DALLAS, TX -- February 19th, 2025 --Burcon Nutrascience Corporation (TSX: BU): Stonegate Capital Partners updates their coverage on Burcon Nutrascience Corporation (TSX: BU). In the third quarter of 2025, Burcon made significant progress in its strategic initiatives. The Company successfully ramped up commercial production of its canola protein isolate, marking a pivotal milestone in its go-to-market strategy. With over 100 prospective customers evaluating its protein products, Burcon has built a robust sales pipeline. Additionally, The Company sees a multi-billion-dollar TAM for its products, with specific opportunities in the soy protein isolate market (US$70-116M), pea protein market (US$215-392M), and canola protein market (US$68-113M), among others. We note that these developments position Burcon well for future growth, driven by expanding market opportunities and strategic advancements in product commercialization.
Company Updates:
ProMan Partnership: In 3Q25, Burcon detailed a strategic partnership with ProMan to acquire and operate a protein production facility. This partnership, led by Burcon board member John Vassallo, involves ProMan purchasing the facility and leasing it to Burcon. This arrangement allows Burcon to maintain a capital-light position while gaining full control over the production of its entire suite of plant-based protein products. Production is expected to commence in the first half of 2025 following necessary upgrades to the facility. First-year sales are projected to be in the range of $1M – 3M, with double-digit revenue expected in year two. Gross margins are expected to improve quarterly, targeting over 50% as capacity utilization increases, with profitability and positive cash flow expected in 2026.
Product Commercialization: During the quarter, the Company collaborated with Puratos to pioneer new canola protein applications, and announced a rights offering to fund production, marketing, and sales of its proteins. The Company also launched next-generation Peazazz® pea protein and Puratein® canola protein for egg replacement applications. Subsequent to the quarter-end, Burcon's alliance partner, ProMan, signed a purchase and sale agreement to acquire the protein production facility, and Burcon agreed to terms for the purchase and operation of the facility. The Company successfully closed a rights offering with gross proceeds of $9.43M and launched Solatein™ sunflower protein isolate.
Financial Overview: In 3Q25, Burcon generated $0.06M in revenues from the sale of its protein isolate and contract research services, compared to no revenues in the same quarter last year. The Company reported a net loss of $1.8M or $0.01 per share, compared to a net loss of $2.0M or $0.02 per share in the same period last year. R&D expenses decreased to $0.7M from $1.1M, while G&A expenses increased by 1.4% in the same period. The Company received $78,000 in funding from Protein Industries Canada for the scale-up and commercialization of hempseed and sunflower seed proteins. The Company has a pro-forma cash balance of ~10.0M following its rights offering. This gives BU enough liquidity for the foreseeable future.
Valuation: We use a DCF Model to frame our valuation of BU. Our DCF analysis relies on a range of discount rates between 10.75% and 11.25% with a midpoint of 11.00%, which we believe accurately accounts for the size and relative illiquidity of BU. This arrives at a valuation range of $1.15 to $1.43 with a mid-point of $1.27.
