DAVIS, Calif. (August 10, 2015) – Arcadia Biosciences, Inc. (NASDAQ: RKDA), an agricultural technology company with more than 50 pipeline products focused on generating higher yields for farmers through controlling abiotic stress in plants, today released its financial and business results for second-quarter and first-half 2015.

The company’s loss from operations of $3.5 million in the second quarter of 2015 was a 29 percent improvement over the loss from operations in the second quarter of 2014 as a result of slightly higher product and license revenues and a lower level of operating expenses. For the first half of 2015, the operating loss of $7.3 million was a 4 percent improvement on a comparative basis, as reduced operating expenses offset lower revenues.

“Operating performance from the first half of the year and our first quarter as a public company are in line with our expectations, and we are comfortable with our relatively stable level of revenues and expenses in the near-term,” said Eric Rey, president and CEO of Arcadia. “Longer-term, our financial success will be a function of our ability to advance our later-stage pipeline products toward commercialization while continuing to carefully manage operating expenses.”

“The key regulatory approvals, technology achievements, and new partnerships achieved so far this year underscore our ability to advance our pipeline through global regulatory systems, effectively manage extensive field testing, and expand our major global partnerships,” added Rey. “We have created a differentiated model for bringing major yield enhancements to growers globally, and we are focused on accelerating and expanding that potential.”

Arcadia Biosciences, Inc.
Financial Snapshot

(In thousands)
  Three Months Ended June 30   Six Months Ended June 30
  2015 2014 % Increase/
(Decrease)
  2015 2014 % Increase/
(Decrease)
Total Revenues 1,430 1,305 10%   2,245 2,682 (16%)
Total Operating Expenses 4,977 6,304 (21%)   9,503 10,262 (7%)
Loss From Operations (3,547) (4,999) (29%)   (7,258) (7,580) (4%)
Net Loss and Comprehensive Loss (3,677) (5,811) (37%)   (9,480) (9,287) 2%
Net Loss Attributable to Common Stockholders (4,556) (6,329) (28%)   (12,251) (9,805) 25%

Revenues

In the second quarter of 2015, revenues were $1.4 million as compared with revenues of $1.3 million in the second quarter of 2014, a 10 percent increase. The quarter-over-quarter growth was the result of increases in product and license revenues, which offset a decrease in revenues from contract research and government grants. In the first half of 2015, overall revenues decreased to $2.2 million from $2.7 million as a result of lower revenue from contract research and government grants.

Operating Expenses

In the second quarter of 2015, operating expenses were $5 million, down from $6.3 million in the second quarter of 2014, a 21 percent improvement. For the first half of 2015, operating expenses were $9.5 million as compared with $10.3 million during the same period in 2014, a 7 percent reduction. These decreases in operating expenses were a function of lower research and development (R&D) and selling, general and administrative (SG&A) expenses, primarily resulting from the absence of significant one-time expenses, which were incurred in the second quarter and first half of 2014.

Net Loss and Comprehensive Loss

Net loss and comprehensive loss for the second quarter of 2015 was $3.7 million, a 37 percent decrease from the second quarter of 2014. Net loss for the first half of 2015 was $9.5 million, a 2 percent increase over the first half of 2014. The net loss in the first half of 2015 included the effect of higher interest expense, but also was materially impacted by non-cash adjustments to the value of financing-related derivatives, which occurred in the first quarter. Additionally, the 2015 net loss included the effect of a higher income tax provision, while the 2014 first half included a non-cash loss generated by Arcadia’s Limagrain Cereal Seeds LLC joint venture.

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders for the second quarter of 2015 was $4.6 million, or a loss of 19 cents per share, a 28 percent decrease from the second quarter of 2014. The net loss for the first half of 2015 was $12.3 million, or a loss of 94 cents per share, a 25 percent increase from the first half of 2014. The net loss attributable to shareowners included significant non-cash adjustments associated with Series D financing redemption rights and deemed dividends to a warrant holder. The number of diluted shares outstanding used to calculate the per-share losses attributable to common stockholders is weighted and reflects the company’s change from a private to a public company.

