Arcadia Biosciences announces fourth-quarter and full-year 2016 financial results and business highlights

Date:03-09-2017

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 fourth quarter and full year of 2016.

The company’s loss from operations was $5.5 million in the fourth quarter and $18.6 million for the full year of 2016 compared to $4.1 million in the fourth quarter and $15.6 million for 2015. Net loss attributable to common stockholders in the fourth quarter and full year of 2016 was $5.7 million and $19.6 million, compared to $3.9 million and $20.7 million for the comparable periods in 2015.

Cash on hand and investments at the end of the fourth quarter totaled $53.1 million.

“2016 was a year of transition for Arcadia, as we focused on high value yield and nutrition traits that we believe will deliver near-term revenue,” said Raj Ketkar, president and CEO. “After a comprehensive strategic review, in Q4 we realigned the organization and operations to conserve cash, and we expect to see the benefits of these changes in 2017.

“We will continue to work with our partners to advance our rich pipeline of abiotic stress traits, such as nitrogen use efficiency, water use efficiency and salinity tolerance,” he added.

Business and Technology Highlights
Arcadia made the following business and technical achievements in the fourth quarter of 2016:

• SONOVA® GLA safflower oil use in pet food. Arcadia is awaiting approval from the FDA on its regulatory submission for GLA safflower oil use in pet food, which is expected to open a new market for its highly concentrated SONOVA GLA product.
• Regulatory submittal 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 joined 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.
• Organizational changes. Following a comprehensive strategic review of all technology programs, partner progress and market conditions, Arcadia realigned its organization to support near-term product commercialization and preserve cash. This included a reduction in workforce, management changes and consolidation of facilities to reduce operating expenses by 15-20 percent

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

• Arcadia Biosciences Obtains U.S. FDA GRAS Status for SONOVA® GLA Safflower Oil.Arcadia followed FDA-proposed procedures to establish its SONOVA® GLA safflower oil as GRAS under the intended conditions of use. This process included convening an expert panel to review the necessary product safety data and then submitting a notification to the FDA.
• Study Shows Arcadia’s Nitrogen Use Efficiency Trait Increases Yield in NERICA Rice.In field evaluations over three growing seasons and in both upland and lowland rice production systems, rice lines with Arcadia’s NUE trait showed substantial yield increases under different nitrogen application rates. The leading NUE rice line showed a 34 percent increase over controls.

Origin, Arcadia Announce China Biotechnology Collaboration in Corn. Arcadia announced a collaboration with Origin Agritech to deregulate insect resistance/ herbicide tolerance traits in corn. The project involves the first-ever export of a key corn biotechnology product developed in China to the U.S., and Arcadia will assist Origin in developing information for submission to regulatory authorities in the U.S., China and other countries.


Revenues
In the fourth quarter of 2016, revenues were $540,000, compared to revenues of $1.3 million in the fourth quarter of 2015. For annual 2016, overall revenues decreased to $3.2 million compared to $5.4 million during the same period of 2015. The quarter-over-quarter and annual results were primarily impacted by delays to the estimated commercialization dates within the portfolio of license agreements as well as the conclusion of certain contract research and government grant projects in 2015.

Operating Expenses
In the fourth quarter of 2016, operating expenses were $6.0 million, compared to $5.4 million in the fourth quarter of 2015. For annual 2016, operating expenses were $21.8 million, compared to $21.0 million during the same period in 2015. Research and development (R&D) spending decreased by $303,000 in 2016, as a result of reduced subcontract work, partially offset by increased costs associated with Arcadia’s program in corn trait development and commercialization initiated in early 2016. General and administrative (SG&A) expenses increased by $1.1 million during the same period, primarily due to severance costs associated with the reductions in force.

Net Loss
Net loss for the fourth quarter of 2016 was $5.7 million, compared to $3.9 million for the fourth quarter of 2015. Net loss for the year was $19.6 million, compared to $18.0 million for 2015. The net loss in the fourth quarter 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 fourth quarter of 2015 net loss included the effect of a reduction to the income tax provision.

Net Loss Attributable to Common Stockholders
Net loss attributable to common stockholders for the fourth quarter of 2016 was $5.7 million, compared to $3.9 million for the fourth quarter of 2015. Net loss attributable to common stockholders for the year was $19.6 million, compared to $20.7 million for 2015. The net loss attributable to stockholders for 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 fourth quarter of 2016 was 13 cents, compared to 9 cents for the fourth quarter of 2015, and 44 cents for 2016, compared to 73 cents for 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.