Full Press Release Details
Arcadia Biosciences Announces Second-Quarter and First-Half 2020 Financial Results and Business Highlights
DAVIS, Calif. (August 13, 2020) - 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 second quarter and first half of 2020.
"Amidst an incredibly challenging economic landscape, I am pleased to report Arcadia has achieved a number of key milestones across each of the crop product areas in which we innovate: hemp, wheat and soy," said Matthew Plavan, president and CEO of Arcadia Biosciences. "In light of the persistent overhang of this pandemic on the markets, and the impact on our ability to forecast our business with reliable precision, we believe it prudent to provide more generalized versus specific revenue guidance. Notwithstanding these risks, we believe our recently announced multiple GoodWheatTM distribution arrangements, in both B2B and B2C channels, and the conversion of our $3.7M GoodHempTM seed purchase backlog to grower seed shipments during the balance of the year, will drive a strong revenue finish for 2020.
"Furthermore, against the buffeting of COVID-19 headwinds, we strengthened our cash position by $9 million during the first half of the year through warrant exchanges, which are less dilutive to shareholders than traditional financings that feature warrant coverage," continued Plavan. "We believe the probability that these headwinds will largely dissipate by 2021 is reasonably positive. If so, we see the fundamentals of our business as ever-strengthening, and that our GoodWheat, GoodHemp, Hawaiian CBD and HB4 soybean businesses unrestrained portend for a very positive financial performance in 2021, and the prospect of reaching quarterly profitability by year's end remains realistic."
Recent Operating and Business Highlights
Arcadia Biosciences, Inc.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2020 | 2019 | Favorable / (Unfavorable) | 2020 | 2019 | Favorable / (Unfavorable) | |||||||||||||||||||||||||||
| $ | % | $ | % | |||||||||||||||||||||||||||||
| Total revenues | 281 | 203 | 78 | 38 | % | 590 | 361 | 229 | 63 | % | ||||||||||||||||||||||
| Total operating expenses | 7,157 | 5,185 | (1,972 | ) | (38 | )% | 13,256 | 9,561 | (3,695 | ) | (39 | )% | ||||||||||||||||||||
| Loss from operations | (6,876 | ) | (4,982 | ) | (1,894 | ) | (38 | )% | (12,666 | ) | (9,200 | ) | (3,466 | ) | (38 | )% | ||||||||||||||||
| Net income (loss) attributable to common stockholders | (9,689 | ) | 4,237 | (13,926 | ) | (329 | )% | (7,164 | ) | (8,375 | ) | 1,211 | 14 | % |
In the second quarter of 2020, revenues were $281,000, compared to revenues of $203,000 in the second quarter of 2019 and first half 2020 revenues were $590,000, compared to $361,000 in the first half of 2019. The quarter-over-quarter revenue increase was driven by the increase in GLA product sales and GoodWheat royalty revenues. The year-over-year increase was driven by the aforementioned, in addition to revenue earned from the milestone achievement by a licensee during the first quarter.
In the second quarter of 2020, operating expenses were $7.2 million, compared to $5.2 million in the second quarter of 2019 and first half 2020 operating expenses were $13.3 million, compared to $9.6 million in the first half of 2019. Research and development (R&D) costs increased by $43,000 and $781,000 for the second quarter and first half of 2020, primarily due to higher employee expenses and hemp-related research costs. General and administrative (SG&A) costs increased by $528,000 and $1.4 million for the second quarter and first half of 2020, respectively, primarily due to higher employee expenses, consulting fees and consultants' stock compensation expenses. Cost of product revenues for the second quarter and first half of 2020 both increased primarily as a result of a $1.4 million write-off of GoodHemp inventory that did not meet Arcadia's required minimum quality specifications.
Net Income Attributable to Common Stockholders
Net loss attributable to common shareholders for the second quarter of 2020 was $9.7 million, or ($1.04) per share, a $13.9 million decrease from the $4.2 million, or $0.84 per share, net income recognized in the second quarter of 2019. The quarter-over-quarter decrease was largely due to the $3.1 million non-cash expense recognized in the second quarter of 2020 as a result of an increase in the fair value of common stock warrant liabilities versus the $9.5 million non-cash income recognized in the second quarter of 2019 as a result of a decrease in these liabilities.
Net loss attributable to common shareholders for the first half of 2020 was $7.2 million, or ($0.80) per share, a $1.2 million decrease from the $8.4 million, or ($1.70) per share, net loss recognized in the first half of 2019.
