Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 |
Organization | Organization Arcadia Biosciences, Inc. (the "Company"), was incorporated in Arizona in 2002 and maintains its headquarters in Davis, California, with additional facilities in Phoenix, Arizona, American Falls, Idaho, Molokai, Hawaii, and Albany, Oregon. The Company was reincorporated in Delaware in March 2015. The Company is a leader in science-based approaches to developing high value crop productivity traits primarily in hemp, wheat, and soybean, designed to enhance farm economics by improving the performance of crops in the field, as well as their value as food ingredients, health and wellness products, and their viability for industrial applications. The Company uses state of the art gene-editing technology and advanced breeding techniques to develop these proprietary innovations which the Company is beginning to monetize through a number of methods including seed and grain sales, product extract sales, trait licensing and royalty agreements. In February 2012, the Company formed Verdeca LLC (“Verdeca,” see Note 9), a limited liability company jointly owned with Bioceres, Inc. (“Bioceres”), a U.S. wholly owned subsidiary of Bioceres, S.A., an Argentine corporation. Bioceres, S.A. is an agricultural investment and development cooperative. On November 12, 2020, the Company entered into a Master Transaction Agreement (“Transaction”) with Bioceres Crop Solutions Corp pursuant to which the Company sold all of its memberships interests it owned in Verdeca to Bioceres, Inc. Verdeca was consolidated by the Company through the date of the Transaction. On August 9, 2019, the Company entered into a joint venture agreement with Legacy Ventures Hawaii, LLC (“Legacy,” see Note 8) to grow, extract, and sell hemp products. The new partnership, Archipelago Ventures Hawaii, LLC (“Archipelago”), combines the Company’s extensive genetic expertise and resources with Legacy’s experience in hemp extraction and sales. |
Liquidity, Capital Resources, and Going Concern | Liquidity, Capital Resources, and Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. Since inception, the Company has financed its operations primarily through equity and debt financings. As of December 31, 2020, the Company had an accumulated deficit of $211.8 million, cash and cash equivalents of $14.0 million, restricted cash of $2.0 million, and short-term investments of $11.6 million. For the years ended December 31, 2020 and 2019, the Company had net losses of $6.0 million and $28.9 million, respectively, and net cash used in operations of $30.2 million and $17.2 million, respectively. The Company believes that its existing cash, cash equivalents and investments will be sufficient to meet its anticipated cash requirements for at least through March 2022. The Company may seek to raise additional The Company is closely monitoring how the spread of the novel coronavirus (“COVID-19”) is affecting its business operations and employees. The Company’s targeted revenues have been adversely impacted as hemp growers have been slower to make decisions to purchase hemp seeds due to economic uncertainty and wheat consumer packaged goods companies have been heavily focused on production over R&D evaluation as demand for staples like pasta and flour have increased. The continued spread of the outbreak may further impact the Company’s business, results of operations, and financial condition. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company, Verdeca and Archipelago. All intercompany balances and transactions have been eliminated in consolidation. The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP (“GAAP”), and with the rules of the Securities and Exchange Commission. The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities ("VIEs"). This approach focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. Up to the date of the sale transaction described in Note 1, the Company has determined that it is the primary beneficiary of Verdeca, which was a VIE. Accordingly, the Company consolidates Verdeca in the consolidated financial statements after eliminating intercompany transactions. The Company evaluates its relationships with its VIEs upon the occurrence of certain significant events that affect the design, structure or other factors pertinent to the primary beneficiary determination. Verdeca had no operations, assets or liabilities as of and for the period ended November 12, 2020 and for the year ended December 31, 2019. For all periods presented, the Company has determined that it is the primary beneficiary of Archipelago, a joint venture, as it has a controlling interest in Archipelago. Accordingly, the Company consolidates Archipelago in the consolidated financial statements after eliminating intercompany transactions. For consolidated joint ventures, the non-controlling partner’s share of the assets, liabilities and operations of the joint venture is included in non-controlling interests as equity of the Company. The non-controlling partner’s interest is generally computed as the joint venture partner’s ownership percentage of Archipelago. Net loss attributable to non-controlling interest of $1,371,000 and $68,000 is recorded as an adjustment to net loss to arrive at net loss attributable to common stockholders for the years ended December 31, 2020 and 2019, respectively. The non-controlling partner’s equity interests are presented as non-controlling interests on the consolidated balance sheets as of December 31, 2020 and 2019. