Arcadia Biosciences (RKDA) Announces Strong Third-Quarter Financial Results and Business Highlights

Revenues for quarter up six-fold, year-to-date up four-fold

News provided by

Arcadia Biosciences, Inc.

Nov 15, 2021, 16:05 ET

DAVIS, Calif., Nov. 15, 2021 /PRNewswire/ -- 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 ProVaultTM in Q1 2021.
     
    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 SoulSpringTM (mysoulspring.com).
     
  • Arcadia Advances Plans for GoodWheatTM Launch. 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)


Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

Favorable/
(Unfavorable)

 

2021

2020

Favorable/
(Unfavorable)



$

%


$

%

Total revenues

2,376

314

2,062

657%

4,609

904

3,705

410%

Total operating expenses

11,089

7,895

(3,194)

(40%)

26,331

21,151

(5,180)

(24%)

Loss from operations

(8,713)

(7,581)

(1,132)

(15%)

(21,722)

(20,247)

(1,475)

(7%)

Net loss attributable to
common stockholders

(2,175)

(6,391)

4,216

66%

(5,378)

(13,553)

8,175

60%

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.

Conference Call and Webcast
The company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, November 15, to discuss third-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

International Dial-In:        

+1-225-283-0138

Passcode:                       

9543419

A live webcast of the conference call will be available on the "Investors" section of the Arcadia 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.
With origins as a trailblazing developer of science-based approaches to enhancing the quality and nutritional value of crops and food ingredients, Arcadia Biosciences (Nasdaq: RKDA) is now a producer of innovative, plant-based health and wellness products, which include GoodWheat™, Soul Spring™, ProVault™, Saavy Naturals® and Zola® coconut water. The company's growing number of innovative offerings are designed to enhance quality and health benefits in an array of consumer product categories. 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 projected revenue growth as a result of the asset acquisition. 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 price and demand for the company's products are lower than expected; the company's and its partners' and affiliates' ability to develop and sell commercial products incorporating its traits, and complete the regulatory review process for such products; the company's compliance with laws and regulations that impact the company's business, including the sale of products containing CBD, and changes to such laws and regulations; the growth of the global wheat and hemp markets; the successful integration of the acquired brands and assets into Arcadia's business; the potential impact of COVID-19 on the company's business; 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, 2020, and other filings. These forward-looking statements speak only as of the date hereof, and Arcadia Biosciences, Inc. undertakes no duty to update these forward-looking statements.

Arcadia Biosciences, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)









September 30,
2021

December 31,
2020

Assets





Current assets:





Cash and cash equivalents

$

35,526

$

14,042

Short-term investments

—


11,625

Accounts receivable

1,453


1,406

Inventories, net — current

5,447


3,812

Prepaid expenses and other current assets

1,408


811

Total current assets

43,834


31,696

Restricted cash

—


2,001

Property and equipment, net

2,634


3,539

Right of use asset

3,486


5,826

Inventories, net — noncurrent

3,539


3,485

Goodwill

1,648


408

Intangible assets, net

3,905


370

Other noncurrent assets

182


23

Total assets

$

59,228

$

47,348

Liabilities and stockholders' equity





Current liabilities:





Accounts payable and accrued expenses

$

5,004

$

4,105

Amounts due to related parties

51


80

Debt — current

36


1,141

Unearned revenue — current

—


8

Operating lease liability — current

1,134


717

Other current liabilities

264


263

Total current liabilities

6,489


6,314

Debt — noncurrent

78


2,105

Operating lease liability — noncurrent

2,562


5,389

Common stock warrant liabilities

7,736


2,708

Other noncurrent liabilities

2,140


2,280

Total liabilities

19,005


18,796

Commitments and contingencies





Stockholders' equity:





Common stock, $0.001 par value—150,000,000 shares authorized as of
September 30, 2021 and December 31, 2020; 22,184,235 and 13,450,861
shares issued and outstanding as of September 30, 2021 and December
31, 2020, respectively

63


54

Additional paid-in capital

257,009


239,496

Accumulated other comprehensive income

(24)


—

Accumulated deficit

(217,203)


(211,825)

Total Arcadia Biosciences stockholders' equity



39,845


27,725

Non-controlling interest

378


827

Total stockholders' equity

40,223


28,552

Total liabilities and stockholders' equity

$

59,228

$

47,348

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)




Three Months Ended
September 30,

Nine Months Ended
September 30,



2021


2020


2021


2020

Revenues:











Product

$

2,324

$

245

$

4,506

$

630

License

17


10


17


110

Royalty

35


16


86


58

Contract research and government grants

—


43


—


106

Total revenues

2,376


314


4,609


904

Operating expenses:











Cost of product revenues

2,511


1,841


4,954


3,463

Research and development

1,038


1,762


3,328


5,999

Impairment of intangible assets

120


—


120


—

Change in fair value of contingent consideration

—


—


(140)


—

Write-down of fixed assets

1,108


—


1,319


—

Selling, general and administrative

6,312


4,292


16,750


11,689

Total operating expenses

11,089


7,895


26,331


21,151

Loss from operations

(8,713)


