Stonegate Capital Partners has updated coverage on Burcon Nutrascience Corporation, highlighting the company's significant progress in commercializing its plant protein portfolio during the second quarter of fiscal year 2026. The company achieved first commercial production and sales of Puratein® C canola protein and first commercial production of FavaPro™ fava protein at its Galesburg facility, while continuing to scale production of Peazazz® C pea protein. These developments represent critical milestones in Burcon's transition from development to commercial operations.
The company's operational achievements are translating into tangible market traction, with more than $500,000 in commercial sales orders received subsequent to quarter-end and the first commercial sale of FavaPro recorded. This growing demand signals that customers are completing evaluations and moving to purchase orders, validating Burcon's product offerings in the competitive plant protein market. The company's operational flexibility positions it to meet evolving customer needs quickly while maintaining consistent quality standards across its protein portfolio.
Commercial engagement continues to broaden significantly, with over 200 active projects progressing through late-stage evaluations across diverse end-market applications in food, beverage, and lifestyle nutrition. The company's second quarter execution included record production activity and successful trade-show outreach, reinforcing momentum to convert pipeline activity into recurring orders and expand shipments as production scales. This expanding customer engagement portfolio demonstrates the market's growing acceptance of Burcon's specialized plant protein technologies.
Financial performance showed substantial improvement, with second quarter revenues of $0.36 million representing a 783% increase over the prior year period, driven by initial protein sales and contract manufacturing. Year-to-date revenue reached approximately $0.7 million, though the company reported a net loss of $3.59 million, or $0.28 per share, reflecting $2.1 million in cost of goods sold that included startup and commissioning costs. Operating focus has clearly shifted toward commercialization, with research and development expenses down 67% and general and administrative expenses down 17% respectively from the prior year period.
The company strengthened its financial position through strategic financing initiatives, announcing a non-brokered private placement of up to $4.0 million in unsecured convertible debentures bearing 15% annual interest with a 48-month term. The financing includes a conversion price of $2.27 per share and a conditional accelerated prepayment or conversion feature if the share price trades above $4.54 for 14 consecutive trading days. Insiders committed to a minimum of $2.0 million, demonstrating confidence in the company's direction. Additionally, the company executed a $700,000 short-term unsecured loan and extended the maturity of the second tranche of its senior secured loan to December 2026.
Proceeds from these financing activities are intended for inventory buildup, labor expansion, production capability enhancement, planning future infrastructure, general corporate purposes, and repayment of the bridge loan. The company ended the second quarter with $1.8 million in cash and a working capital deficit of $8.2 million, though subsequent actions have improved the financial position. Management reaffirmed its calendar year 2025 revenue target of $1-3 million and its calendar year 2026 outlook for $10 million plus revenue with a path to positive cash flow.
Stonegate Capital Partners' valuation analysis using a discounted cash flow model with discount rates between 10.50% and 11.00% arrives at a valuation range of $20.29 to $25.66 with a midpoint of $22.61. This valuation framework accounts for the company's size and relative illiquidity while recognizing the significant growth potential as commercial operations scale. The progression from development stage to commercial production represents a fundamental shift in Burcon's business model, with the potential to capture meaningful market share in the rapidly expanding plant protein industry. More information about Stonegate Capital Partners is available at https://www.stonegateinc.com.