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions in the Company’s consolidated financial statements and notes thereto. Significant estimates and assumptions made by management included the determination of the provision for income taxes, stock-based compensation, fair value of certain equity instruments, and net realizable value of inventory. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. COVID-19 continues to create significant uncertainty and disruption in the global economy and financial markets and could impact estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers any liquid investments with a stated maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks. The Company limits cash investments to financial institutions with high credit standings; therefore, management believes that there is no significant exposure to any credit risk in the Company’s cash and cash equivalents. However, as of December 31, 2020 and 2019, a substantial portion of the Company’s cash in depository accounts is in excess of the federal deposit insurance limits. |
Restricted Cash | Restricted Cash Restricted cash consists of funds that are contractually or legally restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents on the consolidated balance sheets |
Investments in Debt and Equity Securities | Investments in Debt and Equity Securities Investments in debt and equity securities are carried at fair value and classified as short-term investments. The 1,875,000 shares of common stock of Bioceres Crop Solutions Corp. (“BIOX”) added during the fourth quarter ended December 31, 2020, have a six-months’ trading restriction, expiring on May 12, 2021. Realized and unrealized gains and losses on investment securities are included in other income, net, in the consolidated statements of operations and comprehensive loss. Investment securities are reported as cash and cash equivalent, short-term investments or long-term investments in the consolidated balance sheets based on the nature of the investments and maturity period. Short-term investments have maturities of less than a year and long-term investments have maturities of a year and greater from the balance sheet date. The Company’s equity securities are primarily comprised of shares of BIOX listed on the New York Stock Exchange (“NYSE”). These investments are held in the custody of a major financial institution. Other debt securities consist of U.S. government securities, treasury bills, commercial paper, corporate securities, and money markets. |
Other-than-Temporary Impairments on Investment | Other-than-Temporary Impairments on Investment The Company regularly reviews each of its investments for impairment by determining if the investment has sustained an other-than-temporary decline in its value, in which case the investment is written down to its fair value by a charge to earnings. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include (i) the market value of the investment in relation to its cost basis, (ii) the financial condition of the investment, and (iii) the Company’s intent and ability to retain the investment for a sufficient period of time to allow for recovery of the market value of the investment. As of December 31, 2020 and 2019, there was no impairment of the Company’s investments. |
Accounts Receivable | Accounts Receivable Accounts receivable represents amounts owed to the Company from product sales, licenses, royalties and contract research and government grants. The carrying value of the Company’s receivables represents estimated net realizable values. The Company generally does not require collateral and estimates any required allowance for doubtful accounts based on historical collection trends, the age of outstanding receivables, and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is recorded accordingly. Past-due receivable balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amounts due. The Company had no amounts reserved for doubtful accounts at December 31, 2020 and 2019 as the Company expected full collections of all accounts receivable balances as of each of these dates. |
Inventory | Inventory GoodWheat: Propriety wheat plants are grown, producing seed with a variety of improved nutritional qualities, including high levels of amylose, improved shelf-life, and reduced gluten. The seed is used for subsequent plantings or processed, and sold as GoodWheat seeds, grain, and flour, which the Company refers to collectively as GoodWheat products. Amounts inventoried consist primarily of fees paid to contracted cooperators to grow the crops, costs to process and store harvested seed and grain, and costs to mill the grain into flour. SONOVA® Gamma Linolenic Acid (“GLA”) Safflower Oil: Proprietary safflower plants were grown, producing seed with a high-GLA content. This seed was processed, and is sold as GLA oil, including SONOVA 400 GLA safflower oil and SONOVA Ultra GLA safflower oil, which the Company refers to collectively as SONOVA products. Amounts inventoried consist primarily of fees paid to contracted cooperators to grow the crops and costs to process and store the oil. GoodHemp : Proprietary seeds are grown and used for subsequent plantings and