- Arcadia's GoodWheat line of products includes flour enriched to be healthier, contain less gluten and last longer, all while maintaining taste and quality.
- The company expects to see GoodWheat sales by the end of 2019
- Its latest venture, Arcadia Speciality Genomics, is taking the company headlong into developing a genetically superior hemp seed
What Arcadia Biosciences does:
Arcadia Biosciences (NASDAQ:RKDA) wants to put better tasting, higher nutrient and lower gluten whole wheat in your shopping cart.
Set up in Davis, California as a research and development company in 2002, Arcadia is engaged in pioneering research on crop improvement. It is now a health and nutrition food-ingredients company that is working with food companies around the world to test its new ingredients and will see its first sales this year.
Chief among them is GoodWheat. Arcadia’s portfolio of wheat flour ingredients offers healthier enriched and whole grain wheat options while providing the same baking quality, taste, and texture as traditional wheat with a longer shelf life.
The GoodWheat high-fiber line, for example, offers the benefits of high-fiber without the need to add an extra source of fiber in the form of corn starch or another additive. That gives the food companies and consumers the benefits of more fiber without the downside of having to shoehorn in additives that diminish texture or taste.
The company has already secured patents for its high-fiber wheat, its reduced gluten-wheat and its extended-shelf-life wheat with more than 192 patents in total to its name.
Using patented Arcadia trait technology, the storage life of whole wheat flour can be extended by slowing the enzymatic processes that reduce shelf life. Because milled flour from wheat carrying Arcadia trait technology oxidizes more slowly, it cuts down on the bitterness associated with whole-wheat products.
Arcadia’s latest crop frontier is hemp. This year, the company launched Arcadia Specialty Genomics, a new unit focused on the genetic improvement of hemp. The idea is to create a proprietary US-grown hemp seed that provides improved genetics and uniformity within batches. In recent months, the company announced a pair of direct offerings worth $17.5 million in total, a portion of which is expected to go toward the acquisition of hemp germplasm — a key ingredient in plant breeding.
How is it doing:
Arcadia is in various stages of recipe testing with at least 10 companies around the world that are interested in its GoodWheat portfolio. Some are food companies that would be using the wheat to make end-products to put on the grocery shelf. Others are ingredient and milling companies that are interested in offering Arcadia’s traits in their flour.
Going forward, the expectation is that Arcadia will collect a tidy stream of royalties when GoodWheat traits are sold to seed companies and when GoodWheat ingredients are sold to the big consumer product groups. Indeed, revenue from trait royalties could hit $20 million to $40 million per year, while revenue from ingredient sales could reach $215 million to $325 million.
Arcadia is also nearing the commercial launch of its HB4 soybeans, which are being produced in Argentina as part of its Verdeca joint venture with Bioceres, that country’s predominant agriculture technology company.
The company received approval from Argentina’s regulatory authorities for its HB4 drought-resistant soybeans stacked with herbicide-tolerant traits. The novel traits help soybean farmers by protecting yields under stressful climatic conditions without dispensing with weed control.
On the hemp front, the company formed a joint venture in August with Legacy Ventures Hawaii to create a vertically-integrated cannabis enterprise in the state. The partnership, known as Archipelago Ventures, pairs Arcadia’s genetic expertise and cultivation facility in Hawaii with Legacy’s extraction and sales experience. That gives the two companies control of the hemp extract production process from seed to sale. Sales are expected to begin in late 2019.
A month later, it announced a hemp cultivation facility in California, with planting expected to begin on October 1.
In the second quarter, the company swung to net income of $4.2 million, up from a loss of $6.7 million in the prior-year quarter. On a per-share basis, it earned $0.84, compared with a loss of $2.02 in the period in 2018. Revenue came in at $203,000, down year-over-year from $436,000.
Arcadia recently underwent a change in leadership. Raj Ketkar resigned as CEO on September 1, and CFO Matthew Plavan assumed the lead role. The new top dog has been with the company since 2016, and in February he was named president of its hemp strategic business unit, Arcadia Specialty Genomics.
Along with its second quarter results, Arcadia projected revenue in 2020 and 2021 to exceed $10 million and $30 million, respectively, If that comes to fruition, the company would generate net cash from operations by mid-to-late 2021.
On September 23, the company received a patent for reduced gluten wheat, the 17th patent awarded to its GoodWheat portfolio. The company plans to sell a direct-to-consumer reduced gluten flour starting in late 2019.
What the boss says:
Arcadia's new CEO Matthew Plavan has said: "From an agricultural perspective, hemp is decades behind other crops in terms of improved plant genetics, and that starts at the seed level."
"It's very difficult to purchase a batch of uniform CBD hemp seed, resulting in unpredictable outcomes for both growers and buyers. Our goal is to reduce these risks by developing a proprietary line of US-grown, genetically superior hemp seeds for the commercial market.”