PR Newswire | Nov 12, 2020 08:03AM EST

Business Highlights

11/12 07:00 CST

Arcadia Biosciences (RKDA) Announces Third-Quarter 2020 Financial Results and Business Highlights-- Executes strategic transaction with Bioceres Crop Solutions (BIOX), bringing $8 million in up-front and contingent cash, 1.875 million BIOX shares and trait royalties of up to $10 million on HB4(r) soybean sales-- Completes acquisition of Industrial Seed Innovations, expanding GoodHemp(tm) portfolio-- Launches multiple products on-line and in grocery stores with Three Farm Daughters to bring GoodWheat(tm) to consumers DAVIS, Calif., Nov. 12, 2020

DAVIS, Calif., Nov. 12, 2020 /PRNewswire/ -- Arcadia Biosciences, Inc.(r) (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 third quarter of 2020.

"I am pleased to report Arcadia has achieved a number of fundamental milestones, resulting in a stronger financial wherewithal to achieve our number one goal: driving near-term shareholder value by unlocking the full potential of our commercial-ready products," said Matthew Plavan, Arcadia's president and CEO. "Through a series of strategic transactions we're announcing today with our business partner Bioceres Crop Solutions (BIOX), commercialization of the HB4(r) soybean business and distribution of our GoodWheat portfolio of products into South and Central America is now in their capable hands, in exchange for cash, shares of BIOX and ongoing royalty payments to Arcadia for both HB4 soybean and GoodWheat sales."

Continued Plavan, "Bioceres is the perfect commercial steward to advance the HB4 soybean into global markets, and we are delighted to share in the equity and revenue upside of the business while dedicating all of our time, attention and capital resources to the near-term scale-up of our GoodWheat and GoodHemp-branded products. With the formal U.S. launch of Three Farm Daughters brand products powered by GoodWheat and the completion of our acquisition of Industrial Seed Innovations (ISI) and its popular hemp seed varieties, we have plenty of momentum to capitalize on."

Recent Operating and Business Highlights

* Strategic Transactions with Bioceres Crop Solutions (BIOX). Arcadia today is announcing a series of strategic transactions with BIOX, including the sale of its membership interest in Verdeca, a soybean joint venture the two companies formed in 2012. In another transaction, Bioceres acquired license rights to Arcadia's GoodWheat technologies in South and Central America, for which Arcadia will receive future royalties on all sales. Arcadia will also receive $6 million in cash, including reimbursement of transaction-related expenses and fees, with an additional $2 million in cash to be paid upon achievement by Verdeca of specific regulatory and commercial milestones. Arcadia also receives 1.875 million unregistered shares of BIOX common stock and trait royalties of up to $10 million on HB4 soybean sales. * Partnership with Three Farm Daughters to Develop and Market GoodWheat Products. In the third quarter, Arcadia announced 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 technology. Since then, the companies have launched multiple Three Farm Daughters-branded food products, including pastas and flour, that leverage the enhanced nutritional profiles of GoodWheat ingredients. These products are now being sold regionally and through the company's e-commerce site: www.threefarmdaughters.com. * Acquisition of Innovative Hemp Seed Breeding Company. Arcadia closed 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 and extracts. The acquisition significantly broadens and accelerates commercialization of Arcadia's hemp-related breeding platform and establishes a breeding research and development facility in the Pacific Northwest, a key hemp production area. * 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 expanding in the future to 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 8 million consumers in China per month. * 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 2021. GoodMills Innovation is recognized as one of the world's leading innovators in grain-based ingredients that are both highly functional and nutritional. * 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. * 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. * Warrant Exercise Transaction Generated $2.6M in Gross Proceeds. Arcadia strengthened its balance sheet through a warrant exercise transaction in the third quarter, providing additional cash resources to persevere through the headwinds of the COVID-19 pandemic.

Arcadia Biosciences, Inc.

Financial Snapshot

(Unaudited)

($ in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

Favorable/ Favorable/ 2020 2019 2020 2019 (Unfavorable) (Unfavorable)

$ % $ %

Total 314 392 (78) (20%) 904 753 151 20%revenues

Totaloperating 7,895 6,585 (1,310) (20%) 21,151 16,145 (5,006) (31%)expenses

Loss from (7,581) (6,193) (1,388) (22%) (20,247) (15,392) (4,855) (32%)operations

Net lossattributable (6,391) (14,187) 7,796 55% (13,553) (22,562) 9,009 40%to commonstockholders

RevenuesIn the third quarter of 2020, revenues were $314,000, compared to revenues of $392,000 in the third quarter of 2019 and for the nine months ended September 30, 2020, revenues were $904,000, compared to $753,000 during the same period in 2019. The quarter-over-quarter revenue decrease was driven by a decrease in contract research and government grants revenue, partially offset by an increase in GLA product sales and GoodWheat royalty revenues. The nine months period increase was driven primarily by a milestone achievement by a licensee in the first quarter of 2020, as well as the increase in GLA product sales and GoodWheat royalty revenues.