sold as final product to other growers. Amounts in inventory for internally produced hemp seeds consist primarily of labor, supplies and facility costs. The costs to procure seeds from external growers and suppliers are included in inventory, as well. Archipelago : Hemp seeds are purchased from external sources and planted on land leased in Molokai. The costs of purchasing, planting and growing the seed, and harvesting the resulting biomass are captured as inventory, along with the costs to process the biomass into CBD oil. Amounts in inventory for growing biomass primarily consist of labor, supplies and facility costs. The inventories—current line item on the balance sheet represents inventory forecasted to be sold or used in production in the next 12 months, as of the balance sheet date, and consists primarily of the cost of GoodWheat seed, grain, and flour, GLA oil, and hemp seed. The inventories—noncurrent line item on the balance sheet represents inventory expected to be used in production or sold beyond the next 12 months, as of the balance sheet date, and consists primarily of GoodWheat seed and grain, and GLA oil. Raw materials inventories consist primarily of the costs to produce GoodWheat seeds. Goods in process inventories consist of costs to produce GoodHemp seed, hemp seed production costs incurred by Archipelago, grower fees and related costs for soybeans to be transferred to Verdeca, and GoodWheat seed and grain. Finished goods inventories consist of GoodWheat products, GoodHemp seed and GLA oil that are available for sale. |
Property and Equipment | Property and Equipment Property and equipment acquisitions are recorded at cost. Provisions for depreciation are calculated using the straight-line method over the following average estimated useful lives of the assets: Years Laboratory equipment 5 Software and computer equipment 3 Machinery and equipment 2-20 Furniture and fixtures 7 Vehicles 5 Leasehold improvements 2-10 * * Leasehold improvements are depreciated over the shorter of the estimated life of the asset or the remaining life of the lease. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates if events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets may warrant revision or that the remaining balance of these assets may not be recoverable. In evaluating for recoverability, the Company estimates the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. In the event that the balance of any asset exceeds the future undiscounted cash flow estimate, impairment is recognized based on the excess of the carrying amounts of the asset above its estimated fair value. As of December 31, 2020 and 2019, there was no impairment of the Company’s long-lived assets. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Assets and liabilities recorded at fair value in the consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities, are as follows: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. • Level 2 inputs are observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 inputs are unobservable inputs for the asset or liability. The carrying values of the Company’s financial instruments, including cash equivalents, accounts receivable, and accounts payable approximated their fair values due to the short period of time to maturity or repayment. |
Concentration of Risk | Concentration of Risk Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear minimal credit risk. The Company seeks to mitigate its credit risks by spreading such risks across multiple counterparties and monitoring the risk profiles of these counterparties. |
Customer Concentration | Customer Concentration Significant customers are those that represent greater than 10% of the Company’s total revenues or gross accounts receivable balance at each respective balance sheet date. The Company had three customers that represented 57%, 21% and 12% of accounts receivable, and three customers that represented 47%, 17%, and 15% of accounts receivable, as of December 31, 2020 and 2019, respectively. The Company had one customer that represented 83% of total revenues, and two customers that represented 40% and 15% of total revenues, for the years ended December 31, 2020 and 2019, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes compensation expense related to its employee stock purchase plan and the cost of stock-based compensation awards on a straight-line basis over the requisite service period, net of estimated forfeitures. Judgment is required in estimating the amount of stock-based awards that will be forfeited prior to vesting. Compensation expense could be revised in subsequent periods if actual forfeitures differ from those estimates. The Company has selected the Black-Scholes option-pricing model and various inputs to estimate the fair value of its stock-based awards. See Note 14 for additional information. Amounts recognized in the consolidated statements of operations and comprehensive loss were as follows (in thousands): Year Ended December 31, 2020 2019 (in thousands) Research and development $ 341 $ 321 Selling, general and administrative 1,701 1,966 Total stock-based compensation $ 2,042 $ 2,287 |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. |
