Market Overview

Arcadia Biosciences Announces Second-Quarter and First-Half 2018 Financial Results and Business Highlights

Share:

Arcadia
Biosciences, Inc.
(NASDAQ:RKDA), an agricultural food ingredient
company, today released its financial and business results for the
second quarter and first half of 2018.

"Arcadia's focus in the second quarter was on building the critical
commercial capabilities needed to launch our GoodWheatTM
portfolio of added-value, non-GM wheat ingredients," said Raj Ketkar.
"We added Reduced Gluten wheat, and we are expanding our grower base to
prepare for the commercial launch of our Resistant Starch wheat in 2019."

"Data from our HB4 drought tolerant soybeans in Argentina showed
positive results in the 2017-2018 season trials for adapted breeding
lines, and just recently our non-GM Extended Shelf Life tomatoes
achieved a technical milestone with our partner in India," he added. "We
anticipate that three products – GoodWheat, HB4 drought tolerant
soybeans and Extended Shelf Life tomatoes – will be launched
commercially in the next 12 to 18 months."

Q2 2018 Operating and Financial Highlights

  • Completed $14M Financing to Support
    Commercialization Plans.
    Arcadia closed a registered direct
    offering for $14 million in Q2 to support commercialization activities
    for its portfolio of health and nutrition products.
  • Collaboration with Farmers Business Network
    (FBN) to expand GoodWheat production.
    Arcadia formed a
    partnership with FBN to expand the grower base for its GoodWheat
    products and scale production to meet the anticipated demand following
    the commercial launch of Resistant Starch (RS) GoodWheat in 2019. The
    FBN farmer member base, which represents over 24 million acres in the
    U.S. and Canada, will have access to Arcadia's specialty,
    identity-preserved GoodWheat, enabling them to earn a premium over
    commodity wheat and improve the economics of wheat production.
  • Reduced Gluten Wheat added to GoodWheat Branded
    Ingredients Platform.
    Arcadia expanded its GoodWheat portfolio
    with Reduced Gluten (RG) wheat and plans to have lines available for
    commercial testing by the end of the year. Arcadia's RG wheat product
    is a non-GM, patent-pending, identity-preserved specialty wheat in
    which allergenic glutens have been reduced by 75 percent while the
    levels of glutens important for baking are not changed. With the
    growing number of consumers making a conscious effort to reduce gluten
    in their diets, Arcadia believes its RG wheat represents a rich and
    untapped opportunity for specialty products and unique brand
    extensions.
  • New Directors Bring Consumer Food Industry and
    Financial Expertise.
    Albert D. Bolles, Ph.D., former executive
    vice president, chief technology and operations officer of ConAgra
    Foods, joined the Arcadia board in Q2. Bolles is a prominent consumer
    food industry executive and will be instrumental in helping Arcadia
    build the industry relationships and commercial capabilities needed to
    bring its GoodWheat products to market. Lilian Shackelford Murray also
    joined the board in Q2. Murray has more than 33 years of financial and
    management experience as an advisor, investment banker and managing
    director in the biotech and healthcare industries. She was an early
    investor in the TILLING technology that underpins Arcadia's non-GM
    health and nutrition portfolio, and previously served as an observer
    to the board from 2007 to 2015.
  • Stacked Traits in Rice Increase Yields.
    Arcadia announced field trial results for its triple-stack technology,
    featuring nitrogen use efficiency (NUE), water use efficiency (WUE)
    and salinity tolerance (ST) in rice. The trait demonstrated
    double-digit yield increases in two crop seasons of field trials.

Q3 Achievements and Strategic Outlook

  • HB4 Drought Tolerant Soybeans Improve Yields in
    Field Trials.
    During the 2017-18 field trial season in
    Argentina, HB4 Drought Tolerant soybeans showed improved yields in
    under drought conditions in elite breeding lines. More than 50 million
    of the world's soybean hectares are grown in Argentina and Brazil, a
    region that has experienced significant drought conditions in recent
    years. Verdeca estimates that 30 percent of these hectares are the
    addressable market for the HB4 trait. In preparation for the
    commercialization of drought tolerant soybeans, Arcadia's joint
    venture with Bioceres, Verdeca, hired Martin Mariani Ventura, a
    seasoned agriculture executive with over 20 years of experience in
    marketing and commercialization of new products, as General Manager.
    The technology is being introduced to farmers at the AAPRESID Congress
    in Argentina this week.
  • Extended Shelf Life Tomatoes Achieve Milestone.
    Arcadia recently reached a technical milestone with partner Shriram
    Bioseed in India for Extended Shelf Life tomatoes. This non-GM trait
    is bred to fully ripen on the vine yet remain durable enough to
    survive the packing and shipping process, reducing post harvest damage
    and costly waste. Field trial results over multiple seasons in
    multiple varieties showed significant improvements in field yield,
    firmness, shelf life and color development. These new hybrids are in
    the pre-commercial, wide area testing phase and commercial launch is
    anticipated in 2019.
  • Advancing GoodWheat Commercialization Plan.
    Arcadia's focus in Q3 will be on building and expanding partnerships
    throughout the wheat supply chain with growers, seed companies,
    millers and food companies. The first product in the GoodWheat
    portfolio, Resistant Starch wheat, is anticipated to be commercially
    available in 2019, so these partnerships will be key to launching
    innovative wheat ingredients and forming the foundation of a
    long-term, sustainable business.
 

