Burcon NutraScience Corp

TSX:BU

Earnings Call Transcript 2022-Q3

[Operator]

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Burcon NutraScience Corporation's Fiscal 2022 Third Quarter ended December 31, 2021. Joining us today are Johann Tergesen, President and CEO of Burcon; Peter Kappel, Chair of the Board of Directors of Burcon; and Jade Cheng, the company's Chief Financial Officer. Following their remarks, we will open up the call for your questions.[Operator Instructions] Then 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 President and CEO of Burcon, Mr. Johann Tergesen. Please go ahead, sir.

[Johann Franz Tergesen, President & CEO]

Thank you, operator. Good afternoon, everyone. Thank you for joining us today. Burcon's fiscal 2022 third quarter, which ended December 31, included some notable advancements for Burcon as well as some milestone achievements for our joint venture company, Merit Functional Foods.Beginning with Merit Foods, we are pleased to report that Merit has now commissioned its state-of-the-art pea and canola protein production facility in Winnipeg, Manitoba and is fully scaled to supply leading CPG companies with its best-in-class pea and canola protein ingredients. During the months of October and November, Merit was focused on increasing its production throughput as they worked to resolve the final commissioning challenges at their new state-of-the-art pea and canola protein production facility.In December, after further fine-tuning and optimization of its facility, Merit began hitting its production targets and achieving new high water marks for both processing throughput and production yield. Coincident with Merit's production breakthrough sales of protein products by Merit for the month of December were also the highest for any single month to date. We're very pleased to see Merit turn the corner on its production challenges, finally putting it in a position to begin the process of supplying larger volumes of protein ingredients to its existing and new leading food and beverage customers. In today's call, we will discuss Merit's sales pipeline and the sell-in process they are currently managing for their best-in-class pea and canola protein ingredients. Just over a year ago, Merit completed the construction of its new state-of-the-art protein production facility. And shortly thereafter, Merit completed its first end-to-end production run of pea protein.Since that time, and as a standard practice with any newly constructed specialty food ingredient production facility, Merit has progressed through a commissioning process at its Winnipeg production plant, methodically working through and resolving operational challenges as they have arisen with the goal of optimizing production throughput and yield, striving to achieve the nameplate capacity as per the originally engineered design. As of the end of December, Merit's pea and canola protein production facility is now commissioned and producing its best-in-class pea and canola protein ingredients.There were other notable developments for Burcon and Merit during our fiscal 2022 third quarter. But before I talk about those developments, I'd first like to turn the call over to our Chief Financial Officer, Jade Cheng, who will briefly take us through the financial details for the quarter. Then I'll return to provide a further update and discuss some of the opportunities Burcon is currently pursuing. We will open the call to questions following our remarks. Jade, please go ahead.

[Jade Cheng, CFO & Treasurer]

Thanks, Johann. Earlier today, our financial results for fiscal 2022 third quarter were issued in the news release and filed with SEDAR and EDGAR as well as posted to the Investor Relations section of our website. Turning first to our income statement.During this quarter, we reported a net loss of $1.5 million or $0.01 per basic and diluted share. This compares to a net loss of $1.1 million or $0.01 per basic and diluted share in the same year ago quarter. Burcon recorded royalty revenues of $45,000 from Merit on the sales of pea and canola protein products. Merit's recorded sales revenues of $1.2 million for the quarter ended December 31, 2021, which included sales of commodity and coproducts in addition to pea and canola protein products. Bunge made an additional investment of $4.9 million into Merit during this quarter. After Bunge's investment, Burcon's ownership interest decreased from 33.3% to 31.6%. As a result, we have recorded a dilution gain of $961,000 during the current quarter.Merit recorded a loss of $3.8 million during this quarter, and Burcon recorded $1.2 million as a share of Merit's loss for the third quarter of fiscal 2022. Merit's loss reflects the stage of development during the quarter as it continued with its commissioning process at the Flex production facility, which completed on December 31, 2021. Gross research and development expenditures went up by $291,000 in the third quarter over the same year ago quarter. The increase is due mainly to higher stock-based compensation expense and scientific staff additions.During the quarter, we allocated $623,000 of development costs to deferred development costs. As Burcon's pea and canola technology that is under licensed to Merit is now capable of operating in the manner intended by management with the commissioning of Merit's production facility as at December 31, Burcon will seize the capitalization of costs to defer development and commence the amortization of the intangible assets as of January 1, 2022. Gross intellectual property expenses did not change significantly from the same year ago quarter. During this quarter, we allocated $192,000 of IP expenditures to defer development costs. As with R&D costs, Burcon will seize the capitalization of patent costs to defer development and commence amortization.G&A expenses increased by $431,000 in the third quarter of fiscal 2022 as compared to the same year ago quarter. The increase is due to increased salary costs from higher stock-based compensation expense and staff additions as well as increases in investor relations, professional fees and insurance costs. As at December 31, 2021, our cash resources totaled $9.4 million as compared to $14 million as at March 31, 2021.I would like to refer you to our complete financial statements and management's discussion and analysis of our results that are available in the Investors section of our website at burcon.ca as well as on sedar.com. In terms of our patent portfolio, Burcon was granted 8 new patents during this quarter, covering our novel processes for the extraction and purification of pea, canola and soy protein ingredients and the high-purity proteins produced therefrom. Our patent portfolio now consists of 307 issued patents in various countries, including 73 in the U.S. and 215 active patent applications, including 34 additional U.S. patent applications.With that, I'd like to turn the call back over to our CEO and President, Johann Tergesen. Johann?

