment. As at March 31, 2024, the company had CAD 4.2 million of cash. During this year, Burcon completed two non-brokered private placements that provided total net proceeds of CAD 7.7 million. Burcon also met the conditions this year for the CAD 5 million second tranche of the large-scale loan, of which CAD 1 million was drawn.

[Jade Cheng, CFO at Burcon NutraScience Corporation]

During fiscal 2024, Burcon received funding approval from PIC for the scale-up and commercialization of hemp seed and sunflower seed protein. The CAD 6.9 million project, led by Burcon, includes funding of CAD 3 million from PIC. As you may know, it was announced earlier today that I will be stepping down as CFO, effective June 30, 2024. Burcon has been a big part of my professional career, so this has not been an easy decision for me. I would like to say that it has been a true pleasure to have had the opportunity to be a part of Burcon since its inception and to have worked alongside our talented team. I leave Burcon in the capable hands of Mr. Robert Peets, the new CFO, and our CEO, Kip Underwood.

[Jade Cheng, CFO at Burcon NutraScience Corporation]

I have great confidence in Burcon and look forward to seeing Burcon's continued success in bringing our protein products to market. With that, I'd like to turn the call back over to Kip.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Thanks, Jade. Burcon NutraScience, at its core, is a food technology company that has developed game-changing protein ingredients, which enable the creation of great-tasting, more sustainable food. We are on the cusp of moving beyond a company that creates technology to one that derives profit from our innovation. Over the past year, we have laid the foundation to take the next step in our journey. At the start of the fiscal year, we went back to the drawing board to devise a strategy that could successfully bring our innovative protein technologies to market. We affirmed our three strategic imperatives: identify alternative revenue streams, get closer to customers and end markets, gain control or influence over the manufacture of our products. In addition, we developed our capital-light business model, enabling the commercial production of our protein portfolio by leveraging third-party manufacturing assets.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

During the year, we focused on the execution of those strategic imperatives. Getting our products to market was top priority. Partnering with HPS Food & Ingredients and launching our hemp seed protein isolate last July was the first proof point in our business plan execution. Initial customer demand exceeded our expectations, which allowed us to accelerate our commercial production plans. Burcon entered into a production agreement with its partner manufacturer to produce its hemp seed protein. Commercial production and influence over the manufacture of our proteins were key success factors and a major milestone we cleared in the last quarter of fiscal 2024. In March this year, we announced the successful commercial scale production of our hemp seed protein. We are incredibly proud of our team, who worked closely with our partner manufacturer to commission and optimize our hemp process.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

From equipment installation to optimizing process parameters and officially beginning commercial production, we were able to bring our hemp process online in about 3 months time, an achievement that accelerated our path towards profitability. Subsequent to year-end, we announced the first commercial sale of our 95% hemp seed protein isolate, which was a significant achievement for us, considering we launched just 9 months ago. We continue to see strong demand for our hemp protein and are aiming to ramp up production in order to fulfill the growing customer orders. Prospective customers are evaluating and providing positive feedback. Our 95% hemp seed protein isolate, with its neutral flavor and off-white color, works well in applications such as ready-to-mix powdered beverages, ready-to-drink beverages, dairy alternatives, and protein nutrition bars.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

We expect that our hemp protein will be incorporated into some of these food and beverage applications and be available on store shelves later this year. We are working closely with HPS and our partner manufacturer to prepare for additional production campaigns in the coming months. Ramping up production of hemp protein to fulfill new and incoming customer orders is a priority for us. During the fiscal year, we also validated customer demand from former Merit and new prospective customers for our other protein products. We wanted to understand if there was interest in purchasing Burcon's proteins again. Nearly 100% of former customers expressed interest in evaluating our proteins, while many expressed direct purchase intent. They were unable to find suitable replacement ingredients and eager for us to bring Burcon's technologies back to market.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

