Raj Ketkar - President and CEO Matt Plavan - CFO.

Graham Wells - Credit Suisse Brett Wong - Piper Jaffray.

Good afternoon and welcome to Arcadia Biosciences Third Quarter 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 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. You can review the Company’s safe harbor language in their most recently filed 10-Q and again on slide two of this presentation.

With that, I’ll turn the call over to Raj Ketkar, President and CEO..

First, acceleration of the development and commercialization of products in our food and nutrition platform, particularly Resistant Starch wheat; second, continuing to advance our GM yield traits in corn and soybean in North and South America with our strategic partners; and third, continuing to support partners who are advancing our GM yield traits in rice, wheat and cotton in the rest of the world.

On our last call, I talked about our portfolio of TILLING-based non-GM wheat traits. These traits and additional adjacent product opportunities in food and nutrition can provide near-term sustainable revenue growth, and I look forward to updating you further on these opportunities in the future.

In our assessment of our yield trait technologies, we determined that in North and South America, the regulatory agencies continue to embrace structured, disciplined and science-based frameworks with respect to the approval of transgenic traits.

However, in countries such as India, regulatory processes have slowed considerably, which has the potential to delay the commercial launch of our lead traits in rice, wheat and cotton by as much as two to three years.

As you all know, the entire ag industry is also going through a prolonged down cycle in commodity pricing, which is causing companies to reevaluate their long-term strategies.

Nonetheless, we want to reiterate our strongly held belief that our abiotic stress traits will add value to farmers and to society around the world by increasing yield and reducing input and cultivation costs for farmers.

Our partner Mahyco has indicated to us that they are fully committed to developing and commercializing our products in India with full recognition of the kind of value that these products can bring to Indian farmers. Shifting now to operations, on slide six. Our strategic review resulted in a couple of key operational takeaways.

First, by focusing on high-priority projects, we can reduce our total operating expenses, both in internal and external spends. Secondly, much of the work on our yield traits pipeline such as breeding and regulatory submissions is essentially in the hands of our partners.

As such, directing significant additional Arcadia investments and resources to further advance those products or develop additional GM traits is not required at this time. We believe that these outcomes provide us with an opportunity to optimize our cost structure to better align with the strategic focus I just outlined.

Moving to the third pillar of our strategy, on slide seven, our people. Focusing on certain key products will allow for better execution as we prepare for the future. Part of that process of course is not only to consolidate resources but to bring in the talent and relevant experience to support our long-term success.

In addition to bringing on our new CFO, we have also recently hired a new Director of HR, who brings significant industry experience and depth to be HR functioned. Both of these hires were made with the specific purpose of helping us build a performance-driven organization to deliver on our goals.

We look forward to reporting on our progress as we move forward in this direction that I just outlined, and achieve some key internal and external milestones. With that, I’d like to now shift to talking about the progress we’ve made in some of the key projects, and touch on pipeline development and reporting overall.

If you turn to slide eight, we’ve seen modest growth in nutritional supplement demand for our SONOVA GLA safflower oil product this year. And we are now actively engaged with the FDA on the status of our regulatory submission for use in pet food.

While it’s not possible to predict timing on this regulatory approval, the FDA has indicated that they have completed the scientific review. GLA is recognized for its nutritional role in pet care for immune system support, weight control and the maintenance of healthy skin and coat.

Arcadia SONOVA 400 GLA product has already launched a pet food ingredient in Canada, and we and our customers are excited about the larger U.S. market opportunity. We are also continuing to advance product testing of a Resistant Starch wheat, as I touched on earlier.

This non-GM product increases the dietary fiber of wheat and will play an important role in the development of highly nutritious, low glycemic index foods which are important in combating diabetes and obesity, which as you know are both global issues.

At present, Arcadia has evolution programs with more than a half dozen downstream ingredient and consumer products goods companies who are leaders in their market sectors. In Q3, we committed to feel scale up of our most advanced RS wheat line, to produce sufficient flour for large scale testing with our customers.

Based on those results, we’ll finalize our production and commercial plans for this highly-anticipated product. And of course, since our Resistant Starch wheat is non-GM ,there’re no significant regulatory hurdles for commercializing this product.

If you turn to slide nine on the crop yield side, our HB4 stress-tolerant soybean product continues to advance towards commercialization through our Verdeca joint venture with Bioceres.

