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Arcadia Biosciences Announces Strong Second-Quarter and First-Half 2021 Financial Results and Business Highlights

 Arcadia Biosciences, Inc.® (Nasdaq: RKDA), a producer and marketer of innovative, plant-based health and wellness products, today released its financial and business results for the second quarter and first half of 2021.

"In addition to being marked by five-fold revenue growth, our second quarter was the first time Arcadia recorded sales from our consumer brands, representing a key milestone in our transformation to a dynamic producer and marketer of innovative, plant-based health and wellness products," said Matt Plavan, CEO of Arcadia.

"The quarter was also highlighted by significant advancements in our strategic resource and capacity building, and the successful integration of operations following the Lief Brands acquisition," he added. "We strongly believe that these initiatives, along with the profitable sale of our Bioceres shares will enable us to accelerate our current momentum and strongly position the company to achieve meaningful top-line growth."

Q2 and Recent Operating and Business Highlights

  • Arcadia Names Veteran CPG Leader Laura Pitlik as Chief Marketing Officer. Arcadia recently named Laura Pitlik its Chief Marketing Officer to expand brand awareness of its consumer goods following several key acquisitions. A veteran CPG strategist, Pitlik launched the first national line of all-natural breads, Nature's Pride®, for Hostess Brands, and has deep expertise in the CPG industry, leading brands such as Dr Pepper®, Wonder® Bread and On The Border® tortilla chips and salsas.
  • Arcadia Hires Lief Executives with Acquisition, Bringing Deep CPG Experience. As part of the Lief acquisition, Arcadia hired two senior CPG executives: Chris Cuvelier as Chief Growth Officer and Belinda Yao as Vice President of Operations. Cuvelier leads growth strategy and sales execution for the company's consumer goods business. As the founder and former CEO of plant-based beverage maker Zola, Cuvelier successfully extended the Zola brand to include coconut water and grew gross revenues to more than $20 million annually.
     
    Yao oversees supply chain manufacturing for the company, including demand planning, procurement and supplier relationships, order fulfillment, inventory management, logistics, customer service and data analytics. She is a former supply chain lead for The Dannon Company, Harmless Harvest and Zola.
     
    The company also expanded its roster of CPG talent beyond executive roles, having attracted key individuals in finance and procurement positions who bring tenured experience from leading CPG companies.
  • Arcadia Advances Successful Integration of Lief Brands. Immediately upon the close of the Lief acquisition, Arcadia began integrating the Lief manufacturing team, leveraging overhead synergies, and scaling manufacturing capacity to meet anticipated volume growth.
  • Arcadia Completes Sale of Bioceres Shares. Arcadia successfully sold the Bioceres shares previously acquired as partial consideration for the sale of its partnership interest in Verdeca. With this sale and the up-front payments received at the time of the transaction, the company successfully monetized more than $27 million in cash from the sale of its interest in the HB4 drought tolerant soybean technology. Arcadia still retains further royalty rights up to $10 million upon commercialization of HB4.

Arcadia Biosciences, Inc.

Financial Snapshot

(Unaudited)

($ in thousands)

 
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
  

2021

  

2020

  

Favorable /

(Unfavorable)

  

2021

  

2020

  

Favorable /

(Unfavorable)

 
          

$

  

%

          

$

  

%

 

Total revenues

  

1,405

   

281

   

1,124

   

400

%

  

2,234

   

590

   

1,644

   

279

%

Total operating expenses

  

9,088

   

7,157

   

(1,931)

   

(27)

%

  

15,243

   

13,256

   

(1,987)

   

(15)

%

Loss from operations

  

(7,682)

   

(6,876)

   

(806)

   

(12)

%

  

(13,009)

   

(12,666)

   

(343)

   

(3)

%

Net loss attributable to common stockholders

  

(5,261)

   

(9,689)

   

4,428

   

46

%

  

(3,202)

   

(7,164)

   

3,962

   

55

%

Revenues
In the second quarter of 2021, revenues were $1.4 million, compared to revenues of $281,000 in the second quarter of 2020, and first half 2021 revenues were $2.2 million, compared to $590,000 in the first half of 2020. The $1.1 million quarter-over-quarter increase was primarily driven by the sales related to the newly acquired portfolio of wellness brands, in addition to GoodHemp seed sales. The $1.6 million year-over-year increase was driven by the aforementioned, in addition to higher GoodWheat grain sales during the first quarter of 2021.