[Johann Franz Tergesen, President & CEO]

Thanks, Jade. As I mentioned at the beginning of today's call, the third quarter included some notable advancements for both Burcon and its joint venture, Merit Foods. During the quarter, our joint venture, Merit Functional Foods, reached the production output threshold, which met the definition under the amended and restated license and production agreement for its Flex protein production facility to have now attained commission status for Phase 1 of the multiphase production capacity build-out at its Winnipeg manufacturing headquarters.Merit's state-of-the-art protein production facility now has the capability to produce under license from Burcon, its best-in-class pea and canola protein ingredients at a level approaching its originally planned capacity. This solidifies Merit's position as the world's first and only producer and supplier of food-grade canola proteins in the global food ingredient industry.Commissioning the Flex production facility, including the process of scaling up production throughput and yield required a huge amount of effort from the teams at Merit and Burcon. The normal challenges associated with commissioning a plant with the technological complexity of Merit's Flex production facility were magnified by pandemic-related logistical constraints and supply chain bottlenecks. Despite these challenges, Merit successfully achieved a series of new high watermarks for production output in the latter half of December 2021 and has been producing protein at an equally significant level of output on a consistent basis since that time. Despite having achieved commission status, we expect Merit will follow a strategy of continuous improvement going forward, constantly striving to fine-tune and optimize the production throughput, quality and yield of its protein ingredients.As with any complex manufacturing facility, operational efficiencies will be pursued and incorporated where possible to improve upon or streamline the production process with the goal of reaching a state of continuous production at or near its nameplate capacity as per the originally engineered design for Phase 1 of the Flex production facility. With that being said, Merit's facility is now functioning very well indeed, and Merit is on track to meet its production targets and as a result, to also meet its sales forecast to reach full allocation of its Phase 1 capacity by the end of calendar 2022.We are thrilled by Merit's recent production achievements, attaining commission status for Merit's Flex production facility is an important milestone and one which further validates Burcon's position as a global technology leader in the development of plant-based proteins for foods and beverages. As discussed in our previous quarterly call, many of the challenges and start-up issues that delayed the commissioning process stem from equipment malfunctioning or processing equipment simply not performing to the original manufacturer specification. But it also included supply chain delays and limited in-person support from the specialists and professional engineers who would normally be on site to assist in the commissioning process.All these factors were compounded further by general pandemic-related challenges which hampered Merit's everyday activities. Considering the many challenges encountered over the course of the past year, it is noteworthy that Merit was able to push through the adversity and achieve the results they had targeted to reach the level of production capability that now positions Merit as the world's first fuel technology protein production facility, supplying the global food and beverage industry with both unique and differentiated pea protein ingredients and first-of-a-kind canola protein ingredients and with the expectation that Merit will continue to do so for decades to come.While Merit enjoyed success in resolving commissioning challenges and fine-tuning its facility this past quarter, sales of Merit's pea and canola proteins to food and beverage companies were limited with Merit's facility now able to consistently produce at scale, and now has the capability to produce the commercial volumes required to fulfill large orders and to support the procurement processes of more and larger CPG companies. And those procurement processes can frequently include individual in-person quality and safety audits.Completing the commissioning process has set up Merit to be in a position to more readily progress through the industry standard procurement processes to fulfill orders and also to secure future large sales orders from the major and even super major CPG companies, which brings me to discuss Merit's current sell-in process and what we expect in terms of sales for the coming year.We expect Merit to achieve a steady ramp-up of sales beginning with the current quarter, but notably skewed to the back end of the year with the largest components of the projected sales pipeline expected to culminate in initial buying programs in the second half of calendar 2022. During the quarter, Burcon recorded a 41% quarter-over-quarter increase in royalty revenues from Merit's sale of protein products. On a quarter-over-quarter basis, it's encouraging that Merit's sales are increasing rapidly. However, they remain disproportionately small compared to the potential production capability of Merit's production facility.As we've already discussed, during calendar 2021, Merit's focus was on completing the commissioning process and ensuring protein product quality. Because Merit's team was significantly occupied with incorporating processing modifications and reconfiguring its production facility in some cases, over and over again, Merit was, as a result, frequently unable to produce finished product for delivery to customers. However, Merit has worked with and supported the quality assurance and safety audit teams of a number of important CPG customers as part of those entities procurement processes. And Merit is already producing its best-in-class pea protein ingredient for a major food and beverage customer, a leading brand for dairy and dairy alternative products with the first delivery to this customer having been completed this quarter. And Merit is also now starting to ship proteins to multiple CPG brands as they are launching new food and beverage products with Merit's proteins.As part of the broader selling process, Merit