In Q3 of this year, we made regulatory submissions to the USDA and FDA and we initiated regulatory studies to support submissions to China and Europe for import approval.

And I’m pleased to announce that just last week, we submitted our regulatory dossier to China, the single largest soybean import market in the world and a critical country for our soybean program.

From a product development perspective, HB4 soybeans are also currently undergoing the first season of field trials in breeding partner lines and those partners representing a significant portion of seed sales in South America.

Continuing with the yield platform, we’re also advancing our most-promising yield traits in corn through our collaboration with Dow AgroSciences where we have multiple candidates that are showing promise. In Q3, Dow completed its third season of field trials in corn hybrids with wide area multi-location testing in the heart of the corn-belt.

We’re currently analyzing data from these trials to determine which lines to advance and do additional field testing in 2017. The yield and stress traits from this program combined with Dow’s leading product protection -- crop protection pipeline could deliver some of the most competitive corn trait stacks in the industry.

Overall, I’m very pleased with the progress we’ve made during the quarter for the most advanced traits in our pipeline. And though our industry is facing considerable headwinds at the moment, I remain optimistic about the near-term and long-term potential for our products to generate significant value for our partners and shareholders.

I would also note that given -- that as we are a Company engaged in agriculture crop cycles, on a go-forward basis, we will report on technical pipeline advancements annually in conjunction with our year-end reporting. We will of course continue to report on material regulatory and commercial developments as they occur within any given quarter.

With that I’d now like to turn the call over to Matt Plavan for an update on our financial results for the quarter..

Thank you, Raj and good afternoon to everyone. I’m excited to be here today and for the opportunity to serve as CFO of Arcadia Biosciences. There are number of reasons to be excited about joining Arcadia but for me there are two major reasons.

One, I firmly believe we are well-positioned to create significant shareholder value; and two, I believe we are on the most direct path to do so today. And to that end, I look forward to working closely with Raj and sharing our progress to plan going forward.

As for our financial report, I’d like to provide a brief primer on our revenue streams today and also speak how we expect them to evolve over time. I think it sets the stage for the review of our financial highlights for this quarter as well as some insights I’ll share about our forward-looking expectations. Okay.

As for today, there are three primary areas from which we derive revenues and where we expect to drive near-term revenue growth. First, product revenues. These are revenues generated from the sale of products Arcadia has developed and commercialized. Currently that’s our SONOVA GLA safflower oil. Second, license revenues.

Today, these revenues primarily represent amortization of upfront and annual license payment by our partners for the rights to further develop and commercialize our traits. And third, granting contract research revenues. These are revenues we earn from performing contract research services for our partners, government agencies and other third parties.

We continue to target additional contract research opportunities that not only provide new revenue opportunities but will represent project that are highly aligned with our strategic focus.

Now, as we have discussed at length, we have a robust pipeline of GM and non-GM traits at various stages of development towards commercialization, which upon launch and scale up, represent significant revenue potential for our partners and in turn for Arcadia, as we receive our share of those high-margin revenue streams.

However, today, based upon where these traits reside in the development process, we do not expect significant revenues over the next few years from the launch and commercialization of these traits. Alright, with that as the backdrop, if you can now please turn to slide 10, we can review our revenue highlights. Starting from the top.

Our product sales of SONOVA GLA oil were down by $21,000 for the quarter. However, year-to-date, product sales are up by $39,000. So, overall, pretty consistent performance. And this is where we are targeting and counting on U.S. pet [ph] approval to provide greater lifts in these revenues moving forward.

License revenues for the third quarter was consistent with last year. For the first three quarters, however, license revenue of $510,000 is down from last year by $263,000. This is primarily due to the acceleration of revenues from certain contracts in 2015 that was due to the shortening of a customer’s license period.

Our contract research and government revenues for the third quarter were $755,000 as compared to $1.5 million last year, a reduction of 49%. Year-to-date, these revenues were down $1.2 million from the prior year. This is the result of fewer government grants and contract research agreements this year over the last year.

However, in connection with the interest we are seeing from nutrition food industry players that Raj spoke to earlier, we do expect to add new contracts in the coming quarters as we work to bring partnerships on line to further develop our trait candidates.

All-in, this changes resulted in a decrease in total revenues for the quarter and year of $748,000 and $1.4 million, respectively. Turning now to our expenses on slide 11. Research and development expenses for the quarter are down by $924,000 or 29% compared to the same period last year and down by $424,000 or 6% for the first nine months of the year.

