Davis, California, USA
August 13, 2020 

• Revenues up 38% for the quarter and 63% year to date
• Multiple GoodWheat™ distribution agreements position company for strong revenue finish in 2020
• Pending acquisition of Industrial Seed Innovations will expand GoodHemp™ seed portfolio to include popular Umpqua and Rogue varieties
• Global scale up of HB4® soybeans underway, with harvest of foundation seed to grow up to 90,000 hectares

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 second quarter and first half of 2020.

“Amidst an incredibly challenging economic landscape, I am pleased to report Arcadia has achieved a number of key milestones across each of the crop product areas in which we innovate: hemp, wheat and soy,” said Matthew Plavan, president and CEO of Arcadia Biosciences. “In light of the persistent overhang of this pandemic on the markets, and the impact on our ability to forecast our business with reliable precision, we believe it prudent to provide more generalized versus specific revenue guidance. Notwithstanding these risks, we believe our recently announced multiple GoodWheat™ distribution arrangements, in both B2B and B2C channels, and the conversion of our $3.7M GoodHemp™ seed purchase backlog to grower seed shipments during the balance of the year, will drive a strong revenue finish for 2020.”

“Furthermore, against the buffeting of COVID-19 headwinds, we strengthened our cash position by $9 million during the first half of the year through warrant exchanges, which are less dilutive to shareholders than traditional financings that feature warrant coverage,” continued Plavan. “We believe the probability that these headwinds will largely dissipate by 2021 is reasonably positive. If so, we see the fundamentals of our business as ever-strengthening, and that our GoodWheat™, GoodHemp™, Hawaiian CBD and HB4® soybean businesses unrestrained portend for a very positive financial performance in 2021, and the prospect of reaching quarterly profitability by year’s end remains realistic.”

Recent Operating and Business Highlights

• Collaboration with Corner Foods to Bring GoodWheat to China and Israel. Arcadia’s collaboration with Corner Foods, an affiliate of Corner Capital Group, brings Arcadia’s GoodWheat™ portfolio of non-GMO specialty wheat ingredients to China and Israel. The partnership will introduce GoodWheat products directly to consumers in China via popular e-commerce site TMall and cooking and lifestyle network Tastemade China. Together, these digital platforms reach an estimated eight million consumers in China per month. Arcadia and Corner Foods also plan for introductions into food retail and foodservice markets in Israel, long known for food tech innovation focused on healthful ingredients.
• Partnership with Three Farm Daughters to Develop and Market GoodWheat Products. This week Arcadia announced the execution of a term sheet to form a strategic business venture with Three Farm Daughters, a majority female-owned North Dakota-based consumer food company, to develop and market food products using Arcadia’s patented non-GMO GoodWheat™ Together, the companies will develop Three Farm Daughters-branded food products such as flours, pastas and crackers that leverage the enhanced nutritional profiles of GoodWheat ingredients. Three Farm Daughters products will be sold in grocery stores, on Amazon and through the company’s e-commerce site: www.threefarmdaughters.com.
• Collaboration with GoodMills to Sell GoodWheat in Europe. Through a collaboration with GoodMills Innovation, an affiliate of GoodMills Group, Europe’s largest milling company, Arcadia plans to commercialize GoodWheat varieties across Europe, introducing uniquely healthy products for the retail, consumer and food service sectors beginning in 2020. GoodMills Innovation is recognized as one of the world’s leading innovators in grain-based ingredients that are both highly functional and nutritional.
• Acquisition of Innovative Hemp Seed Breeding Company. Arcadia is closing a transaction with Industrial Seed Innovations (ISI), an Oregon-based industrial hemp breeding and seed company, to acquire its commercial and genetic assets, including seed varieties, germplasm library and intellectual property. ISI’s popular Rogue and Umpqua seed varieties will become part of Arcadia’s portfolio, alongside the company’s GoodHemp™ line of genetically superior hemp seeds, transplants, flowers and extracts. The acquisition will significantly broaden and accelerate commercialization of Arcadia’s hemp-related breeding platform and establish a breeding research and development facility in the Pacific Northwest, a key hemp production area.
• Global Scale-up Underway for HB4® Drought Resistant, Herbicide Tolerant Soybeans. Through its Verdeca joint venture with Bioceres Crop Solutions, Arcadia successfully harvested foundation seed to enable up to 90,000 hectares in preparation for regulatory approval from China. Verdeca is also increasing breeding and new market development activities to access incremental geographies, including Brazil and the U.S.
• Inclusion in Russell Microcap Index. At the end of June, Arcadia joined the Russell Microcap® Index (^RUMIC). Membership in the Index, which remains in place for one year, means automatic inclusion in the appropriate growth and value style indexes, which are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. Arcadia’s inclusion in the Russell Microcap Index will increase investor awareness and broaden its investor base at a time when the company is focused on scaling revenues through the sales of GoodHemp™ and GoodWheat™ seed and grain, as well as the introduction of its Hawaiian CBD products in 2020.
• Expansion of Intellectual Property Protection for GoodWheat Portfolio. Arcadia strengthened its intellectual property and GoodWheat™ technology portfolio with five additional U.S. patents in Q2. The U.S. Patent and Trademark Office awarded the company two patents for extending the shelf life of whole wheat by minimizing hydrolytic and oxidative rancidity. The company also received notices of allowance for three additional patents extending earlier claims surrounding the extended shelf life of wheat and reduced gluten grains. The new patents bring the total number of patents in Arcadia’s GoodWheat portfolio of non-GMO wheat varieties to 23.
• Foundational Patents for Non-GMO Herbicide Tolerant Wheat. The Australian Patent Office granted patents to Arcadia covering herbicide tolerance in wheat, and the U.S. Patent and Trademark Office issued a notice of allowance for the same technology, with patents pending in other territories. Arcadia’s herbicide tolerant wheat technology can be an important tool in the hybrid breeding toolkit. This technology will serve as the foundation for future innovation and could open the door to development of a highly efficient hybrid wheat production system, which would transform the 200 million hectare global wheat industry.
• Randy Shultz, Ph.D. Named Chief Technology Officer. Early in Q2, Arcadia promoted Randy Shultz, Ph.D. to the role of chief technology officer. Shultz joined Arcadia in 2019 as head of research and development and has played an instrumental role in accelerating novel non-GMO hemp varieties with ArcaTechTM, Arcadia’s proprietary rapid prototyping and development platform. In this new, elevated position, Shultz oversees the execution of Arcadia’s strategic, multi-year plan to become a market leader in high-value hemp innovations, as well as continuing to advance next generation products through the company’s GoodWheat pipeline.
• Warrant Exercise Transactions Exceed $9 Million. Arcadia strengthened its balance sheet through two separate warrant exercise transactions in Q2 and Q3, providing additional cash resources to persevere through the headwinds of the COVID-19 pandemic. Proceeds from the transactions with current investors will enable the company to advance its growth strategy, fund product commercialization activities and transform its business through the potential acquisition of assets adding value and speed to its hemp products business.

