Good afternoon, everyone, thank you for participating in today's conference call to discuss Burcon NutraScience Corporation's fiscal year end 2023, ended on March 31st, 2023. Joining us today are Kip Underwood, Burcon's Chief Executive Officer, and Jade Cheng, the company's Chief Financial Officer. Following their remarks, we will open up the call for your questions. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star zero. Before we conclude today's call, I will provide the company's Safe Harbor statement with important cautions regarding the forward-looking statements made during this call. I would like to turn the call over to the CEO of Burcon, Mr. Kip Underwood. Please go ahead, sir.
Thank you, operator, and thank you everyone for joining us this afternoon. It's great to speak with everyone again, and I'm excited to share with you the opportunities ahead for Burcon and how we envision the company executing its Burcon 2.0 strategy. Looking back, it was a year with a lot of headwinds, but I am proud of our team for having the perseverance to navigate through these difficult times to position the company for growth in the long run. I've been with the company now for about six months, and I'm even more convinced today that Burcon and our value propositions are absolutely necessary for the plant-based and protein alternative markets to reach the next level of adoption and growth. How do we get there?
How do we get our best-in-class technologies to market and start making a positive impact for our customers, consumers, and our planet? That's where our Burcon 2.0 strategy comes in. Our revised go-to-market approach is what we believe can give Burcon the best chances of achieving success. That's what I'm looking forward to discussing with everyone today on this call. Before I get into it, I'd like to turn the call over to our Chief Financial Officer, Jade Cheng, to provide a brief overview of the financial results for the year. After which I will return to provide my remarks, discuss our strategy and our plan to capitalize on the opportunity we have in front of us. We will open the call to questions following our remarks. Jade, please go ahead.
Thanks, Kip. Earlier today, our summary of the unaudited financial results for fiscal year 2023 was issued in the news release and filed with SEDAR, as well as posted to the investor relations section of our website. The financial information contained in the news release and presented herein is unaudited and has been prepared using International Financial Reporting Standards, as issued by the International Accounting Standards Board. The financial information is based on the company's reasonable estimates and information available to the company at this time. As such, actual results may vary from the unaudited results presented herein until the completion of the annual audit. In addition, any statements regarding the company's preliminary financial performance do not present all the information necessary for an understanding of the company's financial condition and results of operations.
The company expects to file the audited consolidated financial statements and management's discussion and analysis for the years ended March 31st, 2023 and 2022, with securities regulators by June 29th, 2023. These documents will be made available in the investor relations section of our website and on sedar.com. Burcon reported a net loss for fiscal 2023 of CAD 25.3 million, as compared to CAD 10.3 million in fiscal 2022. The increase in the loss is due almost entirely to the write-off of the investment in and loan to Merit, and the increase in the share of loss in Merit, which were reported in our third quarter results. Total operating expenses for fiscal 2023 did not change significantly over the prior year.
During the current year, Burcon recorded funding of CAD 453,000 from Protein Industries Canada, that has been applied against research and development expenses. General and administrative expenses were CAD 3.7 million for this fiscal year, as compared to CAD 4.3 million in the previous year. The decrease of CAD 555,000 is due mainly to lower professional fees and investor relations expenses related to the NASDAQ listing, and also to lower stock-based compensation expense. As at March 31, 2023, the company had CAD 1.5 million of cash. During fiscal 2023, Burcon secured a CAD 10 million loan facility from our major shareholder, of which Burcon drew down a total of CAD 5 million during the year. Subsequent to the year-end, we completed a non-brokered private placement for gross proceeds of CAD 3.4 million.
Burcon expects its cash resources to fund its operations to March 2024, and further to March 2025, if conditions for advance under the second tranche of the secured loan facility are satisfied. These estimated dates could potentially be further extended if the company receives funding or generates revenues from other sources, including government assistance and pilot plant processing and scale-up validation services that we recently announced. With that, I'd like to turn the call back over to our CEO, Kip Underwood. Kip?
Thanks, Jade. We are moving forward on our Burcon 2.0 strategy, which we believe will enable us to capitalize on a number of opportunities to get our best-in-class products to market. After completing a business review, which included assessments of our target markets, competition, intellectual property portfolio, and value propositions, we are very optimistic about Burcon's future and firmly believe we have an important role to play in the plant-based food revolution. Let's start with market analysis. We wanted to understand what's changed and evolved in the last 3-5 years. The last time Burcon focused on partnerships was before our Merit investment or over four years ago. At the time, the market was concentrated, therefore, the number of potential partners was limited to a few. Fast forward to today, more than CAD 11 billion has been invested into alternative protein space in just three years.
