Earnings call transcript: Burcon NutraScience Q4 2024 launches new products

Burcon NutraScience Corporation (BU) reported strategic advancements during its Q4 2024 earnings call, including a successful rights offering and the launch of innovative protein products. The company’s stock rose by 5% following the announcement, suggesting a positive market reaction to its future growth prospects. According to InvestingPro data, while the stock has experienced a challenging period with a -47% return over the past six months, analysts expect sales growth and profitability improvements in the current year.

Key Takeaways

• Burcon completed a $9.4 million rights offering, bolstering its financial position.
• The company launched two new products, including a sunflower isolate protein.
• Plans to begin production trials at a new facility in Illinois by Q2 2025.
• Strong market demand for plant-based proteins supports growth potential.
• No immediate plans for additional financing, with sufficient cash for two years.

Company Performance

Burcon NutraScience is positioning itself as a leader in the plant-based protein market with its diverse product portfolio. The company is leveraging consumer demand for protein-rich products to drive growth, with revenue showing an impressive 83.7% increase in the last twelve months. Its strategic initiatives, including the purchase of a production facility and new product launches, are expected to enhance its competitive edge. InvestingPro analysis indicates the company currently trades below its Fair Value, suggesting potential upside for investors who can tolerate high risk.

Financial Highlights

• Completed a rights offering, raising $9.4 million.
• Cash reserves are sufficient to support operations for at least two years.
• No specific EPS or revenue figures were disclosed for Q4 2024.

Market Reaction

Following the earnings call, Burcon’s stock price increased by 5%, reflecting investor optimism about the company’s strategic direction and new product offerings. The stock remains within its 52-week range, indicating potential for further growth as the company executes its plans.

Outlook & Guidance

Burcon expects to be cash flow positive by 2026, with plans to begin production trials at its new Illinois facility in Q2 2025. The company aims to achieve full-scale commercial production in the first half of 2025 and secure supply contracts by the end of the year. Its three-phase growth strategy focuses on product launch, sales scaling, and technology licensing.

Executive Commentary

CEO Keith Underwood highlighted the company’s strategic position, stating, "Protein is hot right now. Consumers are seeking protein." He expressed confidence in Burcon’s growth potential, saying, "We see a path to being a highly profitable exciting business." Underwood also emphasized the company’s resilience, noting, "Our best defense against unforeseen market actions is the strength of our portfolio."

Risks and Challenges

• Potential supply chain disruptions could impact production timelines.
• Market saturation and competition in the plant-based protein sector.
• Macroeconomic pressures and trade issues, such as potential tariffs and China pea protein dumping concerns.
• Execution risks related to the new production facility and production trials.

Q&A

During the earnings call, analysts inquired about the impact of potential tariffs and the company’s relationship with Puratos in the global baking industry. Burcon confirmed no immediate tariff impact and discussed its flexibility with the Merit Functional Foods facility situation, addressing concerns about market conditions and strategic partnerships.

Full transcript - Burcon NutraScience Corporation (BU) Q3 2025:

Ian, Conference Call Moderator: Good afternoon, ladies and gentlemen, and welcome to the Birkin NutraScience Corporation twenty twenty five Investor Day Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded today, 02/18/2025. I would now like to turn the conference over to Mr.

Keith Underwood, Chief Executive Officer. Thank you. Please go ahead.

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Thank you, Ian, and good morning, good afternoon and good evening to everyone around the world. And thank you for joining us today. It certainly is a new day for Virkon and we are excited to get into today’s discussion. I’ll start with our safe harbor statement. I’m sure all have read and understand.

There’s two takeaways we hope everyone walks away with today. The first is, there’s a tremendous opportunity in front of us. And the second is, execution is the key to our success. To work through those two topics, we’ll cover the following things. We’ll talk about our achievements since early November.

Talk about the customer, the market opportunity. I’m sure all are interested about to learn more about the new production facility we are working on with our partner ProMed. The road to profitability, our path forward and we’ll certainly be time at the end for closing remarks and Q and A. Before we look forward, I’d like to take a minute and look back. We last came to the market in early November and we communicated three things.

First, that we were looking for a new route to market, a facility that could produce our entire product portfolio. We announced that we formed an alliance to identify and secure that facility. And we also announced on a parallel path, we were initiating a rights offering to build a balance sheet that allow us to fully execute our strategy. Over the last ninety days, I’m excited to report our achievements and grateful to our team members for all the hard work they have put in. First and foremost, as I think everyone on the phone or the call here knows today, we successfully completed our rights offering at $9,400,000 last year.