continues to work closely with hundreds of CPG companies looking to develop innovative new foods and beverages or reformulate existing products using Merit's innovative pea and canola protein ingredients. Merit's sales prospects are encouraging, and we expect to see many more consumer products using Merit's proteins available on store shelves this year.On a previous quarterly results call, I've talked about the lengthy sales cycle and the end of ingredient procurement processes characteristic of the food and beverage industry. The lead up to an initial sale in the food ingredient industry can take a long time with CPG companies following a cautious and calculated approach to the development and launch of new food and beverage products and/or when reformulating an existing product. It's important to note, however, that this same onerous process for achieving new sales also means that customers and purchase orders are generally sticky, often resulting in reliable recurring revenue streams and supply contracts that continue for many years.Within the context of the current undersupplied plant-based protein ingredient market, there is significant interest in demand for Merit's pea and canola protein ingredients, which offer unparalleled purity and an exceptionally clean and neutral taste compared to what's currently available on the market, providing Merit with a competitive advantage, which we and Merit expect will drive sales and which are expected to evolve into the long-term recurring revenue streams we just talked about. Merit's facility has been designed and built with future expansion in mind.And as I've already noted today, Merit is on track to meet its production targets and sales forecasts to reach full allocation of its Phase 1 capacity by the end of calendar 2022, which, if successful, will lead to a decision point for Phase 2 expansion and a potential doubling of the current production capability. During the quarter, Merit received an additional $4.95 million in the form of an equity investment from minority stakeholder, Bunge Limited. Bunge did so by exercising its special preemptive right to make a further equity investment into Merit Foods. Merit also received an additional co-investment from Protein Industries Canada during the third quarter for a new project where Merit is partnering with Winecrush Technology, Wamame Foods and Wismettac Asian Foods for the development and distribution throughout Europe, Asia and North America of a line of plant-based meat alternatives to pork and Wagyu beef.The total project cost is budgeted at $7.6 million with Protein Industries Canada having committed to fund 1/2 of that amount. This project is another excellent opportunity for Merit to showcase the versatility and functional capabilities of its high-purity pea and canola proteins in meat alternative applications.With Merit having now completed the commissioning process, transitioning to full production and aggressively pursuing its sales pipeline and the sell-in process, Merit is now more than ever well positioned as a premier plant-based protein ingredient solution provider, giving Burcon the luxury of being able to turn our focus to exploiting the other technologies in our intellectual property portfolio and to pursue the additional commercialization opportunities we have been nurturing through our management team and the team at Burcon's Winnipeg Technical Center.In that regard, during the quarter, we advanced the due diligence and negotiation process on a number of existing and new potential strategic partnership opportunities where we believe Burcon can quickly bring to market one or more of our other plant-based protein platforms. We also advanced, through continued research and development activities, our pipeline of plant-based protein technologies. And similarly, we bolstered our already substantial intellectual property portfolio with additional inventions and improvements during the quarter.Subsequent to the quarter end, Burcon announced that I will be stepping down as President and CEO effective February 28, 2022. After co-founding Burcon more than 23 years ago, I've made the decision to step down as President and CEO effective February 28. To ensure an orderly transition, I will continue as an adviser to the company as well as to Burcon's Board of Directors. In December, Burcon engaged an executive search firm, Kincannon & Reed, which specializes in the food and agribusiness sectors to assist Burcon's Board in the process of recruiting a new Chief Executive Officer. That process is on track with numerous qualified candidates already identified and engaged.As I was quoted in Burcon's release from early January, there is no right time to leave a business that one has put his heart and soul into for over 2 decades. But clearly, with Merit now on such a sound footing with its production lined out and the sell-in process well underway, Burcon's prospects are fully at the point of commercialization and I leave the business in the capable hands of our talented and driven team and Board of Directors. It's been a highly rewarding experience for me to both lead and work alongside of Burcon's team during the past 23 years, and I'm confident of and look forward to seeing Burcon's technologies thrive in the global marketplace.I'd like to expand on my statement that Burcon is in the capable hands of our talented driven team and Board of Directors. Over the past more than 2 decades, Burcon has built an excellent team with both scientific expertise and business management expertise in the plant-based foods and specialty food ingredient industry. That team drives our partnering activities and public company activities and is in turn supported by a first grade Board of Directors. During the past year, Peter Kappel, who is on the call today, was appointed Chairman of Burcon's Board, which was also strengthened during the year by the additions of Jeanne McCaherty and Alfred Lau. Burcon's current 8-member Board of Directors, chaired by Peter is an exceptional group of individuals who collectively bring a wealth of experience and insight to Burcon's business opportunities and who are engaged and committed to Burcon's success.As I've stated, Burcon is in very capable hands as we transition to a new CEO from the specialty food ingredients space. I'd like to briefly turn the call over to Peter, and I'll then return to provide a final update. Peter?

