Earnings call transcript: Burcon NutraScience Q2 2025 highlights revenue surge

Burcon NutraScience Corporation reported its Q2 2025 earnings, showcasing significant revenue growth and cost reductions. Revenues reached CAD 350,000, marking an almost eightfold increase year-over-year. Following the quarter, sales orders surpassed CAD 500,000. The company also implemented cost-cutting measures, reducing R&D expenses by 61% and G&A expenses by 27%. Burcon's stock remained stable at CAD 2.29, within its 52-week range of CAD 1.5 to CAD 5.

Key Takeaways

• Revenue increased nearly eightfold to CAD 350,000.
• Post-quarter sales orders exceeded CAD 500,000.
• Cost reductions in R&D and G&A expenses by 61% and 27%, respectively.
• Successfully commercialized three protein technologies.
• Strong market positioning in the plant protein sector.

Company Performance

Burcon NutraScience demonstrated robust performance in Q2 2025, driven by substantial revenue growth and effective cost management. The company's strategic focus on commercializing protein technologies and expanding its customer base has positioned it well in the growing plant protein market. Burcon's ability to achieve quality certifications and engage in numerous customer projects underscores its competitive edge.

Financial Highlights

• Revenue: CAD 350,000, up nearly 8x year-over-year.
• R&D expenses: Reduced by 61%.
• G&A expenses: Reduced by 27%.
• Sales orders post-quarter: Exceeded CAD 500,000.

Outlook & Guidance

Burcon projects 2025 sales between CAD 1 million and CAD 3 million, with a 2026 revenue target exceeding $10 million, indicating double-digit growth. The company aims to achieve cash flow positivity by the end of 2026. Planned growth strategies include increasing operating days, adding production equipment, and enhancing process efficiency.

Executive Commentary

CEO Kip Underwood highlighted the company's momentum, stating, "We at Burcon have tremendous business momentum." He emphasized the reduced risk and potential for significant growth, saying, "We've substantially de-risked Burcon with significant upside opportunity." Underwood also stressed the company's commitment to consistency, noting, "We talk a lot about say what we do and do what we say."

Risks and Challenges

• Supply chain disruptions could impact production efficiency.
• Market competition in the plant protein sector remains intense.
• Economic fluctuations may affect consumer spending and demand.
• Scaling production capacity to meet increasing demand poses operational challenges.

Burcon's strategic initiatives and strong market positioning suggest a positive trajectory, although the company must navigate competitive pressures and operational scalability to sustain its growth momentum.

Full transcript - Burcon NutraScience Corporation (BU) Q2 2026:

Marissa, Conference Call Moderator: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Burcon NutraScience Corporation's fiscal 2026 second quarter results ended September 30, 2025. Joining us today are Kip Underwood, Burcon's Chief Executive Officer, and Alex Vardy, the company's Interim Chief Financial Officer. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. 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 the CEO of Burcon, Mr. Kip Underwood. Please go ahead.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Thank you, Marissa. Good morning, good afternoon, and good evening. Thank you to all on the phone for your time, your interest, and to many of you for your investment in Burcon. If you have one takeaway from our discussion today, it is that we at Burcon have tremendous business momentum. Today, you'll hear about the successful commercialization of technology. You will hear us discuss record production. You will hear us talk about subsequent to the quarter significant recurring sales. At the end, as we announced earlier today, the desire to complete an additional funding round to accelerate our growth because we can see the customer demand coming. Again, exciting times for Burcon, great business momentum. Our safe harbor statement. To walk through the business momentum I just discussed, we'll go through key highlights. We'll ground ourselves in our technology platform.

We'll go back and we'll talk about the plant protein market dynamic growing. We'll review our sales and production, talk about how we're investing for growth, our cash position, why we believe it's a great time to invest in Burcon, and then look forward to what does 2026 look like. In the end, obviously, we will open it up for Q&A. For Q2, on the operational side, I think if there was one word I would say is execution. From an executional perspective, again, initial commercial sales, our pea protein and our canola protein. Successful scale-up of pea protein, fava protein, and canola protein. That is very difficult because we are both starting up a new facility with our partner and commercializing technology. Both are hard independently. They're extremely difficult to do together. Great customer engagement, as evidenced by our customer pipeline, 200-plus projects.

Inside of those projects, customers are progressing. They continue to vote with their time. The more time they vote with, the more validation that our products, our proteins are meeting and not exceeding their expectations. Lastly, a great market outreach at IFT First, one of the largest food trade shows in the world. Great opportunity to showcase Burcon's technology and interact with the entire industry. That is the executional side. With that, I'll turn it over to Alex for the financial highlights. Alex, please.

