DAVIS, Calif., March 25, 2020 /PRNewswire/ -- Arcadia Biosciences, Inc. (Nasdaq: RKDA), a leader in science-based approaches to enhancing the quality and nutritional value of crops and food ingredients, today released its financial and business results for the fourth quarter and full year of 2019.
"We are energized by our progress in hemp, wheat and soy in 2019 and the strength with which we enter 2020 to grow our GoodHempTM seed sales, Hawaiian CBD oils, and GoodWheatTM flour and grain sales," said Matthew Plavan, president and CEO. "Moreover, as we take stock of our progress so far this year, including more than $3.7 million in backlog GoodHemp seed orders, we maintain confidence in our projected goal to exceed $10 million in total revenue this year, although we will continue to assess the potential impact of COVID-19 on our business. Revenues from these orders will be recognized when the seeds are delivered to growers, between second and fourth quarter this year.
"The legalization of industrial hemp cultivation in late 2018 provided us an opportunity like none other in the history of our company," Plavan continued. "With Arcadia's proven plant transformation capabilities in global crops like wheat, rice and soybean, we trained our sights in 2019 on building the most advanced plant breeding platform, ArcaTech, to rapidly prototype, develop and deliver functional improvements in hemp targeting the greatest challenges growers face in adopting and scaling hemp cultivation, such as federal compliance, disease resistance and high cannabinoid content. As a result, much of our R&D focus for the year was on this newly emerging crop, having introduced 10 new varieties, with the goal of becoming a leading provider of high value seed and extracts for the global hemp market.
"2019 also marked a year of strong progress in our GoodWheat business, where we captured first sales and executed a key global commercial agreement. And our Verdeca joint venture accelerated toward commercial launch with new approvals of HB4® drought and herbicide tolerant soybeans in the U.S., Brazil and Paraguay," Plavan said.
2019 Operating and Business Highlights
New Focus on Innovating in Hemp
GoodWheat Portfolio of Non-GM Specialty Wheat Varieties
HB4® Drought and Herbicide Tolerant Soybeans
Recent Highlights in 2020
Arcadia Biosciences, Inc. | |||||||||
Financial Snapshot | |||||||||
(Unaudited) | |||||||||
($ in thousands) | |||||||||
Three months ended Dec 31 | Twelve months ended Dec 31 | ||||||||
2019 | 2018 | Favorable/(Unfavorable) | 2019 | 2018 | Favorable/(Unfavorable) | ||||
$ | % | $ | % | ||||||
Total Revenues | 416 | 444 | (28) | (6%) | 1,169 | 1,464 | (295) | (20%) | |
Total Operating Expenses | 4,405 | 4,798 | 393 | 8% | 20,550 | 18,334 | (2,216) | (12%) | |
Loss From Operations | (3,989) | (4,354) | 365 | 8% | (19,381) | (16,870) | (2,511) | (15%) | |
Net Loss Attributable to Common Stockholders | (6,243) | (646) | (5,597) | (866%) | (28,805) | (13,480) | (15,325) | (114%) |
RevenuesArcadia's revenues in 2019 reflect the impact of the company's transformation from a predominately research and licensing business model to a commercial agriculture model. As a result, revenues from its legacy sources continued to wind down during the year. Arcadia's expectations for the onset and scale up of new product and trait revenues from hemp and wheat remain unchanged for 2020 and beyond, although the company will continue to assess the potential impact of COVID-19 on its business.
In the fourth quarter of 2019, revenues were $416,000, compared to revenues of $444,000 in the fourth quarter of 2018. For annual 2019, revenues decreased to $1.2 million from $1.5 million during the same period of 2018. The quarter-over-quarter and annual results were primarily driven by the decrease in government grant and contract research revenue, partially offset by higher GLA product revenues. The company expects revenue from its hemp and wheat products to total at least $10 million in 2020.
Operating ExpensesOperating expenses for the fourth quarter and year ended December 31, 2019 were $4.4 million and $20.6 million, compared to $4.8 million and $18.3 million for the fourth quarter and year ended December 31, 2018.