Arcadia Biosciences, Inc.

Financial Snapshot

(Unaudited)

($ in thousands)

   
Three months ended June 30 Six months ended June 30
2018     2017    

Favorable/
(Unfavorable)

2018     2017     Favorable/

(Unfavorable)

$   % $   %
Total Revenues 436 991 (555 ) (56 %) 650 2,009 (1,359 ) (68 %)
Total Operating Expenses 5,014 4,728 (286 ) (6 %) 9,067 9,709 642 7 %
Loss From Operations (4,578 ) (3,737 ) (841 ) (23 %) (8,417 ) (7,700 ) (717 ) (9 %)
Net Loss and Net Loss Attributable to Common Stockholders (6,669 ) (4,006 ) (2,663 ) (66 %) (17,284 ) (8,222 ) (9,062 ) (110 %)
 

Revenues

In the second quarter of 2018, total revenues were $436,000 compared to
revenues of $991,000 in the second quarter of 2017, a 56 percent
decrease. The quarter-over-quarter decrease was driven mainly by a
$535,000 reduction in our contract research and government grant revenue
due to a short-term research contract in the second quarter of 2017 that
was not present in 2018, as well as the completion of government grants
during 2017. In the first half of 2018, overall revenues decreased by
$1.4 million from $2.0 million to $650,000, driven again by the decrease
in contract research and government grant revenue. Over the next 12 to
36 months, as the company transitions to its new focus on health and
nutrition quality products, Arcadia expects revenue from government
grants, research contracts and license revenues to be replaced by
product and trait revenues.

Operating Expenses

In the second quarter of 2018, operating expenses totaled $5.0 million,
up slightly from $4.7 million in the second quarter of 2017, an increase
of $286,000 or 6 percent. Cost of product revenues was $155,000, or 134
percent, higher in the second quarter of 2018 than in the second quarter
of 2017 due to a write-down of our GLA inventory in the amount of
$177,000. Research and development (R&D) spending was $125,000 higher,
mainly in support of Verdeca, while general and administrative (SG&A)
costs were even with the same quarter in 2017. For the first half of
2018, total operating expenses were $9.1 million, compared with $9.7
million during the same period in 2017, a reduction of $642,000 or 7
percent. Cost of product revenues increased by $85,000, or 38 percent,
as a result of the GLA inventory write-down. R&D spending was $302,000
or 9 percent less, primarily the effect of the termination of a license
and contract research agreement at the end of 2017, while SG&A expenses
decreased by $425,000 or 7 percent, due largely to lower salary and
benefit, as well as lower advisory, costs.

Net Loss and Net Loss Attributable to Common Stockholders

Net loss and net loss attributable to common stockholders for the second
quarter of 2018 was $6.7 million, an 66 percent increase from the $4.0
million loss in the second quarter of 2017. Net loss and net loss
attributable to common stockholders for the first half of 2018 was $17.3
million, compared to $8.2 million for the first half of 2017. The
increase for both periods was driven primarily by the initial
recognition, and subsequent fair value remeasurement, of the liabilities
associated with the PIPE financing, as well as offering costs associated
with both the PIPE and the registered direct offering. These amounts
totaled $2.2 million and $9.0 million for the second quarter and first
half of 2018, respectively.

Conference Call and Webcast

The company has scheduled a conference call for 4:30 p.m. Eastern (1:30
p.m. Pacific) today, August 8, to discuss second-quarter and first-half
financial results and key strategic achievements.

Interested participants can join the conference call using the following
numbers:

U.S. Toll-Free Dial-In:   +1-844-243-4690
International Dial-In: +1-225-283-0138
Passcode: 7493459

A live webcast of the conference call will be available on the
"Investors" section of the Arcadia's website at www.arcadiabio.com.
Following completion of the call, a recorded replay will be available on
the company's investor website.

