RKDA - Earnings call transcript Q3 2017 | Arcadia Biosciences, Inc.

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Operator

Good afternoon and welcome to Arcadia Biosciences' Third Quarter 2017 Earnings Conference Call. Today's presenters will be Raj Ketkar, President and CEO; and Matt Plavan, CFO. This call is being webcast and you can refer to the company's press release and slides at arcadiabio.com.

Before we start, if you refer to slide two, we would like to remind you, that the Arcadia Biosciences will be making forward-looking statements on this call based on current expectations and currently available information.

However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied today.

company's and language of again, the recently their this review XX-K, filed on can Safe in Harbor most presentation. You slide two Raj I'll President that, now the over With turn and to CEO. call Ketkar,

Raj Ketkar

and XXXX. Nova the call And our of then, product third the the achievements like us I'd the financial quarter of the the you, who and quarter is thanks Thank today. update an strategy. review results joining end begin for Matt to we take At during will on everyone as will, on your emerging to our questions. call, always,

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trait soybeans We our safety drought food FDA's of We also safety concluded received further achieved the approvals in completed other also quarter. clearance the in and U.S. review that evaluation for and this Water and tolerance animals. Efficiency The protein for the our and regulatory way Use safe clearances food early traits. and paved for traits and the it important These for humans countries HBX for feed. Efficiency HBX Use for FDA is use approvals Water

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bring abiotic Use to these and our Efficiency process be to Use Nitrogen of Efficiency, transgenic stress up Water mitigation decade rice, can years. million this wheat, CRISPR traits abiotic While GM accelerate market. to Further process they over Tolerance last the further five over will Salinity in crops. mitigation as come traits three $XXX get has years products TILLING five we other and the partners our develop seven stress nine the royalties to like cotton this by could done to to development technology will speeds years and to to XX to from the and market, Arcadia take invested traits

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We rich Library we from our of consumers. are that wheat to bringing have a products pipeline TILLING

Some of of already are stages pre-commercial the these products in development.

also can to will Our years. strong shorten coupled launch demonstrated from are to lines to our us enable commercial to and IP, time capabilities expected germplasm, non-regulated We develop have derived technology five apply directly to therefore, earlier with launch to three than status. CRISPR-CasX other product, companies. Products products the these these

to non-GM wheat product see of turn development slide five products. our Let's to how accelerating we're

can the products. to wheat consumers, in are wheat, traits you the slide wheat see on traits five, path chain. value targeted our we As developing could beginning these commercialization to in off at accelerate value pay investments as Quality quality add for

a for traits, reduced a in wheat. wheat and demand see fiber feed rapidly And for is towards represents such progressing traits High gluten. customers as Our animal pasta extended and high large fiber, life, and bread opportunity commercialization these strong shelf applications.

this effort, we bring consumers CRISPR a we traits will allele trait trait due valuable Having that TILLING trait benefit of non-GM is wheat underway. steps opportunity to sensitivity. product to significantly the are quality germplasm than trait also using and remaining believe will these wheat developing We now We this well market. platforms, life commercialization in shorter reduce trait, have significantly are gluten trait. who others, commercial can the are penalty significant identified this to are Case well-positioned trait our lines represents into yield new have in our whole also the now This believe reduced trait. extended shelf and wheat are lot launch. a breeding so these the effort the a into commercial compared develop non-GM to reached Breeding summarize, wheat The important accelerate germplasm. whole the is track, results development we wheat. without under to parallel in to milestones to To added this commercial this quarter. accelerate shown to who with reduced susceptible gluten to technology studies gluten commercial We We've the for traits to with trait dual positive the to way. germplasm that identified a