Research and development (R&D) spending increased by $166,000 and $1.0 million for the fourth quarter and year end December 31, 2019 compared to the same periods in 2018, primarily due to additional soybean development activities, higher employee-related expenses and hemp related costs.
General and administrative (SG&A) expenses for the fourth quarter of 2019 were $110,000 and $2.0 million higher than for the fourth quarter and year ended December 31, 2018, primarily the result of additional employee-related expenses, hemp consulting fees and stock compensation expense, as well as increased marketing and public relations activities. Included in annual 2019 stock compensation expense was $662,000 of one-time charges for the accelerated vesting of a consultant's performance-based warrants and the modification of our former CEO's stock options in connection with his separation.
Cost of product revenues was $331,000 higher than in the fourth quarter of 2018 and $224,000 higher than annual 2018 due primarily to the write down of wheat inventory in 2019.
Operating expenses for 2019 includes a $1.0 million non-cash fair value gain recognized during the fourth quarter. The non-cash gain was the result of a reduction in the fair value of Arcadia's contingent consideration liability.
Net Loss Attributable to Common StockholdersNet loss for the fourth quarter of 2019 was $6.2 million, or a loss of ($0.72) per share, compared to the $646,000 loss recognized in the fourth quarter of 2018. Net loss for the year was $28.8 million, or ($4.53) per share, compared to the net loss of $13.5 million in 2018. The decrease for both periods was largely due to the change in the fair value of the common stock warrant and common stock adjustment feature liabilities, which is driven by the number of common stock warrants outstanding, as well as the change in the company's stock price. Net loss in the fourth quarter and year ended December 31, 2019 includes non-cash expense of $2.5 million and $9.2 million, respectively, for the change in the fair value of common stock warrant and common stock adjustment feature liabilities, as compared to $3.6 million and $9.6 million of non-cash income recorded during the same periods in 2018.
Conference Call and WebcastThe company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, March 25, to discuss fourth-quarter and annual financial results and key strategic achievements.
Interested participants can join the conference call using the following numbers:
U.S. Toll-Free Dial-In: | +1-844-243-4690 |
International Dial-In: | +1-225-283-0138 |
Passcode: | 8662765 |
A live webcast of the conference call will be available on the "Investors" section of the Arcadia's website at www.arcadiabio.com. Following completion of the call, a recorded replay will be available on the company's investor website.
About Arcadia Biosciences, Inc.Arcadia Biosciences (Nasdaq: RKDA) is a leader in science-based approaches to enhancing the quality and nutritional value of crops and food ingredients. The company's GoodWheat™ branded ingredients deliver health benefits to consumers and enable consumer packaged goods companies to differentiate their brands in the marketplace. Arcadia's agricultural traits are being developed to enable farmers around the world to be more productive and minimize the impact of agriculture on the environment. The company's new GoodHemp seed catalog delivers genetically superior hemp seeds, clones, transplants, flower and extracts, applying the company's proprietary crop innovation technology, ArcaTech, to an emerging crop. For more information, visit www.arcadiabio.com.
Safe Harbor Statement"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release and the accompanying conference call contain forward-looking statements about the company and its products, including statements relating to components of the company's long-term financial success and ongoing plans; the company's and its partners' ability to fulfill backlog seed orders; and the company's traits, commercial products and collaborations. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to: the company's and its partners' ability to develop commercial products incorporating its traits and to complete the regulatory review process for such products; the company's compliance with laws and regulations that impact the company's business, and changes to such laws and regulations; the potential impact of COVID-19 on our business; and the company's future capital requirements and ability to satisfy its capital needs. Further information regarding these and other factors that could affect the company's financial results is included in filings the company makes with the Securities and Exchange Commission from time to time, including the section entitled "Risk Factors" in the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 and additional information that will be set forth in its Form 10-K for the year ended December 31, 2019. These documents are or will be available on the SEC Filings section of the Investor Relations pages of the company's website at www.arcadiabio.com. All information provided in this release and in the attachments is as of the date hereof, and Arcadia Biosciences, Inc. undertakes no duty to update this information.
