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Good afternoon everyone and thank you for participating in today's conference call to discuss Burcon NutraScience Corporation's fiscal year 2024 first quarter results ended June 30, 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'll be an opportunity to ask questions. [Operator Instructions] Then before we conclude today's call, I'll provide the company Safe Harbor statements with important cautions regarding the forward-looking statements made during this call. I would like to turn the call over to CEO of Burcon, Mr. Kip Underwood. Sir, please go ahead.
Thank you operator, and thank you everyone for joining us this afternoon. Great to speak with everyone again so soon, and I hope everyone is having fantastic summer. We are encouraged and excited about where Burcon is going, and we'll be sharing with you the opportunities we are pursuing as part of our Burcon 2.0 strategy. The continued growth of the plant-based market and food industry landscape is encouraging and we believe this mega trend is here to stay. Consumers continue to shift towards a plant-based diet, creating opportunities for food scientists to develop high quality products that meet the consumer's evolving needs. Better products start with better ingredients, and that's where Burcon's Specialty protein ingredients can deliver significant value and be disruptive to the broader ingredient market. In turn, our approach needs to adapt to the changing market landscape. We started our fiscal year with a renewed approach to commercialization. Learning from our past successes and failures, we've applied our experiences into our revised Burcon 2.0 approach, our go-to market strategies for each of our protein technologies focus on speed-to-market and leveraging existing resources in order to maximize the return on investment. We're looking forward to discussing our commercialization paths for our various proteins and in particular our recently announced hemp protein partnership and product launch, which is potentially the quickest path to revenue generation. Before I get into it, I'd first like to turn the call over to our Chief Financial Officer, Jade Chung, to provide a brief overview of the financial results for the quarter, after which I will return to provide my remarks and discuss our business outlook for the fiscal year. We will open the call to questions following our remarks.Jade, please go ahead.
Thanks, Kip. Earlier today our financial results for the first quarter of fiscal 2024 were issued in a news release and filed with SEDAR as well as posted to the Investor Relations section of our website. For the first quarter of fiscal 2024, we reported a net loss of $1.9 million or $0.2 per basic and diluted share as compared to $4 million or $0.4 per basic and diluted share in the same year ago quarter. The lower loss this quarter, as compared to the first quarter of last year, is due almost entirely to the share of loss in Merit recorded during the first quarter of last year. The company's cash conservation efforts have also contributed to lower expenditures. Research and development expenses totaled $936,000 down from $1.2 million in the same year ago quarter. The decrease is due mainly to lower intellectual property expenses driven by optimization of the patent portfolio that resulted in lower maintenance fees. General and administrative expenses totaled $837,000 as compared to $911,000 in the same year ago quarter. The decrease is due mainly to the NASDAQ annual fee and U.S. investor relations consulting expenses incurred during the first quarter of last year. During this quarter, Burcon completed a private placement for net proceeds of $3.4 million.As the June 30, cash balances total $3.6 million as compared to $1.5 million at March 31. Subsequent to the quarter end, our largest shareholder, Large Scale Investments agreed to extend the maturity date of the first tranche of our secured loan for 1 year to July 1, 2025. Burcon expects his current cash resources to fund its operations to February, 2024 and further to February, 2025 if conditions for advance under the second tranche are satisfied. These states may potentially be extended if the company receives funding or generates revenues from other sources, including government assistance and pilot plant processing and scale up validation services.With that, I'd like to turn the call back over to our CEO, Kip Underwood. Kip?
Thanks Jade. Burcon's renewed approach to commercialization enables us to be creative in how we go to market. As mentioned in our previous call, we need optionality. The optionality comes leveraging everything we do. We are applying a different lens to which we view commercialization, including evaluating which paths make the most sense, whether we partner and build a facility, license our technologies, or go to market ourselves through a contract manufacturer supply chain. These are all viable routes to market for us to consider as we execute our Burcon 2.0 strategy with the goal of bringing all of our protein technologies to market. Our Burcon 2.0 strategy is off to a good start. Our partnership with HPS Food and Ingredients represents the first proof point in the execution of our Burcon 2.0 strategy. Our partnership fits perfectly within Burcon's 3 main strategic imperatives. That is to identify additional revenue sources, get closer to customers, and gain more influence over the production of our proteins. We are thrilled to be partnered with HPS to launch the world's first high purity hemp protein isolate. By joining forces with HPS, a premier leader in hempseed and plant-based protein ingredient solutions, we began excellent partner with the resources to quickly bring our hempseed protein to market. This is truly a marriage of expertise where our respective strengths are complimentary. Burcon has production and process engineering expertise while HPS has access to hempseed farmers, raw material production, and a global network of hempseed ingredient customers. Moreover, both Burcon and HPS are in an excellent position to rapidly bring this innovative new protein ingredient to the global market.I've said this before, speed to market is top of mind for us, and we see this partnership as one of the fastest routes for Burcon to achieve material commercial revenues. Shortly after announcing our partnership with HPS, we officially launched our hempseed protein is isolate at IFT FIRST, the world's largest food ingredient trade show held in Chicago, Illinois. We showcased our first of its kind hempseed protein isolate that has greater than 95% protein purity, clean flavor, light color, and exceptional functional attributes. These are the characteristics that