Operating ExpensesIn the third quarter of 2020, operating expenses were $7.9 million, compared to $6.6 million in the third quarter of 2019 and for the nine months ended September 30, 2020, operating expenses were $21.2 million, compared to $16.1 million during the same period in 2019.

Research and development (R&D) costs decreased by $169,000 and increased by $612,000 for the third quarter and nine months ended September 30, 2020, respectively. The third quarter decrease was the result of lower soy related costs somewhat offset by higher hemp-related research costs. The increase for the nine months ended September 30, 2020 was primarily driven by higher employee expenses and hemp-related research costs.

General and administrative (SG&A) costs decreased by $185,000 and increased by $1.3 million for the third quarter and nine months ended September 30, 2020, respectively. The third quarter decrease was mainly comprised of lower employee expenses partially offset by higher consulting fees. The increase for the nine months ended September 30, 2020 was primarily the result of higher consulting fees, consultants' stock compensation expenses and insurance premiums.

Cost of product revenues increased by $1.7 million and $3.1 million for the third quarter and nine months ended September 30, 2020, respectively. The third quarter increase was due to a $1.3 million inventory write-off for Arcadia's Archipelago joint venture in response to a recently issued regulatory ruling. The increase for the nine months ended September 30, 2020 was comprised of the third quarter inventory write-off, in addition to the $1.6 million write-down of GoodHemp inventory that did not meet Arcadia's required minimum quality specifications during the first half of 2020.

Net Loss Attributable to Common StockholdersNet loss attributable to common shareholders for the third quarter of 2020 was $6.4 million, or ($0.60) per share, a $7.8 million decrease from the $14.2 million, or $2.04 per share, net loss recognized in the third quarter of 2019. The quarter-over-quarter decrease was largely due to the $7.8 million non-cash expense recognized in the third quarter of 2019 as a result of a significant increase in the fair value of common stock warrant liabilities compared to $1.1 million of non-cash income recognized in the third quarter of 2020 associated with a decrease in these liabilities.

Net loss attributable to common shareholders for the nine months ended September 30, 2020 was $13.6 million, or ($1.42) per share, a $9.0 million decrease from the $22.6 million, or ($4.03) per share, net loss recognized for the nine months ended September 30, 2019.

Conference Call and WebcastThe company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, November 12, to discuss third-quarter financial results, company operations 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: 1303009

A live webcast of the conference call will be available on the "Investors" section of Arcadia's website atwww.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(tm) branded ingredients deliver health benefits to consumers and enable consumer packaged goods companies to differentiate their brands in the marketplace. The company's GoodHemp(tm) seed catalog delivers genetically superior hemp seeds and clones, applying the company's proprietary crop innovation technology, ArcaTech(tm), to an emerging crop. 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. For more information, visitwww.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 the collaboration with Corner Foods, the partnership with Three Farm Daughters, the collaboration with GoodMills Innovation, revenue in 2020, financial performance in 2021, the acquisition of assets from Industrial Seed Innovations and the growth of the company. 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 wheat and hemp related 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 and it partners' ability to fulfill current and follow-on purchase commitments; the company's compliance with laws and regulations that impact the company's business, and changes to such laws and regulations; the growth of the global wheat and hemp markets; the successful integration of the company's business with the businesses of any future partners; the potential impact of COVID-19 on the company's business; the successful closing of the acquisition of Industrial Seed Innovations; 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, 2019, 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 BiosciencesTwitter: @ArcadiaAg

Arcadia Biosciences, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

September 30, December 31, 2020 2019

Assets

Current assets:

Cash and cash equivalents $ 10,201 $ 8,417

Short-term investments - 16,915

Accounts receivable 373 602

Inventories, net - current 9,416 1,794

Prepaid expenses and other current assets 1,204 712

Total current assets 21,194 28,440

Restricted cash 2,001 -

Property and equipment, net 3,484 1,799

Right of use asset 6,013 1,963

Inventories, net - noncurrent 461 364

Goodwill 301 -

Intangible assets, net 400 -

Other noncurrent assets 23 8

Total assets $ 33,877 $ 32,574

Liabilities and stockholders' equity

Current liabilities:

Accounts payable and accrued expenses $ 6,711 $ 4,685

Amounts due to related parties 29 40

Debt - current 705 24

Unearned revenue - current - 42

Operating lease liability - current 700 611

Other current liabilities 263 306

Total current liabilities 8,408 5,708

Debt - noncurrent 2,548 107

Operating lease liability - noncurrent 5,574 1,497

Common stock warrant liabilities 3,065 14,936

Other noncurrent liabilities 2,280 2,000

Total liabilities 21,875 24,248

Commitments and contingencies (Note 14)

Stockholders' equity:

Common stock, $0.001 par value- 150,000,000 shares authorized as of September30, 2020 and December 31, 2019; 10,832,203 and 8,646,149 51 49 shares issued and outstanding as of September30, 2020 and December 31, 2019, respectively

Additional paid-in capital 231,954 214,826

Accumulated other comprehensive income - 1

Accumulated deficit (220,725) (207,171)

Total Arcadia Biosciences stockholders' equity 11,280 7,705

Non-controlling interest 722 621

Total stockholders' equity 12,002 8,326

Total liabilities and stockholders' equity $ 33,877 $ 32,574

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Revenues:

