Arcadia Biosciences Announces First-Quarter 2019 Financial Results and Business Highlights
DAVIS, Calif.--(BUSINESS WIRE)-- Arcadia Biosciences, Inc. (Nasdaq: RKDA), a food ingredient company and proven leader in agricultural innovation to improve the quality and nutritional content of crops, today released its financial and business results for the first quarter of 2019.
“With the launch of Arcadia Specialty Genomics™ in the first quarter of 2019 and research trials already underway, we are now leveraging our years of expertise in plant science, advanced breeding and regulatory affairs to offer value-added innovations in cannabis,” said Raj Ketkar, president and CEO of Arcadia.
“We also advanced both our GoodWheat™ specialty ingredients and HB4 drought tolerant soybeans this quarter, scaling production and building seed supply to support commercialization later in 2019,” he said.
Q1 2019 Operating and Business Highlights
- New Business Unit Dedicated to Cannabis. In February 2019, Arcadia launched Arcadia Specialty Genomics, to leverage the company’s years of plant science, industry and regulatory expertise, offering value-added capabilities for rapid growth in cannabis-based functional ingredients. This dedicated business unit will develop a proprietary germplasm estate and traits for license to cultivators in federal and state legal markets, for products serving the nutraceutical and food industries. These innovations are made possible through a proprietary approach combining conventional breeding, TILLING and gene editing. Matt Plavan, Arcadia’s CFO, will lead the business unit as president of Arcadia Specialty Genomics.
- Hemp Research Underway in Hawaii. Hawaii’s Department of Agriculture granted Arcadia Biosciences a license for its Industrial Hemp Pilot Program in March. With this license, Arcadia Specialty Genomics began its research and cultivation immediately, planting in April.
- GoodWheat Production Scales in Preparation for Commercial Launch. Arcadia completed its counter-season GoodWheat production trials in the first quarter, with harvest early in the second quarter. The company’s agricultural operations team is building supply in preparation for commercialization, with the first sales of GoodWheat expected by the end of 2019.
- Verdeca Introduces Pre-Commercial HB4 Drought Tolerant and Herbicide Tolerant Soybeans to Growers in Argentina. Verdeca, a joint venture between Arcadia and Bioceres Crop Solutions Corp., introduced HB4 soybeans at Expoagro, the largest farm show in Argentina. More than 1200 growers visited the Verdeca pavilion, and many signed on to the company’s Bio-Innovator program, which grants priority access to test the HB4 soybean varieties in their fields.
- Experienced Science Leader Hired as Head of R&D. On April 8, Randy Shultz, Ph.D. joined Arcadia’s leadership team as head of research and development. Shultz is the former global crop lead at Inari Agriculture, where he also served as director of R&D and senior director of R&D strategy. He has deep expertise in gene editing and new plant breeding technologies, as well as an established reputation as a keen R&D strategist. Shultz will be exploring new partnerships and licensing opportunities to build Arcadia’s capabilities in cannabis and advance future innovations in the GoodWheat portfolio of novel wheat attributes.
Arcadia Biosciences, Inc.
($ in thousands)
|Three Months Ended March 31,|
|2019||2018||Favorable / (Unfavorable)|
|Total Operating Expenses||4,376||4,053||(323||)||(8||)%|
|Loss From Operations||(4,218||)||(3,839||)||(379||)||(10||)%|
In the first quarter of 2019, revenues were $158,000, compared to revenues of $214,000 in the first quarter of 2018. The quarter-over-quarter decrease was primarily impacted by the decrease in government grant revenue, partially offset by the increase in product sales. Over the next six to 15 months, as the company transitions to its new focus on health and nutrition quality products, Arcadia expects revenue from government grants and research contracts revenues to be replaced by product and trait revenues.
In the first quarter of 2019, operating expenses were $4.4 million, compared to $4.1 million in the first quarter of 2018. Research and development (R&D) spending increased by $109,000 in the first quarter of 2019, primarily the result of the timing of expenses relating to Verdeca. General and administrative (SG&A) costs for the first quarter of 2019 were $191,000 higher than the first quarter in 2018, driven primarily by higher employee expenses due to the growth of the commercial development team. Cost of product revenues was $23,000 higher in the first quarter of 2019 compared to 2018 due to additional product sales in 2019.
Net loss for the first quarter of 2019 was $12.6 million, or a loss of $2.64 per share, a 19 percent increase from the $10.6 million loss in the first quarter of 2018. The quarter-over-quarter increase was largely due to the $6.6 million greater increase in the change in the fair value of common stock warrant and common stock adjustment feature liabilities this quarter versus the same quarter last year, partially offset by the $4.0 million initial loss on common stock warrant and common stock adjustment feature liabilities that were recorded in the first quarter of 2018.
