Davis, California, USA
March 30, 2021

• Record revenues, up six-fold over prior year 
• Strong balance sheet entering 2021 
• Expanded product offerings

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 fourth quarter and full year of 2020.

“2020 was a remarkable year for Arcadia, as we achieved record revenues and greatly strengthened our financial wherewithal, said Matt Plavan, CEO of Arcadia. “We also established new direct-to-consumer sales channels, introduced new consumer products, enhanced our IP portfolio and fundamentally evolved to a viable commercial enterprise.

“All of this progress in 2020, despite the pandemic, underscores our agility, fortitude and commitment to advancing the transformation of our proprietary innovations into good-for-you foods and wellness products that both fulfill our mission – Healthy people. Healthy planet. – and bring superior returns to our shareholders,” he continued. “We enter 2021 well-funded, well-equipped and highly enthusiastic.”

2020 Key Operating and Business Highlights

GoodWheat™ Platform of Non-GMO Specialty Wheat Ingredients

During 2020, consumer demand for pantry staples like pasta and flour increased significantly, as did e-commerce as a means of consumer procurement, which bodes well for Arcadia’s strategy decision to focus on direct-to-consumer sales for GoodWheat, both on-line and through direct retail. The company began developing the necessary capabilities to access consumers more broadly via e-commerce and retail channels in 2021.

•  Partnership with Three Farm Daughters to Develop and Market GoodWheat Products. Arcadia announced a strategic business venture with Three Farm Daughters™, a majority female-owned North Dakota-based consumer food company, to develop and market food products using Arcadia’s patented non-GMO GoodWheat technology. The companies launched multiple Three Farm Daughters-branded food products, including pastas and flour, that leverage the enhanced nutritional profiles of GoodWheat ingredients. In Q4 of 2020 Arcadia began designing the fundamental building blocks for a successful e-commerce and retail strategy for its GoodWheat pastas and flour, initiating online sales through the Three Farm Daughters website, Amazon and retail sales with a regional grocery chain in North Dakota and Minnesota. This entailed the development of 1) the “powered by” GoodWheat brand positioning, 2) the development of the Three Farm Daughters consumer brand positioning, 3) Design of the back-end e-commerce website functionality, as well as aligning the co-manufacturing supply chain and consumer packaging design. GoodWheat pastas and flour are now being sold in 38 regional grocers and retail stores throughout North Dakota and Minnesota. A sales channel partner was identified to develop a strategy for optimizing distribution and building retail sales in 2021.
• Collaboration with GoodMills to Sell GoodWheat in Europe. Through a collaboration with GoodMills Innovation, an affiliate of GoodMills Group, Europe’s largest milling company, Arcadia plans to commercialize GoodWheat varieties across Europe, introducing uniquely healthy products for the retail, consumer and food service sectors beginning in 2021. GoodMills Innovation is recognized as one of the world’s leading innovators in grain-based ingredients that are both highly functional and nutritional.
• Expansion of Intellectual Property Protection for GoodWheat Portfolio. Arcadia strengthened its intellectual property and GoodWheat technology portfolio with 10 additional patents in 2020. The new patents bring the total number of patents in Arcadia’s GoodWheat portfolio of non-GMO wheat varieties to 28. Key patents include U.S. patents for extending the shelf life of whole wheat by minimizing hydrolytic and oxidative rancidity, a U.S. patent for an allele that improves yield in high fiber, resistant starch wheat, and U.S. and Australian patents for non-GMO herbicide tolerant wheat. The company also received notices of allowance for three additional patents extending earlier claims surrounding the extended shelf life of wheat and reduced gluten grains.

GoodHemp™ Portfolio of Genetically Superior Hemp Seeds

Despite the opaque regulatory framework for CBD in 2020, industry expectations for hemp derived products remains exceptional. Significant fundamentals were established to enable the company to serve the CBD hemp seed and extract markets as expected regulations governing commerce are implemented.

