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 Highlights
- GoodWheat 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 Outlook
- Arcadia 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.
Arcadia Biosciences, Inc.
Financial Snapshot
(Unaudited)
($ in thousands)
Three months ended Sept 30 Nine months
ended Sept 30 2018 2017
Favorable/ (Unfavorable)
2018 2017
Favorable/(Unfavorable)
$ % $ % Total Revenues 370 589
(219 ) (37 %) 1,020 2,598 (1,578 ) (61 %)
Total Operating
Expenses 4,469 4,204 (265 ) (6 %) 13,536 13,913 377 3 %
Loss
From Operations (4,099 ) (3,615 ) (484 ) (13 %) (12,516 )
(11,315 ) (1,201 ) (11 %)
Net Income (Loss) and Net Income
(Loss) Attributable to Common Stockholders 4,450 (4,525 ) 8,975
198 % (12,834 ) (12,747 ) (87 ) (1 )%
Revenues
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.
Operating Expenses
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: +1-844-243-4690International Dial-In:
+1-225-283-0138Passcode: 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.
Arcadia Biosciences, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands, except share data)
September 30, 2018
December 31, 2017
Assets Current assets: Cash and cash equivalents $ 6,669 $
9,125 Short-term investments 17,931 3,898 Accounts receivable 193
1,231 Unbilled revenue 168 4 Inventories — current 354 229 Prepaid
expenses and other current assets 888 560 Total
current assets 26,203 15,047 Property and equipment, net 265 299
Inventories — noncurrent 742 1,168 Other noncurrent assets 7
56 Total assets $ 27,217 $ 16,570
Liabilities and
stockholders’ equity Current liabilities: Accounts payable and
accrued expenses $ 2,303 $ 2,496 Amounts due to related parties 18
29 Unearned revenue — current 316 1,000 Total current
liabilities 2,637 3,525 Unearned revenue — noncurrent — 2,038
Common stock warrant liabilities 8,658 — Other noncurrent
liabilities 3,000 3,000 Total liabilities
14,295 8,563 Stockholders’ equity: Common stock, $0.001 par
value—150,000,000 shares authorized as of September 30, 2018 and
December 31, 2017; 4,774,919 and 2,134,154 shares issued and
outstanding as of September 30, 2018 and December 31, 2017,
respectively 45 42 Additional paid-in capital 190,599 175,223
Accumulated deficit (177,720 ) (167,257 ) Accumulated other
comprehensive loss (2 ) (1 ) Total stockholders’
equity 12,922 8,007 Total liabilities and
stockholders’ equity $ 27,217 $ 16,570
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of
Operations and Comprehensive Income (Loss)
(Unaudited)
(In thousands, except share and per share
data)
Three Months Ended September 30, Nine
Months Ended September 30, 2018
2017 2018 2017 Revenues:
Product $ 144 $ 82 $ 393 $ 482 License 10 144 100 353 Contract
research and government grants 216 363 527
1,763 Total revenues 370 589 1,020 2,598 Operating expenses:
Cost of product revenues 124 40 431 262 Research and development
1,334 1,749 4,524 5,241 Selling, general and administrative
3,011 2,415 8,581 8,410 Total operating
expenses 4,469 4,204 13,536 13,913 Loss
from operations (4,099 ) (3,615 ) (12,516 ) (11,315 ) Interest
expense — (43 ) — (747 ) Other income, net 134 46 266 246 Initial
loss on common stock warrant and common stock adjustment feature
liability — — (4,000 ) — Change in fair value of common stock
warrant liabilities and
common stock adjustment feature
liability
8,421 — 5,986 — Offering costs (1 ) — (2,544 ) — Loss on
extinguishing of debt — (900 ) — (900 )
Net income (loss) before income taxes 4,455 (4,512 ) (12,808 )
(12,716 ) Income tax provision (5 ) (13 ) (26
) (31 ) Net income (loss) $ 4,450 $ (4,525 ) $ (12,834 ) $
(12,747 ) Net income (loss) per share attributable to common
stockholders: Basic and diluted $ 0.93 $ (2.12 ) $ (3.74 ) $ (5.89
) Weighted-average number of shares used in per share calculations:
Basic and diluted 4,774,732 2,133,846
3,427,799 2,163,604 Other comprehensive income (loss), net
of tax Unrealized gains (losses) on available-for-sale
securities
(2 ) 8 (1 ) 14 Other comprehensive
income (loss) (2 ) 8 (1 ) 14
Comprehensive income (loss) attributable to common stockholders $
4,448 $ (4,517 ) $ (12,835 ) $ (12,733 )
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 1,122 — 6 — — 6 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
— — (897 ) — — (897 ) Issuance of placement agent warrants related
to June Offering — — 427 — — 427 Stock-based compensation — — 998 —
— 998 Issuance of shares related to reverse stock split 1,311 — — —
— — Other comprehensive income — — — — (1 ) (1 ) Net loss —
— — (12,834 ) — (12,834 )
Balance at September 30, 2018 4,774,919 $ 45 $ 190,599 $
(177,720 ) $ (2 ) $ 12,922
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended September 30, 2018
2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net
loss $ (12,834 ) $ (12,747 ) 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 liability (5,986 ) — Offering costs 2,544
— Depreciation and amortization 123 215 Gain on disposal of
equipment (3 ) (3 ) Net amortization of investment premium (115 )
(82 ) Stock-based compensation 998 1,177 Loss on sale of
investments — 2 Accretion of debt discount — 98 Loss on
extinguishment of debt — 900 Changes in operating assets and
liabilities: Accounts receivable 1,038 276 Unbilled revenue (164 )
123 Inventories 301 164 Prepaid expenses and other current assets
(334 ) (222 ) Other noncurrent assets — (245 ) Accounts payable and
accrued expenses (142 ) (496 ) Amounts due to related parties (11 )
1 Unearned revenue (351 ) (443 ) Net cash used in
operating activities (10,936 ) (11,282 ) CASH FLOWS
FROM INVESTING ACTIVITIES: Proceeds from sale of property and
equipment 10 4 Purchases of property and equipment (89 ) (77 )
Purchases of investments (22,871 ) (19,405 ) Proceeds from sales
and maturities of investments 8,950 57,778 Net cash
(used in) provided by investing activities (14,000 )
38,300 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 (1,308 )
— Proceeds from issuance of common stock and warrants from June
Offering 14,000 — Payments of offering costs relating to June
Offering (1,181 ) — Payment of debt extinguishment costs — (1,125 )
Proceeds from exercise of stock options and ESPP purchases 969 24
Payment on notes payable — (25,000 ) Net cash
provided by (used in) financing activities 22,480
(26,101 ) Net (decrease) increase in cash and cash equivalents
(2,456 ) 917 Cash and cash equivalents — beginning of period
9,125 2,013 Cash and cash equivalents — end of period $
6,669 $ 2,930 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ — $ 746 Cash paid for income taxes $ 24 $
2 NONCASH INVESTING AND FINANCING ACTIVITIES: Common stock warrants
issued to placement agent and included in offering costs related to
Purchase Agreement $ 526 $ — Common stock warrants issued to
placement agent and included in offering costs related to June
Offering $ 239 $ — Purchases of property and equipment included in
accounts payable and accrued expenses $ — $ 2 Reclassification of
common stock adjustment feature liability balance to equity $ 8,378
$ — Exchange of membership interest in unconsolidated entity for
common stock $ — $ 2
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Arcadia Biosciences, Inc.Jeff
Bergaujeff.bergau@arcadiabio.com+1-312-217-0419
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