Full Press Release Details
Arcadia Biosciences Announces Fourth-Quarter and Full-Year 2018 Financial Results and Business Highlights
-- Company delivers regulatory, scientific and commercial progress in four crops, and
launches new strategy in cannabis --
DAVIS, Calif. (March 27, 2019) - Arcadia Biosciences, Inc. (Nasdaq: RKDA), a food ingredient company and proven leader in agricultural innovation, improving the quality and nutritional content of crops, today released its financial and business results for the fourth quarter and full year of 2018.
"2018 was a transformative year for Arcadia, as we delivered significant regulatory, commercial and scientific advancements in wheat, soy, tomato and safflower," said Raj Ketkar. "We are now well positioned in 2019 to apply our years of expertise to a new crop - cannabis - with the formation of Arcadia Specialty Genomics. This new strategic business unit, headed by Matt Plavan, is dedicated to improving the plant quality, productivity, consistency and climate resilience of cannabis, working initially in hemp in federal and state legal markets."
"This is a natural evolution of our business, consistent with Arcadia's focus as a consumer-driven agricultural technology company, developing and commercializing innovative food ingredients, nutritional oils and products that improve crop productivity, nutritional quality and value," Ketkar said.
2018 Operating and Business Highlights
Q1 Achievements and Strategic Outlook
Arcadia Biosciences, Inc.
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||
| 2018 | 2017 | % Favorable/ (Unfavorable) | 2018 | 2017 | % Favorable/ (Unfavorable) | |||||||||||||||||||||||||||
| $ | % | $ | % | |||||||||||||||||||||||||||||
| Total Revenues | 444 | 1,428 | (984 | ) | (69 | )% | 1,464 | 4,026 | (2,562 | ) | (64 | )% | ||||||||||||||||||||
| Total Operating Expenses | 4,798 | 4,428 | (370 | ) | (8 | )% | 18,334 | 18,341 | 7 | 0 | % | |||||||||||||||||||||
| Loss From Operations | (4,354 | ) | (3,000 | ) | (1,354 | ) | (45 | )% | (16,870 | ) | (14,315 | ) | (2,555 | ) | (18 | )% | ||||||||||||||||
| Net Loss Attributable to Common Stockholders | (646 | ) | (2,960 | ) | 2,314 | 78 | % | (13,480 | ) | (15,707 | ) | 2,227 | 14 | % |
Arcadia's revenues in 2018 reflect the impact of the company's transformation from a predominately research and licensing business model to a one of a consumer products health and ingredients model. As a result, revenues from its legacy R&D business model wound down during the year, and forward expectations for the onset and scale up of new revenues from nutritional ingredient products over the next nine to 18 months remain unchanged.
In the fourth quarter of 2018, revenues were $444,000, compared to revenues of $1.4 million in the fourth quarter of 2017. For annual 2018, overall revenues decreased to $1.5 million compared to $4.0 million during the same period of 2017. The quarter-over-quarter and annual results were primarily impacted by the decrease in government grant revenue, in addition to a contract research agreement in 2017 that was not present in 2018 and the recognition of previously deferred upfront license fees with the termination of several agreements in the fourth quarter of 2017. Over the next nine to 18 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 fourth quarter of 2018, operating expenses were $4.8 million, compared to $4.4 million in the fourth quarter of 2017. For annual 2018, operating expenses were $18.3 million, consistent with the amount incurred during the same period in 2017. Annual research and development (R&D) spending decreased by $1.3 million in 2018, primarily the result of the termination of license and contract research agreements at the end of 2017. General and administrative (SG&A) costs for annual 2018 were $953,000 higher than annual 2017, driven primarily by higher intellectual property legal fees and additional marketing activity. Cost of product revenues was $210,000 higher than in the fourth quarter of 2017 and $378,000 higher than annual 2017 due to the write-down of inventory and additional product sales in 2018.
Net Loss Attributable to Common Stockholders
Net loss attributable to common stockholders for the fourth quarter of 2018 was $646,000, or a loss of $0.14 per share, a 78 percent improvement from the $3.0 million loss in the fourth quarter of 2017. Net loss attributable to common stockholders for the year was $13.5 million, or a loss of $3.58 per share, a 14 percent improvement from the $15.7 million loss in 2017.