Alex Vardy, Interim Chief Financial Officer, Burcon NutraScience Corporation: Thank you, Kip. In respect of financial highlights, what we're really seeing is the translation of the operational achievements made throughout calendar 2025 into our financial performance. In Q2 specifically, we generated revenues of over CAD 350,000, representing a nearly eightfold increase over the comparable year-ago quarter. Further, subsequent to year-end, we've also seen strong sales momentum with orders received from October 1 to date in excess of CAD 500,000, including multiple repeat commercial sales. As we concentrate our efforts and our resources on production and sales, we have reduced our spending in research and development and in general and administrative expenses by 61% and 27%, respectively, over the second quarter in fiscal 2025. Lastly, we announced today the offering of convertible debentures, which will allow us to strengthen our balance sheet and support accelerated growth. We'll discuss this more in detail later on in the presentation.

I'll turn it back to you, Kip.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Thank you, Alex. Really reiterating those last two points. All the work we have done since March finally translating, transitioning into significant commercial sales. In discussions with our board, our insiders, seeing those sales come and recognizing we needed to accelerate growth, be ready for growth, hence the fundraise we announced today and that we will discuss later on in the presentation. Our foundation, what enables all of this at our heart is our technology, the innovation that Burcon has invested in over the years. What that truly delivers is purity, unmatched purity in the marketplace. That is important because that purity is what delivers superior performance, excellent taste, excellent texture, excellent color to our customers. We like to say we give the food companies a protein blank canvas so they can go create the great foods that we all want to buy and enjoy.

The technology is also highly relevant in today's market because protein is hot. If you have walked to a grocery store, you have noticed protein on the front of pack, protein positioning, 10 grams of protein, 20 grams of protein, in beverages, in coffee, in cereals, across all types of foods. As our potential customers look to position protein to consumers, that is a great place for us. That is a great place for our technology to play a role. In the end, this is a dynamic market that is truly good for Burcon. We see this in our robust funnel. As mentioned, this funnel has delivered $500,000 of orders since October 1, subsequent quarter, but it is dynamic. 200 active projects. We talk about a customer's development in a new food for all of us is a 9-18 month process.

As they go through that process, we see signs that they are increasing their investment. They start off with small bags, maybe 200-500 grams. Then they order maybe a kilo. Then they order a full bag of our product. Over 30 customers have ordered at least a full bag paid for to advance their development efforts. Some, as we mentioned, initial or essential pallet orders for pea, fava, and canola. The next step is leading to recurring revenue. It is a dynamic process. Customers moving through the funnel. It has great diversity in terms of type of customer, type of food, and again, across all of our products. This is really the lifeblood of our growth in the future. It is fantastic to see that first $500,000 plus in orders come out the bottom of the funnel as wins.

People often hear me say, "One thing you must do before you can sell it is you have to produce it." Working with our partner ProMan, unbelievable, three months in the last quarter and then subsequent to the quarter. Record production, commercialized, three technologies. Again, plant startup, technology commercialization, both hard individually, done and done successfully at the same time, validating our technology platform. We have quality certifications, third-party BRC, which is one of the largest food ingredient certification organizations in the world, kosher, allergen-free. We have a facility with our partner that has the capability and the people to deliver our technology, our products at a cost, a quality, and a consistency that meet or exceed our customers' expectations and fully enable our business plan.

Alex Vardy, Interim Chief Financial Officer, Burcon NutraScience Corporation: As Kip has highlighted, Burcon has the opportunity to capture growing market demand for plant proteins, and we've undertaken a number of steps to strengthen our balance sheet such that we are positioned to capitalize on this opportunity. The central pillar of our strategy here is the offering of the convertible debentures that were announced this morning. Burcon is undertaking a non-brokered private placement of convertible debentures of up to CAD 4 million. We intend to use the net proceeds of this offering to invest in inventory, labor, and production efficiencies to plan for Burcon's future infrastructure needs and to repay the short-term loan. We further highlight that there is significant support from insiders who have committed to participate at a minimum of CAD 2 million of the offering.

The convertible debentures themselves will be unsecured, carry an annual interest rate of 15% with interest payable in full at maturity, and have a 48-month term. The convertible debentures are convertible at the option of the holder in whole or in part into common shares of Burcon at a conversion price of CAD 2.27 per share. Burcon comparatively holds an accelerated prepayment right, whereby if the common share price trades on the TSX or another stock exchange where the shares are principally traded, if the price is above CAD 4.54 for a period of 14 consecutive trading days, then Burcon may prepay the principal amount and any accrued and unpaid interest thereon. Upon written notice from the company for such prepayment, the holder has 30 days to accept the prepayment, failing which the company may accelerate the conversion of the convertible debentures into common shares at the conversion price.

