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RKDA: Arcadia Biosciences is Well Funded for Management’s 2021 Growth Initiatives in GoodWheat & GoodHemp; Also a Review of 2020 Achievements


By Steven Ralston, CFA



Arcadia Biosciences (NASDAQ:RKDA) is on the cusp of meaningful revenue growth, primarily from management’s initiative into the hemp space, but also from the restructured strategic relationship with Bioceres Crop Solutions for the commercialization of HB4 soybean technology in the Central and South America. Furthermore, the GoodWheat franchise should be bolstered by the recent relationships established with Three Farm Daughters (U.S.), Bioceres (Latin America), GoodMills (Europe) and Corner Foods (China and Israel). In addition, the company’s legacy SONOVA GLA product line is anticipated to be sustained through the introduction of GLA supplemental capsules into the China market, which could generate incremental $1.8 million in sales.

The company’s IP portfolio continues to expand through additional patents being granted, and Arcadia is well-funded to advance management’s growth initiatives pertaining to GoodWheat and GoodHemp.

GoodWheat: To help Arcadia Biosciences further transition into a company that provides high-value, branded food ingredients, management has embarked on a direct-to-consumer marketing campaign, which includes digital marketing programs, in order to establish GoodWheat, a non-GMO specialty wheat, as a consumer brand.

Furthermore, retail channel initiatives are being pursued, including the support of North Dakota-based Three Farm Daughters which has both e-commerce ( and and brick & mortar regional grocery store (38 grocers in North Dakota and Minnesota) components.

In August 2020, Arcadia Biosciences entered into a collaborative effort with GoodMills Innovation GmbH. This relationship with Europe’s largest milling company is expected to advance in the second quarter of 2021 with consumer tests in three European countries with three different formulations. If the tests are successful, GoodMills would commercially launch GoodWheat varieties in the second half of 2021.

During 2020, Arcadia was granted 10 additional GoodWheat patents in 2020, bringing the total number of GoodWheat patents to 28.

GoodHemp: Arcadia’s non-GMO hemp seed varieties have superior growth characteristics (productivity, pest resistance and crop quality) and deliver hemp with compliant low THC profiles. The company is advancing its hemp seed genetic development efforts and scaling up a sales/distribution network. Arcadia’s hemp seed varieties have been developed both internally through its own breeding program and through acquisitions.

In August 2020, Arcadia acquired Industrial Seed Innovations, adding the popular Rogue and Umpqua to the GoodHemp catalog. Designed for northern latitudes, Umpqua is variety that matures faster than most existing varieties while Rogue is designed for lower latitude geographies with longer growing seasons, which allows these ultra-high yielding plants to fully mature. In addition to these seed varieties, Arcadia obtained Industrial Seed’s genetic assets, including its germplasm library and intellectual property. Rogue and Umpqua are available on the websites of International Hemp Exchange and Hemp Seed Florida.

In Late November 2020, Arcadia also entered into a key with Tritium 3H, a Canadian hemp seed company that provides hemp varieties that perform well in Canada’s unique climatic regions to breeders and producers. Arcadia plans to distribute Rogue, Umpqua and Santiam in Canada through Tritium 3H once certification is received from Health Canada. The three varieties have already been certified by the Association of Official Seed Certifying Agencies (AOSCA) in early February 2021.

In 2020, regulatory framework for CBD became opaque in 2020 after the Drug Enforcement Agency (DEA) issued an interim final ruling (IFR). The domestic hemp seed market is expected to re-accelerate after the regulatory status of hemp is clarified and any additional regulations are implemented.

On the fourth quarter/year-end conference call, management indicated that there is a compliant pathway to produce Hawaiian CBD. Management stated that 40 acres of hemp are currently being planted with plans to bring premium Hawaiian CBD topicals to the consumer retail market in late 2021 or early 2022.

HB4 Soybeans: Two strategic transactions with Bioceres provide Arcadia with several immediate and long-term benefits.

First, the sale of Arcadia’s 50% interest in Verdeca provided significant liquidity, a strong return on investment, a reduction in forward research and development costs, and a streamlining of management focus towards the wheat and hemp businesses.

• Arcadia will receive $6.0 million in cash over the ensuing 12 months

• Arcadia will receive an additional $2 million in cash upon China granting import clearance for HB4 soybeans

• Arcadia received 1.875 million unregistered shares of BIOX common stock (valued at $15 million)

• Arcadia will receive trait royalties of 6% up to $10 million on HB4 soybean sales.

Second, in separate transaction, Bioceres acquired license rights to GoodWheat for South and Central America. Arcadia will receive 25% royalties on all future sales.