We have a vibrant food ecosystem filled with food technology and agri-food companies striving to revolutionize the food supply chain. Investments into the food ecosystem have resulted in a dramatic increase in the sheer number of players and potential partners for Burcon to collaborate with. We're in a different place today. Markets have evolved to the benefit of Burcon. What's compelling is that there are more consumers today seeking food products that are both better for themselves and better for the planet. Our protein ingredients meet their demand for taste, nutrition, and value. What exactly is the Burcon 2.0 approach? It is a way to reset and renew our approach to commercialization. From working with strategic partners, we have learned a great deal on what we believe it takes to bring our products to market. We need optionality.
We need to apply a differential approach across our portfolio. With optionality comes leverage in everything we pursue, be it partnership negotiations, buying power, et cetera. Optionality gives us the ability to pivot, demonstrate our capabilities, and pursue new opportunities for our products. Burcon 2.0 is a way for us to achieve this optionality. As we have mentioned in the past, we identified three guiding principles during our initial business review late last year. These principles will guide our approach as we execute our Burcon 2.0 strategy. One, we need to identify additional revenue streams. We need to leverage our assets, specifically our infrastructure and intellectual property, to create revenue streams. Launching the pilot plant, processing, and consulting services was our first Burcon 2.0 initiative. Our primary objective is to get closer to customers.
Revenues from these services can also help offset some of our cash burn, extending our cash runway. Our second area of focus is to be better connected to the customer and to markets. Right now, we are too far removed from markets and customers, and that has to change. The market is constantly evolving, and we need to make sure we have a finger on its pulse. Understanding what the market needs and why customers choose our products is crucial for our long-term success. I'm happy to report that since launching our pilot plant services a month ago, we have been approached by a number of industry players, both large and small, inquiring about Burcon services and how we can work together. Those inbounds have turned into very interesting discussions and into potential business opportunities for Burcon.
We continue to proactively engage with industry peers to identify potential synergies where we can work together to achieve success. The initiative is achieving exactly what we were hoping for when we launched, and that is getting closer to customers and markets. The third area of focus is to have more influence over the manufacturing of our protein ingredients. Our team has the expertise to properly implement Burcon's technologies, and as such, we need to have more influence over the production of our protein ingredients. Burcon's team has the process engineering know-how to consistently produce our ingredients at commercial scale. We need to ensure that when our products arrive at our customer's door, we meet, if not, exceed, those customers' expectations. It's really these three strategic imperatives that will guide us in our decision-making process as we move forward.
As for our protein portfolio, we're excited about our current offerings, as well as the up-and-coming protein products that could potentially tap into new customers and new markets. Let's start with the proteins from pea, canola, and soy. These are commercially proven, produced at commercial scale, sampled, and sold all around the world. Customers have tested them, used them, and formulated them into products. There is an existing customer base for these proteins. Feedback from customers on our pea, canola, and soy proteins is that they allow them to do things that they cannot do with the existing proteins on the market today. Customers have validated our proteins as truly best in class, and that's very encouraging for us. Our newer technology, sunflower protein, has the potential to set a new benchmark for the category....
Over the past year, we have developed and validated our sunflower protein process at pilot scale. Sunflower seed is the third largest oilseed crop in the world, produced mainly for its high-value oil. What remains is a low-value byproduct meal filled with protein that is generally sold off as animal feed. We're able to extract and purify a greater than 90% sunflower protein isolate that is near white in color and neutral in flavor, perfect for a variety of food applications, particularly those featuring delicate flavors. We believe our sunflower protein is ready for commercial scale-up, and we're already in discussions with potential partners on how we can work together to bring this unique protein to market. Another up-and-coming protein in the pipeline is our hemp protein. The hemp ingredient market has been experiencing solid growth and has the potential to break out in the next few years.
According to Research and Markets, the global hemp-based food market is currently at $1.3 billion and projected to more than double in the next 5 years, growing at a rate of over 15% to reach $3.1 billion. We are excited about this market and can see tremendous growth in the near future. There are a number of opportunities we see ahead of us in terms of getting our hemp protein to market, and it could be sooner rather than later. When we look at Burcon's portfolio in totality, we have a pea protein, which is currently the hottest plant-based protein. We have soy, canola, and sunflower, the world's top three oilseed crops, from which we have technologies to extract high-purity protein ingredients. And lastly, our hemp protein that is ready to tap into a burgeoning market.