In looking at the next slide, Kip, please. In looking at the financial strategy as a whole here, in addition to the convertible debentures, we've undertaken a number of other steps to strengthen the balance sheet. Specifically, we have obtained a short-term loan of CAD 700,000 from one of Burcon's directors, which carries a 12% interest rate and is repaid at the earlier of four months and the closing of the convertible debentures. This loan, along with our existing cash resources, allows us to maintain the momentum and scale production through to the closing of the convertible debentures financing. Lastly, we've also extended the maturity of tranche two of the secured loan, which was provided by Burcon's largest shareholder, and we've extended that until December 2026.

Across these three financing steps that we have taken, I can highlight that they each involve significant financial support from Burcon's insiders, and collectively, they position us to be able to capture that growing market demand. I'll pass it back to Kip to go through our investment opportunity and our future outlook.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Thanks, Alex. Just to reiterate one piece, and again, I thought the overall theme is great business momentum. What you're seeing from our insiders, those who follow us closely and are participating with us, is belief in that momentum and full support for us to actually accelerate, to raise money so that we can pull forward investments that were planned in 2026 into 2025 so that we are ready for those next customer orders and we are prepared to truly accelerate our growth the back half of 2025 and into 2026. We talked about the market sales, production, our balance sheet investing for growth. Collectively, we believe this positions Burcon as a fabulous investment opportunity. The last piece I want to make is that if you back up from March to now, again, we've significantly de-risked Burcon. Again, we've successfully commercialized the technology in a place many people fail.

We have started up a new production facility, incredibly difficult. We have validation by customer activity either within a project or through already recurring sales. We are investing for not just today's growth, but for tomorrow's growth. Substantially de-risked on one side with significant upside opportunity on the other side. Again, we believe a great investment opportunity. Looking forward into 2026, people always ask me, "How do we know you're being successful? Where are you going? What are you driving for?" To reiterate, to affirm, especially with the recent sales momentum, we are absolutely affirming our guidance of $1 million-$3 million in sales in 2025, our 2026 guidance of $10 million-plus or double-digit revenue and reaching a cash flow positive state. The drivers for that are keep driving sales, driving revenue in this industry.

When you achieve your first sales, they are pretty much by definition recurring sales. Every time a customer manufactures a new food, they come back to us and buy either monthly or every other month. As we drive sales and fill up capacity, we get margin expansion critical to our growth. We will be investing in capacity, be that more operating days, more shifts, more equipment, or all the above. We do all of these with a strong executional bent, always looking for efficiency to help us produce our products at a cost, quality, and consistency that exceed our customers' expectations, as well as drive our financial plan. With that, Marissa, I will turn it back to you for Q&A.

Alex Vardy, Interim Chief Financial Officer, Burcon NutraScience Corporation: Excellent. Thank you. Ladies and gentlemen, should you have a question, please press star followed by one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. Just a moment for your first question. Your first question comes from Rob Lynch with Stonegate Capital Partners. Please go ahead.

Rob Lynch, Analyst, Stonegate Capital Partners: Hey, good afternoon, Kip and Alex.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Hi, Rob.

Rob Lynch, Analyst, Stonegate Capital Partners: Sorry about that. Hey, good afternoon, guys. Congratulations on the quarter. Really appreciate you taking my questions here. The first one is going to be around financing. Could you walk me through the headcount and logistics of bringing on an additional shift? I guess the expected lag to be reflected in revenue given the subsequent quarter-end orders?

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Yeah. I think the simplest way to equate an additional shift is additional operating days. I think that's the simplest way to do that. Every time you add an operating day, you add one-seventh more capacity per week, and that translates per year. For us, to get ahead of that, to hire and train a shift to get to a base level of performance, that's a minimum of 90 days. It is really important that we get ahead of that. We bring those people in, get them trained to ensure they can execute their jobs so that we can, again, produce our products at a cost, quality, and consistency that our customers expect and the financial plan meets.

Rob Lynch, Analyst, Stonegate Capital Partners: Right. Really appreciate that, Kip. I'm going to pivot over to just customer base now. Could you provide a little bit more color on the strategy around new customer acquisition versus the expansion among the current base, especially as there's 200-plus active projects converting from the evaluation stage to purchase orders and recurring on top of that? Just kind of more color there would be great.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Sure. I think first, the primary types of customer focus on are those entrepreneur brands, those brands that are on the cutting edge, those brands that are on the forefront of innovation. They are the right size. We have common values. They move the fastest, therefore, the quicker to sales. That is the type of customer we are looking at. For both our funnel and our current sales, we are looking for diversity. We want diversity in customers, so customer type or customer size. We want diversity in food types. We have projects and sales going into a powdered beverage or a ready-to-mix beverage, a liquid beverage, nutrition bars, as well as the broader category of plant-based foods. In those, we want diversity of our products. We have both projects and initial sales of pea protein, fava protein, and canola protein.