We’ve signed a binding term sheet with our alliance partner to purchase a facility. We’ve launched not one, but two new products, a new to the world sunflower isolate protein, which I personally believe will be disruptive to the the plant protein market, as well as a launch of our next generation PSSP protein that’s generating tremendous interest in the marketplace today. And finally, we’ve collaborated with our partner Puratos on how do we bring our canola protein products to market inside the baking industry. A tremendous amount of work and achievement over the last ninety days. This is an example of strong execution performance.

The type of performance that we will not only need for the future, but we’ll need to improve as well. We always start with the opportunity and the opportunity starts with consumers. In short, protein is hot right now. Consumers are seeking protein. They’re seeking more protein dense products.

Our customers are looking to meet those ever changing consumer needs. How do they deliver a more protein dense better tasting product, so they can meet their consumers ever changing needs? Innovation is the key to delivering against those changing consumer needs and innovation is core to who we are as Birkup. We have our product portfolio, we’ve talked about it a lot. We have a portfolio of plant based proteins from pea, canola, hemp and sunflower.

These help companies deliver the best eating experience to the end consumer. They do that by having unmatched pure. They deliver excellent taste and texture and superior functionality or color. We all know at times we do in fact eat with our eyes. For us at BIRCON, our objective, our goal is simply to have the best protein solution on the market today.

The differentiation and excitement I just mentioned that does drive customer interest. It takes sales execution to convert that interest to revenue. I’m excited to report we have a robust customer pipeline, over 100 product samples currently under evaluation. Inside of that, we have 17 specific expression of interest letters from customers. These are on their letterhead, their brand name, saying essentially, please bring your products to market, we would like to buy them.

They are signed by decision makers, CEO, Chief Scientist Officer, Director of Procurement. There’s true buying intent here once we can bring our products to market. Another subset of this is former P and Canola customers from the Merit facility. These are people who bought our technology in the past, have been seeking alternatives for a couple of years now and they haven’t found anything that meets their need. They are excited for us to bring these products back to market, so they can in fact buy them and use them in their food products.

And I’m going to remind everybody, two years ago, these customers alone drove a revenue run rate of over $10,000,000 In the end, our pipeline must deliver. What does it deliver? First is supply agreements and second is recurring revenue. We get to that by sales execution. So we have a growing market.

We have highly differentiated relevant technology. The missing piece for Virkon has always been a route to market. How do we get our products in the hands of companies in the food space, so they can then deliver great tasting products to their end consumers. Thanks to our partner ProMed led by our Board member, Mr. John Fasallo, we are taking on this challenge.

We are on the last few steps of our alliance partner taking control of the facility. It’s located in The U. S. You see a picture of it here on the slides. Why is this so important?

Again, our route to market, full control over production for Birkon. The ability to launch our entire product portfolio, pea, canola, sun, hemp, a long term agreement that ensures we can continue to supply our customers on ongoing basis. And really excited to be up and running quickly, really up and have full scale commercial production inside the first half of twenty twenty five. In short, this is the first time in Birkin’s history, we will have the full control over the production, the sales and the delivery of our products to customers in a way that meets if not exceeds their expectations, a true unlock for us in the future. So what does this mean financially?

We see a path to being a highly profitable exciting business. I talked about sales execution, prospective customers, letters of interest. We have a clear path to being cash flow positive in 2026 and adding the out years, continual quarter on quarter margin expansion. So think about phase one. Phase one is about product launch, those new product offerings driving new sales.

Phase two is about scaling those sales to deliver unit economics and overall revenue growth. Phase three is even more exciting. Phase three is where we start to get into situations where we leverage our technology through licensing or the sale of technology to truly deliver explosive growth in Birkhand in the future. I’ve said execution many times, I’m going to say it again. Near term inside of calendar 2025, it is all about execution.

What does that look like for us here in 2025? So Q1, as we mentioned, our partner to close on the facility. Q2, we will install our proprietary equipment. We will begin initial commercial production trials. Q3, we’re looking at supply contracts, continuous production of our plant protein offerings into Q4.

Now we’re talking about recurring revenue and really setting the stage for an unbelievable 2025 where again we expect to reach cash flow positive. All of this lays the foundation for what comes into the future. We earn the right to get to that future by execution in 2025. It is a great time to be involved with Broadcom (NASDAQ:AVGO), be a Board member, a member of our team, an investor or me as a CEO. We are excited about our future and are very appreciative of you all taking your time with us today.

I would now like to open the line to questions.