customers, in particular hempseed ingredient customers have been demanding for in a protein ingredient. The interest level and reception to our hempseed protein isolate continues to exceed our expectations with an overwhelming number of customers requesting samples for further evaluation. Current hempseed proteins on the market today are generally insoluble, exhibit a dark color, grainy texture and off-putting flavors that make product formulation difficult. In contrast, our hempseed protein isolate solves many of the formulation challenges today and provides food scientists with a blank canvas to develop innovative food and beverage products. customers and trade show participants at IFT were visibly excited about our new product and stated and I quote, "This is exactly what the industry needs." While someone as far as requesting commercial quantities as early as this fall.Following IFT, HPS has been working closely with a long list of interested customers who are already evaluating samples of our Hempseed protein isolate. Based on the positive feedback received thus far, we anticipate moving forward with initial validation trials and production runs through our contract manufacturer later this fall. Pursuing a contract manufacturer approach has a number of benefits such as low capital cost, speed to market, which could translate into revenues sooner for the company. Following successful market development and validation trials, Burcon and HPS intend to finalize a strategic partnership agreement with the goal of reaching commercial production and sales sometime in calendar 2024. We're excited to quickly bring this best in class hempseed protein ingredient to market and further validate our Burcon 2.0 strategy.In parallel with hemp, we continue to explore and evaluate various paths to market for each of our protein ingredients, including opportunities to bring back to market our soy, pea and canola proteins. We believe there continues to be demand for Burcon soy, pea, and canola proteins from both existing and new customers who are looking for new innovative ingredients. We continue to receive inbound requests from interested customers. As such, we are actively exploring ways where we can economically and efficiently produce and sell them on a commercial scale. We are evaluating commercial options that include partnerships, capital-light licensing models, and contract manufacturer supply chain, as well as the potential option of using the assets of the Merit functional food facility. There continues to be a push in the market towards premium specialty protein ingredients, which allow food scientists to create better overall consumer products.As for our sunflower protein technology, during the quarter, we announced that we successfully completed end-to-end validation trials for our sunflower protein process and that is now commercially ready for scale. Clearing this major milestone in the commercialization process is a big step for us to get this unique protein ingredient to market. Validating our sunflower process using commercial scale equipment is a proof point that our process is feasible, economical, and scalable for large scale commercial production. Industry partners interested in Burcon's sunflower protein technology can have the confidence to work with Burcon as we continue to explore various routes to market. Not only does our sunflower protein have the potential to tap into a new category for protein isolates, it also exhibits a health halo that consumers want. It is non-GMO, non-allergenic and a source of healthy clean label protein that food formulators love to incorporate into products. We believe our sunflower protein isolate has significant value proposition in the marketplace and has the potential to be one of Burcon's premier offerings. We are actively pursuing different reach to market in addition to our ongoing partnership discussions. Personally, I believe our sunflower protein is one of our best protein ingredients and I am truly excited to see it in the marketplace today.In terms of our balance sheet, we're happy to report that during the quarter, we successfully raised $3.4 million through a non-brokered private placement financing. We are grateful to our shareholders for supporting us in the financing and for believing in our vision and strategy. Since I joined Burcon, we underwent a strategic review of the company. We allocated resources to focus on our priorities that align with our 3 strategic imperatives and rallied our entire team to drive forward on our Burcon 2.0 initiatives. We fully understand that we have limited time and cash runway and intend to maximize our resources to position Burcon for future growth. Our current cash runway is projected to last until February of 2024. This cash runway projection includes allocated expenses to accelerate the commercial launch of our hemp protein, which could lead to generating revenue soon.To further extend our runway, Burcon is pursuing federal and provincial government funding in the form of grants for our ongoing commercialization projects. Some of the programs we are pursuing are from Protein Industries Canada and Canadian Food Innovation Network. We're working towards submitting our final applications to these programs and if approved, Burcon could receive up to $4 million in non-diluted government support. In addition, our second tranche of $5 million of the total $10 million loan from Burcon's largest shareholder is still available to us should we need the funds in the future. If we meet the conditions for drawing down the second tranche, our cash runway would extend further to February of 2025. Together with potential income from hempseed protein sales, non-dilutive government funding and a lean operating model, we expect to achieve a net burn rate that provides us a sufficient runway to execute our Burcon 2.0 strategy.To summarize, we've set a strategic framework for Burcon 2.0 and we're now executing on that plan. Partnering and launching our hempseed protein was the first of many proof points. We're optimistic about our commercial plans for hemp protein to start generating revenues for Burcon. We're ecstatic about the potential of our sunflower protein to disrupt the protein ingredient market. In addition, our commercially proven soy, pea and canola are at the root. We look forward to building on the current business momentum and in the long run creating a thriving protein ingredient business.With that, I would like to now open the call up to questions. Operator, can you please provide the appropriate instructions?
Thank you. We will now begin the question and answer session. [Operator Instructions] Our first question comes from Daniel Shahrabani of SRID Investments.
