Arcadia Biosciences (RKDA) Announces Third-Quarter 2020 Financial Results and Business Highlights

DAVIS, Calif., Nov. 12, 2020 /PRNewswire/ -- Arcadia Biosciences, Inc.^® (Nasdaq: RKDA), a leader in science-based approaches to enhancing the quality and nutritional value of crops and food ingredients, today released its financial and business results for the third quarter of 2020.

"I am pleased to report Arcadia has achieved a number of fundamental milestones, resulting in a stronger financial wherewithal to achieve our number one goal: driving near-term shareholder value by unlocking the full potential of our commercial-ready products," said Matthew Plavan, Arcadia's president and CEO. "Through a series of strategic transactions we're announcing today with our business partner Bioceres Crop Solutions (BIOX), commercialization of the HB4^® soybean business and distribution of our GoodWheat portfolio of products into South and Central America is now in their capable hands, in exchange for cash, shares of BIOX and ongoing royalty payments to Arcadia for both HB4 soybean and GoodWheat sales."

Continued Plavan, "Bioceres is the perfect commercial steward to advance the HB4 soybean into global markets, and we are delighted to share in the equity and revenue upside of the business while dedicating all of our time, attention and capital resources to the near-term scale-up of our GoodWheat and GoodHemp-branded products.  With the formal U.S. launch of Three Farm Daughters brand products powered by GoodWheat and the completion of our acquisition of Industrial Seed Innovations (ISI) and its popular hemp seed varieties, we have plenty of momentum to capitalize on." 

Recent Operating and Business Highlights

• Strategic Transactions with Bioceres Crop Solutions (BIOX).  Arcadia today is announcing a series of strategic transactions with BIOX, including the sale of its membership interest in Verdeca, a soybean joint venture the two companies formed in 2012. In another transaction, Bioceres acquired license rights to Arcadia's GoodWheat technologies in South and Central America, for which Arcadia will receive future royalties on all sales. Arcadia will also receive $6 million in cash, including reimbursement of transaction-related expenses and fees, with an additional $2 million in cash to be paid upon achievement by Verdeca of specific regulatory and commercial milestones. Arcadia also receives 1.875 million unregistered shares of BIOX common stock and trait royalties of up to $10 million on HB4 soybean sales.
  
  
• Partnership with Three Farm Daughters to Develop and Market GoodWheat Products.  In the third quarter, Arcadia announced a strategic business venture with Three Farm Daughters, a majority female-owned North Dakota-based consumer food company, to develop and market food products using Arcadia's patented non-GMO GoodWheat technology. Since then, the companies have launched multiple Three Farm Daughters-branded food products, including pastas and flour, that leverage the enhanced nutritional profiles of GoodWheat ingredients. These products are now being sold regionally and through the company's e-commerce site: www.threefarmdaughters.com.
  
  
• Acquisition of Innovative Hemp Seed Breeding Company.  Arcadia closed a transaction with Industrial Seed Innovations (ISI), an Oregon-based industrial hemp breeding and seed company, to acquire its commercial and genetic assets, including seed varieties, germplasm library and intellectual property. ISI's popular Rogue and Umpqua seed varieties will become part of Arcadia's portfolio, alongside the company's GoodHemp line of genetically superior hemp seeds, transplants and extracts. The acquisition significantly broadens and accelerates commercialization of Arcadia's hemp-related breeding platform and establishes a breeding research and development facility in the Pacific Northwest, a key hemp production area.
  
  
• Collaboration with Corner Foods to Bring GoodWheat to China and Israel. Arcadia's collaboration with Corner Foods, an affiliate of Corner Capital Group, brings Arcadia's GoodWheat portfolio of non-GMO specialty wheat ingredients to China and expanding in the future to Israel. The partnership will introduce GoodWheat products directly to consumers in China via popular e-commerce site TMall and cooking and lifestyle network Tastemade China. Together, these digital platforms reach an estimated 8 million consumers in China per month.
  
  
• Collaboration with GoodMills to Sell GoodWheat in Europe. Through a collaboration with GoodMills Innovation, an affiliate of GoodMills Group, Europe's largest milling company, Arcadia plans to commercialize GoodWheat varieties across Europe, introducing uniquely healthy products for the retail, consumer and food service sectors beginning in 2021. GoodMills Innovation is recognized as one of the world's leading innovators in grain-based ingredients that are both highly functional and nutritional.
  
  
• Global Scale-up Underway for HB4 Drought Resistant, Herbicide Tolerant Soybeans. Through its Verdeca joint venture with Bioceres Crop Solutions, Arcadia successfully harvested foundation seed to enable up to 90,000 hectares in preparation for regulatory approval from China. Verdeca is also increasing breeding and new market development activities to access incremental geographies, including Brazil and the U.S.
  
  
• Expansion of Intellectual Property Protection for GoodWheat Portfolio. Arcadia strengthened its intellectual property and GoodWheat technology portfolio with five additional U.S. patents in Q2. The U.S. Patent and Trademark Office awarded the company two patents for extending the shelf life of whole wheat by minimizing hydrolytic and oxidative rancidity. The company also received notices of allowance for three additional patents extending earlier claims surrounding the extended shelf life of wheat and reduced gluten grains. The new patents bring the total number of patents in Arcadia's GoodWheat portfolio of non-GMO wheat varieties to 23.
  