[Peter Kappel]

Thanks, Johann. With the completion of the commissioning of Phase 1 of Merit Functional Foods' new state-of-the-art protein production facility, the groundwork has been laid for Burcon to grow and thrive. On behalf of the Board of Directors and the entire team at Burcon, I want to express our sincere gratitude to Johann for his considerable contribution. I am joining you today as, although I've previously communicated with a number of investors and analysts, due to the departure of Johann, I will be directly involved in communications with shareholders until the new CEO is able to establish himself at Burcon. During this transition period, I welcome you to reach out to me directly or through Paul Lam, our Investor Relations Officer. I look forward to getting to know many of you. Back to you, Johann.

[Johann Franz Tergesen, President & CEO]

Thanks, Peter. As I've already mentioned, during the quarter, we advanced the due diligence and negotiation process on a number of ongoing and new potential strategic partnership opportunities, opportunities where we believe Burcon, with the benefit of a partner or partners can bring to market one or more of Burcon's other plant-based protein technologies, such as sunflower seed protein, hemp protein or oat protein. Burcon and our potential partners see tremendous value in bringing to market a new class of novel plant-based proteins extracted from sunflower seed meal, hemp seed and/or oats, all of which are established agricultural products with a history of use of food and food ingredients. Through our work at the Winnipeg Technical Center, we can leverage Burcon's core protein technology platform to develop and produce high purity, functional and nutritional protein isolates that are perfect for the growing alternative protein market.We are encouraged by the progress made in our partnership discussions and look forward to updating everyone again on this subject in the near future. For now, we continue to work towards a partnership that is the most beneficial to Burcon and its shareholders. During the quarter, Burcon continued to strengthen its already substantial intellectual property portfolio by adding 8 additional patents covering the novel processes for the extraction and purification of protein ingredients from pea, soy and canola crops. These additional patents serve to protect our unique technologies around pea and canola, which are already under a 20-year license to Merit.Furthermore, subsequent to quarter end, we filed an additional 5 U.S. patent applications to protect our new inventions arising from our research pipeline, including technologies for the production of high purity sunflower seed protein. These patent applications may serve as important assets to our ongoing partnership discussions, where we intend to bring to market these novel protein ingredients with exceptional taste and valuable functional and nutritional attributes.Merit, having completed the commissioning of Phase 1 of its state-of-the-art pea and canola protein production facility, has marked another major milestone in its path to becoming a global supplier of premium plant-based protein ingredients. We are pleased with Merit's production achievements and are similarly pleased with the growth of its sales pipeline. We look forward to seeing additional food and beverage products on store shelves arising from the work Merit is currently doing with literally hundreds of CPG companies looking to incorporate Merit's proteins into taste forward and innovative applications in meat alternatives, dairy alternatives and lifestyle nutrition products.Burcon will continue our efforts to secure new strategic partnerships and collaborations while also seeking to protect our new technologies and innovations as they arise. This continues to be an exciting time for Burcon as we further establish ourselves as the leading industry innovator in plant-based specialty protein ingredients. We look forward to updating everyone again on our next call.And now with that, I'd like to open the call up to questions. Operator, can you please provide the appropriate instructions.