Financings: In order to fund the effort to market the company’s new GoodWheat products to consumers and advance its hemp products business, Arcadia Biosciences raised net proceeds of approximately $16.7 million in 2020 through common stock/warrant offering under an existing shelf registration statement in December 2020 and two warrant exercise transactions. Subsequently, the company completed a private placement in January 2021 that provided $25 million in gross proceeds.

Outline of 2020 Highlights


Three Farm Daughters

E-commerce site ( operative with four branded food products (flour and three pastas - artisan linguine, fusilli and fettuccine) powered by Shopify.

▪ Three Farm Daughters GoodWheat products being sold by Hugo's Family Marketplace (a regional, family-owned supermarket grocery chain serving North Dakota and Minnesota), along with Hornbacher's and Kowalski’s Market

GoodMills Innovation is in the R&D development stage of bringing GoodWheat products to market across seven European countries

Corner Foods expected to distribute GoodWheat products to Asia via TMall e-commerce portal, supported by demand driven by Tastemade China cooking and lifestyle network

Bioceres Crop Solutions acquired distribution rights of GoodWheat product portfolio into South and Central America as part of sale of its 50% interest in Verdeca JV to Bioceres

▪ Arcadia will receive future royalties of 25% on GoodWheat revenues

• GoodHemp

◦ Arcadia closed the acquisition of Industrial Seed Innovations (ISI) on August 21st.

▪ As a result, Arcadia now owns ISI’s commercial and genetic assets, including the popular Rogue and Umpqua seed varieties, along with ISI’s germplasm library and IP

▪ Arcadia’s hemp-related breeding platform has been significantly broadened

▪ The acquisition includes a breeding research and development facility in the Pacific Northwest

▪ Hawaiian Hemp Regulatory update

◦ Drug Enforcement Agency (DEA) issued an interim final ruling (IFR)

· The IFR classified any hemp derivative with more than 0.3% THC as marijuana

· In order to remain in compliance with this new regulatory framework, Arcadia was required to destroy the hemp plants in the ground and in inventory prior to October 31, 2020, necessitating an inventory write-off of $1.3 million

◦ The domestic hemp seed market is expected to re-accelerate in 2021 after growers hesitated to make purchasing decisions during the pandemic and during a period of regulatory confusion

HB4® soybean seed commercialization

◦ Arcadia sold its 50% interest in Verdeca JV to Bioceres Crop Solutions (NYSE: BIOX)

▪ In exchange for

• $6.0 million in cash

• 1,875,000 shares of BIOX stock (valued at $15 million)

• $2.0 million upon China granting import clearance for HB4 soybeans

• 6% royalty payments of HB4 soybean revenues up to $10 million

◦ Bioceres acquired license rights to GoodWheat technologies in Latin America

GoodWheat 2021 Developments

Awarded Additional U.S. Patent

In early March 2021, the U.S. Patent and Trademark Office awarded a patent for high fiber resistant starch GoodWheat to Arcadia Biosciences. This is Arcadia’s 28th patent for GoodWheat.

Three Farm Daughters

In 2021, the e-commerce website of Three Farm Daughters is being scaled-up in order to better drive traffic to the website and improve sales conversions. The SEO optimization efforts will be supplemented with digital marketing campaigns with substantial increases in ad spending slated for late April and May.

Part of the GoodWheat marketing campaign to reach out to consumers was two articles in Ag Week, one in December 2020 and another in January 2021. The articles highlighted the stories, ambitions and family history of the three daughters: Annie Gorder, Mollie Ficocello and Grace Lunski. The Sproule sisters grew up on a farm in in northeastern North Dakota on which a variety of GoodWheat is now grown. After attending college, the three moved backed back to focus on transforming the GoodWheat grown on the farm into flour and pasta products.

Also, a Vimeo video on GoodWheat has been produced and it is available on the home page of Arcadia Biosciences’ website.

The retail channel is being developed through traditional brick-and-mortar supermarkets. Currently, GoodWheat products are being sold by Three Farm Daughters through Hugo's Family Marketplace (a regional, family-owned supermarket grocery chain serving North Dakota and Minnesota), along with Hornbacher's and Kowalski’s Market.

GoodHemp 2021 Developments

In early February 2021, four (4) GoodHemp varieties (Umpqua, Rogue, Santiam and Potomac) were approved by the variety review board of AOSCA (National Association of Official Seed Certifying Agencies. These certifications give growers assurances of quality, uniformity and performance. The review board is composed of representatives from seed certifying agencies, academia, the seed industry and USDA.