Business and Technology Update

“Our key achievements in the second quarter of 2015 were a combination of advancing our pipeline toward commercialization and filling our pipeline with promising new traits,” said Rey. “While not reflected in our current financial results, we continue to make progress on the business, regulatory, and technology aspects that make up the critical components of the long-term value of our pipeline.”

During the second quarter of 2015, Arcadia achieved several key business milestones, including:

  • April 2015 – Argentinian Regulatory Approval Of HB4 Stress-Tolerant Soybeans. Through its Verdeca joint venture with Bioceres, Arcadia received approval from Argentina’s National Advisory Commission on Agricultural Biotechnology (CONABIA), concluding that Verdeca soybeans containing the HB4 trait are as safe for the environment as conventional soybeans. This was the world’s first regulatory approval for a stress tolerance trait in soybeans.
  • April 2015 – Dow AgroSciences Soybean Trait Collaboration. Arcadia and Bioceres, through their Verdeca joint venture, signed a key agreement with Dow AgroSciences to develop and commercialize innovative traits in soybeans, combining Verdeca’s agronomic performance and product quality traits with Dow AgroSciences’ herbicide tolerance and insect resistance traits.
  • June 2015 – U.S. Food and Drug Administration (FDA) Early Food Safety Evaluation For Nitrogen Use Efficiency Trait. The FDA completed its Early Food Safety Evaluation (EFSE) process for alanine aminotransferase, the plant protein responsible for the company’s Nitrogen Use Efficiency (NUE) trait. This critical approval lays the foundation for NUE regulatory approvals for all crops globally.
  • June 2015 – Phytola Collaboration To Increase Oil Content In Soybeans. Arcadia announced its collaboration with Phytola, a leader in oilseed crop research, to develop soybean varieties with higher value due to increased oil content.
  • June 2015 – FDA Approval of GLA Safflower Meal For Use In Animal Feed. The FDA approval of GLA safflower meal for use in animal feed opened up new markets for a by-product of the company’s GLA safflower oil manufacturing process, improving production economics of the product.
  • April 2015 – Study Showed NUE Trait Increases Biomass In Sugarcane. The South African Sugarcane Research Institute (SASRI) published a study in the peer-reviewed journal Plant Cell Reports that showed significant improvements in plant growth parameters and biomass in sugarcane lines incorporating Arcadia’s NUE trait.

Conference Call and Webcast

The company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) to discuss second-quarter and first-half results and the quarter and half’s key strategic achievements.

Interested participants can join the conference call using the following numbers:

U.S. Toll-Free Dial-In +1-855-546-9560
International Dial-In +1-412-455-6124
Passcode 87674224

A live webcast of the conference call will be available on the [“Investors” section of the Arcadia’s website][1] at [www.arcadiabio.com][2]. Following completion of the call, a recorded replay will be available on the company’s [investor website][1].

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; the company’s traits, commercial products, and collaborations; and the company’s ability to manage the regulatory processes for its traits and commercial products. 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; 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 March 31, 2015 and additional information that will be set forth in its Form 10-Q for the quarter ended June 30, 2015. 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][2]. 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.

About Arcadia Biosciences, Inc.

Based in Davis, Calif., with additional facilities in Seattle, Wash. and Phoenix, Ariz., Arcadia Biosciences (NASDAQ: RKDA) develops agricultural products that create added value for farmers while benefitting the environment and enhancing human health. Arcadia’s agronomic performance traits, including Nitrogen Use Efficiency, Water Use Efficiency, Salinity Tolerance, Heat Tolerance and Herbicide Tolerance, are all aimed at making agricultural production more economically efficient and environmentally sound. Arcadia’s nutrition traits and products are aimed at creating healthier ingredients and whole foods with lower production costs. The company was recently listed in the Global Cleantech 100 and was previously named one of MIT Technology Review’s 50 Smartest Companies. For more information, visit [www.arcadiabio.com][2].