The annual loss for 2018 includes non-cash income of $9.6 million recognized as the fair values of the common stock warrant liabilities associated with the PIPE financing and Registered Direct Offering were adjusted from quarter to quarter during 2018. The loss for annual 2018 also includes $4.0 million of expense recorded upon the initial recognition of the common stock warrant and adjustment feature liabilities associated with the PIPE financing. In addition, there was $2.6 million of offering costs expensed in support of both transactions. The combined impact of this activity during annual 2018 netted to $3.0 million of income.
The annual loss for 2017 includes a loss on extinguishment of debt in the amount of $900,000, as well as $747,000 of interest expense incurred through the July 2017 debt payoff.
Conference Call and Webcast
The company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, March 27, to discuss fourth-quarter and annual 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: | 6189179 |
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 components of the company's long-term financial success and ongoing plans; the company's traits, commercial products, and 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, and changes to such laws and regulations; 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 and additional information that will be set forth in its Form 10-K for the year ended December 31, 2018. These documents are or will be available on the SEC Filings section of the Investor Relations pages 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.
Consolidated Balance Sheets
(In thousands, except share data)
| As of December 31, | ||||||||
| 2018 | 2017 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 11,998 | $ | 9,125 | ||||
| Short-term investments | 9,825 | 3,898 | ||||||
| Accounts receivable | 165 | 1,231 | ||||||
| Unbilled revenue | 3 | 4 | ||||||
| Inventories - current | 181 | 229 | ||||||
| Prepaid expenses and other current assets | 704 | 560 | ||||||
| Total current assets | 22,876 | 15,047 | ||||||
| Property and equipment, net | 395 | 299 | ||||||
| Inventories - noncurrent | 746 | 1,168 | ||||||
| Other noncurrent assets | 7 | 56 | ||||||
| Total assets | $ | 24,024 | $ | 16,570 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 2,645 | $ | 2,496 | ||||
| Amounts due to related parties | 29 | 29 | ||||||
| Unearned revenue - current | 96 | 1,000 | ||||||
| Other current liabilities | 284 | - | ||||||
| Total current liabilities | 3,054 | 3,525 | ||||||
| Unearned revenue - noncurrent | - | 2,038 | ||||||
| Common stock warrant liabilities | 5,083 | - | ||||||
| Other noncurrent liabilities | 3,072 | 3,000 | ||||||
| Total liabilities | 11,209 | 8,563 | ||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.001 par value-150,000,000 shares authorized as of December 31, 2018 and December 31, 2017; 4,774,919 and 2,134,154 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively. | 45 | 42 | ||||||
| Additional paid-in capital | 191,136 | 175,223 | ||||||
| Accumulated deficit | (178,366 | ) | (167,257 | ) | ||||
| Accumulated other comprehensive loss | - | (1 | ) | |||||
| Total stockholders' equity | 12,815 | 8,007 | ||||||
| Total liabilities and stockholders' equity | $ | 24,024 | $ | 16,570 |
Arcadia Biosciences, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
| Year Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| Revenues: | ||||||||
| Product | $ | 657 | $ | 514 | ||||
| License | 150 | 1,470 | ||||||
| Contract research and government grants | 657 | 2,042 | ||||||
| Total revenues | 1,464 | 4,026 | ||||||
| Operating expenses: | ||||||||
| Cost of product revenues | 661 | 283 | ||||||
| Research and development | 6,069 | 7,407 | ||||||
| Selling, general and administrative | 11,604 | 10,651 | ||||||
| Total operating expenses | 18,334 | 18,341 | ||||||
| Loss from operations | (16,870 | ) | (14,315 | ) | ||||
| Interest expense | - | (747 | ) | |||||
| Other income, net | 394 | 281 | ||||||
| Initial loss on common stock warrant and common stock adjustment feature liabilities | (4,000 | ) | - | |||||
| Change in fair value of common stock warrant and common stock adjustment feature liabilities | 9,561 | - | ||||||
| Offering costs | (2,555 | ) | - | |||||
| Loss on extinguishment of debt | - | (900 | ) | |||||
| Net loss before income taxes | (13,470 | ) | (15,681 | ) | ||||
| Income tax provision | (10 | ) | (26 | ) | ||||
| Net loss attributable to common stockholders | $ | (13,480 | ) | $ | (15,707 | ) | ||
| Net loss per share attributable to common stockholders: | ||||||||
| Basic and diluted | $ | (3.58 | ) | $ | (7.28 | ) | ||
| Weighted-average number of shares used in per share calculations: | ||||||||
| Basic and diluted | 3,766,419 | 2,156,201 | ||||||
| Other comprehensive income, net of tax | ||||||||
| Unrealized gains on available-for-sale securities | - | 18 | ||||||
| Other comprehensive income | - | 18 | ||||||
| Comprehensive loss attributable to common stockholders | $ | (13,480 | ) | $ | (15,689 | ) |
Arcadia Biosciences, Inc.
