Full Press Release Details
Arcadia Biosciences Announces Third-Quarter September 30, 2020 Financial Results and Business Highlights
- Executes strategic transaction with Bioceres Crop Solutions (BIOX), bringing $8 million in up-front and contingent cash, 1.875 million BIOX shares and trait royalties of up to $10 million on HB4 soybean sales
- Completes acquisition of Industrial Seed Innovations, expanding GoodHempTM portfolio
- Launches multiple products on-line and in grocery stores with Three Farm Daughters to bring GoodWheatTM to consumers
DAVIS, Calif. (November 12, 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 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
Arcadia Biosciences, Inc.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
| 2020 | 2019 | Favorable / (Unfavorable) | 2020 | 2019 | Favorable / (Unfavorable) | ||||||||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||||||||||||
| Total revenues | 314 | 392 | (78 | ) | (20 | )% | 904 | 753 | 151 | 20 | % | ||||||||||||||||||||||
| Total operating expenses | 7,895 | 6,585 | (1,310 | ) | (20 | )% | 21,151 | 16,145 | (5,006 | ) | (31 | )% | |||||||||||||||||||||
| Loss from operations | (7,581 | ) | (6,193 | ) | (1,388 | ) | (22 | )% | (20,247 | ) | (15,392 | ) | (4,855 | ) | (32 | )% | |||||||||||||||||
| Net loss attributable to common stockholders | (6,391 | ) | (14,187 | ) | 7,796 | 55 | % | (13,553 | ) | (22,562 | ) | 9,009 | 40 | % |
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.
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:
| U.S. Toll-Free Dial-In: | +1-844-243-4690 |
| International Dial-In: | +1-225-283-0138 |
| Passcode: | 1303009 |
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.
Chief Financial Officer
LinkedIn: Arcadia Biosciences
Arcadia Biosciences, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
| September 30, 2020 | December 31, 2019 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,201 | $ | 8,417 | ||||
| Short-term investments | - | 16,915 | ||||||
| Accounts receivable | 373 | 602 | ||||||
| Inventories, net - current | 9,416 | 1,794 | ||||||
| Prepaid expenses and other current assets | 1,204 | 712 | ||||||
| Total current assets | 21,194 | 28,440 | ||||||
| Restricted cash | 2,001 | - | ||||||
| Property and equipment, net | 3,484 | 1,799 | ||||||
| Right of use asset | 6,013 | 1,963 | ||||||
| Inventories, net - noncurrent | 461 | 364 | ||||||
| Goodwill | 301 | - | ||||||
| Intangible assets, net | 400 | - | ||||||
| Other noncurrent assets | 23 | 8 | ||||||
| Total assets | $ | 33,877 | $ | 32,574 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 6,711 | $ | 4,685 | ||||
| Amounts due to related parties | 29 | 40 | ||||||
| Debt - current | 705 | 24 | ||||||
| Unearned revenue - current | - | 42 | ||||||
| Operating lease liability - current | 700 | 611 | ||||||
| Other current liabilities | 263 | 306 | ||||||
| Total current liabilities | 8,408 | 5,708 | ||||||
| Debt - noncurrent | 2,548 | 107 | ||||||
| Operating lease liability - noncurrent | 5,574 | 1,497 | ||||||
| Common stock warrant liabilities | 3,065 | 14,936 | ||||||
| Other noncurrent liabilities | 2,280 | 2,000 | ||||||
| Total liabilities | 21,875 | 24,248 | ||||||
| Commitments and contingencies (Note 14) | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.001 par value-150,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 10,832,203 and 8,646,149 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 51 | 49 | ||||||
| Additional paid-in capital | 231,954 | 214,826 | ||||||
| Accumulated other comprehensive income | - | 1 | ||||||
| Accumulated deficit | (220,725 | ) | (207,171 | ) | ||||
| Total Arcadia Biosciences stockholders' equity | 11,280 | 7,705 | ||||||
| Non-controlling interest | 722 | 621 | ||||||
| Total stockholders' equity | 12,002 | 8,326 | ||||||
| Total liabilities and stockholders' equity | $ | 33,877 | $ | 32,574 |
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenues: | ||||||||||||||||
| Product | $ | 245 | $ | 216 | $ | 630 | $ | 485 | ||||||||
| License | 10 | 17 | 110 | 17 | ||||||||||||
| Royalty | 16 | - | 58 | - | ||||||||||||
| Contract research and government grants | 43 | 159 | 106 | 251 | ||||||||||||
| Total revenues | 314 | 392 | 904 | 753 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of product revenues | 1,841 | 177 | 3,463 | 324 | ||||||||||||
| Research and development | 1,762 | 1,931 | 5,999 | 5,387 | ||||||||||||
| Selling, general and administrative | 4,292 | 4,477 | 11,689 | 10,434 | ||||||||||||
| Total operating expenses | 7,895 | 6,585 | 21,151 | 16,145 | ||||||||||||
| Loss from operations | (7,581 | ) | (6,193 | ) | (20,247 | ) | (15,392 | ) | ||||||||
| Interest expense | (23 | ) | (3 | ) | (32 | ) | (3 | ) | ||||||||
| Other income, net | - | 119 | 83 | 339 | ||||||||||||
| Change in fair value of common stock warrant liabilities | 1,130 | (7,777 | ) | 6,212 | (6,790 | ) | ||||||||||
| Loss on extinguishment of warrant liability | (682 | ) | - | (635 | ) | - | ||||||||||
| Offering costs | - | (336 | ) | - | (702 | ) | ||||||||||
| Net loss before income taxes | (7,156 | ) | (14,190 | ) | (14,619 | ) | (22,548 | ) | ||||||||
| Income tax benefit (provision) | (9 | ) | 3 | (15 | ) | (14 | ) | |||||||||