This is primarily due to less utilization of subcontracted services in support of our government grants and our research contracts in the current year. SG&A costs of $2.7 million for the quarter are comparable to the same quarter last year.

For the first three quarters, SG&A expenses are up by $641,000, much of which is related to expenses of being a public company in addition to certain severance costs booked earlier in the year. Thus, altogether, our total operating expenses for the third quarter of 2016 at $5 million were an improvement of $1 million from the same period last year.

Operating expenses for the first three quarters of $15.8 million were up slightly by $236,000 or 1.2% from last year.

While it’s not on the chart, I’d like to point out that interest expense for the third quarter of 2016 decreased by $435,000 and year-to-date by more than $1 million compared to 2015, as a result of our debt refinancing which occurred in December of last year.

As for our liquidity, at the end of the third quarter of this year, cash on hand and liquid investments totaled a solid $57.4 million. Our net cash used for the quarter was $3.7 million.

Putting all this activity together, loss from operations improved for the quarter to $3.9 million compared to last year’s loss of $4.2 million as reductions in operating expenses more than offset lower revenues for the period.

As for the year-to-date, loss from operations for the first three quarters of 2016 increased $1.6 million to $13.1 million compared to $11.5 million in 2015 due to lower revenues on essentially the same level of operating expenses as in the prior year. And having covered the highlight, here is a little perspective on our near-term financial outlook.

For 2016, we expect to finish the year with revenues between $4 million and $4.5 million and to keep our operating expenses in line with the prior year, even though this is our first full year having the infrastructure of a public company.

In 2017, we expect to achieve increases in each of our revenue categories that would be product license and grants and contract research.

And as we progress through the fourth quarter of this year and early part of 2017, we expect to gain better visibility into these new revenue opportunities and a better feel for the impact of our cost optimization efforts. We look forward to updating you as we progress through this and update you on upcoming calls.

I very much enjoy the opportunity to speak with you today and I thank you for your time.

So now, let me turn the call back over to you, Raj?.

Thank, Matt. Before we get to your questions, let me say that in the last three months, the team at Arcadia has been involved in a bold initiative to evaluate a strategic direction and develop new pathways for the future of the Company.

We have a clear focus for the priorities ahead and we have already started to take steps in the new directions we discussed today. I believe we have an exciting future and we are committed to make it happen. With that, I would like to turn the call over to your questions now..

[Operator Instructions] And our first question or comment comes from the line of Chris Parkinson from Credit Suisse.

Your question please?.

Good afternoon, guys. This is Graham Wells on for Chris.

How are you guys doing?.

Hi. Good..

So, I just had a quick question. Raj, you had mentioned earlier that you’ve seen kind of a slowdown in approval processes globally and you highlighted India in particular.

We were just curious what are the regions in particular could you point to where you kind of seeing the slowdown in approval processes and what do you think is really driving that?.

Yes. I think the two major regions where I would point to for any kind of slowdown or continued slowdown is Europe and China, really. I mean, in Europe, as you know, essentially no significant approvals have been given for quite some time and the regulatory processes take quite long to get through all of it to get to an approval.

They do -- they have been giving import approvals but even so, the requirements are getting tougher there. China is also sort of in a similar situation in terms of timing. I think what we’re seeing is that they are trying to bring their regulatory frameworks harmonize them more with global frameworks to make them more consistent.

And right now, it’s a bit unpredictable in terms of timeline. I don’t think we can specifically say, is it slowdown by a year or two or whatever. But I think we are hopeful that that’ll continue to increase. But I think those two are the main areas. South America is actually quite favorable..

And then, I just had another question kind of around, just in ballpark sense just trying to get a feel for what you guys see in terms of the size of the opportunity to explore the move into pet foods within the SONOVA product line?.

We see it as an attractive market. I mean, the entire pet food market is a large market. And there’s many ingredient players within that and different ingredients. So, we need to sort of figure out the specifics in terms of the size of the market. We are talking to companies that formulate pet foods and how are our ingredient would fit in.

So, I think we’re in the early stages of that and we’ll be happy to report on that in the future..

And then, just the last one from before I let you guys go. I know, Matt, you kind of mentioned that you guys will be able to give more color on this moving forward. But, we were actually just curious on where could we see potentially the greatest benefits from the cost optimization kind of planning that you guys have gone through.