Consolidated Statements of Cash Flows
| Year Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (13,480 | ) | $ | (15,707 | ) | ||
| 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 and common stock adjustment feature liabilities | (9,561 | ) | - | |||||
| Offering costs | 2,555 | - | ||||||
| Depreciation | 154 | 279 | ||||||
| Gain on disposal of equipment | (3 | ) | (1 | ) | ||||
| Net amortization of investment premium and discount | (193 | ) | (89 | ) | ||||
| Stock-based compensation | 1,550 | 1,474 | ||||||
| Loss on sale of investments | - | 2 | ||||||
| Accretion of debt discount | - | 98 | ||||||
| Loss on extinguishment of debt | - | 900 | ||||||
| Write down of inventory | 310 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 1,066 | (882 | ) | |||||
| Unbilled revenue | 2 | 179 | ||||||
| Inventories | 160 | 183 | ||||||
| Prepaid expenses and other current assets | (151 | ) | 324 | |||||
| Other noncurrent assets | - | 11 | ||||||
| Accounts payable and accrued expenses | 176 | 87 | ||||||
| Amounts due to related parties | (1 | ) | (1 | ) | ||||
| Unearned revenue | (312 | ) | (822 | ) | ||||
| Other current liabilities | 25 | - | ||||||
| Other noncurrent liabilities | 72 | - | ||||||
| Net cash used in operating activities | (13,631 | ) | (13,965 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from sale of property and equipment | 10 | 4 | ||||||
| Purchases of property and equipment | (250 | ) | (79 | ) | ||||
| Purchases of investments | (29,885 | ) | (19,405 | ) | ||||
| Proceeds from sales and maturities of investments | 24,150 | 66,658 | ||||||
| Net cash (used in) provided by investing activities | (5,975 | ) | 47,178 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of common stock and warrants under 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 | (1,182 | ) | - | |||||
| Payments of debt extinguishment costs | - | (1,125 | ) | |||||
| Proceeds from exercise of stock options and purchases through ESPP | 969 | 24 | ||||||
| Payments on notes payable | - | (25,000 | ) | |||||
| Net cash provided by (used in) financing activities | 22,479 | (26,101 | ) | |||||
| Net increase in cash and cash equivalents | 2,873 | 7,112 | ||||||
| Cash and cash equivalents - beginning of period | 9,125 | 2,013 | ||||||
| Cash and cash equivalents - end of period | $ | 11,998 | $ | 9,125 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | - | $ | 746 | ||||
| Cash paid for income taxes | $ | 34 | $ | 2 | ||||
| NONCASH TRANSACTIONS: | ||||||||
| Offering costs in accounts payable and accrued expenses at end of period | $ | 23 | $ | 50 | ||||
| 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 | $ | - | ||||
| Proceeds from sale of fixed assets included in prepaid expenses and other current assets | $ | - | $ | 7 | ||||
| Reclassification of unearned revenue to other short term liabilities | $ | 259 | $ | - | ||||
| Reclassification of common stock adjustment feature liability balance to equity | $ | 8,378 | $ | - | ||||
| Exchange of membership interest in unconsolidated entity for common stock | $ | - | $ | 2 |