Ian, Conference Call Moderator: Thank you. Your first question comes from the line of Dave Storms from Stonegate David.

Dave Storms, Analyst, Stonegate: Afternoon. Appreciate you taking the question.

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Hi, Dave. How are you today, sir?

Dave Storms, Analyst, Stonegate: Hi. I’m good. I hope you can say the same. I just want to start with obviously the ProMan facility and maybe if you could just go into a little bit more about what early success will look like in calendar twenty twenty five for that facility. Is it going to be based on recurring revenue?

Is it going to be based on how many proteins you can get flowing through that facility? Maybe just a little more color there would be helpful.

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Thanks, Dave. Sure. So I think there’s three components, right? So the first is that we successfully install our proprietary equipment and we start the facility up successfully in a way we can produce our products. That’s step one.

Step two then is to go through and produce our entire portfolio at commercial scale, so we can deliver those products to customers, so they can complete that next phase or the final phase really evaluation before they purchase. Third step then is achieving a place where our sales drive recurring routine production that further fuels recurring sales. So installation of our proprietary equipment, getting those the entire portfolio commercial scale production samples, so customers can complete their last step in their evaluation process and then really moving to a space of ongoing production and sales in the back half of twenty twenty five.

Dave Storms, Analyst, Stonegate: Understood. That’s very helpful. Thank you. And then just from a more modeling standpoint for the program facility, are there any upgrades or CapEx expenses that we should be thinking about through the first half of this year and into the second half of this year?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: I think one of the exciting things for our investors and a thank you to our partner ProMan is the way this deal is structured, our partner ProMan will both purchase the facility, obviously with us into and then install the pay for the equipment that we need to produce our products. So from our perspective, we do not have a capital required to launch our entire portfolio. And again, the fund rates we just completed was around to pay for the expenses to produce and launch our products through the cash flow positive. But the capital side is all handled by our partner ProMed.

Dave Storms, Analyst, Stonegate: That’s great. Thank you. Kind of switching gears here to the portfolio, just any early thoughts on Pizzazz and Sunflower, any indications of early success there kind of what we could expect over the next couple of months from those new launches?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Sure. I think I’d offer a little bit of color. I would anticipate our first sales in 2025 to be pizzas, right? That’s going into more of an established market. Pea protein going to more of an established market, where we can come in and have those first initial sales.

Longer term, I truly believe that the growth from year two and year three will be driven by sunflower. Again, we believe it is the most disruptive technology we have. It had the opportunity to redefine the plant protein space along three dimensions. Its performance is fantastic from its white in color, great taste, right, has excellent economics. And third, it’s protein from the sun and who would not want that.

So really P protein near term, sunflower protein mid to long term.

Dave Storms, Analyst, Stonegate: Understood. That’s great color. One more for me if I can. Congratulations on completing the rights offering. I’m sure that gives you a lot of breathing room as we’re looking into the next year or so.

How do you feel about your current financial position? And is there any expectations that you’ll need to do further financing in the near term?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Hey, Dave, I’m going to turn that over to Rob Pietz, our CFO. Rob?

Rob Pietz, Chief Financial Officer, Birkon NutraScience Corporation: Hey, Dave. Yes, so a couple of points, I guess, to address your two questions there. The first, you’re absolutely right. The financing was very strong. We had a lot of good participation from both insiders as well as existing shareholders.

And as a result, we’ve got like we’ve got cash on hand to support our burn for at least the next two years and likely further as we reach cash flow profitability as Kent mentioned earlier in calendar twenty twenty six. So we’re in a very, very strong position there. And then sorry, the second part of your question was?

Dave Storms, Analyst, Stonegate: I think he answered it by mentioning that you feel good about the firm position for the next couple of years until you reach cash flow positive and it sounds like that indicates no major financings in I’m

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: sure that was whether we were

Rob Pietz, Chief Financial Officer, Birkon NutraScience Corporation: going to undertake any financings. Yes. I mean obviously if a very opportunistic situation came along, we certainly wouldn’t review it, but no, we don’t have anything planned at this time.

Dave Storms, Analyst, Stonegate: Understood. That’s great color. I appreciate that. And I hope you all have a great rest of your day. Thanks for taking questions.

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Thanks, Ted.

Ian, Conference Call Moderator: Thank you. Your next question comes from the line of William Galbraith. Please go ahead.