Arcadia Biosciences, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

 

 

June 30,

 

December 31,

2015

2014

 

(Unaudited)

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current
assets:

 

 

 

 

 

Cash and cash equivalents

$

80,003

 

$

16,571

Accounts receivable

 

145

 

 

1,042

Unbilled revenue

 

212

 

 

380

Inventories —
current

 

572

 

 

424

Prepaid expenses and
other current assets

 

704

 

 

278

Total current assets

 

81,636

 

 

18,695

Property
and equipment, net

 

633

 

 

728

Inventories
— noncurrent

 

2,101

 

 

2,149

Cost
method investment

 

500

 

 

500

Other
noncurrent assets

 

118

 

 

2,817

Total
assets

$

84,988

 

$

24,889

 

 

 

 

 

 

Liabilities, redeemable and convertible preferred stock

and stockholders’ equity
(deficit)

 

 

 

 

 

Current
liabilities:

 

 

 

 

 

Accounts payable and
accrued expenses

$

4,677

 

$

3,197

Amounts due to related
parties

 

10

 

 

56

Promissory notes
— current

 

 

 

1,055

Convertible promissory
notes

 

3,456

 

 

4,551

Unearned revenue
— current

 

952

 

 

830

Derivative liabilities
related to convertible promissory notes

 

2,688

 

 

1,580

Total current
liabilities

 

11,783

 

 

11,269

Notes
payable

 

19,349

 

 

Note
payable to related party

 

 

 

8,000

Promissory
notes — noncurrent

 

 

 

869

Unearned
revenue — noncurrent

 

2,930

 

 

3,636

Other
noncurrent liabilities

 

3,000

 

 

3,000

Total
liabilities

 

37,062

 

 

26,774

 

 

 

 

 

 

Redeemable
convertible preferred stock, no par value—0 and 10,553,770 shares
authorized as of June 30, 2015 and December 31, 2014; 0 and 9,587,764 issued
and outstanding as of June 30, 2015 and December 31, 2014

 

 

 

34,098

Convertible
preferred stock, no par value—0 and 94,586,346 shares authorized as of
June 30, 2015 and December 31, 2014; 0 and 23,385,029 issued and outstanding
as of June 30, 2015 and December 31, 2014

 

 

 

48,783

Stockholders’
equity (deficit):

 

 

 

 

 

Preferred
stock, $0.001 par value—20,000,000 and 0 shares authorized as of June
30, 2015 and December 31, 2014; no shares issued and outstanding as of June
30, 2015 and December 31, 2014

 

 

 

Common
stock, $0.001 par value—400,000,000 and 140,000,000 shares authorized
as of June 30, 2015 and December 31, 2014; 43,581,695 and 2,074,030
shares issued and outstanding as of June 30, 2015 and December 31, 2014

 

44

 

 

Additional paid-in
capital

 

171,332

 

 

29,204

Accumulated deficit

 

(123,450)

 

 

(113,970)

Total stockholders’ equity
(deficit)

 

47,926

 

 

(84,766)

Total
liabilities, redeemable and convertible preferred stock and stockholders’
equity (deficit)

$

84,988

 

$

24,889

 



 

Arcadia
Biosciences, Inc.

Condensed Consolidated Statements of Operations and
Comprehensive Loss

(Unaudited)

(In thousands, except share and per
share data)

 

 

Three Months Ended June
30,

 

Six Months Ended June
30,

 

2015

 

2014

 

2015

 

2014

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Product

$

179

 

$

65

 

$

260

 

$

199

License

 

401

 

 

195

 

 

559

 

 

371

Contract
research and government grants

 

850

 

 

1,045

 

 

1,426

 

 

2,112

Total revenues

 

1,430

 

 

1,305

 

 

2,245

 

 

2,682

Operating
expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of
product revenues

 

106

 

 

46

 

 

162

 

 

137

Research and
development

 

2,086

 

 

2,275

 

 

3,918

 

 

4,258

Selling,
general and administrative

 

2,785

 

 

3,983

 

 

5,423

 

 

5,867

Total operating
expenses

 

4,977

 

 

6,304

 

 

9,503

 

 

10,262

Loss
from operations

 

(3,547)

 

 

(4,999)

 

 

(7,258)

 

 

(7,580)

Interest
expense

 

(775)

 

 

(399)

 

 

(1,242)

 

 

(783)

Other
income (expense), net

 

735

 

 

222

 

 

(661)

 

 

200

Net
loss before income taxes and equity in loss of unconsolidated entity

 

(3,587)

 

 

(5,176)

 

 

(9,161)

 

 

(8,163)

Income
tax provision

 

(90)

 

 

(99)

 

 

(319)