[Operator]

[Operator Instructions] Our first question comes from [ Joseph Sawyer, ] Private Investor. Our next question comes from [ Daniel Chadrani ] of KFRD Investments.

[Unknown Analyst]

It's wonderful to hear about all these achievements from Merit. I was just wondering if there's any concern about the cash flow, like how -- I mean, given we're lower $3 million on the balance sheet, I'm wondering if anything is being done to making sure that, that will be dealt with in the next 6 to 8 months?

[Johann Franz Tergesen, President & CEO]

Thanks, [ Daniel. ] That's an excellent question. A couple of things. One is we do have significant cash on our balance sheet. As you saw, there's $9.5 million at the December 31 balance sheet date. And Burcon has maintained a sort of disciplined attitude towards what we spend. So that is sufficient funds even if no other money were to come in, even without royalty revenues from Merit that allows us just into the end of Q1 or Q2 2023.With that said, I would also add that we, of course, have been talking about if we do need additional capital, what would be the options that we have. And there are -- Burcon does have the ability to raise funds if we need to. But I would add also that we continue to have the support of our excellent Hong Kong-based shareholders, the largest shareholder of Burcon with 24% has been with Burcon since founding. And we've had the benefit of their supports in the past and have recently had conversations with them and expect the same again going forward. So we do have those options.By the way, we are also right now, looking at some projects where we may be able to get government funding. So we are ourselves talking to Protein Industries Canada and a couple of other government funding opportunities. And we're quite optimistic and hopeful that those funds would come in as well. So generally speaking, we always have our eye on what our existing resources are and how quickly we may be burning through them. But I think that we're in a good position at least until the middle of this year to not have to do anything, not have to take any action until we can see the build out that we're -- sorry, the build-out of the sales that we're expecting to see from Merit and some other developments that we're working on that will hopefully add to our share price if we do find ourselves wanting to or needing to raise money through the markets.

[Unknown Analyst]

Okay. Good luck, and thank you for all the -- it's very exciting that Merit is now fully operational and hopefully, there'll be more sales, and that's kind of exciting for shareholders to see.

[Johann Franz Tergesen, President & CEO]

Thanks, [ Daniel. ] Those are my thoughts exactly.

[Operator]

Our next question comes from [ Harold Grunau, ] shareholder.

[Unknown Attendee]

Yes. Okay. I guess the question is, has to do with the direction and perhaps the success of the direction. And by that, I mean, I know long ago, the use of patents was arranged for companies like Archer Daniels Midland is one that I know. So that was -- I think that was the way Burcon originally expected to go. This is a big change. It sounds like an excellent change. I guess one of the questions I have is what comments can you make about competition in -- with Merit Foods? Can you comment there?