Net Loss per Share | Net Loss per Share Basic net loss per share, which excludes dilution, is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, convertible promissory notes, convertible preferred stock, redeemable convertible preferred stock and warrants, result in the issuance of common stock which share in the losses of the Company. Certain potential shares of common stock have been excluded from the computation of diluted net loss per share as their effect would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce the loss per share. Due to net losses, there is no impact on earnings per share calculation in applying the two-class method since the participating securities have no legal requirement to share in any losses. |
Revenue Recognition | Revenue Recognition The Company derives its revenues from product revenues, licensing agreements, royalties, contract research agreements, and government grants. |
Unearned Revenue | Unearned Revenue The Company defers revenue to the extent that cash received in conjunction with a license agreement, contract or grant exceeds the revenue recognized in accordance with Company policies. During the year ended December 31, 2020, the Company recognized revenue of $54,000 that was included in unearned revenue on the consolidated balance sheet as of December 31, 2019. |
Cost of Product Revenues | Cost of Product Revenues Cost of product revenues relates to the sale of SONOVA and GoodWheat products and consists of in-licensing and royalty fees, any adjustments or write-downs to inventory, as well as the cost of raw materials, including inventory and third-party services costs related to procuring, processing, formulating, packaging, and shipping the Company’s products. |
Research and Development Expenses | Research and Development Expenses Research and development expenses consist of costs incurred in the discovery, development, and testing of the Company’s products and products in development incorporating the Company’s traits. These expenses consist primarily of employee salaries and benefits, fees paid to subcontracted research providers, fees associated with in-licensing technology, land leased for field trials, chemicals and supplies, and other external expenses. These costs are expensed as incurred. |
Change in Fair Value of Contingent Consideration | C hange in Fair Value of Contingent Consideration Change in the fair value of contingent consideration is comprised of the gain associated with the reduction of the contingent liability. See Note 15. |
Change in the Estimated Fair Value of Common Stock Warrant Liabilities | C hange in the Estimated Fair Value of Common Stock Warrant Liabilities Change in the estimated fair value of common stock warrant liabilities is comprised of the fair value remeasurement of liability classified common stock warrants. See Note 13. |
Product Revenues | |
Revenue Recognition | Product Revenues Product revenues to date have consisted primarily of sales of SONOVA products, with initial GoodWheat seed sale revenues recognized in the fourth quarter of 2019 and initial GoodHemp seed sale revenues recognized in the fourth quarter of 2020. The Company recognizes revenue from product sales when control of the product is transferred to third-party distributors and manufacturers, collectively “our customers”, which generally occurs upon shipment. Revenues fluctuate depending on the timing of shipments of product to our customers. |
License Revenues | |
Revenue Recognition | License Revenues License revenues to date consist of up-front, nonrefundable license fees, annual license fees, and subsequent milestone payments that the Company receives under the Company’s research and license agreements. The Company recognizes revenue generated from up-front, nonrefundable license fees upon execution of the agreement and recognizes annual license fees when it is probable that a material reversal will not occur. Milestone fees are variable consideration that is initially constrained and recognized only when it is probable that such amounts would not be reversed. The Company assesses when achievement of milestones is probable to determine the timing of revenue recognition for milestone fees |
Royalty | |
Revenue Recognition | Royalty Revenues Royalty revenues from the Company’s agreements with third parties related to GoodWheat products are recognized when the Company can reasonably determine the amounts earned. In most cases, this will be upon notification from the third-party licensee. |
Contract Research Revenues | |
Revenue Recognition | Contract Research Revenues Contract research and government grant revenues consist of amounts earned from performing contracted research primarily related to breeding programs or the genetic engineering of plants for third parties. Contract research revenue is accounted for as a single performance obligation for which revenues are recognized over time using the input method (e.g., costs incurred to date relative to the total estimated costs at completion). |
Government Grant Revenues | |
Revenue Recognition | Government Grant Revenues The Company receives payments from government entities in the form of government grants. Government grant revenue is accounted for as a single performance obligation for which revenues are recognized over time using the input method (e.g., costs incurred to date relative to the total estimated costs at completion). The Company’s obligation with respect to these agreements is to perform the research on a best-efforts basis. |