Arcadia Biosciences(RKDA) - 2019 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2019, the company experienced a 6% reduction in revenues for Q4 compared to the prior year and a 20% reduction for the full year compared to 2018 [31] - The net loss attributable to common stockholders for Q4 2019 was $6.2 million, compared to $646,000 in Q4 2018 [35] - Cash on hand, cash equivalents, and short-term investments totaled $25.3 million at the end of 2019, with net cash used in operating activities for the year at $17.2 million [36] Business Line Data and Key Metrics Changes - The company harvested over 2,300 acres of GoodWheat varieties in 2019, which was ten times more than the previous year [9] - The backlog purchase commitments for good hemp seeds exceeded $3.7 million, representing minimum order commitments from retailers and growers for 2020 [12] - The company reported strong feedback from partners testing GoodWheat varieties, indicating positive results for formulation, taste, and baking performance [14] Market Data and Key Metrics Changes - The legalization of hemp cultivation in late 2018 led to a significant increase in the market for hemp-derived products, with global CBD sales topping $4 billion in 2019 [4] - The company has expanded its HB4 drought-tolerant and herbicide-resistant soybeans to over 80% of the global soybean market, including key regions like the U.S., Brazil, and Argentina [10] Company Strategy and Development Direction - The company aims to become a market leader in high-value hemp seeds and varieties by deploying advanced breeding technologies in partnership with the hemp grower community [11] - The company is focused on building a vertically integrated Hawaiian good hemp supply chain to support commercial scale-up once regulations are finalized [7] - The company plans to launch six new hemp prototype varieties for on-farm evaluation through its hemp innovation partner farmer network [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue projections exceeding $10 million in 2020, supported by strong backlog commitments and ongoing interest in hemp products [38] - The company acknowledged potential impacts from the coronavirus but noted that agriculture is deemed an essential industry, allowing operations to continue [38] Other Important Information - The company has established a research pipeline to deliver new hemp varieties that address market challenges and deliver value across various segments [18] - The company is actively pursuing partnerships with North American soybean seed companies to bring HB4 traits to market [58] Q&A Session All Questions and Answers Question: Can you comment on the revenue guidance and the expected split between hemp and wheat product lines? - Management indicated that hemp seed sales and CBD sales are likely to dominate revenues, with a reasonable split of 60-40 in favor of hemp [41][42] Question: What is the impact of social distancing on wheat consumption? - Management noted a significant increase in milling capacity and production to meet the demand for flour as consumers shift to home cooking [44] Question: What is the potential for GoodWheat's brand lines due to supply chain disruptions? - Management believes both Resistant Starch and Reduced Gluten products are compelling, with the potential for Reduced Gluten to catch up in popularity [47] Question: Can you elaborate on the incremental opportunity for hemp sales this year? - Management expects a significant inflow of commitments in May and June as growers finalize their decisions for spring and summer plantings [54][55] Question: What are the milestones for bringing HB4 into North America? - Management highlighted the importance of partnerships and field trials to evaluate the performance of HB4 traits in North American conditions [56][58]