[Johann Franz Tergesen, President & CEO]

Yes, please, yes, thanks. So that is absolutely true that historically, we looked to partner with our CLARISOY technology. We did that with Archer Daniels Midland in the form of a license essentially the support of our intellectual property that ADM could use. We, in many ways, didn't like the lack of control that we got through that process. And so when we partnered with Merit, we really were only willing to do so in the form of a joint venture, which is what we have done. With that said, the intellectual property we have is, in fact, licensed to Merit so in addition to Burcon owning 31.5% of Merit Functional Foods, we have licensed to them the intellectual property that they use in order to be able to produce proteins from canola and from pea. And by the way, they pay a significant single-digit royalty on that. So that's actually a big part of the economics of the opportunity.With that said, when we look at the playing field of who is out there, who is our competition and how does the intellectual property relate, I think it's actually quite substantial. What I would suggest is this -- is that -- in the -- if you look at Burcon's value, if you look at Merit's value, it is one where it is significantly a factor of how large this can be grown to be. And I continue to believe, and I can tell you our partners do as well that we can make a huge opportunity from this. That's why the plant has been designed to be built out in multiple phases. And that's why we have every expectation that we will be building additional phases and likely additional plants on top of that in the future.And that's where the intellectual property becomes even more important because in the end, what we are doing through having such a significant mass of intellectual property is protecting from other large players, and this is -- now we're into the world of the big agro business giants because that's who dominates the world of plant-based proteins. We are protecting and trying to ensure that they don't even try to come into this space, at least not into the way that Burcon produces proteins and the quality of the proteins that we produce.We do believe that the 2 go hand-in-hand and that ultimately, the intellectual property platform that we've built protects us in that longer term in terms of keeping players out while we get the benefit of being able to build the market in the meantime.

[Unknown Attendee]

Okay. Thanks very much. And this is very helpful this and the previous information. But I got one -- and you probably mentioned where are the previous information about the various -- that was came before this questioning period. Where is that available?

[Johann Franz Tergesen, President & CEO]

Sorry, it's probably, I don't know, if Paul is on the line.

[Unknown Attendee]

Where else I can find? On the Merit?

[Johann Franz Tergesen, President & CEO]

On Burcon's website you should be able to find.

[Unknown Attendee]

On Burcon's website. Sure enough. Okay. That will do it for now. Been very useful. I'll look at that.

[Operator]

[Operator Instructions] Our next question comes from [ Bruce Lazenby, ] Investor Inc.

[Unknown Analyst]

Yes, Good. So after a couple of decades, you've built up a massive IP portfolio, that's fantastic. The question now seems to be how to monetize that. And the Merit JV is a good model, but it takes a long time to generate any kind of revenues at all. Meanwhile, as you discussed earlier, some of your competitors are certainly going into the same IP challenging some of the patents that you've got. So I guess my question is, is there a way to accelerate the growth of the monetization of that patent portfolio? As your market cap today is about $150 million, and I would argue you could probably sell that patent portfolio for that or more. And related to that is, can you tell us what you're looking for in the new CEO as you look at moving forward?

[Johann Franz Tergesen, President & CEO]

Sure. Those are 2 great questions. I'll field the first one and maybe I'll let Peter respond to the second one with respect to the new CEO. So yes, we absolutely -- we regularly -- Burcon has a strategic planning committee, which is a subset of our Board of Directors, senior management strategic planning committee talk on a regular basis, basically monthly about monetizing our intellectual property portfolio, what we think is the best strategy. One of the discussion points is quite often the trade-off between what can we do quickly, what can we do in the immediate near term, but what's in our -- or what's in our best long-term interest.We believe that the process we're going through right now is absolutely the right way. It sounds funny, the Merit facility is, in my opinion, a large facility. It's -- they can process 20,000 metric tons of field peas equivalent, let's call it, amount of canola. And as we have said on a number of occasions previously implying revenue of up to about CAD 60 million at full capacity. And yes, I can tell you that one of our Board members likes to point out over and over again that it's a demonstration plant in the grand scheme of when you look at the plant-based protein ingredient industry on a global basis, when you look at the big players that exist in soy and pea protein, potato protein, you name it. And what she's really making reference to there, our Board member, is that basically, this plant is really demonstrating what the potential is.And I think it is the right strategy because I do anticipate, as I've said on the call previously, I do anticipate the expansions will come. I do anticipate that there will be additional future plants. And they will be different, likely from this one, they'll have modifications. And ultimately, it is a process of getting to the largest cash flows in the -- in what we think is the smartest and the most prudent manner.With respect to our other technologies, our opportunities go like this. We are considering everything from licensing agreements to additional joint venture partnerships. And again, we're moving them forward in the process that we think is the smartest with respect to getting to market in a position that benefits Burcon the most. So not necessarily giving things up quickly, but also looking for where we think the most value comes to us in the long term.Right now, we are in the process. We're negotiating some deals, some of which contemplate joint ventures. And we will move those forward as quickly as we can. But again, always with the eye to the longer term. A little over 30% of Burcon's shares are owned by insiders, myself and many members of management or the Board of Directors. And so we really are not influenced by what we're doing in the very, very short term. We're really thinking more as owners and what makes sense in the longer term. With that, Peter, do you want to respond to the search process?

