Davis, California, USA
August 14, 2019

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 second quarter and first half of 2019.

“We made major progress on several fronts in the second quarter with our wheat, soybean and hemp initiatives,” said Raj Ketkar, president and CEO of Arcadia. “Most notably, we recently launched Archipelago™ Ventures, a strategic joint venture with Legacy Ventures Hawaii, which harnesses the islands’ unique geographic and climate advantages for growing hemp year-round, gives us access to world class extraction facilities and provides a channel to key international markets for hemp and CBD.”

“Our focus for the rest of 2019 will be on continuing this momentum to achieve first revenues in wheat, soy and hemp by the end of the year, positioning us to significantly scale revenues in 2020.”

Recent Operating and Business Highlights

GoodWheat™ Advances Toward Sales in 2019
Arcadia scaled up production of its GoodWheat specialty wheat varieties, harvesting winter trials with higher than expected yields. Summer production trials have been planted in key wheat growing areas. The company expects first sales of GoodWheat products by the end of the year.

Arcadia Specialty Genomics™ Launches Hemp Joint Venture, Advances R&D
Arcadia recently launched a strategic joint venture with Legacy Ventures Hawaii to grow, extract and sell superior sun-grown hemp. The partnership, ArchipelagoTM Ventures, joins Arcadia’s extensive genetic expertise and resources with the proven extraction and commercial capabilities of Legacy and its partner Vapen CBD, leveraging Arcadia’s existing 10-acre cultivation facility in Hawaii. The result is one vertically integrated supply chain, from seed to sale, enabling Archipelago to deliver superior hemp extract.

The company completed its first harvest in Hawaii and is now expanding production acres and establishing extraction capabilities. First sales of hemp products are expected by the end of the year, with a significant ramp up in 2020.

Arcadia Specialty Genomics has advanced its R&D capabilities as well, in the areas of breeding operations, extraction research, cannabinoid profiling and germplasm acquisition. Most significantly, the company created its first in-house hemp line.

Verdeca HB4® Drought and Herbicide Tolerant Soybeans Receive Key Regulatory Approvals
Verdeca, Arcadia’s joint venture with Bioceres Crop Solutions Corp, received two key regulatory approvals for its HB4 drought and herbicide tolerant soybeans. Brazil approved the traits in late May, with a public comment period to follow. The U.S. Department of Agriculture (USDA) recently approved the trait, following the U.S Food and Drug Administration’s (FDA’s) approval two years ago. Initial sales will commence in Argentina, pending import approval from China, which is now expected in 2020. With the USDA approval, Verdeca will accelerate its evaluation of potential U.S. germplasm partners to carry the HB4 trait.
 

Arcadia Biosciences, Inc.
Financial Snapshot
(Unaudited)
($ in thousands)

	Three Months Ended June 30,					Six Months Ended June 30,
	2019	2018	Favorable/ (Unfavorable)			2019	2018	Favorable/ (Unfavorable)
			$	%				$	%
Total Revenues	203	436	(233)	(53)%		361	650	(289)	(44)%
Total Operating Expenses	5,184	5,014	(170)	(3)%		9,561	9,067	(494)	(5)%
Loss From Operations	(4,981)	(4,578)	(403)	(9)%		(9,200)	(8,417)	(783)	(9)%
Net Income (Loss)	4,238	(6,669)	10,907	164%		(8,375)	(17,284)	8,909	52%

Revenues

In the second quarter of 2019, revenues were $203,000, compared to revenues of $436,000 in the second quarter of 2018 and first half 2019 revenues were $361,000, compared to $650,000 in the first half of 2018. The decrease for both periods was largely the result of the wind down in government grant and contract research activity. Over the next three to 12 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 from wheat and hemp.

Operating Expenses

Operating expenses in the second quarter of 2019 were $5.2 million, compared to $5.0 million in the second quarter of 2018. Cost of product revenues was $182,000 less in the second quarter of 2019 compared to the second quarter of 2018 due to a write-down of our GLA inventory in the second quarter of 2018. Research and development (R&D) spending increased by $156,000 in the second quarter of 2019, primarily due to higher employee-related expenses and ASG costs. General and administrative (SG&A) costs for the second quarter of 2019 were $196,000 higher than the second quarter in 2018, mainly the result of additional employee-related expenses, as well as increased marketing and public relations activities. In the first half of 2019, operating expenses were $9.6 million, compared to $9.1 million in the first half of 2018. Cost of product revenues decreased by $159,000, or 52 percent, in the first half of 2019 as compared to the first half of 2018, as a result of the GLA inventory write-down in 2018. R&D expenses were $266,000 higher, or 8%, due mainly to the timing of activities in support of Verdeca and SG&A expenses increased by $387,000, or 7 percent, primarily the result of higher employee and recruiting expenses, along with increased consulting, marketing and public relations activities.

Net Income (Loss)

Net income for the second quarter of 2019 was $4.2 million, or income of $0.84 per share, a 164 percent increase from the $6.7 million loss in the second quarter of 2018. Net loss for the first half of 2019 was $8.4 million, or ($1.70) per share, compared to the net loss of $17.3 million for the first half of 2018. The increase for both periods was largely due to 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 was recorded in the first quarter of 2018.

 

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