Davis, California, USA
November 15, 2021

Arcadia Biosciences, Inc.® (Nasdaq: RKDA), a producer and marketer of innovative, plant-based health and wellness products, today released its financial and business results for the third quarter of 2021.

“Our third quarter was a continuation of the exciting momentum Arcadia has generated since the beginning of the year, as we again produced strong financial results that further validate our successful transformation into a consumer products company,” said Matt Plavan, CEO of Arcadia. “The quarter also was marked by a heightened intensity of focus, building on the significant progress we have made in capacity-building, integration and alignment of resources.

“To help ensure the positive trajectory continues, we’ve been persistent – with our expanded bench of CPG talent in place – in honing our focus, further refining our go-to-market strategies for 2022 and identifying ways to accelerate our path forward,” he added.

Q3 and Recent Operating and Business Highlights

• Arcadia Expands Distribution of Body Care Products. The company significantly expanded its distribution of body care products compared to the prior year third quarter, which bodes well for continued retail growth. We estimate that distribution for our three body care brands expanded by nearly 80% compared to the prior year, primarily driven by the launch of ProVault™ in Q1 2021.
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  In addition, a new ProVault site – getprovault.com – went live in October, supported by a  digital marketing and advertising campaign. Two remaining product sites are expected to launch by the end of the year, including the rebranded e-commerce sites for Saavy Naturals® (saavynaturals.com) and SoulSpring™ (mysoulspring.com).

• Arcadia Advances Plans for GoodWheat™.  A full-scale launch of five pasta SKUs supported by a comprehensive, consumer-focused marketing campaign will launch in Q1 of 2022, rather than a soft launch of one SKU in December 2021. As part of this effort, the company has made meaningful progress preparing GoodWheat pasta products for entrée into the consumer retail channel, including developing and testing consumer-preferred packaging.
• Arcadia Successfully Harvests Hawaiian Hemp Biomass. Arcadia successfully harvested more than 20,000 lbs. of Hawaiian hemp biomass. The company is currently processing the biomass and expects the resulting output to be the largest supply of Hawaiian CBD on the market today. An analysis of options to optimally monetize this asset is currently underway in cooperation with our partner in Archipelago Ventures™.

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

Revenues
In the third quarter of 2021, revenues were $2.4 million, compared to revenues of $314,000 in the third quarter of 2020, and for the nine months ended September 30, 2021 revenues were $4.6 million, compared to $904,000 in the nine months ended September 30, 2020. The $2.1 million quarter-over-quarter increase was primarily driven by the sales related to the newly acquired portfolio of wellness brands. The $3.7 million year-over-year increase was driven by the aforementioned, in addition to GoodHemp™ seed, GoodWheat grain and increased GLA oil sales during the first nine months of 2021.

Operating Expenses
In the third quarter of 2021, total operating expenses were $11.1 million compared to $7.9 million in the third quarter of 2020, and in the nine months ended September 30, 2021, total operating expenses were $26.3 million compared to $21.2 million in the nine months ended September 30, 2020.

Cost of product revenues in the third quarter of 2021 were $670,000 higher than in the third quarter of 2020. Third quarter 2021 included costs associated with the newly acquired portfolio of wellness brands, along with $449,000 of write-downs of hemp seed inventory to fair value and the destruction of hemp crops, while the three months ended September 30, 2020 included $1.5 million in write-downs. Cost of product revenues for the nine months ended September 30, 2021 were $1.5 million higher than in the nine months ended September 30, 2020, primarily driven by sales of the newly acquired product lines, partially offset by lower write-downs during 2021.

Research and development (R&D) expense decreased by $724,000 and $2.7 million for the third quarter and nine months ended September 30, 2021 and 2020, respectively, primarily due to lower employee expenses as we right-sized our research teams, along with the absence of Verdeca related activity in 2021. Partially offsetting the favorability for the quarter and year to date is a $333,000 expense included in 2021 for the release of product from inventory that was not commercialized by Arcadia.

A write-down of fixed assets in the amount of $1.1 million was recognized in the third quarter of 2021 as a result of the assessed impairment of Archipelago fixed assets due to regulatory challenges and unfavorable market conditions for hemp. The write-down totaled $1.3 million third quarter 2021 year to date, while there was no such write-down during 2020.

General and administrative (SG&A) costs for the quarter and nine months ended September 30, 2021 were $2.0 million and $5.1 million higher than in the quarter and nine months ended September 30, 2020, respectively, resulting in part from the acquisitions, including investment banker success fees, legal diligence and transaction fees, as well as additional salaries and benefits with the increased headcount. Marketing, advertising and consulting activities increased in 2021 as well.

Net Loss Attributable to Common Stockholders
Net loss attributable to common stockholders for the third quarter of 2021 was $2.2 million, or $0.10 per share, a $4.2 million decrease from the $6.4 million, or $0.60 per share, net loss for the third quarter of 2020. The third quarter of 2021 included $1.1 million of other income for the gain on extinguishment of the Paycheck Protection Program loan and $4.8 million of non-cash income recognized as a result of the decrease in the fair value of common stock warrant liabilities. The third quarter of 2020 included $1.1 million of non-cash income for the decrease in the fair value of common stock warrant liabilities.

Net loss attributable to common stockholders for the first nine months of 2021 was $5.4 million, or $0.26 per share, a $8.2 million decrease from the $13.6 million, or $1.42 per share, net loss for the first nine months of 2020. A realized gain on the sale of Bioceres shares in the amount of $10.2 million was recognized in the first nine months of 2021. Non-cash income of $4.6 million was recorded in the first nine months of 2021 for the decrease in the fair value of common stock warrant liabilities, while $6.2 million of non-cash income was recorded during the first nine months of 2020 for the decrease in the fair value of common stock warrant liabilities.

Website: http://www.arcadiabio.com

Published: November 15, 2021