Operating Expenses
In the second quarter of 2021, operating expenses were $9.1 million compared to $7.2 million in the second quarter of 2020, and first half 2021 operating expenses were $15.2 million compared to $13.3 million in the first half of 2020.

Cost of product revenues in the second quarter of 2021 included costs associated with the newly acquired portfolio of wellness brands and $720,000 of write-downs of wheat inventories and hemp seed inventory to fair value, while the second quarter of 2020 included a $1.4 million write-off of hemp seeds that did not meet quality specifications. Cost of product revenues for the first half of 2021 were $2.4 million, or $821,000 higher than in the first half of 2020, primarily driven by sales of the newly acquired product lines.

Research and development (R&D) spending decreased by $862,000 and $1.9 million for the second quarter and six months ended June 30, 2021, respectively, primarily due to lower employee expenses as we right-sized our research teams, along with the absence of Verdeca related activity in 2021.

General and administrative (SG&A) costs for the quarter and six months ended June 30, 2021 were $2.7 million and $3.0 million higher than in the quarter and six months ended June 30, 2020, respectively, resulting in part from the acquisitions this quarter, including investment banker success fees, legal diligence and transaction fees, as well as additional salaries and benefits with the increased headcount. Marketing, advertising and consulting activities increased in 2021 as well.

Net Income Attributable to Common Stockholders
Net loss attributable to common stockholders for the second quarter of 2021 was $5.3 million, or $0.24 per share, a $4.4 million decrease from the $9.7 million, or $1.04 per share, net loss for the second quarter of 2020. The second quarter of 2021 included $2.8 million of other income for the gain on the sale of Bioceres shares and $498,000 of non-cash expense recognized as a result of the increase in the fair value of common stock warrant liabilities. The first quarter of 2020 included $3.1 million of non-cash expense for the increase in the fair value of common stock warrant liabilities.

Net loss attributable to common stockholders for the first half of 2021 was $3.2 million, or $0.15 per share, a $4.0 million decrease from the $7.2 million, or $0.80 per share, net loss for the second half of 2020. A realized gain on the sale of Bioceres shares in the amount of $10.2 million was recognized in the first half of 2021. Non-cash expense of $176,000 was recorded in the first half of 2021 for the increase in the fair value of common stock warrant liabilities, while $5.1 million of non-cash income was recorded during the first half of 2020 for the decrease in the fair value of common stock warrant liabilities.

Conference Call and Webcast
The company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, August 16, to discuss second-quarter 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:

3389334

A live webcast of the conference call will be available on the "Investors" section of the Arcadia 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.
With origins as a trailblazing developer of science-based approaches to enhancing the quality and nutritional value of crops and food ingredients, Arcadia Biosciences (Nasdaq: RKDA) is now a producer of innovative, plant-based health and wellness products, within the portfolios of GoodWheat™ and Lief™, which includes popular brands Soul Spring™, ProVault™, Saavy Naturals® and Zola® coconut water. The company's growing number of innovative offerings are designed to enhance quality and health benefits in an array of consumer product categories. For more information, visit https://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 projected revenue growth as a result of the asset acquisition. 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 price and demand for the company's products are lower than expected; the company's and its partners' and affiliates' ability to develop and sell commercial products incorporating its traits, and complete the regulatory review process for such products; the company's compliance with laws and regulations that impact the company's business, including the sale of products containing CBD, and changes to such laws and regulations; the growth of the global wheat and hemp markets; the successful integration of the acquired brands and assets into Arcadia's business; the potential impact of COVID-19 on the company's 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" and additional information set forth in its Form 10-K for the year ended December 31, 2020, and other filings. These forward-looking statements speak only as of the date hereof, and Arcadia Biosciences, Inc. undertakes no duty to update these forward-looking statements.