The key for our funnel is diversity of those with a real laser focus on those cutting-edge entrepreneurial brands that are aligned on values, move the fastest, and can help drive Burcon's growth in place.

Rob Lynch, Analyst, Stonegate Capital Partners: Really appreciate that again, Kip. I think the last one I have here is just going to be around guidance, more or less. You touched on it at the end of your closing remarks, but cash flow positive by the end of 2026. Do any of these changes give you an indication that that could be pulled forward a little bit? Anything there would be great.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Right now, we're affirming the guidance for 2025 and 2026, Rob. I think the way to think about it really is the guidance hasn't changed, but it's been de-risked. As we've proven technology, commercialized technology, got customers to move from a project to a sale to a buy, I think all of those things de-risk our guidance and truly position us for a strong, close to calendar 2025 and just an amazing calendar 2026.

Rob Lynch, Analyst, Stonegate Capital Partners: All right. Great. I think that might be it for me. I'll get back in the queue, and if something comes up, I'll dial back in. Really appreciate it. Congrats, and good luck in the next quarter.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Thanks, Rob. Appreciate it.

Alex Vardy, Interim Chief Financial Officer, Burcon NutraScience Corporation: Your next question comes from Bruce Lazenby with Ottawa. Please go ahead.

Bruce Lazenby, Analyst, Ottawa: Hey, Kip. Great presentation. Thank you so much. I'm thinking from a CapEx point of view, what's the capacity of the current facility? If you're running it at max capacity, however you define that, is that going to get you your 10-20 million, or do you need more than that?

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: The current facility will get us beyond that.

Bruce Lazenby, Analyst, Ottawa: Beyond that.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: We're a few years away from tapping that out as we move forward. We'll expand capacity in three different ways. One is expansion of operating days, which we talked about, shift people. One is the addition of equipment. Third is just good old-fashioned process engineering and gaining efficiency. We'll continue to stack all three of those in the months and throughout 2026 and into 2027 for sure.

Bruce Lazenby, Analyst, Ottawa: Okay. So you think the existing facility can take you to 2027, 2028, which would put you in the $40 million-$50 million-$60 million range?

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Certainly takes us into 2027.

Bruce Lazenby, Analyst, Ottawa: Okay. Good. Good news.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Okay.

Bruce Lazenby, Analyst, Ottawa: That's it. Thank you. Continue. Good luck.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Thanks, Bruce.

Alex Vardy, Interim Chief Financial Officer, Burcon NutraScience Corporation: As a reminder, if you would like to ask a question, please press star one. I would like to turn the call over to Paul Lam, Director of Investor Relations and Communications, for questions from the webcast.

Paul Lam, Director of Investor Relations and Communications, Burcon NutraScience Corporation: Thank you, Marissa. We have one question from the webcast. This is from Harry Hammad from Aeris International. He says, "Hi, long-time investor. Thanks for all the hard work. We keep hearing CAD 1 million to CAD 3 million revenue this year. There's a huge difference. What is the forecast? CAD 1 million, CAD 2 million, or CAD 3 million in revenue, or maybe even more?

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Thank you, Harry, for the question. It is a good one. For us, what we want for us, I'll be very frank, is a new company. We believe it is very important that we are consistent in our guidance. It is very important that we build credibility. We talk a lot about say what we do and do what we say. That is a mantra inside of Burcon. We are going to hold fast to our guidance of CAD 1 million-CAD 3 million for 2025, and at the same time, communicate the reality of where we are, CAD 500,000 in orders from October 1 to now. As we continue to have success in the marketplace, we will communicate that as well. Thank you.

Paul Lam, Director of Investor Relations and Communications, Burcon NutraScience Corporation: Thanks for the question, Harry. I do not see any further questions from the webcast unless anyone is putting in question now. Marissa, back to you. I think we are okay for questions from the webcast.

Alex Vardy, Interim Chief Financial Officer, Burcon NutraScience Corporation: Excellent. Thank you, everyone. That is all the time we have for questions today. This concludes our question-and-answer session. I would like to turn the call back over to Mr. Underwood for any closing remarks. Sir, please go ahead.

Kip Underwood, Chief Executive Officer, Burcon NutraScience Corporation: Thank you to everyone on the phone today in the conference today. Thank you to our investors for your confidence in us, prospective investors, for your interest. Certainly, thank you to our team members that have applied the work and the discipline and the creativity to get us to where we are today, which is a business with great momentum. Exciting days are certainly ahead for Burcon. Have a great day, everyone. Thank you again for your time. Cheers all.

Alex Vardy, Interim Chief Financial Officer, Burcon NutraScience Corporation: 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, including this call, are forward-looking statements.

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 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 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.ceder.com. Any forward-looking statements 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 for today's presentation. You may now disconnect.

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