I'm actually speaking from Montreal. I'm a long-term investor, so Kip, it's nice to meet you. I just have 2 questions, maybe just updates, but from the press releases, it seemed as though we would get a definitive answer about -- like the bankruptcy of Merit and in terms of like the liquidator would assign a company and I was just wondering whatever happened to our bid for Merit? Are there any updates, but that's not mentioned anymore. And then my second question is why do you think that for someone who's just an investor, not a scientist, why is, would hemp be better than the pea protein or sunflower? Why are you so excited about the hemp and when do you think we're going to see some cash flow coming in, in terms of revenue?
Thank you Daniel, for both questions and for being a long time shareholder, really appreciate your patience and interest in this. So let's first take on Merit. So the Merit, the assets of Merit are still under receivership. We are in routine contact with the receiver and they are running their process. You are right in that their process is taking much longer than they had communicated. All we can do is, is stay close with them as they drive their timeline. Moving forward, though we are actively engaged, we are still looking and seeking for opportunities to partner with someone to buy the assets and or to partner with who may buy the asset in the future. We take a step back, we look at the Merit assets and they are purpose-built for our technology. So we believe if we stay close to the process down the road, there may be an opportunity for us to partner by and or contract manufacturing in the facility and we'll see how that turns out in the coming months. Relative to hemp, we are very excited about hemp for a couple reasons. First we have a fantastic partner that it can help us get to market quickly. Second, it is new to the world technology and the part of the plant-based food ingredient space that is brand new, the opportunity to define a category. At the same time, the excitement on hemp does not mean we're not excited about the broader pieces of our portfolio. We are retrenching and looking at taking our entire portfolio to market. That would be soy, pea, canola and sunflower. And we're relaunching all those to the market with an open mind towards what's the fastest way to monetize the intellectual property. So that may include license, build, sell, and or partner. So we're excited about the portfolio, excited about the market we play in and excited right now mostly about hemp because it's here and now and it is our quickest path to revenue.
[Operator Instructions] I'll now hand the call over to Paul for any additional questions from the webcast.
Hi Kip, we have a few questions from the webcast. The first one comes from a private investor. When you discuss sunflower disrupting the protein market, are you thinking it can emulate or exceed the success of pea protein over the past decade, which has grown to over to a $500 billion plus market? C^Kip Underwood^ We are very excited about the sunflower from a few prospective. So first, let's think about sunflower right now is the world's third largest oilseed product. It actually has far, far more acres in [indiscernible] today, as an example. And the byproduct of sunflower oil production is generally not used in food production today. So first is we have a readily available raw material that is cost effective. Second, have a proprietary process that can turn that into a highly differentiated offering in particular, along the dimensions of flavor and color, which go a long ways towards driving unique experience with the consumer. The last piece that gets us excited about it is really the halo. So not only is it non-GMO, not only is it non-allergen, it gets the halo from the sun, hence sunflower. So the combination of those, we truly see sunflower in the future being a major player in the plant-based protein space on a global scale, and we're excited to be a leader in that.
I think that answers the question. Next question we have from David [indiscernible]. He is wanting to understand the status of our pea and canola proteins. His question actually comes 3-part. The first is the Merit receivership, which you've already answered. The second is the status of the pea and the canola proteins. I'm guessing he's referring to the license agreement with Merit Functional Foods. And then the third part is whether we've added any new employees.
David, I'm going to assume that I've handled the state of the Merit bankruptcy. In regards to pea and canola proteins, certainly still very excited about both of those. Believe there's real market opportunity for those. The license for those does sit with the receiver. So as that process moves forward we'll work through those. At the same time, we do have a series of off ramps in our licensing agreement in the future. So we believe we have freedom to operate moving forward, be that inside of Merit or outside. And lastly interesting question, have we added new employees? What I can say is we're leveraging new skill sets. So from my experience, we have a few outside consultants that are working with us with significant food industry experience, to both pressure test our value propositions, to pressure test our strategy, and then to help us get creative in how we execute in the marketplace. So no new employees today, but certainly leveraging new thinking, outside thinking on a project basis that can help us to be more creative and execute in the food industry today.
And I think that's all we have in terms of questions. Operator, throwing it back to you to wrap things up, please.
Thank you everyone. That's all we have for 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, operator. Just a couple points. One, I hope what the audience can hear is with Burcon 2.0, we have a plan and we are executing that plan. We are excited about our technology and it's the opportunity for it to differentiate in today's marketplace and looking to our first proof point, our partnership with HPS to launch hemp protein isolate in the marketplace, a highly innovative very exciting product launch that we can't wait to see what the future holds. Relative to our teams, I'd like to thank them for their perseverance and belief in our vision. Relative to our shareholders, thank you for your patience and understanding as we continue to position Burcon to capitalize on the next wave of plant-based growth. Thank you again for your time today and really appreciate your commitment to Burcon. 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 involves risks and uncertainties and other factors that could cause actual results, performance 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 statements will prove to be accurate and actual results in future events could differ materially from those anticipated and 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 risk factors detailed herein and from time to time in the filings made by Burcon with security 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 it 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.