• Acquisition of Innovative Hemp Seed Breeding Company. Arcadia closed a transaction with Industrial Seed Innovations (ISI), an Oregon-based industrial hemp breeding and seed company, to acquire its commercial and genetic assets, including seed varieties, germplasm library and intellectual property. ISI’s popular Rogue and Umpqua seed varieties became part of Arcadia’s GoodHemp portfolio of genetically superior hemp seeds, transplants and extracts. The acquisition significantly broadens and accelerates commercialization of Arcadia’s hemp-related breeding platform and established a breeding research and development facility in the Pacific Northwest, a key hemp production area.
• Tritium 3H to Distribute GoodHemp in Canada. In the fourth quarter of 2020, Arcadia signed a distribution agreement with Tritium 3H, Inc. (T3H), a Canadian hemp seed company that specializes in hemp field testing, certified seed production, commercialization and distribution of industrial hemp varieties for the Canadian market. T3H will distribute Arcadia’s GoodHemp seed varieties and genetics in Canada once they have been certified by the Association of Official Seed Certifying Agencies (AOSCA) and Health Canada. This agreement solidifies Arcadia’s plans to accelerate the commercialization of its hemp genetics internationally and affirms market demand for the GoodHemp portfolio of superior hemp varieties.
• Archipelago Ventures Partnered with Vivion Specialties, Inc. to Distribute Hawaiian Hemp Products in North America. Archipelago Ventures™, a joint venture between Arcadia and Legacy Ventures Hawaii, announced a new partnership with Vivion Specialties, Inc.® (VSI), a North American specialty ingredient supplier in the first quarter of 2020. VSI will serve as Archipelago’s North American distributor, managing the stateside marketing and sales of sun-grown Hawaiian hemp ingredients in key markets like food and beverage, human and pet nutrition and personal care. VSI has a network of 18 sales regions in the U.S. and Canada and is known for its proprietary VivAssure® purity validation process, which tests every ingredient and provides a detailed Certificate of Analysis of its contents. The collaboration will deliver rigorously tested and lab-certified CBD ingredients, providing high quality and transparency for discerning retailers and shoppers throughout North America.

HB4® Drought and Herbicide Tolerant Soybeans

The strategic transaction with Bioceres provided a number of favorable results for Arcadia including, significant non-dilutive liquidity, a strong return on investment, a reduction in forward research and development costs, and a streamlining of management focus towards the wheat and hemp businesses at a critical commercial inflection point.

• Strategic Transactions with Bioceres Crop Solutions.  Arcadia closed a series of strategic transactions with Bioceres Crop Solutions® (BIOX) in the fourth quarter, including the sale of its membership interest in Verdeca®, a soybean joint venture the two companies formed in 2012. In another transaction, Bioceres acquired license rights to Arcadia’s GoodWheat technologies in South and Central America, for which Arcadia will receive future royalties on all sales. Arcadia received $6 million in cash, including reimbursement of transaction-related expenses and fees, with an additional $2 million in cash to be paid upon achievement by Verdeca of specific regulatory and commercial milestones. Arcadia also received 1.875 million unregistered shares of BIOX common stock and trait royalties of up to $10 million on HB4 soybean sales.

Other 2020 Highlights

• Inclusion in Russell Microcap Index. In June 2020, Arcadia joined the Russell Microcap Index® (^RUMIC). Membership in the Index, which remains in place for one year, means automatic inclusion in the appropriate growth and value style indexes, which are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. Arcadia’s inclusion in the Russell Microcap Index will increase investor awareness and broaden its investor base at a time when the company is focused on scaling revenues through the sales of GoodHemp and GoodWheat seed and grain, as well as the introduction of its Hawaiian CBD products in 2020.
• Financing Transactions Generated $17.3 Million in Gross Proceeds. Arcadia strengthened its balance sheet in 2020 through a common stock and warrant financing and two warrant exercise transactions totaling $17.3 million, providing additional cash resources to persevere through the headwinds of the COVID-19 pandemic. Proceeds from these transactions with current investors enabled the company to advance its growth strategy, fund product commercialization activities and transform its business through the potential acquisition of assets adding value and speed to its hemp products business.

Recent Highlights in 2021

Several achievements in the first quarter have positioned Arcadia well for shareholder value creation in 2021.