Rob Pietz, Chief Financial Officer, Birkon NutraScience Corporation: Just a question about the announcement of collaboration with Puratos, which sounds very positive. Is there anything that you can elaborate on with respect to that collaboration in terms of the amount of time? And is it with is Puratos Canada involved playing any role?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Thank you. And we’re certainly excited about our relationship with Puratos. So again, they are a global leader in supplying the baking industry with cutting edge leading ingredients. We’ve worked with them for several months now and we see opportunity both in cost and use benefit on their existing products as well as launching maybe some exciting more plant based food type products. It is global in nature.

So we are doing work with products both in Europe and Canada and we’re really excited to move forward with them and help bring new solutions to the baking industry around the world.

Rob Pietz, Chief Financial Officer, Birkon NutraScience Corporation: Okay. Thank you.

Ian, Conference Call Moderator: Thank you. And there are no further questions over the phone. Mr. Lam, please proceed.

Paul, Webcast Moderator: Hi, thanks, Tina. We have a few questions over the webcast. First, this comes from a private investor. Is the Merit Functional Foods facility, which is currently in receivership no longer an option for Bergcon given the announcement with ProMan? I’ll start with that first.

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Thanks, Paul. Thanks for the question. So the Merit facility is to best of our knowledge still for sale. And we still look at the overall Merit situation as an opportunity. So we look at there’s three potential ways the merit situation could be resolved.

So first, we are still in contact with them and maybe there’s an opportunity for us to further grow in the future. Second, somebody else may buy the facility and choose to license technology from us to launch. We would love to work with somebody on that. Third, somebody else could buy the facility, repurpose the facility for something else, give us the opportunity to go in and remove proprietary assets and leverage those to grow our business with ProMed. So we’re still in contact and we know at some point in time this situation will resolve itself.

What was key for us is we were not in control of the timeline. We had to take control of our own destiny. Hence, the announcement today, our region market with ProMed. It was also true though, we’re in constant contact. And as that merit situation evolves or resolves itself, we see any of the potential landing points as being accretive to our overall financial plan.

Paul, Webcast Moderator: Thank you. And follow-up to that and let me provide, if I may provide a bit of context. I believe this is a previous announcement on Bergcon and Merit and NetSclee’s collaboration. And this follow-up question comes from the same private investor is, is there still an ongoing relationship between Bunge (NYSE:BG) and Nestle?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: I don’t know. I don’t have knowledge of what Bunge and or Nestle (NSE:NEST) are doing in the market optimistic to comment on that. Okay.

Paul, Webcast Moderator: Following up, we have a question from Ralph Mazda. If tariffs are coming, how will this affect Bergcon supply chain?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Hi, Rob. Thanks for the question. So first, we can say that the facility is located in The United States. It’s located in the state of Illinois. So from a production and sales standpoint, since the primary customer base will be inside The United States, minimal impact there.

Second, I can also share that from a raw material perspective, we have been working with raw material providers both in Canada and in U. S, both to ensure we have redundancy for execution and also to be sure if there are any tariff type issues that we are we have a supply chain that’s robust enough to handle that situation. So we do not see the tariff situation, however it evolves or unfolds affecting our business today.

Paul, Webcast Moderator: Thanks for the question, Ralph. Next (LON:NXT) question comes from Joe Sawyer and I’m just going to summarize his question. And his first question actually revolves around the situation where China was dumping a lot of low cost pea protein into the country. How would this affect Bercon and what are the risks going forward in terms of future cheap product coming into the country if at all?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Sure. So let me speak to the China dumping piece was really around pea protein. So that has been addressed with substantial duties applied to incoming Chinese products in North America. They’re in the 300% to 400%. And if you look at pea protein prices in the market today, they reflect that.

So that specific issue has been resolved and we see excellent pricing opportunity in the marketplace specifically for pea protein. On the broader sense, our best defense against unforeseen market actions is the strength of our portfolio. One reason it was critical to us to have a facility where we could market pea, canola, hemp and sun is that first of all, we’re highly differentiated. We can ensure we control the production, deliver that to customers, but also because each of these have unique strengths. They are all have the opportunity to highly profitable for us and we will listen to the market to understand how do we evolve that mix moving forward.

And if there’s a negative market influence on, let’s say, pea protein or canola, then we will pivot and focus on hemp and sunflower. So the China situation for North America resolved. Moving forward, the diversity of our portfolio is our best strength to unanticipated market situations.

Paul, Webcast Moderator: Okay. And then the second question too from Joe Sawyer is, this is around the capacity of the new facility. He’s wanting to understand what is the output capacity of the new facility and its ability to expand production and scale to meet this high consumer demand that seems seems like we’re getting a lot of demand from our customer funnel?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Thanks for that question. Let me start with why we picked this facility, right? So we had choices. We were trying to what was the best fit for BERCOM today, what was the best fit for our partner ProMine on the buying and capital and license side. We got our best choice, our first choice.

