Arcadia Biosciences announces Third-Quarter 2016 financial results and business highlights

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 2016.

The company’s loss from operations was $3.9 million in the third quarter of 2016 compared to $4.2 million in the third quarter of 2015. Net loss attributable to common stockholders in the third quarter of 2016 was $4.2 million, compared to $4.6 million in the comparable period in 2015.

Cash on hand and liquid investments at the end of the third quarter totaled $57.4 million.

“I’m pleased to report that Arcadia advanced several pipeline traits this quarter with the completion of current season field trials in corn hybrids and wheat, as well as USDA and FDA regulatory submissions for HB4 stress tolerant soybeans,” said Raj Ketkar, president and CEO of Arcadia. “In addition, we made substantial progress in our comprehensive pipeline review, which will result in a realignment of our priorities, a refined focus on near-term revenue and continued optimization in our cost structure.” Arcadia made the following business and technical achievements in the third quarter of 2016:

• HB4 stress tolerant soybean regulatory progress. Through its Verdeca joint venture with Bioceres, Arcadia submitted regulatory dossiers to the USDA and FDA and initiated regulatory studies to support planned submissions in China and Europe.
• Arcadia expands production of Resistant Starch wheat. Arcadia advanced product and agronomic testing of its Resistant Starch wheat materials. This non-GM product is expected to play an important role in the development of high fiber, low glycemic index foods to combat global health issues of diabetes and obesity, and the product is currently being evaluated by multiple ingredient and consumer packaged goods companies.
• Corn yield and stress trait development with Dow AgroSciences. The third season of field trials in corn was completed, with multiple candidates showing promise. Data analysis is underway to identify the most promising elite lines to advance into additional field testing.
• SONOVA GLA use in pet food. Arcadia is actively engaged with the FDA on its regulatory submission for GLA safflower oil use in pet food, which, upon approval, is expected to open a new market for its highly concentrated SONOVA GLA product.
• Arcadia names new CFO. Matthew Plavan joined the company as chief financial officer on September 12, 2016. Plavan brings nearly 30 years of financial and executive leadership experience to Arcadia in the areas of business operations, fiscal management and strategy, commercial partnering, M&A and integration activities, and public and private equity fundraising. Most recently, Plavan served in multiple executive capacities, including CFO, COO and CEO with Cesca Therapeutics, Inc. (Nasdaq: KOOL), a company engaged in research, development and commercialization of autologous cell-based therapeutics.

Since the close of the third quarter, Arcadia has announced the following:

• Verdeca submits regulatory dossier for HB4 soybeans in China. Through its Verdeca joint venture with Bioceres, Arcadia submitted a regulatory dossier in China for import approval of HB4 stress tolerant soybeans. The trait has received regulatory approval in Argentina, with additional approvals pending in Uruguay and the U.S.
• Kevin Comcowich joins board of directors. Experienced business and financial executive Kevin Comcowich joined Arcadia’s board of directors on October 30, 2016. Comcowich most recently served as the CEO and portfolio manager of HTX Energy Fund in Houston, Texas and has extensive experience in investment management and global capital market strategies. He will serve as an independent director and member of the audit committee.
• Chief scientific officer plans to retire. Vic Knauf, Arcadia’s chief scientific officer, has announced his plans to retire at the end of this year. He will continue to serve on the company’s board of directors and will assist in an informal advisory capacity after his retirement to ensure a seamless transition of his management duties.

Revenues

In the third quarter of 2016, revenues were $1.1 million, compared to revenues of $1.8 million in the third quarter of 2015. The quarter-over-quarter results were impacted by the conclusion of certain contract research and government grant projects in 2015. For the first nine months of 2016, overall revenues decreased to $2.6 million from $4.1 million, also as a result of completed contracts and grants in 2015, as well as accelerated revenue recognition associated with the discontinuation of certain license agreements.

Operating Expenses

In the third quarter of 2016, operating expenses were $5.0 million, compared to $6.1 million in the third quarter of 2015. For the first nine months of 2016, operating expenses were $15.8 million, compared to $15.6 million during the same period in 2015. Research and development (R&D) spending decreased by $424,000 in the first nine months of 2016, as a result of reduced subcontract work pertaining to contract research and government grant agreements. General and administrative (SG&A) expenses increased by $641,000 during the same period, primarily as a result of severance costs incurred earlier in the year.

Net Loss

Net loss for the third quarter of 2016 was $4.2 million, compared to $4.6 million for the third quarter of 2015. Net loss for the first nine months of 2016 was $13.9 million, compared to $14.1 million for the first nine months of 2015. The net loss in the first nine months of 2015 included the effect of higher interest expense, and also was impacted by non-cash adjustments to the value of financing-related derivatives. Additionally, the 2015 net loss included the effect of a higher income tax provision.

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders for the third quarter of 2016 was $4.2 million, comparable to $4.6 million in 2015. Net loss attributable to common stockholders for the first nine months of 2016 was $13.9 million, compared to $16.9 million for the same period in 2015. The net loss attributable to stockholders for the first nine months of 2015 included adjustments associated with preferred share financing redemption rights and deemed dividends to a warrant holder.

Per share net loss attributable to common stockholders for the third quarter of 2016 was 9 cents, compared to 11 cents for the third quarter of 2015, and 31 cents for the first nine months of 2016, compared to 72 cents for the first nine months of 2015. The number of shares outstanding used to calculate the per-share losses attributable to common stockholders for each period is weighted and reflects the company’s change from a private to a public company in May 2015.