Arcadia Biosciences, Inc. | ||
Consolidated Balance Sheets | ||
(Unaudited) | ||
(In thousands, except share data) | ||
As of December 31, | ||
2019 | 2018 | |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $ 8,417 | $ 11,998 |
Short-term investments | 16,915 | 9,825 |
Accounts receivable | 602 | 165 |
Unbilled revenue | — | 3 |
Inventories, net — current | 1,794 | 181 |
Prepaid expenses and other current assets | 712 | 704 |
Total current assets | 28,440 | 22,876 |
Property and equipment, net | 1,799 | 395 |
Right of use asset | 1,963 | — |
Inventories, net — noncurrent | 364 | 746 |
Other noncurrent assets | 8 | 7 |
Total assets | $ 32,574 | $ 24,024 |
Liabilities and stockholders' equity | ||
Current liabilities: | ||
Accounts payable and accrued expenses | $ 4,685 | $ 2,645 |
Amounts due to related parties | 40 | 29 |
Notes payable – current | 24 | — |
Unearned revenue — current | 42 | 96 |
Operating lease liability – current | 611 | — |
Other current liabilities | 306 | 284 |
Total current liabilities | 5,708 | 3,054 |
Notes payable – noncurrent | 107 | — |
Operating lease liability – noncurrent | 1,497 | — |
Common stock warrant liabilities | 14,936 | 5,083 |
Other noncurrent liabilities | 2,000 | 3,072 |
Total liabilities | 24,248 | 11,209 |
Stockholders' equity: | ||
Common stock, $0.001 par value — 150,000,000 shares authorized as of December 31, 2019 and December 31, 2018; 8,646,149 and 4,774,919 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively. | 49 | 45 |
Additional paid-in capital | 214,826 | 191,136 |
Accumulated other comprehensive income | 1 | — |
Accumulated deficit | (207,171) | (178,366) |
Total Arcadia Biosciences stockholders' equity | 7,705 | 12,815 |
Non-controlling interest | 621 | — |
Total stockholders' equity | 8,326 | 12,815 |
Total liabilities and stockholders' equity | $ 32,574 | $ 24,024 |
Arcadia Biosciences, Inc. | ||
Consolidated Statements of Operations and Comprehensive Loss | ||
(Unaudited) | ||
(In thousands, except share and per share data) | ||
Year Ended December 31, | ||
2019 | 2018 | |
Revenues: | ||
Product | $ 814 | $ 657 |
License | 67 | 150 |
Contract research and government grants | 288 | 657 |
Total revenues | 1,169 | 1,464 |
Operating expenses: | ||
Cost of product revenues | 885 | 661 |
Research and development | 7,098 | 6,069 |
Change in fair value of contingent consideration | (1,000) | - |
Selling, general and administrative | 13,567 | 11,604 |
Total operating expenses | 20,550 | 18,334 |
Loss from operations | (19,381) | (16,870) |
Interest expense | (5) | — |
Other income, net | 466 | 394 |
Initial loss on common stock warrant and common stock adjustment feature liabilities | — | (4,000) |
Change in fair value of common stock warrant and common stock adjustment feature liabilities | (9,243) | 9,561 |
Offering costs | (708) | (2,555) |
Net loss before income taxes | (28,871) | (13,470) |
Income tax provision | (2) | (10) |
Net loss | (28,873) | (13,480) |
Net loss attributable to non-controlling interest | (68) | — |
Net loss attributable to common stockholders | $ (28,805) | $ (13,480) |
Net loss per share attributable to common stockholders: | ||
Basic and diluted | $ (4.53) | $ (3.58) |
Weighted-average number of shares used in per share calculations: | ||
Basic and diluted | 6,363,112 | 3,766,419 |
Other comprehensive income, net of tax | ||
Unrealized gains on available-for-sale securities | 1 | — |
Other comprehensive income | 1 | — |
Comprehensive loss attributable to common stockholders | $ (28,804) | $ (13,480) |
Arcadia Biosciences, Inc. | ||
Consolidated Statements of Cash Flows | ||
(Unaudited) | ||
(In thousands) | ||
Year Ended December 31, | ||
2019 | 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (28,873) | $ 13,480) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Initial loss on common stock warrant and common stock adjustment feature liabilities | — | 4,000 |