All of these offer significant value to food companies, one of which is the ability to provide food formulators with a blank canvas, so they can, in turn, create nutritious, healthy food products that consumers want. Consumers are seeking plant-based foods across multiple eating occasions throughout the day, breakfast, lunch, dinner, and snacks. Meeting this need will require new and different protein solutions beyond what is available on the market today. This is where Burcon comes in. How do we bring our proteins to market, create value, and at the same time, capture our fair share? We need to approach commercialization different from what we've done before. The key for us is optionality. No longer putting our eggs in one basket, Burcon 2.0 broadens our scope and gives us the optionality to pursue a different route for each of our protein technologies.
There is no one-size-fits-all scenario for our proteins. Each of our protein offerings is playing in a market with varying degrees of maturation. Soy has been around for decades, while hemp isolate doesn't exist today. We need multiple options, multiple routes to market to monetize our IP. We are looking at a variety of options that include the traditional licensing or partnership structure. We can build a new facility with a partner or go to market ourselves via contract manufacturer supply chain, an option we call the capital-light model. We can leverage somebody else's infrastructure, add in Burcon's proprietary unit processes, and go to market much faster than one of the traditional methods. Contract manufacturing is an appealing option for us and one that we are actively pursuing right now.
It provides us with a capital-light structure where we can immediately go to market and begin selling our protein ingredients. Speed to market is top of mind for us. We cannot afford to waste the limited time and resources we have. There's also the option of selling our technology if someone is better equipped to bring it to market, provided we are able to achieve an appropriate return on investment. This is to say that we are evaluating all available options to monetize our IP and generate value for Burcon and its shareholders. I go back to the market landscape and vibrant food ecosystem that continues to evolve as the industry pushes forward toward a more sustainable food supply chain. There is an expansive list of food ingredient and agri-food tech companies looking to collaborate and in turn, create opportunities for Burcon to go to market.
In regard to finances, we successfully completed a CAD 3.4 million non-brokered private placement. The funds raised will go towards executing our Burcon 2.0 strategy and help us get our unique proteins to market. During the year, we underwent a number of cost-cutting measures and successfully reduced our burn rate by 20%. In conjunction with cost-cutting measures, Burcon has been pursuing federal and provincial government funding programs that can help Burcon further develop its protein technologies and also invest in commercial processing equipment. Specifically, we are pursuing government programs in the form of grants and subsidies. There's a real push within Canada towards developing its agricultural, food, and plant-based sectors. Burcon is an excellent fit for a number of funding programs, including co-investment and grant programs from Protein Industries Canada, Canadian Food Innovation Network, and others.
We believe our applications for funding provide a compelling case and anticipate we may receive government support for our proposed projects. Together with alternative revenue streams, government grants, and lower operating expenses, we expect our net burn rate to give us a sufficient runway to execute our Burcon 2.0 strategy. We are optimistic about Burcon's near-term opportunities, as well as its long-term outlook for generating revenue, not only to reach breakeven, but to become a profitable company. There are a number of opportunities we are exploring and are determined to pursue the low-hanging fruit, while at the same time continue our discussions with major potential partners for our technologies. If I may use a sports analogy, we are going for singles and doubles, and when the opportunity is right, we swing for the home run.
We are taking significant steps to position Burcon for future growth, and I look forward to reporting more positive news in 2023. With that, I'd like to now open the call up to questions. Operator, can you please provide the appropriate instructions?
We will now begin the question-and-answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question comes from Joseph Storms, private investor. Please go ahead.
Can you hear me okay? Hello?
Yes. Yes, we can.
Thank you for taking my call. The world-class facility at Merit is something I want to speak about, which somehow spectacularly failed. Under the interim CEO, investors were never informed of this impending implosion of the facility and the partnership, which was clearly devastating to the share price and long-term investors like myself. Investors were only given positive news that things were moving along as planned and that impending partnerships were very close, none of which has happened. Kip, all I ask is, can you promise investors that there will be clarity and openness going forward?
Joe, thank you for the commentary, and the question and the thought. I hope what our investing community has seen is that we have made a commitment to increase transparency. We value our investors' patience and understand that we need to be transparent as we can and when we can, in order to continue to build trust with the investment community. In short, the answer is yes. You have our commitment to greater transparency, both since I started and moving forward.
Thank you. It's great to know that an industry specialist is now in charge, and we look forward to future good news. Thank you.
Thank you, Joe.