| Net loss | (7,165 | ) | (14,187 | ) | (14,634 | ) | (22,562 | ) | ||||||||
| Net loss attributable to non-controlling interest | (774 | ) | - | (1,081 | ) | - | ||||||||||
| Net loss attributable to common stockholders | $ | (6,391 | ) | $ | (14,187 | ) | $ | (13,553 | ) | $ | (22,562 | ) | ||||
| Net loss per share attributable to common stockholders: | ||||||||||||||||
| Basic and diluted | $ | (0.60 | ) | $ | (2.04 | ) | $ | (1.42 | ) | $ | (4.03 | ) | ||||
| Weighted-average number of shares used in per share calculations: | ||||||||||||||||
| Basic and Diluted | 10,719,618 | 6,942,612 | 9,570,259 | 5,596,545 | ||||||||||||
| Other comprehensive loss, net of tax | ||||||||||||||||
| Unrealized losses on available-for-sale securities | - | (1 | ) | (1 | ) | - | ||||||||||
| Other comprehensive loss | - | (1 | ) | (1 | ) | - | ||||||||||
| Comprehensive loss attributable to common stockholders | $ | (6,391 | ) | $ | (14,188 | ) | $ | (13,554 | ) | $ | (22,562 | ) |
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Cash Flows
| Nine Months Ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (14,634 | ) | $ | (22,562 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Change in fair value of common stock warrant liabilities | (6,212 | ) | 6,790 | |||||
| Loss on extinguishment of warrant liability | 635 | - | ||||||
| Offering costs | - | 702 | ||||||
| Depreciation | 395 | 133 | ||||||
| Lease amortization | 745 | 530 | ||||||
| (Gain) Loss on disposal of equipment | (8 | ) | 1 | |||||
| Net amortization of investment premium | (44 | ) | (121 | ) | ||||
| Stock-based compensation | 1,844 | 1,870 | ||||||
| Write-down of inventory and prepaid production costs | 3,063 | - | ||||||
| Changes in operating assets and liabilities: | - | - | ||||||
| Accounts receivable | 229 | 38 | ||||||
| Unbilled revenue | - | 3 | ||||||
| Inventories | (9,609 | ) | (1,411 | ) | ||||
| Prepaid expenses and other current assets | (1,157 | ) | (36 | ) | ||||
| Other noncurrent assets | (15 | ) | - | |||||
| Accounts payable and accrued expenses | 2,026 | 2,425 | ||||||
| Amounts due to related parties | (11 | ) | (1 | ) | ||||
| Other current liabilities | (43 | ) | 3 | |||||
| Unearned revenue | (42 | ) | (16 | ) | ||||
| Operating lease payments | (629 | ) | (534 | ) | ||||
| Net cash used in operating activities | (23,467 | ) | (12,186 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from sale of property and equipment | 8 | 1 | ||||||
| Purchases of property and equipment | (2,038 | ) | (878 | ) | ||||
| Acquisitions, net of cash acquired | (500 | ) | - | |||||
| Purchases of investments | (1,292 | ) | (18,458 | ) | ||||
| Proceeds from sales and maturities of investments | 18,250 | 18,050 | ||||||
| Net cash provided by (used in) investing activities | 14,428 | (1,285 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of common stock and warrants from June 2019 Offering | 9,372 | 7,500 | ||||||
| Proceeds from borrowings | 3,108 | - | ||||||
| Payments of transaction costs relating to extinguishment of warrant liability | (863 | ) | - | |||||
| Proceeds from issuance of common stock and warrants from Purchase Agreement | - | 10,000 | ||||||
| Payments of offering costs relating to September 2019 Offering | - | (776 | ) | |||||
| Payments of offering costs relating to June 2019 Offering | - | (663 | ) | |||||
| Payments of offering costs relating to June 2018 Offering | - | (24 | ) | |||||
| Principal payments on notes payable | (26 | ) | (2 | ) | ||||
| Proceeds from the exercise of warrants | - | 5,269 | ||||||
| Proceeds from ESPP purchases | 51 | 21 | ||||||
| Capital contributions received from non-controlling interest | 1,182 | 689 | ||||||
| Net cash provided by financing activities | 12,824 | 22,014 | ||||||
| Net increase in cash, cash equivalents and restricted cash | 3,785 | 8,543 | ||||||
| Cash, cash equivalents and restricted cash - beginning of period | 8,417 | 11,998 | ||||||
| Cash, cash equivalents and restricted cash - end of period | $ | 12,202 | $ | 20,541 |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for income taxes | $ | 1 | $ | 2 | ||||
| Cash paid for interest | $ | 7 | $ | - | ||||
| NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Fixed assets acquired with notes payable | $ | 37 | $ | 139 | ||||
| Common stock warrants issued to placement agent and included in offering costs related to May 2020 Warrant Transaction | $ | 215 | $ | - | ||||
| Common stock warrants issued to placement agent and included in offering costs related to July 2020 Warrant Transaction | $ | 101 | $ | - | ||||
| Offering costs in accounts payable and accrued expenses at end of period | $ | - | $ | 21 | ||||
| Common stock warrants issued to placement agent and included in offering costs related to June 2019 Offering | $ | - | $ | 86 | ||||
| Common stock warrants issued to placement agent and included in offering costs related to September 2019 Offering | $ | - | $ | 95 | ||||
| Reclassification of common stock warrant liability balance with warrant exercises | $ | - | $ | 7,016 | ||||
| Right of use assets obtained in exchange for new operating lease liabilities | $ | 4,157 | $ | 2,328 | ||||
| Purchases of fixed assets included in accounts payable and accrued expenses | $ | - | $ | 6 |