Conference Call and Webcast
The company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, August 13, 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
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 GoodHemp seed catalog delivers genetically superior hemp seeds, clones, transplants, flower and extracts, applying the company's proprietary crop innovation technology, ArcaTech , to an emerging crop. The company's GoodWheat branded ingredients deliver health benefits to consumers and enable consumer packaged goods companies to differentiate their brands in the marketplace. 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, regulatory approval in China, revenue in 2020, financial performance in 2021, the acquisition of assets from Industrial Seed Innovations, the growth of the company and the use proceeds from the exercise of warrants. 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; the company entering into definitive agreements with Corner Foods, Three Farm Daughters and GoodMills Innovation; 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.
Chief Financial Officer
LinkedIn: Arcadia Biosciences
Arcadia Biosciences, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
| June 30, 2020 | December 31, 2019 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 14,995 | $ | 8,417 | ||||
| Short-term investments | 600 | 16,915 | ||||||
| Accounts receivable | 403 | 602 | ||||||
| Inventories, net - current | 8,772 | 1,794 | ||||||
| Prepaid expenses and other current assets | 1,326 | 712 | ||||||
| Total current assets | 26,096 | 28,440 | ||||||
| Restricted cash | 2,000 | - | ||||||
| Property and equipment, net | 3,403 | 1,799 | ||||||
| Right of use asset | 5,598 | 1,963 | ||||||
| Inventories, net - noncurrent | 658 | 364 | ||||||
| Other noncurrent assets | 23 | 8 | ||||||
| Total assets | $ | 37,778 | $ | 32,574 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 6,937 | $ | 4,685 | ||||
| Amounts due to related parties | 22 | 40 | ||||||
| Debt - current | 519 | 24 | ||||||
| Unearned revenue - current | - | 42 | ||||||
| Operating lease liability - current | 623 | 611 | ||||||
| Other current liabilities | 263 | 306 | ||||||
| Total current liabilities | 8,364 | 5,708 | ||||||
| Debt - noncurrent | 2,742 | 107 | ||||||
| Operating lease liability - noncurrent | 5,220 | 1,497 | ||||||
| Common stock warrant liabilities | 5,836 | 14,936 | ||||||
| Other noncurrent liabilities | 2,000 | 2,000 | ||||||
| Total liabilities | 24,162 | 24,248 | ||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.001 par value-150,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 10,046,440 and 8,646,149 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 50 | 49 | ||||||
| Additional paid-in capital | 226,405 | 214,826 | ||||||
| Accumulated other comprehensive income | - | 1 | ||||||
| Accumulated deficit | (214,335 | ) | (207,171 | ) | ||||
| Total Arcadia Biosciences stockholders' equity | 12,120 | 7,705 | ||||||
| Non-controlling interest | 1,496 | 621 | ||||||
| Total stockholders' equity | 13,616 | 8,326 | ||||||
| Total liabilities and stockholders' equity | $ | 37,778 | $ | 32,574 |
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
(In thousands, except share and per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenues: | ||||||||||||||||
| Product | $ | 231 | $ | 162 | $ | 385 | $ | 269 | ||||||||
| License | - | - | 100 | - | ||||||||||||
| Royalty | 12 | - | 42 | - | ||||||||||||
| Contract research and government grants | 38 | 41 | 63 | 92 | ||||||||||||
| Total revenues | 281 | 203 | 590 | 361 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of product revenues | 1,490 | 89 | 1,622 | 148 | ||||||||||||
| Research and development | 1,993 | 1,950 | 4,237 | 3,456 | ||||||||||||
| Selling, general and administrative | 3,674 | 3,146 | 7,397 | 5,957 | ||||||||||||
| Total operating expenses | 7,157 | 5,185 | 13,256 | 9,561 | ||||||||||||
| Loss from operations | (6,876 | ) | (4,982 | ) | (12,666 | ) | (9,200 | ) | ||||||||
| Interest expense | (6 | ) | - | (9 | ) | - | ||||||||||
| Other income, net | 10 | 101 | 82 | 221 | ||||||||||||
| Change in fair value of common stock warrant liabilities | (3,079 | ) | 9,482 | 5,082 | 987 | |||||||||||
| Gain on extinguishment of warrant liability | 47 | - | 47 | - | ||||||||||||
| Offering costs | - | (365 | ) | - | (365 | ) | ||||||||||
| Net (loss) income before income taxes | (9,904 | ) | 4,236 | (7,464 | ) | (8,357 | ) | |||||||||
