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Stonegate Capital Partners Updates Coverage On Burcon NutraScience Corporation (TSX:BU)

·3 min read

DALLAS, TX / ACCESSWIRE / December 14, 2021 / Burcon NutraScience Corporation (TSX:BU): The full report can be accessed by clicking on the following link: http://stonegateinc.com/reports/BU.TO Q2FY22.pdf


Burcon NutraScience is at the forefront of the plant-based eating movement as a global technology leader in the development of plant-based proteins. With over 290 issued patents and over 200 patent applications, Burcon has an extensive portfolio of composition, application, and process patents covering novel plant-based proteins derived from field peas, canola, soy, hemp, sunflower seed and more. In 2019, Burcon established Merit Functional Foods Corporation through a JV. Merit Foods completed building a 94,000 sq ft state-of-the-art plant protein production facility in Manitoba, Canada, in Q420. The facility now produces, under license, Burcon's novel pea and canola protein ingredients and is the only commercial facility globally with the capability to produce food grade canola proteins.


  • Plant based foods are surging - Plant based proteins are in the early innings of adoption with Markets and Markets estimating the plant-based protein market accounted for a value of $18.5B in 2019 and will grow at a 14.0% CAGR until 2025 to reach $40.6B.

  • History of developing plant proteins - Burcon has spent 20 years and raised ~$90M in order to perfect and patent its process to extract plant proteins that can be used in the commercial production of foods and beverages. This has resulted in the Company amassing over 290 issued patents and over 200 additional patent applications.

  • Proteins with differentiators - Burcon's pea and canola proteins will offer traditional nutritional value as well as functional values such as binding, gelling, whipping/foaming, and emulsification that should enhance the overall benefits to food and beverage producers and consumers.

  • Merit Functional Foods JV points to growth - Burcon entered a JV with three industry veterans to construct a production facility focused on pea and canola proteins. Production started in January 2021 and Burcon is the largest shareholder with a 31.6% equity position. The facility will initially be anticipated to process 25,000 tonnes of yellow field peas and canola proteins annually followed by future expansion plans toward 100,000 tonnes per year capacity.

  • Partnered with notable players - Burcon's JV, Merit Functional Foods, recently announced a partnership with Nestlé (SWX: NESN) to tailor its pea and canola proteins for use in products produced by Nestlé. Additionally, Bunge Limited (NYSE: BG) invested $30M in the JV, which accelerated the construction of the Merit facility and will supply Merit with key inputs. The Company expects Merit to announce additional partnerships in late CY21.

  • Solid balance sheet - The Company has a solid balance sheet with ~CAD$ 10.9M in cash and has stated it has enough cash to fund operations to August 2023. Additionally, Merit has secured CAD$85M from a consortium of lenders and a CAD$10M interest free loan from Agri-Food Canada's Agrilnnovate Program.

  • Valuation - We use a sum-of-the-parts analysis of Burcon and Burcon's ownership in the Merit JV. Our SOTP analysis arrives at a valuation range of $5.00 to $7.50 with a mid-point at $6.00.

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.

Stonegate Capital Partners
(214) 987-4121

SOURCE: Stonegate Capital Partners

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