Arcadia Biosciences sales up 28% in first-half 2017

Arcadia Biosciences, Inc., an agricultural technology company that creates value for farmers while benefitting the environment and enhancing human health, today released its financial and business results for the second quarter and first half of 2017.

Revenues for the quarter were up 37 percent to $991,000, compared to $721,000 for the second quarter of 2016. The increase reflects higher product sales as well as higher contract and grant revenue, primarily the result of a new agreement. Operating expenses for the second quarter were $4.7 million compared to $5.0 million for the same period in the prior year.

The company’s net loss and net loss attributable to common stockholders in the second quarter of 2017 was $4.0 million, compared to $4.6 million in the comparable period in 2016.

For the first half of 2017, net loss attributable to common stockholders was $8.2 million, an improvement of 16 percent over the comparable period loss of $9.7 million in 2016. Cash on hand and liquid investments at the end of the second quarter totaled $44.1 million.

“Our positive momentum from the first quarter continued in the second quarter with increased revenue, decreased operating costs and a reduced net loss,” said Raj Ketkar, president and CEO of Arcadia. “Together with our global partners, we continue to advance the key products from our yield trait and food ingredient platforms toward commercialization.”

Business and Technology Highlights

Arcadia made the following business and technical achievements during the second quarter of 2017:

• SONOVA GLA Safflower Oil Approved For Use in Dog Food. After completing its review of Arcadia’s food additive petition, the FDA concluded that the data supports the safety and functionality of GLA safflower oil as a source of omega-6 fatty acids in dry food for adult dogs. The petition will be approved when the final rule is published in the Federal Register. This approval opens up an expanded opportunity for use of SONOVA GLA safflower oil in pet nutrition and demonstrates Arcadia’s strong regulatory capabilities and commitment toward creating the greatest possible value for our entire product portfolio.
•  
• Eric J. Rey and Gregory D. Waller Join Arcadia Biosciences Board Of Directors. Eric J. Rey and Gregory D. Waller were elected at the company’s annual stockholders meeting to replace directors Vic Knauf, Ph.D., and Rajiv Shah, M.D. Additionally, the board of directors formally elected George F.J. Gosbee as its chair. Gosbee had served as interim chair of the board since November 2016.

Since the close of the second quarter, Arcadia has also announced the following achievements:

• Arcadia and Dow AgroSciences (DAS) to Collaborate on Improved Wheat Quality Trait. Arcadia and DAS will jointly develop and commercialize a breakthrough improved wheat quality trait in North America. The collaboration leverages Arcadia's leading non-GM TILLING trait development platform with DAS’ enabling technology platforms, high-quality elite germplasm and global commercial channels.
•  
• HB4 Stress-Tolerant Soybeans Complete U.S. FDA Safety Review. Through Verdeca, a joint venture with Bioceres, Arcadia completed the FDA safety review for HB4 stress-tolerant soybeans. This allows products derived from the trait to be used commercially in human food and animal feed. This is a major milestone in the development of this trait, which aims to create significant value for soybean growers by bringing yield stability to areas that experience chronic water stress problems.
•  
• Arcadia’s Water Use Efficiency Trait Completes US Food and Drug Administration Early Food Safety Evaluation (EFSE). The FDA’s EFSE concluded that the functional protein for the WUE trait, isopentenyl transferase (IPT), is safe for humans and animals and would not raise food safety concerns if present in the food supply. This approval is an assurance of safety for WUE crops currently under development and being tested in the field and will expedite the regulatory approvals for this trait. Greenhouse and field trials of the WUE trait have been completed in agronomic crops such as rice, wheat, cotton, peanuts and alfalfa, and Arcadia is currently working with collaborators in rice, potato, sugarcane, cotton and multiple tree species.
•  
• Amy Yoder Joins Arcadia Biosciences Board of Directors. Yoder is president and CEO of Anuvia Plant Nutrients and the former president and CEO of Arysta LifeScience. She received a bachelor’s degree in agricultural technology and systems management from Michigan State University, with an emphasis in crop and soil science.

Revenues
In the second quarter of 2017, revenues were $991,000 compared to revenues of $721,000 in the second quarter of 2016, a 37 percent improvement. The quarter-over-quarter increase was driven by increased product sales and additional revenue from a new contract research agreement in 2017. In the first half of 2017, overall revenues increased to $2.0 million from $1.6 million primarily as a result of the new contract research agreement.

Operating Expenses
In the second quarter of 2017, operating expenses totaled $4.7 million, down from $5.0 million in the first quarter of 2016, a decrease of $282,000 or 6 percent. For the first half of 2017, operating expenses were $9.7 million, compared with $10.8 million during the same period in 2016. Cost of product revenues increased by $40,000 as a result of higher sales when comparing the respective six-month periods. Research and development (R&D) spending decreased by $926,000 and general and administrative (SG&A) expenses decreased by $200,000. Both expense categories had decreases driven primarily by lower salaries and benefits, mainly the result of workforce reductions made during 2016.

Net Loss and Net Loss Attributable to Common Stockholders
Net loss and net loss attributable to common stockholders for the second quarter of 2017 was $4.0 million, or a loss of $0.09 per share, a 12 percent improvement from the $4.6 million loss in the second quarter of 2016. Net loss and net loss attributable to common stockholders for the first half of 2017 was $8.2 million, compared to $9.7 million for the first half of 2016.

Liquidity
Following the close of the second quarter, in July 2017, the Company repaid its outstanding term loan with Silicon Valley Bank, including the principal balance of $25.0 million, interest of $148,000, an early prepayment fee of $500,000 and an end-of-term payment fee of $625,000. Due to the early termination of the facility, management estimates the company will save a total of $2.0 million in cash interest payments over the remaining term of the original facility.