Conference Call and Webcast
The company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, May 8, to discuss first-quarter 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|
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.
About Arcadia Specialty Genomics
Arcadia Specialty Genomics is a strategic business unit of Arcadia Biosciences, Inc. leveraging the market-leading capabilities of its parent company to deliver crop innovation into developing proprietary, industry-leading cannabis germplasm. Focused on productivity, pest resistance and favored quality traits, Arcadia Specialty Genomics’ innovations serve the state- and federally-legal nutraceutical, food and industrial markets. For more information, visit www.arcadiaspecialtygenomics.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” and additional information set forth in its Form 10-K for the year ended December 31, 2018. These documents are 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.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
|March 31, 2019||December 31, 2018|
|Cash and cash equivalents||$||10,438||$||11,998|
|Inventories — current||187||181|
|Prepaid expenses and other current assets||506||704|
|Total current assets||18,565||22,876|
|Property and equipment, net||460||395|
|Right of use asset||2,193||—|
|Inventories — noncurrent||701||746|
|Other noncurrent assets||31||7|
|Liabilities and stockholders’ equity|
|Accounts payable and accrued expenses||$||2,062||$||2,645|
|Amounts due to related parties||12||29|
|Unearned revenue — current||56||96|
|Operating lease liability — current||574||—|
|Other current liabilities||264||284|
|Total current liabilities||2,968||3,054|
|Operating lease liability — noncurrent||1,771||—|
|Common stock warrant liabilities||13,578||5,083|
|Other noncurrent liabilities||3,000||3,072|
|Common stock, $0.001 par value—150,000,000 shares authorized as of March 31, 2019 and December 31, 2018; 4,777,419 and 4,774,919 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively||45||45|
|Additional paid-in capital||191,566||191,136|
|Total stockholders’ equity||633||12,815|
|Total liabilities and stockholders’ equity||$||21,950||$||24,024|
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
|Three Months Ended March 31,|
|Contract research and government grants||51||153|
|Cost of product revenues||59||36|
|Research and development||1,505||1,396|
|Selling, general and administrative||2,812||2,621|
|Total operating expenses||4,376||4,053|
|Loss from operations||(4,218||)||(3,839||)|
|Other income, net||120||38|
Initial loss on common stock warrant and common stock adjustment feature liabilities
|Change in fair value of common stock warrant and
common stock adjustment feature liabilities
|Net loss before income taxes||(12,593||)||(10,605||)|
|Income tax provision||(19||)||(10||)|
|Net loss per share:|
|Basic and diluted||$||(2.64||)||$||(4.86||)|
|Weighted-average number of shares used in per share calculations:|
|Basic and diluted||4,776,540||2,186,196|
|Other comprehensive loss, net of tax|
|Unrealized losses on available-for-sale securities||—||1|
|Other comprehensive loss||—||1|
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Cash Flows
Three Months Ended
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|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
|Depreciation and amortization||34||52|
|Gain on disposal of equipment||—||(3||)|
|Net amortization of investment premium||(39||)||(2||)|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other current assets||197||137|
|Accounts payable and accrued expenses||(538||)||(322||)|
|Amounts due to related parties||(16||)||(25||)|
|Operating lease payments||(172||)||0|
|Net cash used in operating activities||(3,969||)||(2,617||)|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Proceeds from sale of property and equipment||—||9|
|Purchases of property and equipment||(88||)||(33||)|
|Purchases of investments||(6,690||)||—|
|Proceeds from sales and maturities of investments||9,200||3,900|
|Net cash provided by investing activities||2,422||3,876|
|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||—||(932||)|
|Payments of offering costs relating to June Offering||(16||)||—|
|Payments of deferred offering costs||(5||)||—|
|Proceeds from exercise of stock options and ESPP purchases||8||966|
|Net cash (used in) provided by financing activities||(13||)||10,034|
|Net (decrease) increase in cash and cash equivalents||(1,560||)||11,293|
|Cash and cash equivalents — beginning of period||11,998||9,125|
|Cash and cash equivalents — end of period||$||10,438||$||20,418|
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:|
|Cash paid for income taxes||$||2||$||24|
|NONCASH INVESTING AND FINANCING ACTIVITIES:|
|Offering costs in accounts payable and accrued expenses at end of period||$||7||$||334|
|Deferred offering costs in accounts payable and accrued expenses at end of period||$||18||$||—|
|Common stock warrants issued to placement agent and included in offering costs related to Purchase Agreement||$||—||$||526|
|Right of use assets obtained in exchange for new operating lease liabilities||$||2,328||$||—|
|Proceeds from sale of fixed assets included in prepaid expenses and other current assets at end of period||$||—||$||1|
|Purchases of fixed assets included in accounts payable and accrued expenses||$||13||$||—|
Source: Arcadia Biosciences, Inc.