With strong customer interest, subsequent to year-end, we officially launched our high-purity, nutritionally complete canola protein isolate. Burcon's canola protein is derived from the canola crop, which is the second largest oilseed crop in the world behind soy, with Canada being the largest global producer. Burcon's canola technology utilizes low-value canola meal, which is a byproduct from canola oil production used as animal feed, and upcycle it into value-added, highly purified protein powder to be used in food and beverages. Initial customer feedback on our canola protein has been very positive. By launching with pilot scale material, we expect to reduce the time required from launch to commercial sales. Production is anticipated to start through our partner manufacturer in the latter half of this year, with commercial sales to follow. We look forward to updating everyone more on this as we move forward on canola.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

During the fiscal year, we successfully strengthened our balance sheet and achieved a fully funded business plan, which includes two rounds of equity financing, non-dilutive government support, and a loan from our largest shareholder. Thanks to all of our long-term shareholders, new investors, company directors, and management, who continue to believe in Burcon's vision, we are able to close two non-brokered private placements of units for a total gross proceeds of CAD 7.8 million. We are grateful to all of our shareholders for their support. Our achievements to date would not have been possible without their investment. Supplementing our equity financing, we executed an agreement to access the second CAD 5 million tranche of the CAD 10 million loan from our largest shareholder, as well as secured CAD 3 million in non-dilutive government funding.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Collectively, the second tranche loan, non-dilutive government funding, and anticipated sales revenue, we believe we have a fully funded business plan and a cash runway that can get Burcon to a cash flow positive state. This was a key success factor for us, and we are pleased to have this funding to execute our plan. As part of our strategic imperative to identify additional revenue streams for the company, we announced this week that Burcon has completed its first contract research project and are in discussions to initiate additional research projects through our Winnipeg technical center. This is highly complementary to Burcon's core protein business and accretive to our bottom line. Our team of scientists and engineers have extensive food process development expertise, which can be leveraged to engage the market. In review of the year, fiscal 2024 has been a turnaround year for us.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

We are pleased to have made significant strides along each of our three strategic imperatives, which are to identify alternative revenue sources, get closer to customers, and have more influence over the manufacture of Burcon's proteins. Establishing a capital-light production supply chain was a cornerstone of our strategic plan, and we now have the capabilities to produce Burcon's portfolio of game-changing protein ingredients. We have validated customer demand that exceeds our business plan expectations, and we continue to grow our customer funnel for both our hemp and canola proteins. Burcon is in an excellent position to capitalize on these opportunities and grow its revenue. For the coming year, we continue our strong momentum in executing our business plan.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Key milestones for the coming year include ramping up commercial production of hemp protein to fulfill increasing customer orders, building our customer funnel, and beginning commercial production for our canola protein, growing and establishing recurring revenues for both protein sales and contract services. Our team is focused on executing and achieving these strategic objectives. Selling our hemp and canola proteins is just the beginning of our growth trajectory. We firmly believe that with our production capabilities and differentiated protein offerings, we have a real opportunity to capture a piece of a $40 billion addressable market for Burcon's high purity plant proteins. We look forward to updating everyone on our commercial progress on the next call, which I believe is not far from today. So we will be speaking again very soon. With that, I'd like to now open the call up to questions.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Operator, can you please provide the appropriate instructions?

[Operator]

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue, and you may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question comes from the line of Jesse Shelmire with Stonegate. Please proceed with your question.

[Jesse Shelmire, Analyst at Stonegate]

Hi, Kip. Thanks for taking a couple of questions.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Thanks, Jesse. Go ahead.

[Jesse Shelmire, Analyst at Stonegate]

First of all, congrats on coming in and, you know, doing a fantastic job in fiscal year 2024, and really getting this thing going in the direction it ought to be going. Anyway, congratulations on that. That's a big deal, Burcon 2.0.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Thank you.

