Arcadia Biosciences Announces Third-Quarter and Nine-Month 2018 Financial Results and Business Highlights
DAVIS, Calif.--(BUSINESS WIRE)--Nov 7, 2018--Arcadia Biosciences, Inc. (Nasdaq: RKDA), an agricultural food ingredient company, today released its financial and business results for the third quarter and first nine months of 2018.
“With the announcement of our collaboration with Ardent Mills, the largest wheat milling company in the U.S., we are positioning ourselves to commercialize our wheat products portfolio,” said Raj Ketkar, president and CEO of Arcadia. “We are planning to launch up to three uniquely different traits in three crops around the globe over the next 12-18 months, driving value for consumers, growers, food manufacturers and Arcadia investors.”
Q3 2018 Operating and Financial HighlightsGoodWheat Harvest Completed. In late Q3, early Q4, Arcadia completed its 2018 GoodWheat Harvest, featuring the scale up of Resistant Starch (RS) GoodWheat and the first field production of its Reduced Gluten variety. These agronomic trials help fine tune the highest possible functionality and performance for GoodWheat growers, and those efforts will continue in the Southern hemisphere during the upcoming planting season. These trials also validated the agronomic performance of the traits in multiple states, which will enable Arcadia to develop specific agronomic packages for each growing region for farmers who will produce commercial quantities of GoodWheat. GoodWheat Test Marketing Initiated. Arcadia initiated market testing with an independent food and beverage innovation team to evaluate GoodWheat formulations in bread, crackers and other baked goods. Arcadia is also conducting consumer research studies through a leading consumer packaged goods market insight company to help refine its GoodWheat commercialization strategy. Building GoodWheat Commercial Team. Arcadia hired Grant Aldridge as head of commercial development to help build out the GoodWheat supply chain. Aldridge has over 25 years of expertise in agronomic breeding, seed production and commercial development. Defending GoodWheat Intellectual Property (IP) . Arcadia initiated legal action against Arista Cereal Technologies to defend the patents supporting Resistant Starch GoodWheat. Arcadia respects and honors the IP of others and vigorously defends its own. While claims are pursued in the U.S., Arcadia is concentrating commercialization efforts for Resistant Starch wheat in regions that are not affected by this dispute and continuing to commercialize and develop the other varieties in its diverse GoodWheat portfolio. Arcadia estimates that its wheat, soy and other nutrition and ingredient products address a total target market approaching $1.5 billion, and the portion of the total target market potentially relevant to the Arista matter represents only approximately 10 percent. Therefore the company does not expect the prosecution and resolution of the Arista matter to have a material impact on its ability to commercialize products or grow its business. HB4 Drought Tolerant Soybeans Advancing Toward Commercialization. In preparation for the commercialization of drought tolerant soybeans, Arcadia’s joint venture with Bioceres, Verdeca, hired a general manager in Q3. Martin Mariani Ventura is a seasoned agriculture executive with over 20 years of experience in marketing and commercialization of new products. The HB4 technology was introduced to farmers at the AAPRESID Congress in Argentina in Q3. During the 2017-18 field trial season in Argentina, HB4 Drought Tolerant soybeans showed improved yields in under drought conditions in elite breeding lines. Extended Shelf Life Tomatoes Achieve Milestone. Arcadia reached a technical milestone in Q3 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 Bioseed expects to launch them in 2019.
Q4 Achievements and Strategic OutlookArcadia and Ardent Mills To Collaborate on Wheat Innovations. Arcadia recently announced a collaboration with Ardent Mills, the leading flour-milling and ingredient company in North America, to develop and commercialize innovative wheat varieties. The first project in this partnership will focus on extending the shelf life of whole wheat flour products to improve taste, reduce waste and positively impact health outcomes by increasing the consumption of whole grains. U.S. Patent Granted for Extended Shelf Life Wheat. Arcadia was recently granted a U.S. patent on its Extended Shelf Life Wheat technology which extends the storage life of whole wheat flour by minimizing oxidation. This new trait was designed to promote whole wheat consumption by improving the shelf life and taste of whole grain wheat products. Argentina Approves HB4 Drought Tolerance Trait Stack With Herbicide Tolerance. Verdeca, a joint venture between Arcadia and Bioceres, recently received approval in Argentina for its HB4 drought tolerant trait stacked with herbicide tolerant traits in soybeans. The approval allows Verdeca to incorporate tolerance to both glyphosate and glufosinate-ammonium into the trait. This expands the market for HB4 technology in South America and will enable increased field testing and seed production in Argentina.