(7,581)


(21,722)


(20,247)

Interest expense

(15)


(23)


(23)


(32)

Other (expense) income, net

(7)


—


10,214


83

Change in fair value of common stock warrant liabilities

4,777


1,130


4,601


6,212

Loss on extinguishment of warrant liability

—


(682)


—


(635)

Gain on extinguishment of PPP loan

1,123


—


1,123


—

Issuance and offering costs

—


—


(769)


—

Net loss before income taxes

(2,835)


(7,156)


(6,576)


(14,619)

Income tax provision

(1)


(9)


(1)


(15)

Net loss

(2,836)


(7,165)


(6,577)


(14,634)

Net loss attributable to non-controlling interest

(661)


(774)


(1,199)


(1,081)

Net loss attributable to common stockholders

$

(2,175)

$

(6,391)

$

(5,378)

$

(13,553)

Net loss per share attributable to common stockholders:











Basic and diluted

$

(0.10)

$

(0.60)

$

(0.26)

$

(1.42)

Weighted-average number of shares used in per share
calculations:











Basic and diluted

22,177,423


10,719,618


20,976,105


9,570,259

Other comprehensive loss, net of tax











Unrealized losses on investment securities

—


—


—


(1)

Foreign currency translation adjustment

(12)


—


(24)


—

Other comprehensive loss

(12)


—


(24)


(1)

Comprehensive loss attributable to common stockholders

$

(2,187)

$

(6,391)

$

(5,402)

$

(13,554)

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)



Nine Months Ended September 30,



2021


2020

CASH FLOWS FROM OPERATING ACTIVITIES:





Net loss

$

(6,577)

$

(14,634)

Adjustments to reconcile net loss to cash used in operating activities:





Change in fair value of common stock warrant liabilities



(4,601)


(6,212)

Loss (gain) on extinguishment of warrant liability

—


635

Change in fair value of contingent consideration

(140)


—

Issuance and offering costs

769


—

Depreciation

737


395

Amortization of intangible assets

99


—

Lease amortization

914


745

Impairment of intangible assets

120


—

Loss (gain) on disposal of fixed assets

17


(8)

Net amortization of investment premium

—


(44)

Stock-based compensation

1,035


1,844

Realized gain on corporate securities

(10,222)


—

Write-down of fixed assets

1,319


—

Write-down of inventory and prepaid production costs

1,802


3,063

Gain on extinguishment of PPP loan

(1,123)


—

Changes in operating assets and liabilities:

—


—

Accounts receivable

(47)


229

Inventories

(2,651)


(9,609)

Prepaid expenses and other current assets

(452)


(1,157)

Other noncurrent assets

(159)


(15)

Accounts payable and accrued expenses

972


2,026

Amounts due to related parties

(29)


(11)

Unearned revenue

(8)


(42)

Other current liabilities

1


(43)

Operating lease payments

(984)


(629)

Net cash used in operating activities

(19,208)


(23,467)

CASH FLOWS FROM INVESTING ACTIVITIES:





Proceeds from sale of property and equipment

2


8

Purchases of property and equipment

(919)


(2,038)

Acquisitions, net of cash acquired

(4,250)


(500)

Purchases of investments

—


(1,292)

Proceeds from sales and maturities of investments

21,845


18,250

Net cash provided by investing activities

16,678


14,428

CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from issuance of common stock and warrants from January 2021
PIPE securities purchase agreement

25,147


—

Payments of offering costs relating to January 2021 PIPE securities
purchase agreement

(1,912)


—

Proceeds from the exercise of warrants

22


9,372

Proceeds from borrowings

—


3,108

Payment of transaction costs relating to extinguishment of warrant liability

—


(863)

Principal payments on debt

(2,032)


(26)

Proceeds from ESPP purchases

39


51

Capital contributions received from non-controlling interest

750


1,182

Net cash provided by financing activities

22,014


12,824

Effects of foreign currency translation on cash and cash equivalents

(1)


—

Net increase in cash, cash equivalents and restricted cash

19,483


3,785

Cash, cash equivalents and restricted cash — beginning of period

16,043


8,417

Cash, cash equivalents and restricted cash — end of period

$

35,526

$

12,202

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:





Cash paid for income taxes

$

1

$

1

Cash paid for interest

$

25

$

7

NONCASH INVESTING AND FINANCING ACTIVITIES:





Fixed assets acquired with notes payable

$

—

$

37

Common stock warrants issued to placement agent and included in offering
costs related to May 2020 Warrant Transaction

$

—

$

215

Common stock warrants issued to placement agent and included in offering
costs related to July 2020 Warrant Transaction

$

—

$

101

Shares of common stock issued at closing of Arcadia Wellness transaction

$

2,053

$

—

Common stock warrants issued to placement agent and included in offering
costs related to January 2021 PIPE securities purchase agreement

$

942

$

—

Right of use assets obtained in exchange for new operating lease liabilities

$

1,662

$

4,157

Purchases of fixed assets included in accounts payable and accrued
expenses

$

—

$

—

SOURCE Arcadia Biosciences, Inc.

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