[Jesse Shelmire, Analyst at Stonegate]

Anyway, now that you've begun your hemp seed commercial production and about to launch your canola commercial production, we're trying to figure out how to model your business and if you could help us, maybe like phase one, what is a fully functioning hemp seed and canola operation look like? Again, you know, maybe you could give it to me in a phase one, you know, over the next year or two years.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Sure, Jesse. I think so... Again, our real key for us in the back half of calendar 2024 is to ramp production and get to recurring sales for both hemp and canola protein. I think the beauty of this business and this industry is, once you achieve new business, you're in an end food application. And so once you're in a formula, right, you have a business, that business becomes recurring. And the way it typically works is you produce monthly, and you typically sell monthly. So as we convert customer projects for both hemp and canola protein to the customers, again, we expect recurring revenue to begin the last couple of quarters of calendar 2024 and continue to build well into the following year.

[Jesse Shelmire, Analyst at Stonegate]

Will you, will you be able to disclose when you get those projects?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Yes, I think as, as we move forward, we'll be able to communicate commercial successes, where appropriate. And obviously then as, as we move forward, we'll be able to communicate, recurring revenue based on our quarterly reporting cadence.

[Jesse Shelmire, Analyst at Stonegate]

Great. Can you give us a sense of priorities for next proteins to be launched? I noticed in the news, the press release today, you mentioned, sunflower seeds.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Right. So the, again, the launches right now are hemp and canola. The one—the next one line we are probably most, most excited about being truly disruptive to the marketplace is, is sunflower protein. Again, it comes from the world's third-largest oil seed, oil seed crop, and the, the byproduct of that oil seed production right now goes into low-value ag, you know, basically a commodity. We have the technology to upcycle this into a high-value, food ingredient that has fantastic performance. The early reads we're getting from prospective customers, it has great performance in the application, white in color, looks fantastic in multiple applications. And the last piece is from a halo standpoint, it's protein from the sun. So from an end consumer perspective, it'll have a great, great, health halo about it, from that perspective. So very excited.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Stay tuned as we work through how to bring this product to market, and as we clear milestones, we will communicate those to the market.

[Jesse Shelmire, Analyst at Stonegate]

Then just a couple more quick questions. Can you provide us on a little bit more color on your contract research services? I understand you're an opportunistic organization focused on revenues, but how does that fit into your overall business strategy?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Thanks, Jesse. So it's complementary. The primary reason we do contract research is to engage the market, right? To understand trends, to see what's happening on the cutting edge, to be out in the marketplace versus, you know, staring at a computer. The icing on the cake is, with our process development expertise, we have people that have marketable skills, and we're able to monetize that. So complementary to our business model, we throttle this to ensure it does not delay our primary priorities as a company, but also a way for us, again, to really engage the market and have a pulse of what's occurring out there.

[Jesse Shelmire, Analyst at Stonegate]

Got it. And last quick two questions, and again, just high level, but, you talk about 95% purity. Can you go just a little bit more detail on how... Are there a bunch of companies out there that have 95% purity? How is 95% purity in these proteins a competitive advantage? Are you, are you the only person or are there a bunch of people? How do you stand competitively with your, with your, product offerings as far as super high purity is concerned?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Yes, Jesse, the typical industry standard would be 90%, right? So why does 95% matter, right? So it is that last bit that we remove or that last bit we maintain in purity, that gives us that edge in color, that gives us that edge in flavor, that gives us that edge in how our product performs in food applications. And why does that matter? Because that's what the food company needs to deliver great-tasting, plant-based foods to the end consumer, to us, as we buy those in the grocery shelf.

[Jesse Shelmire, Analyst at Stonegate]

Got it. So it translates to the higher the purity, the really the better the ultimate consumer offering. Is that the answer?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

The higher the purity, the better the performance, the better a food company can make the end products that we all buy. Yes.

[Jesse Shelmire, Analyst at Stonegate]

How many other companies are out there you're competing with that offer that kind of purity?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

I am personally not aware of any.