LinkedIn: Arcadia Biosciences
Twitter: @ArcadiaAg

Arcadia Biosciences, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

 
 

June 30,
2021

  

December 31,
2020

 

Assets

       

Current assets:

       

Cash and cash equivalents

$

43,977

  

$

14,042

 

Short-term investments

 

   

11,625

 

Accounts receivable

 

1,147

   

1,406

 

Inventories, net — current

 

3,897

   

3,812

 

Prepaid expenses and other current assets

 

1,895

   

811

 

Total current assets

 

50,916

   

31,696

 

Restricted cash

 

   

2,001

 

Property and equipment, net

 

3,740

   

3,539

 

Right of use asset

 

6,360

   

5,826

 

Inventories, net — noncurrent

 

3,890

   

3,485

 

Goodwill

 

1,648

   

408

 

Intangible assets, net

 

4,068

   

370

 

Other noncurrent assets

 

176

   

23

 

Total assets

$

70,798

  

$

47,348

 

Liabilities and stockholders' equity

       

Current liabilities:

       

Accounts payable and accrued expenses

$

5,189

  

$

4,105

 

Amounts due to related parties

 

33

   

80

 

Debt — current

 

1,140

   

1,141

 

Unearned revenue — current

 

63

   

8

 

Operating lease liability — current

 

962

   

717

 

Other current liabilities

 

264

   

263

 

Total current liabilities

 

7,651

   

6,314

 

Debt — noncurrent

 

87

   

2,105

 

Operating lease liability — noncurrent

 

5,727

   

5,389

 

Common stock warrant liabilities

 

12,514

   

2,708

 

Other noncurrent liabilities

 

2,140

   

2,280

 

Total liabilities

 

28,119

   

18,796

 

Commitments and contingencies

       

Stockholders' equity:

       

Common stock, $0.001 par value—150,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 22,163,650 and 13,450,861 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

 

63

   

54

 

Additional paid-in capital

 

256,616

   

239,496

 

Accumulated other comprehensive income

 

(12)

   

 

Accumulated deficit

 

(215,027)

   

(211,825)

 

Total Arcadia Biosciences stockholders' equity

 

41,640

   

27,725

 

Non-controlling interest

 

1,039

   

827

 

Total stockholders' equity

 

42,679

   

28,552

 

Total liabilities and stockholders' equity

$

70,798

  

$

47,348

 

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,

 
  

2021

   

2020

   

2021

   

2020

 

Revenues:

               

Product

$

1,379

  

$

231

  

$

2,183

  

$

385

 

License

 

   

   

   

100

 

Royalty

 

26

   

12

   

51

   

42

 

Contract research and government grants

 

   

38

   

   

63

 

Total revenues

 

1,405

   

281

   

2,234

   

590

 

Operating expenses:

               

Cost of product revenues

 

1,587

   

1,490

   

2,443

   

1,622

 

Research and development

 

1,131

   

1,993

   

2,290

   

4,237

 

Change in fair value of contingent consideration

 

   

   

(140)

   

 

Write-down of fixed assets

 

   

   

210

   

 

Selling, general and administrative

 

6,370

   

3,674

   

10,439

   

7,397

 

Total operating expenses

 

9,088

   

7,157

   

15,243

   

13,256

 

Loss from operations

 

(7,682)

   

(6,876)

   

(13,009)

   

(12,666)

 

Interest expense

 

(1)

   

(6)

   

(8)

   

(9)

 

Other income, net

 

2,759

   

10

   

10,222

   

82

 

Change in fair value of common stock warrant liabilities

 

(498)

   

(3,079)

   

(176)

   

5,082

 

Gain on extinguishment of warrant liability

 

   

47

   

   

47

 

Issuance and offering costs

 

   

   

(769)

   

 

Net loss before income taxes

 

(5,422)

   

(9,904)

   

(3,740)

   

(7,464)

 

Income tax benefit (provision)

 

   

10

   

   

(7)

 

Net loss

 

(5,422)

   

(9,894)

   

(3,740)

   

(7,471)

 

Net loss attributable to non-controlling interest

 

(161)

   

(205)

   

(538)

   

(307)

 

Net loss attributable to common stockholders

$

(5,261)

  

$

(9,689)

  

$

(3,202)

  

$

(7,164)

 

Net loss per share attributable to common stockholders:

               

Basic and diluted

$

(0.24)

  

$

(1.04)

  

$

(0.15)

  

$

(0.80)

 

Weighted-average number of shares used in per share

   calculations:

               

Basic and diluted

 

21,745,403

   

9,327,317

   

21,271,960

   

8,989,265

 

Other comprehensive loss, net of tax

               

Unrealized losses on investment securities

 