About Arcadia Biosciences, Inc.

Arcadia Biosciences (NASDAQ:RKDA) develops and markets high-value food
ingredients and nutritional oils that help meet consumer demand for a
healthier diet. Arcadia's GoodWheat™ branded ingredients deliver health
benefits to consumers and enable consumer packaged goods companies to
differentiate their brands in the marketplace. The company's
agricultural traits are being developed to enable farmers around the
world to be more productive and minimize the impact of agriculture on
the environment. For more information, visit www.arcadiabio.com.

Safe Harbor Statement

"Safe Harbor" statement under the Private Securities Litigation Reform
Act of 1995: This press release and the accompanying conference call
contain forward-looking statements about the company and its products,
including statements relating to components of the company's long-term
financial success; the company's traits, commercial products, and
collaborations; and the company's ability to manage the regulatory
processes for its traits and commercial products. Forward-looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially, and reported results should not be
considered as an indication of future performance. These risks and
uncertainties include, but are not limited to: the company's and its
partners' ability to develop commercial products incorporating its
traits and to complete the regulatory review process for such products;
the company's compliance with laws and regulations that impact the
company's business, and changes to such laws and regulations; and the
company's future capital requirements and ability to satisfy its capital
needs. Further information regarding these and other factors that could
affect the company's financial results is included in filings the
company makes with the Securities and Exchange Commission from time to
time, including the section entitled "Risk Factors" in the company's
Annual Report on Form 10-K for the year ended December 31, 2017. These
documents are on the SEC Filings section of the "Investors" section of
the company's website at www.arcadiabio.com.
All information provided in this release and in the attachments is as of
the date hereof, and Arcadia Biosciences, Inc. undertakes no duty to
update this information.

Arcadia Biosciences, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

   
June 30,

2018

December 31,
2017

Assets
Current assets:
Cash and cash equivalents $ 9,667 $ 9,125
Short-term investments 18,931 3,898
Accounts receivable 180 1,231
Unbilled revenue 106 4
Inventories — current 282 229
Prepaid expenses and other current assets   800   560
Total current assets 29,966 15,047
Property and equipment, net 270 299
Inventories — noncurrent 889 1,168
Other noncurrent assets   7   56
Total assets $ 31,132 $ 16,570
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 2,441 $ 2,496
Amounts due to related parties 12 29
Unearned revenue — current   470   1,000
Total current liabilities 2,923 3,525
Unearned revenue — noncurrent 2,038
Common stock warrant liabilities 17,079
Other noncurrent liabilities   3,000   3,000
Total liabilities   23,002   8,563
Stockholders' equity:
Common stock, $0.001 par value—150,000,000 shares authorized as of
June 30, 2018 and December 31, 2017; 4,774,364 and 2,134,154 shares
issued and outstanding as of June 30, 2018 and December 31, 2017
45 42
Additional paid-in capital 190,255 175,223
Accumulated deficit (182,170 ) (167,257 )
Accumulated other comprehensive loss     (1 )
Total stockholders' equity   8,130   8,007
Total liabilities and stockholders' equity $ 31,132 $ 16,570
 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Operations and
Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)

   

Three Months Ended
June 30,

Six Months Ended

June 30,

  2018     2017   2018     2017
Revenues:
Product $ 188 $ 195 $ 249 $ 400
License 90 103 90 209
Contract research and government grants   158   693   311   1,400
Total revenues 436 991 650 2,009
Operating expenses:
Cost of product revenues 271 116 307 222
Research and development 1,794 1,669 3,190 3,492
Selling, general and administrative   2,949   2,943   5,570   5,995
Total operating expenses   5,014   4,728   9,067   9,709
Loss from operations (4,578 ) (3,737 ) (8,417 ) (7,700 )
Interest expense (365 ) (704 )
Other income, net 94 104 132 200
Initial loss on common stock warrant and common stock adjustment
feature liabilities
(4,000 )
Change in fair value of common stock warrant liabilities and common
stock adjustment feature liability
(535 ) (2,435 )
Offering costs   (1,639 )     (2,543 )  
Net loss before income taxes (6,658 ) (3,998 ) (17,263 ) (8,204 )
Income tax provision   (11 )   (8 )   (21 )   (18 )
Net loss $ (6,669 ) $ (4,006 ) $ (17,284 ) $ (8,222 )
Net loss per share attributable to common stockholders:
Basic and diluted $ (2.02 ) $ (1.88 ) $ (6.29 ) $ (3.77 )
Weighted-average number of shares used in per share calculations:
Basic and diluted   3,307,667   2,133,241   2,746,931   2,178,647
Other comprehensive income, net of tax
Unrealized gains on available-for-sale securities     7   1   6
Other comprehensive income     7   1   6
Comprehensive loss attributable to common stockholders $ (6,669 ) $ (3,999 ) $ (17,283 ) $ (8,216 )
 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