  
• Foundational Patents for Non-GMO Herbicide Tolerant Wheat. The Australian Patent Office granted patents to Arcadia covering herbicide tolerance in wheat, and the U.S. Patent and Trademark Office issued a notice of allowance for the same technology, with patents pending in other territories. Arcadia's herbicide tolerant wheat technology can be an important tool in the hybrid breeding toolkit. This technology will serve as the foundation for future innovation and could open the door to development of a highly efficient hybrid wheat production system, which would transform the 200 million hectare global wheat industry.
  
  
• Warrant Exercise Transaction Generated $2.6M in Gross Proceeds. Arcadia strengthened its balance sheet through a warrant exercise transaction in the third quarter, providing additional cash resources to persevere through the headwinds of the COVID-19 pandemic.

Revenues
In the third quarter of 2020, revenues were $314,000, compared to revenues of $392,000 in the third quarter of 2019 and for the nine months ended September 30, 2020, revenues were $904,000, compared to $753,000 during the same period in 2019. The quarter-over-quarter revenue decrease was driven by a decrease in contract research and government grants revenue, partially offset by an increase in GLA product sales and GoodWheat royalty revenues. The nine months period increase was driven primarily by a milestone achievement by a licensee in the first quarter of 2020, as well as the increase in GLA product sales and GoodWheat royalty revenues.

Operating Expenses
In the third quarter of 2020, operating expenses were $7.9 million, compared to $6.6 million in the third quarter of 2019 and for the nine months ended September 30, 2020, operating expenses were $21.2 million, compared to $16.1 million during the same period in 2019.

Research and development (R&D) costs decreased by $169,000 and increased by $612,000 for the third quarter and nine months ended September 30, 2020, respectively. The third quarter decrease was the result of lower soy related costs somewhat offset by higher hemp-related research costs. The increase for the nine months ended September 30, 2020 was primarily driven by higher employee expenses and hemp-related research costs.

General and administrative (SG&A) costs decreased by $185,000 and increased by $1.3 million for the third quarter and nine months ended September 30, 2020, respectively. The third quarter decrease was mainly comprised of lower employee expenses partially offset by higher consulting fees. The increase for the nine months ended September 30, 2020 was primarily the result of higher consulting fees, consultants' stock compensation expenses and insurance premiums.

Cost of product revenues increased by $1.7 million and $3.1 million for the third quarter and nine months ended September 30, 2020, respectively. The third quarter increase was due to a $1.3 million inventory write-off for Arcadia's Archipelago joint venture in response to a recently issued regulatory ruling. The increase for the nine months ended September 30, 2020 was comprised of the third quarter inventory write-off, in addition to the $1.6 million write-down of GoodHemp inventory that did not meet Arcadia's required minimum quality specifications during the first half of 2020.

Net Loss Attributable to Common Stockholders
Net loss attributable to common shareholders for the third quarter of 2020 was $6.4 million, or ($0.60) per share, a $7.8 million decrease from the $14.2 million, or $2.04 per share, net loss recognized in the third quarter of 2019. The quarter-over-quarter decrease was largely due to the $7.8 million non-cash expense recognized in the third quarter of 2019 as a result of a significant increase in the fair value of common stock warrant liabilities compared to $1.1 million of non-cash income recognized in the third quarter of 2020 associated with a decrease in these liabilities.

Net loss attributable to common shareholders for the nine months ended September 30, 2020 was $13.6 million, or ($1.42) per share, a $9.0 million decrease from the $22.6 million, or ($4.03) per share, net loss recognized for the nine months ended September 30, 2019.

Conference Call and Webcast
The company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, November 12, to discuss third-quarter financial results, company operations and key strategic achievements.

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

A live webcast of the conference call will be available on the "Investors" section of 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) is a leader in science-based approaches to enhancing the quality and nutritional value of crops and food ingredients. The company'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 GoodHemp™ seed catalog delivers genetically superior hemp seeds and clones, applying the company's proprietary crop innovation technology, ArcaTech™, to an emerging crop. Arcadia'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 the collaboration with Corner Foods, the partnership with Three Farm Daughters, the collaboration with GoodMills Innovation, revenue in 2020, financial performance in 2021, the acquisition of assets from Industrial Seed Innovations and the growth of the company. 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 price and demand for the company's wheat and hemp related products are lower than expected; the company's and its partners' and affiliates' ability to develop and sell commercial products incorporating its traits, and complete the regulatory review process for such products; the company's and it partners' ability to fulfill current and follow-on purchase commitments; the company's compliance with laws and regulations that impact the company's business, and changes to such laws and regulations; the growth of the global wheat and hemp markets; the successful integration of the company's business with the businesses of any future partners; the potential impact of COVID-19 on the company's business; the successful closing of the acquisition of Industrial Seed Innovations; 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" and additional information set forth in its Form 10-K for the year ended December 31, 2019, and other filings. These forward-looking statements speak only as of the date hereof, and Arcadia Biosciences, Inc. undertakes no duty to update these forward-looking statements.

LinkedIn: Arcadia Biosciences 
Twitter: @ArcadiaAg

SOURCE Arcadia Biosciences, Inc.