Arcadia Biosciences, Inc.
Financial Snapshot
(Unaudited)
($ in thousands)

Revenues
In the second quarter of 2020, revenues were $281,000, compared to revenues of $203,000 in the second quarter of 2019 and first half 2020 revenues were $590,000, compared to $361,000 in the first half of 2019. The quarter-over-quarter revenue increase was driven by the increase in GLA product sales and GoodWheat royalty revenues. The year-over-year increase was driven by the aforementioned, in addition to revenue earned from the milestone achievement by a licensee during the first quarter.

Operating Expenses
In the second quarter of 2020, operating expenses were $7.2 million, compared to $5.2 million in the second quarter of 2019 and first half 2020 operating expenses were $13.3 million, compared to $9.6 million in the first half of 2019. Research and development (R&D) costs increased by $43,000 and $781,000 for the second quarter and first half of 2020, primarily due to higher employee expenses and hemp-related research costs.  General and administrative (SG&A) costs increased by $528,000 and $1.4 million for the second quarter and first half of 2020, respectively, primarily due to higher employee expenses, consulting fees and consultants’ stock compensation expenses. Cost of product revenues for the second quarter and first half of 2020 both increased primarily as a result of a $1.4 million write-off of GoodHemp inventory that did not meet Arcadia’s required minimum quality specifications.

Net Income Attributable to Common Stockholders
Net loss attributable to common shareholders for the second quarter of 2020 was $9.7 million, or ($1.04) per share, a $13.9 million decrease from the $4.2 million, or $0.84 per share, net income recognized in the second quarter of 2019. The quarter-over-quarter decrease was largely due to the $3.1 million non-cash expense recognized in the second quarter of 2020 as a result of an increase in the fair value of common stock warrant liabilities versus the $9.5 million non-cash income recognized in the second quarter of 2019 as a result of a decrease in these liabilities.

Net loss attributable to common shareholders for the first half of 2020 was $7.2 million, or ($0.80) per share, a $1.2 million decrease from the $8.4 million, or ($1.70) per share, net loss recognized in the first half of 2019.

Website: http://www.arcadiabio.com

Published: August 14, 2020