Change in fair value of common stock warrant and common stock adjustment feature liabilities | 9,243 | (9,561) |
Change in fair value of contingent consideration | (1,000) | - |
Offering costs | 708 | 2,555 |
Depreciation | 194 | 154 |
Lease amortization | 708 | — |
Gain (loss) on disposal of equipment | 3 | (3) |
Net amortization of investment premium | (180) | (193) |
Stock-based compensation | 2,287 | 1,550 |
Write down of inventory | 304 | 310 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (437) | 1,066 |
Unbilled revenue | 3 | 2 |
Inventories | (1,535) | 160 |
Prepaid expenses and other current assets | (8) | (151) |
Other noncurrent assets | (1) | — |
Accounts payable and accrued expenses | 2,102 | 176 |
Amounts due to related parties | 11 | (1) |
Unearned revenue | (54) | (312) |
Other current liabilities | 42 | 25 |
Other noncurrent liabilities | — | 72 |
Operating lease payments | (715) | — |
Net cash used in operating activities | (17,198) | (13,631) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of property and equipment | 16 | 10 |
Purchases of property and equipment | (1,477) | (250) |
Purchases of investments | (28,358) | (29,885) |
Proceeds from sales and maturities of investments | 21,450 | 24,150 |
Net cash used in investing activities | (8,369) | (5,975) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock and warrants from June 2019 Offering | 7,500 | — |
Payments of offering costs relating to June 2019 Offering | (663) | — |
Proceeds from issuance of common stock and warrants from September 2019 Offering | 10,000 | — |
Payments of offering costs relating to September 2019 Offering | (798) | — |
Proceeds from issuance of common stock and warrants under March 20108 Purchase Agreement | — | 10,000 |
Payments of offering costs relating to March 2018 Purchase Agreement | — | (1,308) |
Proceeds from issuance of common stock and warrants from June 2018 Offering | — | 14,000 |
Payments of offering costs relating to June 2018 Offering | (24) | (1,182) |
Principal payments on notes payable | (8) | — |
Proceeds from exercise of warrants | 5,269 | — |
Proceeds from exercise of stock options and purchases through ESPP | 21 | 969 |
Capital contributions received from non-controlling interest | 689 | — |
Net cash provided by financing activities | 21,986 | 22,479 |
Net (decrease) increase in cash and cash equivalents | (3,581) | 2,873 |
Cash and cash equivalents — beginning of period | 11,998 | 9,125 |
Cash and cash equivalents — end of period | $ 8,417 | $ 11,998 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid for interest | $ 4 | $ — |
Cash paid for income taxes | $ 2 | $ 34 |
NONCASH TRANSACTIONS: | ||
Offering costs in accounts payable and accrued expenses at end of period | $ 20 | $ 23 |
Common stock warrants issued to placement agent and included in offering costs related to March 2018 Purchase Agreement | $ — | $ 526 |
Common stock warrants issued to placement agent and included in offering costs related to June 2018 Offering | $ — | $ 239 |
Common stock warrants issued to placement agent and included in offering costs related to June 2019 Offering | $ 86 | $ — |
Common stock warrants issued to placement agent and included in offering costs related to September 2019 Offering | $ 95 | $ — |
Reclassification of common stock warrant liability balance with warrant exercises | $ 7,016 | $ — |
Reclassification of unearned revenue to other short-term liabilities | $ — | $ 259 |
Reclassification of common stock adjustment feature liability balance to equity | $ — | $ 8,378 |
Right of use assets obtained in exchange for new operating lease liabilities | $ 2,328 | $ — |
Right of use assets obtained through modification of existing lease agreement | $ 194 | $ — |
Fixed assets acquired with notes payable | $ 139 | $ — |
Purchases of fixed assets included in accounts payable and accrued expenses | $ 1 | $ — |
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SOURCE Arcadia Biosciences, Inc.