Arcadia Biosciences sales down 45% in Q3 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 third quarter of 2017.

Financial and Operational Highlights

• Financial performance. Product and Contract Research and Government Grant Revenues were up year-to-date, and overall revenues were consistent with the prior year. Operating expenses were down double-digits over the prior year third quarter and year-to-date, with net loss lower by 8 percent year-to-date.
• Technology advancement. In-licensed CRISPR-Cas9 gene editing technology will further enable non-GM trait commercialization, accelerating the development of certain traits by as much as two years.
• Commercialization of non-GM health and ingredient traits. In response to customer demand, Arcadia significantly expanded the non-GM wheat trait portfolio, adding a reduced gluten trait variety to its pipeline. In addition, Arcadia is enhancing near-term revenue opportunities for its high-fiber wheat products by targeting the animal feed market along with consumer markets.
• Commercialization of agricultural productivity traits advances in India. Event-selection field trials and efficacy field trials have been approved and planted by our partner Mahyco in India for Nitrogen Use Efficiency (NUE) and Water Use Efficiency (WUE) traits in cotton and rice, signaling potential upcoming milestone achievements.
• Regulatory advancements for drought tolerance traits. The FDA completed its safety review of Arcadia’s HB4 stress-tolerant soybeans allowing products derived from the trait to be used commercially in human food and animal feed. The FDA also concluded that the functional protein for the WUE trait is safe for humans and animals.
• New development collaboration with Dow AgroSciences (DAS). Together with DAS, Arcadia is developing and commercializing a breakthrough, improved non-GM wheat quality trait in North America.
• Corporate governance enhancement. Arcadia expanded its board industry expertise by adding ag biotech veteran Amy Yoder to the board of directors. Amy is president and CEO of Anuvia Plant Nutrients and the former president and CEO of Arysta LifeScience. Amy brings much valued industry insight and expertise, as well as public company board experience.

“These tangible financial, operational and market accomplishments reflect the fundamental advances we’ve made in our growth strategy for building long-term shareholder value,” said Raj Ketkar. “Importantly during the quarter, we’ve further broadened and advanced to market an unparalleled non-GM health and nutritional ingredient products pipeline, and we’ve jump-started the deregulation and commercialization of two of our leading ag productivity traits, Water- and Nitrogen Use Efficiency in rice and cotton.”

Revenues

Revenues for the quarter were $589,000, 45 percent lower than the $1.1 million for the third quarter of 2016. The quarter-over-quarter decrease was driven by the successful completion of a four-year grant in the second quarter of 2017. For the first nine months of 2017, overall revenues of $2.6 million were consistent with 2016 results.

Operating Expenses

In the third quarter of 2017, operating expenses totaled $4.2 million, down from $5.0 million in the third quarter of 2016, a decrease of $798,000 or 16 percent. For the first nine months of 2017, operating expenses were $13.9 million, compared to $15.8 million during the same period in 2016, an improvement of 12 percent. Research and development (R&D) spending decreased by $1.4 million, and general and administrative (SG&A) expenses decreased by $472,000. 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 third quarter of 2017 was $4.5 million, or a loss of $0.11 per share, 8 percent greater than the $4.2 million loss in the third quarter of 2016. Net loss and net loss attributable to common stockholders for the first nine months of 2017 was $12.7 million, or a loss of $0.29 per share, an 8 percent improvement from the $13.9 million loss in the first nine months of 2016.

Liquidity

In July 2017, the Company repaid its outstanding term loan with Silicon Valley Bank, including the principal balance of $25.0 million, an early prepayment fee of $500,000 and an end-of-term payment fee of $625,000. Accordingly, a nonrecurring loss on extinguishment of debt in the amount of $900,000 was recorded and comprises the $1.125 million of fees and $41,000 of deferred loan issuance fees, partially offset by $267,000 of previously amortized end-of-term fees. As a result of 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.

Financial Outlook

Management continues to target overall revenue growth in 2017 compared to the prior year, led primarily by an expected increase in license revenues. Expenses are expected to hold steadily below prior year, while the company maintains healthy investments in the development and commercialization of its pipeline traits. Management believes these trends will result in a meaningful reduction in the use of cash from operations versus the prior year while continuing to advance its key productivity and nutrition ingredient traits to market.

	Three Months Ended September 30,							Nine Months Ended September 30,
		2017				2016			2017				2016
Revenues:
Product	$	82			$	102		$	482			$	422
License		144				218			353				510
Contract research and government grants		363				755			1,763				1,716
Total revenues		589				1,075			2,598				2,648
Operating expenses:
Cost of product revenues		40				60			262				242
Research and development		1,749				2,255			5,241				6,673
Selling, general and administrative		2,415				2,687			8,410				8,882
Total operating expenses		4,204				5,002			13,913				15,797
Loss from operations		(3,615	)			(3,927	)		(11,315	)			(13,149	)
Interest expense		(43	)			(331	)		(747	)			(985	)
Other income, net		46				90			246				242
Loss on extinguishment of debt		(900	)			—			(900	)			—
Net loss before income taxes		(4,512	)			(4,168	)		(12,716	)			(13,892	)
Income tax provision		(13	)			(7	)		(31	)			(24	)
Net loss and net loss attributable to common stockholders	$	(4,525	)		$	(4,175	)	$	(12,747	)		$	(13,916	)
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.11	)		$	(0.09	)	$	(0.29	)		$	(0.31	)
Weighted-average number of shares used in per share calculations:
Basic and diluted		42,676,916				44,370,061			43,272,083				44,336,324
Other comprehensive income (loss), net of tax
Unrealized gains (loss) on available-for-sale securities		8				(1	)		14				108
Other comprehensive income (loss)		8				(1	)		14				108
Comprehensive loss attributable to common stockholders	$	(4,517	)		$	(4,176	)	$	(12,733	)		$	(13,808	)