 

 

(192)

Equity
in loss of unconsolidated entity

 

 

 

(536)

 

 

 

 

(932)

Net
loss and comprehensive loss

 

(3,677)

 

 

(5,811)

 

 

(9,480)

 

 

(9,287)

Accretion
of redeemable convertible preferred stock to redemption value

 

(879)

 

 

(518)

 

 

(2,574)

 

 

(518)

Deemed dividends to warrant holder

 

 

 

 

 

(197)

 

 

Net
loss attributable to common stockholders

$

(4,556)

 

$

(6,329)

 

$

(12,251)

 

$

(9,805)

Net
loss per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.19)

 

$

(3.08)

 

$

(0.94)

 

$

(4.77)

Weighted-average
number of shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

23,775,368

 

 

2,056,559

 

 

12,985,332

 

 

2,056,559

 

 

 

 

 

 

 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of
Cash Flows

(Unaudited)

(In thousands)

 

 

Six Months Ended June
30,

 

2015

 

2014

CASH
FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 Net loss

$

(9,480)

 

$

(9,287)

 Adjustments to reconcile net loss to
cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

141

 

 

183

Gain on disposal of equipment

 

 

 

(3)

Equity in loss of unconsolidated entity

 

 

 

932

Stock-based compensation

 

924

 

 

399

Common stock warrants issued for services

 

 

 

93

Change in fair value of derivative liabilities
related to convertible promissory notes

 

1,108

 

 

(198)

Gain on expiration of warrant and derivative
liability related to notes payable upon IPO

 

(437)

 

 

Accretion of debt discount

 

343

 

 

308

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

897

 

 

398

Amounts due from
related parties

 

 

 

100

Unbilled revenue

 

168

 

 

(360)

Inventories

 

(100)

 

 

(828)

Prepaid expenses and
other current assets

 

(426)

 

 

44

Other noncurrent assets

 

(59)

 

 

17

Accounts payable and
accrued expenses

 

969

 

 

351

Amounts due to related
parties

 

(46)

 

 

(151)

Unearned revenue

 

(54)

 

 

(421)

 Net cash used in operating activities

 

(6,582)

 

 

(8,423)

 

 

 

 

 

 

CASH
FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Cost
method investment

 

 

 

(950)

Proceeds
from sale of property and equipment

 

 

 

7

Purchases
of property and equipment

 

(23)

 

 

(5)

Net
cash used in investing activities

 

(23)

 

 

(948)

 

 

 

 

 

 

CASH
FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds
from issuance of common stock upon initial public offering

 

68,226

 

 

Payments
of IPO issuance costs

 

(6,805)

 

 

 

Proceeds
from issuance of notes payable

 

20,000

 

 

Payments
of debt issuance costs

 

(290)

 

 

 

Proceeds
from exercise of stock options

 

28

 

 

Proceeds
from issuance of redeemable convertible preferred stock and common stock
warrants, net of issuance costs

 

 

 

32,845

Payments
on note payable to related party

 

(8,000)

 

 

Payments
on notes payable and convertible promissory notes

 

(3,122)

 

 

(595)

Capital
lease payments

 

 

 

(39)

     Net cash provided by
financing activities

 

70,037

 

 

32,211

 

 

 

 

 

 

Net
increase in cash and cash equivalents

 

63,432

 

 

22,840

Cash
and cash equivalents — beginning of period

 

16,571

 

 

2,835

Cash
and cash equivalents — end of period

$

80,003

 

$

25,675

 

 

 

 

 

 

Supplemental Disclosures Of Cash Flow Information:

 

 

 

 

 

Cash
paid for interest

$

945

 

$

414

Cash
paid for income taxes

$

149

 

$

83

 

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

 

Accretion
of redeemable convertible preferred stock

$

2,574

 

$

518

Purchases
of property and equipment included in accounts payable and accrued expenses

$

24

 

$

Reclassification
of deferred IPO costs to equity

$

5,111

 

$

Deemed
dividend to common stock warrant holder

$

197

 

$

Issuance
of warrants and derivatives

$

437

 

$

IPO
costs included in accounts payable and accrued expenses

$

1,488

 

$

Conversion of preferred stock to common stock upon IPO 

$

85,454   

 

$