Arcadia Biosciences sales up 25% in financial 2017

Date:03-22-2018

Arcadia Biosciences, a consumer-driven, agricultural food ingredient company, today released its financial and business results for the fourth quarter and full year of 2017.

“2017 was a pivotal year for Arcadia as we sharpened our focus on the commercialization of our non-GM quality and nutrition ingredient traits for the $200B global wheat flour market and demonstrated steady advancement towards the commercialization of our high-value agricultural productivity traits in Argentina and Asia,” said Raj Ketkar, president and CEO. “We achieved notable reductions in our operating loss for the fourth quarter and full year, driven primarily by continued cost containment and the cost efficiencies brought about through focus on a select group of products.

“With the organization in place and commercial launch plans underway in 2018, yesterday we secured $10 million in private equity financing that meaningfully fortifies our cash resources and allows us to effectively execute our health and nutrition growth strategy,” Ketkar said. “This additional financing will accelerate our commercialization activities and demonstrates our commitment to maximizing value for food companies, consumers, growers and our shareholders.”

2017 Operating and Financial Highlights

• Non-GM Wheat Trait Portfolio. Arcadia advanced its non-GM wheat trait portfolio significantly in 2017 by developing new lines of high fiber Resistant Starch wheat with industry-leading levels of amylose, and identified the phenotype for Reduced Gluten wheat. The company in-licensed CRISPR-Cas9 gene editing technology and began integrating the technology to accelerate current development programs.
   
• Strategy. Arcadia validated its strategy to capture value further down the food value chain and built the foundation of a sales and marketing team focused on high-value branded ingredients.
   
• GoodWheat™ Brand. As a result of the company’s strategy validation to give consumer packaged goods companies an opportunity to differentiate their brands, Arcadia developed a unique, consumer-facing ingredient brand, GoodWheat™.
   
• HB4 Drought Tolerant Soybeans. Arcadia and its Verdeca joint venture partner, Bioceres, advanced HB4 drought tolerant soybeans with the FDA’s requlatory approval of the trait for human food and animal feed. Positive results are anticipated for the 2017 efficacy field trials in South Amercia. Additionally, Arcadia and its partner Mahyco are working to restructure the licenses for our abiotic stress traits for accelerated deregulation.
   
• Financial performance. Overall revenues were up for the year and operating expenses were down, resulting in a significant reduction in loss. Operating expenses were down by more than 25 percent from the prior year’s fourth quarter and by more than 15 percent from the prior year, with net loss and net loss attributable to common stockholders down by 20 percent from the prior year. Toward the end of 2017, Arcadia extinguished a costly debt instrument, saving a total of $2 million in cash interest payments over the remaining term of the loan.

2018 Strategic Outlook

Executing branded ingredients strategy. In 2018, Arcadia will launch its commercialization plan to become a consumer-driven, branded food ingredient company providing value-added traits to the health and nutrition foods industries.

Building commercialization capabilities. Arcadia hired Sarah Reiter as chief commercial officer, with over 20 years of experience in agriculture, to help us migrate forward in the ag-food supply chain, expand our nutrition and health ingredients capabilities and strengthen commercial relationships with consumer food companies.

	Three Months Ended December 31				Year Ended December 31
	2017	2016	% Favorable/ (Unfavorable)		2017	2016	% Favorable/ (Unfavorable)
Total Revenues	1,428	540	165%		4,026	3,188	26%
Total Operating Expenses	4,427	6,011	26%		18,341	21,808	16%
Loss From Operations	(2,999)	(5,471)	45%		(14,315)	(18,620)	23%
Net Loss Attributable to Common Stockholders	(2,959)	(5,708)	48%		(15,707)	(19,624)	20%

Revenues In the fourth quarter of 2017, revenues were $1.4 million, compared to revenues of $540,000 in the fourth quarter of 2016. For annual 2017, overall revenues increased to $4.0 million compared to $3.2 million during the same period of 2016. The quarter-over-quarter and annual results were primarily impacted by previously deferred upfront license fees recognized as several agreements were discontinued in the fourth quarter of 2017, as well as delays identified in the fourth quarter of 2016 to the estimated commercial launch dates within the portfolio of license agreements.

Operating Expenses In the fourth quarter of 2017, operating expenses were $4.4 million, compared to $6.0 million in the fourth quarter of 2016. For annual 2017, operating expenses were $18.3 million, compared to $21.8 million during the same period in 2016. Annual research and development (R&D) spending decreased by $1.3 million in 2017 and general and administrative (SG&A) decreased by $1.6 million. Both expense categories had decreases driven primarily by lower salaries and benefits, mainly the result of workforce reductions made during the latter part of 2016. Cost of product revenues deceased by $612,000 as 2016 included a write-down of inventory and none was recorded in 2017.

Net Loss Attrituable to Common Stockholders Net loss attributable to common stockholders for the fourth quarter of 2017 was $3.0 million, or a loss of $1.39 per share, a 48 percent improvement from the $5.7 million loss in the fourth quarter of 2016. Net loss attributable to common stockholders for the year was $15.7 million, or a loss of $7.28 per share, a 20 percent improvement from the $19.6 million loss in 2016.

The net loss attributable to common stockholders in the fourth quarter of 2016 included interest expense on the term loan that was paid off in the third quarter of 2017. The annual loss for 2017 includes a non-recurring loss on extinghishment of debt in the amount of $900,000, as well as interest expense through the date of payoff.