Product $ 245 $ 216 $ 630 $ 485

License 10 17 110 17

Royalty 16 - 58 -

Contract research and 43 159 106 251government grants

Total revenues 314 392 904 753

Operating expenses:

Cost of product revenues 1,841 177 3,463 324

Research and development 1,762 1,931 5,999 5,387

Selling, general and 4,292 4,477 11,689 10,434administrative

Total operating expenses 7,895 6,585 21,151 16,145

Loss from operations (7,581) (6,193) (20,247) (15,392)

Interest expense (23) (3) (32) (3)

Other income, net - 119 83 339

Change in fair value ofcommon stock warrant 1,130 (7,777) 6,212 (6,790)liabilities

Loss on extinguishment (682) - (635) -of warrant liability

Offering costs - (336) - (702)

Net loss before income (7,156) (14,190) (14,619) (22,548)taxes

Income tax benefit (9) 3 (15) (14)(provision)

Net loss (7,165) (14,187) (14,634) (22,562)

Net loss attributable to (774) - (1,081) -non-controlling interest

Net loss attributable to $ (6,391) $ (14,187) $ (13,553) $ (22,562)common stockholders

Net loss per shareattributable to commonstockholders:

Basic and diluted $ (0.60) $ (2.04) $ (1.42) $ (4.03)

Weighted-average numberof shares used in pershare

calculations:

Basic and diluted 10,719,618 6,942,612 9,570,259 5,596,545

Other comprehensiveloss, net of tax

Unrealized losses onavailable-for-sale - (1) (1) -securities

Other comprehensive loss - (1) (1) -

Comprehensive lossattributable to common $ (6,391) $ (14,188) $ (13,554) $ (22,562)stockholders

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Nine Months Ended September 30,

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (14,634) $ (22,562)

Adjustments to reconcile net loss to cash usedin operating activities:

Change in fair value of common stock warrant (6,212) 6,790liabilities

Loss on extinguishment of warrant liability 635 -

Offering costs - 702

Depreciation 395 133

Lease amortization 745 530

(Gain) Loss on disposal of equipment (8) 1

Net amortization of investment premium (44) (121)

Stock-based compensation 1,844 1,870

Write-down of inventory and prepaid production 3,063 -costs

Changes in operating assets and liabilities:

Accounts receivable 229 38

Unbilled revenue - 3

Inventories (9,609) (1,411)

Prepaid expenses and other current assets (1,157) (36)

Other noncurrent assets (15) -

Accounts payable and accrued expenses 2,026 2,425

Amounts due to related parties (11) (1)

Other current liabilities (43) 3

Unearned revenue (42) (16)

Operating lease payments (629) (534)

Net cash used in operating activities (23,467) (12,186)

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of property and equipment 8 1

Purchases of property and equipment (2,038) (878)

Acquisitions, net of cash acquired (500) -

Purchases of investments (1,292) (18,458)

Proceeds from sales and maturities of 18,250 18,050investments

Net cash provided by (used in) investing 14,428 (1,285)activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock and 9,372 7,500warrants from June 2019 Offering

Proceeds from borrowings 3,108 -

Payments of transaction costs relating to (863) -extinguishment of warrant liability

Proceeds from issuance of common stock and - 10,000warrants from Purchase Agreement

Payments of offering costs relating to - (776)September 2019 Offering

Payments of offering costs relating to June - (663)2019 Offering

Payments of offering costs relating to June - (24)2018 Offering

Principal payments on notes payable (26) (2)

Proceeds from the exercise of warrants - 5,269

Proceeds from ESPP purchases 51 21

Capital contributions received from 1,182 689non-controlling interest

Net cash provided by financing activities 12,824 22,014

Net increase in cash, cash equivalents and 3,785 8,543restricted cash

Cash, cash equivalents and restricted cash - 8,417 11,998beginning of period

Cash, cash equivalents and restricted cash - $ 12,202 $ 20,541end of period

SUPPLEMENTAL DISCLOSURES OF CASH FLOWINFORMATION:

Cash paid for income taxes $ 1 $ 2

Cash paid for interest $ 7 $ -

NONCASH INVESTING AND FINANCING ACTIVITIES:

Fixed assets acquired with notes payable $ 37 $ 139

Common stock warrants issued to placementagent and included in offering costs related $ 215 $ -to May 2020 Warrant Transaction

Common stock warrants issued to placementagent and included in offering costs related $ 101 $ -to July 2020 Warrant Transaction

Offering costs in accounts payable and accrued $ - $ 21expenses at end of period

Common stock warrants issued to placementagent and included in offering costs related $ - $ 86to June 2019 Offering

Common stock warrants issued to placementagent and included in offering costs related $ - $ 95to September 2019 Offering

Reclassification of common stock warrant $ 7,016liability balance with warrant exercises

Right of use assets obtained in exchange for $ 4,157 $ 2,328new operating lease liabilities

Purchases of fixed assets included in accounts $ - $ 6payable and accrued expenses

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SOURCE Arcadia Biosciences, Inc.