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the human this trait animal grain In feed. health, can in and addition animal benefiting can health benefit be used to also

wheat trait and in traits. important this Mills, the providing development, U.S. phase fiber the to pre-commercial life scale germplasm. companies the and of Ardent the milling in the in largest now quarter one extended are high for are is of introgression key the shelf development trails testing. including flour in commercial into an We We customers the of large partner harvested of

it capabilities our develop supply value of also traits. and capability supply supply that for identity assures have We wheat, can This these quality chain an the with of our and our customers to customers. produce preserve wheat quality it, integrated high reliable

our in import approvals spending process year. the for remain other towards now approval In completed of in regulatory being in safety FDA excellent and be a The for status seven, joint the to work, getting HBX with field in year first the the of slide the would Verdeca trait germplasm you the key like and progressing the received the is towards to and focused Uruguay. also trait would submission stress Bioceres Leading significant and approval of approval in trait the tolerant the progress. third our the update for germplasm and quarter Argentina, in productivity by the drought traits. Regulatory venture wheat countries on countries. U.S., approved the introgress I second with trait Europe is Bioceres, year other Don we're and China, Argentina. developed commercial This leading to making quarter, needed trials of this Mario, soybeans. approval XXXX. feed into We additional of soybeans The for continues. to continuing the trials like planted are Turning region for And drought Ag HBX on companies U.S. and fourth in event TMG Verdeca, food in

As been the granted Indian highlighted development India, had selection This traits Efficiency have because is significant and regulatory three and field rice in partner planted quarter for cotton. the field trials, years. authorities before, for the These a approval field Nitrogen seed past Water and event first any Mahyco we for Use our Efficiency for not efficacy expect trials received traits approvals results second in Use and for XXXX. in and of

summarize result last our in period commercialization some advance results year. financial for the will trials of same towards third the year-to-date these To milestone for that payment better than expect We is XXXX. also our quarter, these performance in traits and

for the license turn on wheat adds being and for Matt financial I We in quarter. And like we for would traits an call time technology platform including now to product in new obtained for our nutrition With launch results advanced, products the for that, CRISPR-CasX, and traits, have the accelerate We update identified our capabilities also in non-GM the our space. to planted will to India ingredient as which a commercialization. trials first will three over the years. quality transgenic a accelerate to health

Matt Plavan

financial a see you the in third With our you, regards for Raj good can bit the were off afternoon total Thank slide eight, and mark performance, as to quarter. our everyone. revenues

greater were are first revenues see this In nine we expect pet new However, timing in food Product of with comparing continue were last to QX which XXXX. to we down year, in for XXXX. our of GLA categories expected be total revenues months year, total the now XX% those occur than each to you of can full revenues lower. of even year from we the XXXX orders, the year last sales, early to due revenue believe of and

dry months started formally process ingredient pet food the that was Register. distributor four Therefore, over Federal was The formulations, not approval could food which dog published we than the in for later in until approval revenues the and had establish was more actual ingredients, we're to channels. anticipated. higher be requires labeling, their proper until cautious approval and following now the this primary quarter, XXXX time third for prepare much predicting adjust Our about XXXX. A their not published category

license over lower as a our up-front recognized as we're This to compared revenues, now the nine prior amortizing longer for quarter. less year resulting period reported licensing revenue quarter As periods. months per in revenues all revenue our into and causes time, we've be fees the year, of to

However, expect revenue positive one-time this fourth license year. in increase on note, a quarter on our significant a we of the

jointly licensees on primary Arcadia better Mahyco, and from of at with our conjunction our to of of looking the detail XX-Q, traits third certain commercialization this more in to forward. in deregulation in-country discussed believe we're in pursuing are quarter point our continue able licensed we return partner favor that geographies the new licensee As

of such We deferred in end being review would agreements, such the to and complete year, balance expect licenses up-front terminated. cases, the this a be of as fees, to revenue. recognized previously of any released And number the with license remaining for prior

between increase million one-time revenues $XXX,XXX of and $X.X a expect in QX we such, this As these year. in

has revenues -- Lastly, this a second four-year resulted down the first to completed quarter, revenues research for for -- a $XXX,XXX. of contract having contract in of in quarter the the research in year XX% decrease

compared to as However, prior remain year. up we the do year-to-date slightly

contract know quarter-to-quarter, significantly contract revenues from and As upon completions. eligible R&D the depending vary and project of research awards, expenses, government you can grant timing

