Arcadia Biosciences (NASDAQ: RKDA) swung to profit in the second quarter from a loss last year, helped by the change in the fair value of common stock warrant and common stock adjustment feature liabilities. The bottom line exceeded analysts’ expectations while the top line missed consensus estimates.
Net income was $4.24 million or $0.84 per share, compared to a loss of $6.67 million or $2.02 per share in the previous year quarter. Revenues dropped by 53% to $203,000, largely due to the result of the wind-down in government grant and contract research activity.
Over the next three to 12 months, as the company transitions to its new focus on health and nutrition quality products, Arcadia expects revenue from government grants and research contracts revenues to be replaced by product and trait revenues from wheat and hemp.
The company said its focus for the rest of 2019 will be on continuing this momentum to achieve first revenues in wheat, soy, and hemp by the end of the year, positioning it to significantly scale revenues in 2020.
The company, which preponed its earnings release ahead of the market close, said it scaled up production of its GoodWheat specialty wheat varieties, harvesting winter trials with higher than expected yields. Summer production trials have been planted in key wheat growing areas. The company expects first sales of GoodWheat products by the end of the year.
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Arcadia recently launched a strategic joint venture with Legacy Ventures Hawaii to grow, extract and sell superior sun-grown hemp. The result is one vertically integrated supply chain, from seed to sale, enabling Archipelago to deliver superior hemp extract. The company completed its first harvest in Hawaii and is now expanding production acres and establishing extraction capabilities. First sales of hemp products are expected by the end of the year, with a significant ramp up in 2020.
Verdeca, Arcadia’s joint venture with Bioceres Crop Solutions, received two key regulatory approvals for its HB4 drought and herbicide tolerant soybeans. Brazil approved the traits in late May, followed by the US Department of Agriculture approving the trait. This comes on heels two years after the approval by the US Food and Drug Administration. Initial sales will commence in Argentina, pending import approval from China, which is now expected in 2020.