Umpqua is a CBD-dominant, early photoperiod variety with a unique terpene profile.

Rogue is a CBD-dominant, high yielding intermediate photoperiod variety with extraordinary yields under low planting densities.

Santiam is a CBD-dominant, early photoperiod variety with well above average yields in northern latitudes.

Potomac is a CBD-dominant, full season photoperiod that produces large plants with a heavy yield.

This independent validation is a major milestone toward the ability of selling these GoodHemp varieties in Florida (which requires AOSCA certification) and Canada (which requires AOSCA certification and an approval by Health Canada).

2021 Financing – Private Placement

On January 28, 2021, Arcadia Biosciences closed a private placement of 7,876,784 shares of common stock and 7,876,784 5 ½-year ½–share warrants (exercisable into 3,938,392 common shares at a price of $3.13 per share). The private placement was priced at $3.1925 per share for gross proceeds of $25,146,633. H.C. Wainwright & Co. was the exclusive placement agent for the Private Placement.

Net proceeds will be primarily directed toward building the GoodWheat consumer brand (e-commerce and direct-to-consumer digital marketing for Three Farm Daughters) and funding GoodHemp initiatives, particularly hemp cultivation by Archipelago Ventures in Hawaii and CBD extraction operations on the West Coast.

Details of 2020 Financial Results

On March 25, 2021, Arcadia Biosciences reported financial results for the year ending December 31, 2020. Total revenues increased 587% to approximately $8.0 million, primarily due to the recording of license revenues of $6.7 million from the Verdeca-related licenses granted to Bioceres in November. Without the effect of the Verdeca transaction, total revenues increased 5.5%. Product revenues increased 28.3% (or $230,000) to approximately $1.04 million, primarily driven an increase in SONOVA® GLA product sales related to pet food orders. Royalty revenues were $83,000. Contract research and government grant revenues decreased 63.2% to $106,000 since contract research agreements and government, grant projects are no longer being pursued as management is pursuing sales opportunities of GoodWheat and GoodHemp products.

Total operating expenses increased 44.2%. Cost of product revenues increased 487% to approximately $5.2 million, primarily due a two hemp-related write-downs: $1.6 million for contracted hemp seed production that did not meet quality specifications and $1.3 million for Archipelago JV inventory due to a regulatory ruling. R&D expenses increased 12.1% to approximately $7.96 million, primarily due to higher employee-related expenses and external hemp-related costs. SG&A expenses increased 21.4% to approximately $16.5 million, primarily driven by higher consulting activity, higher employee-related expenses, higher insurance premiums and increased rent expense.

Several other income and expense items were significant in 2020. An $8,814,000 gain was booked from the Verdeca transaction. Also, the non-cash change in the estimated fair value of common stock warrant liabilities resulted in recording income of $6.57 million in 2020, which was made more noteworthy when compared to 2019’s negative $9.24 million, resulting in a positive swing of $15.8 million. Lastly, interest expense increased to $47,000 compared to $5,000 in 2019 due to new notes payable agreements entered into during 2020.

For 2020, Arcadia Biosciences reported a net loss attributable to shareholders of $4.65 million (or $0.47 per diluted share), of which $6.57 million was related to the change in fair value of stock warrants, a non-cash item. Without this non-operating item, Arcadia’s operating loss was $11.2 million (or $1.13 per diluted share).

As of December 30, 2020, working capital was approximately $25.4 million, a $2.65 million improvement from December 31, 2019. In 2020, shares outstanding increased by 55.6% to 13,450,861 shares since December 31, 2019.

Details of Late 2020 Financing - Registered Direct Offering

On December 21, 2020, Arcadia Biosciences closed a registered direct offering under a shelf registration statement for 2,618,658 common shares a $2.93 per share. Gross proceeds were $7,672,668. In a concurrent private placement, Arcadia issued 2,618,658 unregistered 5 ½-year warrants (exercisable into 2,618,658 common shares at a price of $3.00 per share) at a price of $0.125 per warrant. The gross proceeds for the warrants were $327,332. H.C. Wainwright & Co. acted as exclusive placement agent for the offering.


For Arcadia Biosciences, a reasonable methodology is a discounted cash flow (DCF) model that estimates future cash flows and discounts them by using the cost of capital in order to attain a net present value. Arcadia’s revenues are being estimated using projected by industry forecasts and our estimates of the company’s market share. The model is arranged by products lines, namely GoodHemp, GoodWheat, SONOVA GLA and HB4 soybeans. Our DCF model (which applies a 12.0% discount rate and a terminal P/S ratio of 0.79) indicates a NAV share price target of $6.89 per share on a fully diluted basis.

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