Turning to our slide now expenses on nine.

compared development and comparing $XXX,XXX loss categories quarter expenses the As for to Therefore, $XXX,XXX this the for by for and the million was from year. year or nine activity down XXXX. the driven and benefits, our and XX% prior expense together periods, the prior periods and quarter we for saw in respectively XXXX. of on as in and significant in for months period, lower XX% P&L first in $X.X nine Putting $XXX,XXX nine year prior were XX% down the XX% green a by for by decreases the the same quarter they saw sales decrease X% quarter months. respectively and year see, research you X%, as the total Both operating the workforce resulting over slide SG&A and too our the the operating down are third for reductions or our XX% months through expenses XX, the XX% to highlighted the down all over year-to-date boxes. can

just million liquidity for Now, $X.X to $XX.X the to over prior end. government outlook, a was our million overall debt year, consistent from the our increase and quarter's about one-time financial the quarter, remaining of And and expected grant in growth net the million Cash $X prior revenue same revenue, revenues million, as researching quarter totaled near-term with our cash license of target in In last $XX.X year. our on significant a XXXX the closing, word continue relatively used in our used pay our due the contract we resources. year. capital improvement at the over investments hand for off

now As XXXX, pet the below in in product XXXX. I prior earlier, expect uptick market begin new the the into or for to in from at revenues, revenues GLA we mentioned levels year resulting sales food

result overall cash pipeline prior our and back in call With meaningful year, steadily these maintaining below turn of of wrap-up. I'd expect while continue Raj? We run traits. to to development we productivity trends burn our In reductions investments prior a the to will hold our for continue in ingredient rates, key and commercialization to Raj that, expenses traits combination our our the while to in healthy over market. advancing like the over year

Raj Ketkar

Matt. Thanks

quarter your XXXX. to summarize questions, like results of for Before our third get would we to I the

and performance continue today, you've this expect end we heard trend year. As the Arcadia's year, is that better tracking to year the financial of than last to

and Our focused of future remained two success. determinants our to team paths accelerating performance has financial key on the profitability. Current

Our for completed new license years. financial, made market to drought technology to long-term available and These HBX commercialization. for for regulatory trials. the operational, building soybeans products. are first time your And our best trials in advancements I'd Non-GM wheat received With fundamental the the to advancing partner Argentina us utilize strategy to field reflect developing editing questions field traits enables in planted The important on CRISPR-CasX three shareholder gene growth permits value. for Mahyco we've our tolerant turn over India and that, now. tangible in accomplishments advances like the call in

Operator

of question Thank Tyler the Instructions] Piper [Operator you. Jaffray. first comes of from line Etten Our

Your line is open.

Tyler Etten

Good afternoon guys.

Raj Ketkar

Tyler. Hey

Tyler Etten

we've out seen with quarter, of the mean, I I that catch million from million forward? Hey. activities. that $X $X the going from of the a to comment wondering lag in that operating expect can used had it's last Matt, [ph] the I used. use pretty you significant cash to able down about we past rate in was just the that a cash this wasn't lower is

helpful. any color So, would there be

MattPlavan

Yes.

our cash was to I it XXXX, -- be we look think past we expect as to quarter this versus year at it quarterly the what burn ago closer quarter. would

I think expectation. that's fair a

Tyler Etten

these for Yes. the -- HBX just what to some to to year you about of the know I second trials trials a three regulatory I guess I And trials, of it through us trials. standards know. Okay. could minimum needed begin. remind are the these year for That's authorities? then get exactly Is

unfolding how you the through would if be for see That helpful. -- could process HBX? just you Just walk regulatory

Raj Ketkar

Right.

which for target us first for say do in in import grain have of to coming commercialization commercialize key that And that, is China for able approvals -- be should regulatory import main Argentina. I or our Europe, to approvals the So, target for Argentina. we to to main for continents out submit are and

you know, in for As approvals planting. Argentina already we've received

from approvals awaiting now we're So, China.