In the third quarter of 2018, total revenues were $370,000 compared to revenues of $589,000 in the third quarter of 2017, a 37 percent decrease. The quarter-over-quarter decrease was driven mainly by a $147,000 reduction in our contract research and government grant revenue due to the completion of government grants during 2017. In the first nine months of 2018, overall revenues decreased by $1.6 million from $2.6 million to $1.0 million, driven again by the decrease in government grant revenue, in addition to a contract research agreement in 2017 that is not present in 2018. 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.
In the third quarter of 2018, operating expenses totaled $4.5 million, up from $4.2 million in the third quarter of 2017, an increase of $265,000 or 6 percent. Cost of product revenues was $124,000 for the quarter, which was $84,000 or 210 percent higher than in the third quarter of 2017, due to a write-down of our GLA inventory in the amount of $46,000 and additional product revenues. Research and development (R&D) spending was $415,000 lower for the quarter, resulting from the termination of license and contract research agreements at the end of 2017. General and administrative (SG&A) costs were $596,000 higher than the amounts in third quarter of the previous year due to higher intellectual property legal fees and additional marketing activity. For the first nine months of 2018, total operating expenses were $13.5 million, compared with $13.9 million during the same period in 2017, a reduction of $377,000 or 3 percent. Cost of product revenues increased by $169,000, or 65 percent, as a result of the GLA inventory write-downs in the second and third quarters of 2018. Year to date R&D spending in 2018 was $717,000 less, or 14 percent, primarily the effect of the license and contract research agreement terminations at the end of 2017. SG&A expenses increased slightly by $171,000 or 2 percent, due largely to higher intellectual property legal fees and bonus expense in the first three quarters of 2018, partially offset by lower salary, benefit and advisory costs.
Net Income (Loss) and Net Income (Loss) Attributable to Common Stockholders
Net income and net income attributable to common stockholders for the third quarter of 2018 was $4.5 million, a 198 percent increase from the $4.5 million loss in the third quarter of 2017. The change from a net loss to a net income position in this quarter as compared to the third quarter of 2017 was due to non-cash income of $8.4 million recognized as the fair value of the common stock warrant liabilities associated with the PIPE financing and Registered Direct Offering decreased from the value at the end of the second quarter. Net loss and net loss attributable to common stockholders for the first nine months of 2018 was $12.8 million, a 1 percent decrease from the $12.7 million loss in the first nine months of 2017. The loss for the first nine months of 2018 included the initial recognition, and subsequent fair value remeasurement, of the liabilities associated with the PIPE financing, the subsequent fair value remeasurement of the liability associated with the Registered Direct Offering, and offering costs expensed for both transactions. The combined impact of this activity during the first nine months of 2018 totaled $558,000 of expense, while the first nine months of 2017 included a loss of $900,000 related to the extinguishment of debt and $747,000 of interest expense.
Conference Call and Webcast
The company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, November 7, to discuss third-quarter and nine-month 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: 6469448
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 the launch of the company’s products; the impact of legal disputes on the company’s business; the sources of future revenue; 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, the company’s ability to enter into favorable commercial relationships; the company’s ability to develop, secure, enforce and defend its intellectual property rights; 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.
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CONTACT: Arcadia Biosciences, Inc.
KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA
INDUSTRY KEYWORD: NATURAL RESOURCES AGRICULTURE RETAIL FOOD/BEVERAGE
SOURCE: Arcadia Biosciences, Inc.
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PUB: 11/07/2018 04:05 PM/DISC: 11/07/2018 04:05 PM