   

   

   

(1)

 

Foreign currency translation adjustment

 

(12)

   

   

(12)

   

 

Other comprehensive loss

 

(12)

   

   

(12)

   

(1)

 

Comprehensive loss attributable to common stockholders

$

(5,273)

  

$

(9,689)

  

$

(3,214)

  

$

(7,165)

 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 
 

Six Months Ended June 30,

 
  

2021

   

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

       

Net loss

$

(3,740)

  

$

(7,471)

 

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

       

         Change in fair value of common stock warrant liabilities

 

176

   

(5,082)

 

         Gain on extinguishment of warrant liability

 

   

(47)

 

         Change in fair value of contingent consideration

 

(140)

   

 

         Issuance and offering costs

 

769

   

 

         Depreciation

 

484

   

182

 

         Amortization of intangible assets

 

48

   

 

         Lease amortization

 

639

   

484

 

         Loss on disposal of fixed assets

 

135

   

 

         Net amortization of investment premium

 

   

(44)

 

         Stock-based compensation

 

681

   

1,367

 

         Realized gain on corporate securities

 

(10,222)

   

 

         Write-down of fixed assets

 

210

   

 

         Write-down of inventory and prepaid production costs

 

983

   

1,421

 

         Changes in operating assets and liabilities:

       

                Accounts receivable

 

259

   

199

 

                Inventories

 

(633)

   

(8,031)

 

                Prepaid expenses and other current assets

 

(938)

   

(1,276)

 

                Other noncurrent assets

 

(153)

   

(15)

 

                Accounts payable and accrued expenses

 

1,083

   

2,252

 

                Amounts due to related parties

 

(47)

   

(18)

 

                Unearned revenue

 

56

   

(42)

 

                Other current liabilities

 

1

   

 

                Other noncurrent liabilities

 

(1)

   

(43)

 

         Operating lease payments

 

(590)

   

(384)

 

   Net cash used in operating activities

 

(10,940)

   

(16,548)

 

CASH FLOWS FROM INVESTING ACTIVITIES:

       

Purchases of property and equipment

 

(713)

   

(1,749)

 

Purchases of investments

 

   

(1,292)

 

Acquisitions, net of cash acquired

 

(4,250)

   

 

Proceeds from sales and maturities of investments

 

21,845

   

17,650

 

   Net cash (used in) provided by investing activities

 

16,882

   

14,609

 

CASH FLOWS FROM FINANCING ACTIVITIES:

       

Proceeds from issuance of common stock and warrants from January 2021 PIPE securities purchase agreement

 

25,147

   

 

Payments of offering costs relating to January 2021 PIPE securities purchase agreement

 

(1,912)

   

 

Proceeds from warrant exercises from June 2018 Offering

 

   

6,822

 

Proceeds from borrowings

 

   

3,108

 

Payment of transaction costs relating to extinguishment of warrant liability

 

   

(594)

 

Principal payments on debt

 

(2,019)

   

(15)

 

Proceeds from ESPP purchases

 

27

   

14

 

Capital contributions received from non-controlling interest

 

750

   

1,182

 

   Net cash provided by financing activities

 

21,993

   

10,517

 

Effects of foreign currency translation on cash and cash equivalents

 

(1)

   

 

Net increase in cash, cash equivalents and restricted cash

 

27,934

   

8,578

 

Cash, cash equivalents and restricted cash — beginning of period

 

16,043

   

8,417

 

Cash, cash equivalents and restricted cash — end of period

$

43,977

  

$

16,995

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

       

Cash paid for income taxes

$

1

  

$

 

Cash paid for interest

$

21

  

$

6

 

NONCASH INVESTING AND FINANCING ACTIVITIES:

       

Fixed assets acquired with notes payable

$

  

$

37

 

Common stock warrants issued to placement agent and included in offering costs related to May 2020 Warrant Transaction

$

  

$

215

 

Shares of common stock issued at closing of Arcadia Wellness transaction

$

2,053

  

$

 

Common stock warrants issued to placement agent and included in offering costs related to January 2021 PIPE securities purchase agreement

$

942

  

$

 

Right of use assets obtained in exchange for new operating lease liabilities

$

913

  

$

3,947

 

Purchases of fixed assets included in accounts payable and accrued expenses

$

58

  

$

 

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