[Jesse Shelmire, Analyst at Stonegate]

Wow! Okay. And then final question. You, you had about CAD 4.2 million on your balance sheet cash. You have your CAD 4 million undrawn portion of your loan, plus this non-dilutive government funding. You said on the call, we got plenty of runway cash. We, we got plenty of runway to make it, being cash flow positive. At least that's what I picked up. Can you just confirm that? And then how does this non-dilutive government funding works? Is there any... Is that hard to access or pretty easy to access if you need it?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Yes, we do have a fully funded business plan when you add in the anticipated recurring sales for hemp and canola. We're fully funded with recurring sales, a non-dilutive matching funds from government, equity, and debt. Relative to the government program, it's pretty easy to access. It's a matching fund program, so once we spend, we give those invoices to the government that are applicable to the program, and then we are reimbursed. It's a pretty seamless process.

[Jesse Shelmire, Analyst at Stonegate]

Got it. That's all for my questions. And again, congratulations. A really impressive job for you.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Thanks, Jesse. Appreciate it.

[Operator]

As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Daniel Shahrabani with Fard Investments. Please proceed with your question.

[Daniel Shahrabani, Principal at Fard Investments]

Good afternoon, everybody, from Montreal. Kip, thank you. I really feel over the many. As a long-term working investor, I really feel a difference in the whole long-term outlook, and I feel we're in a point where there's a lot more stability in our plans. But I want to ask you, in terms of profitability, do you think 2025, in terms of sales and revenues, we'll even see a sign of that? And the next question is, to what extent does Burcon have visibility to the major food companies in the world, like Nestlé and the large consumer food distributors? Are we making any inroads to those big consumer companies?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Dan, thank you for the question and the time. So I think profitability is a early 2026 timeframe, depending upon how fast we can ramp up sales.

[Daniel Shahrabani, Principal at Fard Investments]

Okay.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Relative to accessing customers, I think it's really important for a company of our size, where we really win in the beginning in sales, is-

[Daniel Shahrabani, Principal at Fard Investments]

Mm-hmm

[Kip Underwood, CEO at Burcon NutraScience Corporation]

-with those entrepreneurial brands. They fit with our scale, their premium price, they value what we do. That is where we start. And then wave two is the bigger partnerships with those great, you know, global food companies that we earn their business as a wave two. So initially, what you'll see is entrepreneurial customers products in health food stores, and they fit great for us from a scale perspective, a price perspective, and a margin perspective.

[Daniel Shahrabani, Principal at Fard Investments]

Mm-hmm.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Is where we'll start.

[Daniel Shahrabani, Principal at Fard Investments]

Okay. Thank you.

[Operator]

Thank you. I'd like to pass the call back to management to address any web questions.

[Company Representative at Burcon NutraScience Corporation]

Thank you, operator. We have a few questions here from our webcast. Let me just start with private investor, Harry Armand. I'm gonna summarize your question, Harry. Are we really going to see some substantial revenue streams and partnerships with major players such as Nestlé again? There's only been talks about $40 billion industry, but who are the players that are using Burcon's technology and products? And will we are we still in discussions with Nestlé? And you partially answered that in the previous question, but could you provide a little bit more color?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Sure. Thanks, Harry. So we expect to see recurring revenue, recurring sales, in the marketplace in the last two quarters of calendar 2024. So I think we're, we're excited for that. Relative to large companies, I'll even blend in partnerships, right? So we are always actively engaged with, larger ingredient companies and large food companies, looking for the right opportunities for us as a business. There are people interested today, right? The important thing for us is we will, we will pursue those partnerships where it we have the opportunity to provide greater leverage and provide a return to our, our shareholders.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

So we're always active in the marketplace, we're always in conversation, but job one is recurring sales of our offering, and then as those opportunities come to fruition, we certainly evaluate those and take advantage where it makes sense for us, as Burcon.