The next question comes from Bruce Lazenby, private investor. Please go ahead.
Hey, Kip.
Hi, Bruce.
Following up on that previous comment, I, maybe I've missed it, but what's the status of the Winnipeg facility?
Are you referring to the Merit facility, Bruce?
Yeah, yeah.
From a Merit perspective, the Merit facility is still in receivership. The receivership is still going through their sales process. Relative to our view on the Merit facility, a couple of thoughts. One is we view the Merit facility now as a route to market within our Burcon 2.0 strategy. It's a good route to market, and it's one of many we're looking at. From our perspective, A, we are still pursuing potential partners to see if we can put forth a bid. Beyond that, we go back and I rely on 2 things. One is, the technology works. The feedback from customers and markets is that it allows food companies to do things they cannot do with existing products. Second, the facility was purpose-built for our technology.
As we move forward, we feel reasonably confident that regardless of how the or the ownership lands, there very well may be a role for us to play. That could be working with a new owner to produce and sell. It could be contract manufacturing with a new owner to bring more products to market ourselves, or it could be, you know, removing the key unit processes from the facility for placement in a new location into the future. We feel we're confident that there's more cards to play in this, and we will have a role in that as things move forward.
Okay, good. Any idea when you're gonna get some clarity on that?
The receiver is already past their defined process. I mean, we really don't know. We're in contact with them on a weekly or biweekly basis. They're going through their process. They're gonna do that on their time, on their timeline, not ours. All we can do.
Right.
... is stay close and be ready, if questions are asked and/or if a movement is made.
Okay, great. Second question, if I may.
Sure.
The, the focus on revenue, I think, is absolutely correct and key. Didn't see much of that in 2023. We're already sort of into Q1. Can you give us any insights about traction at this point?
I think the first thing to look at is there's two layers of revenue we're looking for, right? The first group we talked about is more what I'm gonna call alternative revenue streams, right? This is seeking government funding and the announcement we made to use our WTC, our technology center, as a contract research facility. We're highly confident that both of those will bring in additional revenue yet this year. We just do not have those across the finish line to a point we can publicly announce. The second piece I hope everyone heard is not just the focus on routes to market, but the focus on a capital-light model or using contract manufacturing. What that enables you to do, that enables speed.
We don't have to build a facility, to go launch products to market, and we are in conversations with multiple parties along those lines, and hopefully, we can provide more specific information yet this year.
Okay. You're also looking, as you said, at licensing some of the IP?
Definitely. I think the optionality is really key. When you look at our.
Yeah
our portfolio, each protein has different strengths, be it soy or pea or sunflower or hemp. Each protein, the markets are, and the competition is at very different levels of maturity. Again, soy's been around for decades. Hemp isolate doesn't exist yet.
Yeah.
It requires optionality for us. What we will do, if it's license, partner, build, sell, our focus will be how do we provide the greatest return, on investment to Burcon and its shareholders?
Yeah, I couldn't agree more. Your idea about getting close to the customer is key. I mean, if you can sit down with Nestlé and say, "This is what we've got, where do you want to play?" Right? You know, "How much do you want to take on yourself? How much do you want us to do?" You got to be able to sit down with the right people at the big companies and have those conversations, so I completely agree with that approach.
Thank you.
Frankly, I think, Kip, you probably know a lot of them, if not most of them.
I've been in the game for a long time and have great value for sitting down and listening and learning from customers and crafting a path forward together.
Awesome. Good. Thank you.
Once again, if you have a question, please press Star, then one. We will now take questions from the webcast participants. I will pass the call over to Mr. Paul Lam. Please go ahead.
Thanks, Ashia. We have a couple questions from the webcast, but I believe they were covered in your answer about the Merit situation. I think we're good on that front. If there are any other questions, I would encourage people to put them in through the webcast, and then I can pass them on to Kip. Okay, Ashia, I think we're good to wrap this up.
Thank you. Thank you, everyone. That's all the time we have for the questions today, at this time. This concludes 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.
Thank you, Ashia. I would like to sincerely thank our team for their perseverance and belief in Burcon's vision. I would like to personally thank all of our shareholders for their patience and understanding as we continue to position Burcon to capitalize on the next wave of plant-based growth. Thank you for your time today.
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 involves 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.
There can be no assurance that such statement will prove to be accurate. Actual results and future events could differ materially from those anticipated in such 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, market activities, adverse general economic, market or business conditions, regulatory changes, and other risks and 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.
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 law, 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 guarantee 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 your lines.