(In thousands, except share data)

       
Common Stock Additional

Paid-In

Capital

Accumulated

Deficit

Accumulated

Other

Comprehensive

(Loss)

Total

Stockholders'

Equity

Shares   Amount
Balance at January 1, 2017   2,224,384 $ 44 $ 173,723 $ (151,550 ) $ (19 ) $ 22,198
Issuance of shares related to employee stock purchase plan 1,964 24 24
Stock-based compensation 1,474 1,474
Other comprehensive income 18 18
Exchange of membership interest in unconsolidated entity for common
stock
(92,194 ) (2 ) 2
Net loss         (15,707 )     (15,707 )
Balance at December 31, 2017 2,134,153 $ 42 $ 175,223 $ (167,257 ) $ (1 ) $ 8,007
Impact of adoption of Topic 606 (Note 5) 2,371 2,371
Issuance of shares related to employee stock option exercises 44,354 963 963
Issuance of shares related to employee stock purchase plan 567 3 3
Issuance of shares related to Purchase Agreement 1,201,634 1 (1 )
Issuance of placement agent warrants related to Purchase Agreement 526 526
Reclassification of common stock adjustment feature liability balance 8,378 8,378
Issuance of shares related to June Offering 1,392,345 2 4,976 4,978
Offering costs related to June Offering (896 ) (896 )
Issuance of placement agent warrants related to June Offering 427 427
Stock-based compensation 656 656
Issuance of shares related to reverse stock split 1,311
Other comprehensive income 1 1
Net loss         (17,284 )     (17,284 )
Balance at June 30, 2018   4,774,364 $ 45 $ 190,255 $ (182,170 ) $ $ 8,130
 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 
Six Months Ended June 30,
  2018     2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (17,284 ) $ (8,222 )
Adjustments to reconcile net loss to cash used in operating
activities:
Initial loss on common stock warrant and common stock adjustment
feature liabilities
4,000
Change in fair value of common stock warrant liabilities and common
stock adjustment feature liabilities
2,435
Offering costs 2,543
Depreciation and amortization 98 146
Gain on disposal of equipment (3 ) (3 )
Net amortization of investment premium (27 ) (65 )
Stock-based compensation 656 760
Accretion of debt discount 99
Changes in operating assets and liabilities:
Accounts receivable 1,051 (83 )
Unbilled revenue (102 ) 43
Inventories 226 140
Prepaid expenses and other current assets (245 ) (603 )
Other noncurrent assets (327 )
Accounts payable and accrued expenses (52 ) (525 )
Amounts due to related parties (17 ) (3 )
Unearned revenue   (197 )   (274 )
Net cash used in operating activities   (6,918 )   (8,917 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 9 4
Purchases of property and equipment (68 ) (58 )
Purchases of investments (18,908 ) (19,405 )
Proceeds from sales and maturities of investments   3,900   39,785
Net cash (used in) provided by investing activities   (15,067 )   20,326
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock and warrants from Purchase
Agreement
10,000
Payments of offering costs relating to Purchase Agreement (1,305 )
Proceeds from issuance of common stock and warrants from June
Offering
14,000
Payments of offering costs relating to June Offering (1,134 )
Proceeds from exercise of stock options and ESPP purchases   966   16
Net cash provided by financing activities   22,527   16
Net increase in cash and cash equivalents 542 11,425
Cash and cash equivalents — beginning of period   9,125   2,013
Cash and cash equivalents — end of period $ 9,667 $ 13,438
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ $ 599
Cash paid for income taxes $ 24 $ 1
NONCASH INVESTING AND FINANCING ACTIVITIES:
Proceeds from sale of fixed assets included in prepaid expenses and
other current assets at end of period
$ 1 $
Offering costs in accounts payable and accrued expenses at end of
period
$ 46 $
Common stock warrants issued to placement agent and included in
offering costs relating to Purchase Agreement
$ 526 $
Common stock warrants issued to placement agent and included in
offering costs relating to June Offering
$ 239 $
Reclassification of common stock adjustment feature liability balance $ 8,378 $
Exchange of membership interest in unconsolidated entity for common
stock
$ $ 2

View Comments and Join the Discussion!