[Company Representative at Burcon NutraScience Corporation]

Okay. Thank you, Kip. Next question comes from private investor, Joe Sawyer. Talk about accessing a $40 billion market. Sounds great. Former Merit customers have given 100% positive response to committing to Burcon proteins. Great news. How are you going to match the scale that was once promised through the Merit plant?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

So in core to our current business model, our capital business model, is to launch our offerings. Hemp and canola are first. Establish market demand, establish unit economics, prove in demand, prove profitability, both for us as a company and for those offerings. Once we have proven that, there's stage two of the strategy, which is buy, build, partner, or license the technology, right? So wave one is get up and running and establish profitability for us, unit economics, customer demand. Wave two, then these technology issues, do we build for ourselves? Do we partner with somebody? Do we license the technology, or do we sell? And that's where the technology truly becomes margin accretive to the company and to our forward business plan.

[Company Representative at Burcon NutraScience Corporation]

Okay, thank you, Kip. Second part to that question from Joe as well, too. If the company can scale to meet interest, have you identified manufacturing facilities large enough and capable of scaling up product manufacturing?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Our current capital business model does in fact give us the capacity to execute our plan to cash flow positive. So we have that covered. And yes, we are actively looking into other options beyond that to be sure that we have the capacity runway, not to execute our current plan, but to grow into the future.

[Company Representative at Burcon NutraScience Corporation]

Okay. And one last question from Vantage Appraisals, Peter Smuk. He is asking about our burn rate for 2025. I guess he's referring to perhaps fiscal 2025. Could we some color to that?

[Kip Underwood, CEO at Burcon NutraScience Corporation]

I guess what I can say is, from a historical perspective, our burn rate on what is, say, SG&A, is flat to slightly down over historical. Okay? And any additional costs we have beyond that would be directly attributed to the production of products. All right? So those would be, both the cost of raw material and the cost of processing, which would then obviously, be turned pretty quickly into profit. So from a corporate overhead perspective, we are down year-over-year, and we expect that to remain relatively flat. Any additional costs, right, will only be those associated with, the direct production of either hemp or canola in the short run.

[Company Representative at Burcon NutraScience Corporation]

Okay, fantastic. Thank you, Kip. That's all we have for webcast questions. Operator, I think we are good to close.

[Operator]

Thank you. I'd like... that's all the time we have for questions today. At this time, this will conclude our question and answer session. I would now like to turn the call back over to Mr. Underwood for any closing remarks. Sir, please go ahead.

[Kip Underwood, CEO at Burcon NutraScience Corporation]

Thanks, operator. I would like to sincerely thank our team for their efforts over the past year. I would also like to thank our shareholders for their patience in us as we execute our strategy and become a market-leading plant protein innovation company. Thanks again for your time today. Cheers.

[Operator]

Before we conclude today's call, I would like to take a moment to read the company's Safe Harbor statement. This call contains forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements or forward-looking information involve risks, uncertainties and other factors that could cause actual results, performances, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements or forward-looking information can be identified by words such as anticipate, intend, plan, goal, project, estimate, expect, believe, future, likely, can, may, should, could, will, potentially, and similar references to future periods. All statements other than statements of historical fact included during this call are forward-looking statements.

[Operator]

There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such event, statements or information. Important factors that could cause actual results to differ materially from Burcon's plans and expectations include the actual results of business negotiations, marketing activities, adverse general economic market or business conditions, regulatory changes, and other risk factors detailed herein and from time to time in the filings made by Burcon with securities regulators and stock exchanges, including in the section entitled Risk Factors in Burcon's Annual Information Form filed with the Canadian Securities Administrators on www.sedar.com.

[Operator]

Any forward-looking statement or information only speaks as of the date on which it was made, and except as may be required by applicable securities laws, Burcon disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. Although Burcon believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance, and accordingly, investors should not rely on such statements. Finally, I would like to remind everyone that this call is being recorded, and the webcast will be available for replay on the company's website starting later this evening. Thank you, ladies and gentlemen, for joining us today for our presentation. You may now disconnect.

Participants

Executives

• Jade Cheng, CFO
• Kip Underwood, CEO
• Company Representative

Analysts

• Daniel Shahrabani, Principal at Fard Investments
• Jesse Shelmire, Analyst at Stonegate