And even if you don’t quite have totally clear idea yet of where things will settle out, where do you kind of see the greatest opportunities to kind of streamline things?.

We’re looking -- from a macro standpoint, we’re targeting between say 15% and 20% of our overall operating expenses from a run rate standpoint. And I think in terms of where within the organization that that’ll come from, we’ll be able to give you a better sense going forward.

But I think in terms of just broad macro guide, that’s really the size, the optimization as we see it today..

Thank you. Our next question comes from the line of Brett Wong of Piper Jaffray. Your question please..

I wanted to dig back in on the regulatory timing going off of questioning before.

Are you seeing longer timing for import approval in Europe? And is there risk to getting that import approval for HB4 soybeans?.

No, we’ve not seen anything specific to HB4 yet, Brett.

The general concern is just given the overall sort of macro situation with GM crops in general, given some of the consumer acceptance issues and public acceptance issues which are -- which tend to sort of find their way into the regulatory process and with -- which results many times in demand for more studies and that sort of thing, more documentation which causes a slowdown.

So, it’s hard to say what the magnitude of the slowdown is or what part of the regulatory, which step would get slower. But I think what we’re seeing is there is a general slowing down in different areas..

Okay.

I mean, in regulatory or non-regulatory, seeing any time line impact to expected commercialization, not only this one or any other products outside of the GM yield rice, wheat and cotton?.

No, I think everything else is very much on track, Brett..

Okay.

And, can you talk to some of the field trial stuff, how are corn yields and expectation this year and field trials and maybe talk about HB4 also?.

Yes. So, the field trial results from this current season haven’t yet come in. I mean, harvesting happened just recently and we’re working with our partners at Dow AgroSciences to sort of collate that data and really hone down on what yield increases we saw for which different traits and so on, and which line. So, we’ll have more on that.

And like I alluded to in my presentation, I think early part of next year when we do our end of year reporting, I think that would be the time when we would be able to specifically talk about the performance of our products, product candidates.

And same with HB4; in HB4, I think we are -- our breeding partners in South America are planting as we speak, right now. So that will be available really in second quarter next year..

I thought you did some trials this last season..

Yes. So, those are early trials and obviously it’s a selection process where we’re testing a lot of stuff. And based on that we advanced certain lines and certain traits into the trial program for this year, which has just been completed.

So, I’ll have to go back and look at what the specifics of, were that came out at the end of last season, which we might have reported at the early part of this year. But you know we….

Okay, fair enough. I was just wondering the initial -- on the corn side any initial issues or concerns that you’re having; it doesn’t seem like that’s the case..

No, no concerns. I think the story there is really good. We’ve got some really good candidates with Dow and we’re moving forward. We just completed the season and we’ll have the data for you in the first quarter next year, end of year report..

Great.

And then, in terms of the delay in India, does that affect your agreement with Mahyco at all and do you have any ideas of additional costs related to that?.

I think the issue there is really delays of -- the cost really is in terms of timing of not commercializing according to our original schedule because the regulatory system even for field trials is proving to be challenging there where Mahyco needs to get approval from not just the central authorities but from every state that you want to do trials.

And then, it’s just a time-consuming process, not just time-consuming process but the approvals have come very late, so they could not plant any trials this year. We hope that in the spring, by that time, the process gets a little better. They’ve indicated -- the regulatory authorities have indicated change in their systems.

And so, we’re hoping that that will change for the better in the spring up next year..

Okay, and then last one. Raj, just wondering, given your time so far here as the CEO and all these near term priorities that you’ve laid out, just have you seen any issues, unforeseen issues, is there anything going kind to plan smoothly as you expected? Any initial fix would be great..

It’s been a few months now and it’s just been very exciting to go through this really rich pipeline of products that Arcadia has and go through this whole process that we’ve gone through.

It’s really been a grounds up process with a lot of key people involved to look at every product and look at the market and really focusing on which projects make more sense going forward. And that’s where we are right now and kind of what I outlined today. So, I think it’s going well, going great. And I’m happy to be here.

And now we’ve got a great team..

Thank you. And this does conclude the question-and-answer session of today’s program. I would like to hand the program back to Raj Ketkar for any further remarks..

Thanks, Jonathan. So thanks everyone for joining the call today and your continued interest and support. We look forward to speaking with you again during our yearend conference call..

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day..