And there’s really a few reasons that one is, it has an existing workforce, it has a plant manager, it is up and it is running, we are not starting from ground zero. Second is, it is the right scale from two points of view. First of all, for our target customer base, it’s the right scale. We are relevant to our targeted customers, those entrepreneurs, those cutting edge companies. We are very relevant to them.

We can get to a place where we have twenty, thirty, 40 customers to be relevant to them and it fit very well within our own scale. Third, and maybe most importantly is, this facility is of a size and a scale for Birkon in our own just in this facility to be financially strong, to move to a place we are highly, highly profitable. Relative to the future, there’s also opportunity here at this facility to expand capacity in a relatively capital efficient manner. So we have certainly expansion opportunities there once we fill up this facility on its own. So it’s the right place because right scale, right size, right place because it’s up and running as an existing workforce there today and right because there’s pretty capital efficient capacity improvement opportunities in the future once we sell this facility out.

Paul, Webcast Moderator: Okay. Thanks for that. Next question comes from Bob Hodgkinson. What is the revenue share between ProMan and Birkon considering the expected operational cost versus the cap costs and improvements to be borne by ProMan?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Thanks, Bob. Let Let me go into a little bit about the relationship between Birkon and ProMav. So the first key was finding a facility that could do all the things I just talked about and could be bought at the right price, right. Could be bought at the right price so that our partner could afford to purchase that facility and equip it, but then we could afford to lease it back from them essentially through a contract manufacturing relationship. So in a manner that we could afford and would drive a return on investment for them.

So in essence, we bought we together we bought the facility at the right price, which gives us flexibility for them to get a return on their investment and through our lease payments essentially and then for us to drive a highly profitable business on our side.

Paul, Webcast Moderator: Okay. There are more questions just came in actually. And I apologize for jumping back and forth here. This actually was a follow-up to the tariff question. This question comes from Paul Brunette.

What about suppliers for each product? Is tariff a problem or future tariffs going to be have an impact for Bhushan?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: We don’t see it now. I can’t predict the future what various governments will do. What I can say is that on the supply chain side, we have identified redundant raw material supply both in Canada and in The United States. So we’ve done what we can to ensure that we’ll have a reliable supply that’s of a quality and a cost that fits our financial model.

Paul, Webcast Moderator: Next question comes from Chester Myak from Lee Financial. With respect to the PIRATOs, are they paying some of the costs in developing possible products? And then when might we see something further regarding PIRATOS?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: So it is a R and D project together, right? So what we’re both we are both putting in research and development assets to then create an opportunity for both companies, right. So I think it’s a cost share from that perspective. And then when we launch, right, then we both share in the rewards. They get to launch a more innovative product to market be that in Canada or Europe and then we get to supply a key enabling technological solution to the product they are launching.

So a lot of work to do there. I mean, we’ll see how that work goes. We’re highly excited about it and hopefully in the near future we’ll be able to speak more to that. Thank you.

Paul, Webcast Moderator: We have one more question. This comes from Randall Lewis (JO:LEWJ). Any thoughts on moving back onto the NASDAQ in the near future?

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Thank you, Randall. Certainly, that is something that it’s discussed, it’s out there, right? Now, I think where I would go back to is what is our 2025 focus. Our 2025 focus is execution. It is our partner completing the facility transaction.

It is us installing our proprietary equipment and producing those first commercial products, moving to ongoing continuous production and then moving to the space of ongoing production and ongoing recurring sales. So I think we need to do those to establish our foundation, prove our ability to execute and then may we earn the right to have that conversation in the future.

Paul, Webcast Moderator: All right. Those are all great questions. Thank you to everyone who submitted questions. Some of the questions I didn’t read out because it was already addressed already. Thank you to everybody.

Ina, back to you.

Ian, Conference Call Moderator: Thank you. And that ends our question and answer session. I will now hand the call back to Mr. Keith Underwood for any closing remarks.

Keith Underwood, Chief Executive Officer, Birkon NutraScience Corporation: Yes, a final thank you for your time today, your confidence in us and maybe a parting thought that again, it’s a great time to be part of Barkon and we thank you all for going on this journey with us. Have a great day all. Cheers.

Ian, Conference Call Moderator: This concludes today’s call. Thank you for participating. You may all disconnect.

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