| Income tax benefit (provision) | 10 | 1 | (7 | ) | (18 | ) | ||||||||||
| Net (loss) income | (9,894 | ) | 4,237 | (7,471 | ) | (8,375 | ) | |||||||||
| Net loss attributable to non-controlling interest | (205 | ) | - | (307 | ) | - | ||||||||||
| Net (loss) income attributable to common stockholders | $ | (9,689 | ) | $ | 4,237 | $ | (7,164 | ) | $ | (8,375 | ) | |||||
| Net (loss) income per share attributable to common stockholders: | ||||||||||||||||
| Basic and diluted | (1.04 | ) | 0.84 | (0.80 | ) | (1.70 | ) | |||||||||
| Weighted-average number of shares used in per share calculations: | ||||||||||||||||
| Basic and Diluted | 9,327,317 | 5,054,812 | 8,989,265 | 4,916,116 | ||||||||||||
| Other comprehensive loss, net of tax | ||||||||||||||||
| Unrealized losses on available-for-sale securities | - | - | (1 | ) | - | |||||||||||
| Other comprehensive loss | - | - | (1 | ) | - | |||||||||||
| Comprehensive (loss) income attributable to common stockholders | $ | (9,689 | ) | $ | 4,237 | $ | (7,165 | ) | $ | (8,375 | ) |
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Cash Flows
| Six Months Ended June 30, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (7,471 | ) | $ | (8,375 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Change in fair value of common stock warrant liabilities | (5,082 | ) | (987 | ) | ||||
| Gain on extinguishment of warrant liability | (47 | ) | - | |||||
| Offering costs | - | 365 | ||||||
| Depreciation | 182 | 77 | ||||||
| Lease amortization | 484 | 348 | ||||||
| Net amortization of investment premium | (44 | ) | (82 | ) | ||||
| Stock-based compensation | 1,367 | 811 | ||||||
| Write-down of inventory and prepaid production costs | 1,421 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 199 | 40 | ||||||
| Inventories | (8,031 | ) | (561 | ) | ||||
| Prepaid expenses and other current assets | (1,276 | ) | (302 | ) | ||||
| Other noncurrent assets | (15 | ) | - | |||||
| Accounts payable and accrued expenses | 2,252 | 677 | ||||||
| Amounts due to related parties | (18 | ) | (10 | ) | ||||
| Other noncurrent liabilities | (43 | ) | - | |||||
| Unearned revenue | (42 | ) | (81 | ) | ||||
| Operating lease payments | (384 | ) | (349 | ) | ||||
| Net cash used in operating activities | (16,548 | ) | (8,429 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | (1,749 | ) | (315 | ) | ||||
| Purchases of investments | (1,292 | ) | (8,623 | ) | ||||
| Proceeds from sales and maturities of investments | 17,650 | 13,150 | ||||||
| Net cash provided by investing activities | 14,609 | 4,212 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from warrant exercises from June 2018 Offering | 6,822 | - | ||||||
| Proceeds from borrowings | 3,108 | - | ||||||
| Payments of transaction costs relating to extinguishment of warrant liability | (594 | ) | - | |||||
| Proceeds from issuance of common stock and warrants from June 2019 Offering | - | 7,500 | ||||||
| Payments of offering costs relating to June 2019 Offering | - | (619 | ) | |||||
| Payments of offering costs relating to June 2018 Offering | - | (24 | ) | |||||
| Principal payments on notes payable | (15 | ) | - | |||||
| Proceeds from ESPP purchases | 14 | 8 | ||||||
| Capital contributions received from non-controlling interest | 1,182 | - | ||||||
| Net cash provided by financing activities | 10,517 | 6,865 | ||||||
| Net increase in cash, cash equivalents and restricted cash | 8,578 | 2,648 | ||||||
| Cash, cash equivalents and restricted cash - beginning of period | 8,417 | 11,998 | ||||||
| Cash, cash equivalents and restricted cash - end of period | $ | 16,995 | $ | 14,646 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for income taxes | $ | - | $ | 2 | ||||
| Cash paid for interest | $ | 6 | $ | - | ||||
| NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Fixed assets acquired with notes payable | $ | 37 | $ | - | ||||
| Common stock warrants issued to placement agent and included in offering costs related to May 2020 Warrant Transaction | $ | 215 | $ | - | ||||
| Offering costs in accounts payable and accrued expenses at end of period | $ | - | $ | 22 | ||||
| Common stock warrants issued to placement agent and included in offering costs related to June 2019 Offering | $ | - | $ | 86 | ||||
| Right of use assets obtained in exchange for new operating lease liabilities | $ | 3,947 | $ | 2,328 | ||||
| Purchases of fixed assets included in accounts payable and accrued expenses | $ | - | $ | 6 |