[Peter Kappel]

Sure. Thank you very much for this opportunity to speak with you on this because it's a key thing moving forward. I mean, basically, we're looking for somebody who's passionate about the vision of Burcon's potential, is positive on future of alternative proteins and is passionate about the impact on the planet nutrition. We really are looking for somebody with a food ingredient company background, who's had senior managerial experience, is aware of ingredient production and more importantly, really aware of the application for the big food companies.Obviously, the person will require the base CEO qualities, strategic leadership mindset, communication skills, et cetera, ability to inspire people as well as a good understanding of how the intellectual property rights work and what one needs to do with that. So basically, somebody who can really develop and execute Burcon's strategy from here, really demonstrate to others the competitive advantage of Burcon's products to the rest and somebody from a food ingredient background will be able to do that comparatively to what else is out there.We've been encouraged by the response that we've had from potential candidates. When news came out that Johann was leaving, Kincannon & Reed, our search firm was pleasantly surprised with the number of people who follow Burcon and actually then approached them with regard to their candidacy. And we are in the process of analyzing those others that they have come up with. Obviously, they've got a big Rolodex in this sector. There are quite a number of candidates or potential candidates that have come up. They've been in discussions with a number. We've shortlisted the number for further review and the process is going.What is key, however, as far as the Board is concerned, is that we really want the right individual here. We've got the team in place. We'll keep the ship steady while -- when Johann departs and waiting for the new individual to arrive. But really, where we are now, the right individual, we really think will power Burcon forward in a very, very productive manner. So I pass it back to you, Johann. Thanks.

[Johann Franz Tergesen, President & CEO]

Thanks.

[Unknown Analyst]

Does this signal a change from an R&D attitude to a monetization attitude?

[Johann Franz Tergesen, President & CEO]

Yes. In fact...

[Peter Kappel]

Yes.

[Johann Franz Tergesen, President & CEO]

It's funny to say that because I originally came to Burcon's Board over a year ago and said, listen, when we get Merit up and running, this is the logical segue for me to step down and for us to bring in, just as Peter said, a CEO who comes from the specialty food ingredients industry. I'm happy that my skill set, I think, was appropriate, especially for a lot of years where the job was being able to over and over again raise money and keep telling people this is the vision. This is the future we can get to, while also running a scientific and engineering team developing up the technologies to get us where we are. But now that we are where the rubber hits the road and we're actually at commercialization, we will absolutely benefit -- Burcon will absolutely benefit from a CEO that has that kind of operational expertise as well as literally is from this industry.If I didn't already know that, it's been driven even more home that point by the addition of our -- one of our newest Board member, Jeanne McCaherty, with 30-plus years at Cargill. And the amount of expertise that she has been able to bring to our Board, even to Merit's Board, it's just so evident that, that experience really pays off. So yes, no, that's a great observation, and that's absolutely true. I am going to ask Paul, if you can, Paul, there any questions in the e-mail queue?

[Paul Lam]

Johann, I think that's all the time we have for questions today.

[Johann Franz Tergesen, President & CEO]

Okay. All right. Thanks, Paul. Well, with that, what I would like to say is thank you to the continued support of our staff, to our partners, to shareholders. And I look forward to the next call when I'll be joining you on the other side of the line. Thank you very much, everyone.

[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, may, should, could, will 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 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 the 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.sedar.com.Any forward-looking statement or information only speaks as to the date in which it was made. And except as may be required by applicable securities law, 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 our presentation. You may now disconnect.