• GoodHemp Seed Varieties Earn AOSCA Certification. Arcadia announced in February that four of its GoodHemp varieties – Rogue, Umpqua, Santiam and Potomac –  have all passed the rigorous standards of the national Association of Official Seed Certifying Agencies (AOSCA) variety review board. The variety review is conducted by representatives of seed certifying agencies, academia, the seed industry and USDA to make certain new varieties are distinct, uniform and stable. AOSCA certification signifies to the industry that GoodHemp seed is produced to the highest standards for genetic purity, uniformity, high germination and feminization rates and varietal identity. It also enables sales in states such as Florida, that require AOSCA certified hemp seed for planting.
• Leading Consumer Food Industry Executive Joins Board. Debbie Carosella, a prominent consumer food industry executive, joined Arcadia’s board of Directors in February 2021. Carosella is the former CEO of Madhava Natural Sweeteners, a company that provides natural alternatives to refined sugars and artificial sweeteners. A recognized leader in the natural and organic food industry, she previously served as the senior vice president of innovation for Dean Foods/ WhiteWave Foods where she led the development of value-added brands across the company. Prior to that, Carosella was on the executive leadership team at ConAgra Foods where she was both a general manager and innovator for numerous brands in a multitude of food categories.
• $25.1 Million Private Placement Priced At the Market. In January 2021, Arcadia closed a private placement priced at-the-market with proceeds of $25.1 million. The funds will be used for general corporate purposes, including building Arcadia’s  global GoodWheat family of consumer brands, development of its e-commerce, direct-to-consumer digital marketing infrastructure to launch its Three Farm Daughters branded pasta and flour products, and to fund its Archipelago Ventures Hawaiian hemp cultivation and mainland CBD extraction operations.
• E-commerce and Retail Platforms Established for GoodWheat Pasta and Flour. Arcadia entered 2021 with a functioning e-commerce website, and an SEO and digital media marketing plan to begin the design, test, and prove cycles needed to confirm its e-commerce scale-up strategy. The company began that effort in mid-February of this year. Initial results were very favorable in driving traffic to the site, but initially, with sub-par sales conversion. Modifications were made to the SEO formulas and the company is now seeing much better conversion rates. Arcadia is continuing its optimization efforts and expects to substantially increase ad spend in late April and May in an effort to drive increased sales volumes.

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

Revenues
Arcadia’s revenues for 2020 were predominately comprised of license revenue generated from the series of transactions executed with Bioceres in November 2020. The remaining revenues were largely the result of GLA product revenues. As expected, revenues from legacy sources continued to wind down during the year and revenues from new wheat and hemp products are poised for meaningful growth in 2021.

In the fourth quarter of 2020, revenues were $7.1 million, compared to $416,000 in the fourth quarter of 2019. Annual revenues for 2020 increased to $8.0 million from $1.2 million during the same period of 2019. The quarter-over-quarter and annual results were largely driven by the license revenue generated from Bioceres, along with higher GLA product revenues.

Operating Expenses
Operating expenses for the fourth quarter and year ended December 31, 2020 were $(0.3) million and $20.8 million, compared to $4.4 million and $20.6 million for the fourth quarter and year ended December 31, 2019. In the fourth quarter of 2020, operating expenses included an $8.8 million gain on the sale of its membership interests in Verdeca. Operating expenses for 2019 includes a $1.0 million non-cash fair value gain recognized during the fourth quarter. The non-cash gain was the result of a reduction in the fair value of Arcadia’s contingent consideration liability.

Research and development (R&D) spending increased by $214,000 and $826,000 for the fourth quarter and year end December 31, 2020 compared to the same periods in 2019, primarily due to additional hemp development activities and higher employee-related expenses, partially offset by less Verdeca-related costs.

General and administrative (SG&A) expenses for the fourth quarter and year ended December 31, 2020 were $1.6 million and $2.9 million higher than for the fourth quarter and year ended December 31, 2019, primarily the result of additional employee-related expenses, consulting fees and stock compensation expenses, as well as increased marketing and public relations activities.

Cost of product revenues was $1.2 million higher in the fourth quarter of 2020 than in the fourth quarter of 2019 due to the write down of hemp seed and wheat inventory and $4.3 million higher for the year for this reason, along with write-downs in previous quarters resulting from the destruction of hemp biomass and hemp seeds that did not meet quality specifications.

Net Loss Attributable to Common Stockholders
Net income for the fourth quarter of 2020 was $10.0 million, or a gain of $0.90 per share, compared to the $6.2 million loss recognized in the fourth quarter of 2019. Net loss for the year was $4.7 million, or ($0.47) per share, compared to the net loss of $28.8 million in 2019. Annual 2020 included $6.8 million of license revenue and $8.8 million of gain recognized on the sale of Verdeca to Bioceres as part of the transactions with Bioceres executed in the fourth quarter of 2020. There were no similar transactions during 2019. The change in the fair value of the common stock warrant liabilities for the year was a gain of $6.6 million in 2020 compared to a loss of $9.2 million in 2019, the difference driven by a lower ending stock price and fewer warrants outstanding at December 31, 2020 as compared to 2019

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, transplants and extracts, applying the company’s proprietary crop innovation technology, ArcaTech™, to an emerging crop. For more information, visit www.arcadiabio.com.

Website: http://www.arcadiabio.com

Published: March 30, 2021