the year expect. to submitted authorities be ago, to was So, of last Europe about the and we in we we submitting next will year November Chinese it quarter a regulatory

for in are Argentina are China South crucial in on So, regulatory American Europe. are the not for more or Argentina going trials but countries, approvals they that for purposes few other or

in trying Uruguay, approvals really so Paraguay, they're forth. to So and get

So, large We're trait the do parts would regulatory -- those are are germplasm. conducting, demos, stripped efficacy of the to trials, say, performance continuing trials. different the to of I in fine-tune for And what the trait. trials which showing also -- commercial more to farmers, the

are year the in of this set that trials and second coming we'll the those are And that in so season. be going of other on

Tyler Etten

wheats. licensing, just discovered. you some know Got know if had specifically, non-GM I existing the you on of this CRISPR development. plans the -- this will of was traits on most it. technology Thanks. on the level, help us year, then detailed guys a more wondering have I explain how product I could the And but that already

how accelerate worked on this will have some been on Just time? the already for traits that technology help

Raj Ketkar

well but which So, you wheat, that -- go wheat you had don't of showed line, wheat and in Because specific will, next high itself. advantage the become be lines not in as the the germplasm extended the we or commercial. would high wheat fiber targeted Those you selection CRISPR as do into editing CRISPR, if lines breeding have could already of impacted process, the and advanced RS introgression are will we well on generation, start a lengthy actually and working line new the of through the or life new introgression shelf germplasm to is, breeding of development. by stages wheat traits fiber in slide,

doing And TILLING that with what from is demonstrate the on are starting process, first still to the line. commercial reduced for reduced gluten parallel which in the in in a our cycle, we're just and it slide. with tool, early we But do which research our target. but is development a tool, the even parallel which gluten, in could in are work we we wheat, we is It's that's So, starting what tried great it.

well we're But stuff So there's that wheat we're are us. at applying for our up speed. a as of really to who lines. to core learning there different and curve got this good scientists, getting We've already quickly

Tyler Etten

Excellent. Thank you.

Operator

comes question of Investments. next [Indiscernible] Bill Peters the our line And of from

Your line is open.

Unidentified Analyst

Hi, gentlemen. my taking call. Thank good day for you

Raj Ketkar

Good day.

Unidentified Analyst

quick I question. have a

burn in so cash cash decreased your has reference XX-Q, I to hand you through the be current So, there get that, but based past the cash in on the been to know the say to that since $XX a would opinion you in burn enough you concern on was now, and cash much million, year. have what seems the that? about going is

Matt Plavan

a that's Bill, good Yes question.

of, just, think question. teeing Tyler's kind to the I answer off of

from next in I wisely and our can. we now, how on depends dollar conservation very level maybe XXXX. bring to the But on ought a through to cash we the remain think at be I as is And to as if we were can of quarter, more think going continue that could using year? way through all much that to obviously XXXX, focused year way will this burn -- able we our we to get certainly revenue every run extend

Unidentified Analyst

the Okay. company's that invested? reference the million, And one that $XXX more to question has NOLs. company in Is

Matt Plavan

Well--

Unidentified Analyst

Yes, ahead. sorry. I'm go

Matt Plavan

Yes, since has inception. raised the $XXX company approximately million

Unidentified Analyst

Okay.

Matt Plavan

that so deficit. you're retained that's seeing in what Yes,

Unidentified Analyst

Okay. Thank you.

Operator

queue and President questions in call like Raj the turn I'd to showing CEO, no your for time. at closing Ketkar remarks. back to further I'm this And the

Raj Ketkar

everyone call continued Thank our during end interest the you again call. support and and in you. year Arcadia. conference XXXX with forward speaking Thanks to look We of for your joining

Operator

This Ladies conference. conclude the for and does gentlemen, you in today's call. thank participating

a You wonderful now may have Everyone, day. disconnect.

Arcadia Biosciences (RKDA) 9 Nov 172017 Q3 Earnings call transcript