Raj Ketkar – President and Chief Executive Officer Matthew Plavan – Chief Financial Officer.

Julian Harrison – H. C. Wainwright.

Good afternoon, and welcome to Arcadia Biosciences' Second Quarter 2018 Earnings Conference Call. Today's presenters will be Raj Ketkar, President and CEO; and Matthew 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 2, 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-K and again on Slide 2 of this presentation.

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

Thank you, Connor, and thanks for everyone who is joining us on the call. Today, we would like to report on the second quarter 2018 earnings and share with you the great progress we are making in moving our products closer to launch.

I will summarize the second quarter achievements and Matt will discuss our recently completed financing round and the second quarter 2018 financials. At the end of the call, we will, as always, take your questions. Turning to Slide 3.

In the second quarter of 2018, we continue progress towards the commercialization phase as a health and nutrition ingredients company. We have the potential now of commercializing up to three products in 2019 and I will be talking to you about those products today.

A major accomplishment this quarter was a completion of $14 million registered direct offering round which will meaningfully fortify our cash resources and allow us to better execute our growth strategy in 2018 and beyond. Coupled with the $10 million round completed in the first quarter, we are well equipped to build on our strategy.

We also made important progress in developing our non-GM wheat traits portfolio and I will speak to some of these in more detail later. We executed an agreement with the farmers business network which sets up for the production and supply of identity preserved GoodWheat products to our customers.

Resistant Starch GoodWheat scale-up production trials were planted in multiple locations. Breeding of Resistant Starch GoodWheat into commercial germplasm continues, so that growers who will produce GoodWheat will have more options for planting.

We’re building partnerships with several milling and food companies who are testing Resistant Starch GoodWheat in their product. Our ag productivity traits also completed important steps towards launch.

Field trials of HB4 drought tolerant soybeans in the 2017-2018 seasons in Argentina showed improved yields in drought conditions in elite breeding lines. In preparation for commercialization of drought tolerant soybeans, Verdeca, a joint venture with Bioceres hired a general manager.

Martin Mariani Ventura is an ag executive with over 20 years experience in marketing and commercialization of new products.

Extended Shelf Life Tomatoes a product of our non-GM TILLING technology being developed by our licensee partner Shriram Bioseed in India reached an important milestone on its paths to commercialization with an expected launch date in 2019.

An earlier in the quarter, we announced that rice lines containing our triple-stack traits, which contain our nitrogen use efficiency, water use efficiency and salt tolerant traits, demonstrated double-digit yield increases over two years of trials. This quarter we also added two new members to the board of directors.

Al Bolles is a well-known leader in the food industry. His experience in wheat processing will be valuable as we develop our commercialization strategy. And Lilian Shackelford Murray also joined the board and brings skill and experience in the finance and biotech start-up industries.

Our board is now at full strength with a rich mix of skills and finance, agriculture and the food industry. And finally, we launched our new website, where customers, investors and the general public can find information about our new strategy products and technology. Please visit us at www.arcadiabio.com.

Turning to slide 4 in 2018, we are focused on preparing for commercialization by building partnerships with farmers, seed companies, millers and food companies to develop the supply chain needed for the successful launch of our GoodWheat ingredients, Breeding into newer commercial lines has been done in collaboration with public germplasm providers.

Production testing is ongoing in multiple wheat production sales. We are building partnerships with seed companies who will produce condition and package to seeds for delivery to farmers. Our collaboration with Farmers Business Network, which represents 24 million acres in the U.S.

and Canada, will help expand the grower base for our identity preserve grain GoodWheat in key geographies. We are engaging with milling companies that represents over 50% of the milling capacity in the U.S. and major millers in Europe to test the processing of identity preserved wheat.

We’re also working with a number of food companies to develop the end products that will appeal to consumers. Our focus this year is to build these partnerships that will be the foundation of a long-term sustainable business.

Turning to Slide 5, HB4, the drought tolerant soybeans trade being developed by Verdeca, a joint venture between Arcadia and Bioceres continues to make steady progress. A total of 17 trials including many elite breeding lines were conducted in seven locations across Argentina.

This was the second year of trials of breeding lines containing the HB4 trade. This fast growing season in Argentina was impacted by drought in many parts of the country, which provided a good testing environment for the trait.

Analysis of the data shows that elite breeding lines with HB4 adapted to the specific regions of Argentina performed well in those regions compared to commercial controls. This technology offers the farmer an important tool to manage their crops during drought conditions.

At this week's AAPRESID Congress held in Córdoba, Argentina, Verdeca is introducing HB4 technology to soybean growers inviting them to participate in pre-commercial testing in the upcoming 2018-2019 season. This marks the first step in commercializing HB4, the first trait in Verdeca’s pipeline of traits to benefit soybean growers.

Breeding of the trait into elite line is now moving into its third year of testing and we plan to conduct larger plot sized pre-commercial demonstration trials on farmers’ fields. More than $50 million of the world’s soybean hectares are grown in Argentina and Brazil, a region that has experienced significant drought conditions in recent years.

We estimate that 30% of these hectares are the addressable market for HB4. To prepare for launch of HB4 in Argentine, Verdeca recently hired Martin Mariani Ventura as general manager. Martin has over 20 years of experience in the ag industry in Argentina and was involved in the launch of major new product.

He will lead the efforts for commercialization of HB4 in South America and we are excited to bring him on board. As we have mentioned in past reports, we are awaiting approval from China for import approval of soybeans and from the USDA. Concurrently, we are conducting studies required for approval in Europe and expect to submit this dossier in 2018.

We expect to launch HB4 drought tolerant soybeans in Argentina as soon as we have the required approvals. Two other ag productivity traits made important progress this quarter has shown in Slide 6. Extended Shelf Life Tomato technology was developed by Arcadia and licensed to Shriram Bioseed, a major private seed company in India.

After years of reading and field development Bioseed has reached an important milestone and is moving towards commercialization of the technology in 2019. This technology allows the tomatoes to ripen on the vine before they are baked and the fruit retained its firmness during the picking, handling and transportation to market.

Allowing the fruit to ripen on the vine results in better color and taste in the tomato. It also reduces post-harvest spoilage thereby reducing food waste. This is very important to improve the sustainability of growing tomatoes while at the same time improving color and taste. We look forward to the commercialization in 2019.

We also recently announced significant yield gains in rice with three of our proprietary input traits stacked together and tested in Colombia and Africa.

These results confirmed that our ag productivity traits hold significant promise to help farmers increase the yields and improve farm revenue as they deal with the effects of climate change and challenging growing conditions such as nutrient deficient soil, drought and salinity.

While we have shifted our near-term focus to our non-GM wheat ingredients portfolio, we still see value in these agricultural productivity traits and we will continue to support our partners in unlocking the commercial potential at they advance.

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

Thank you, Raj, and good afternoon everyone. It was indeed a good quarter for Arcadia having achieved important milestones on the path to commercialization of our health and nutritional products as well as our HB4 soybeans.

As we touched on in our last quarterly call, our financial results in the near-term will continue to reflect the impact of our transformation from a predominantly research and licensing business model to one of a consumer health and ingredient product company.

As we introduce our new nutritional ingredient products like GoodWheat to the market and we advance our HB4 soybeans to commercialization, we expect the onset and scale-up of these new revenues over the next 12 to 36 months, which will be characterized as product revenues or trait fees depending upon the specific arrangement with our end customers.

Because of our primary focus on these new products, we do not intend to continue pursuing new contract research and government grant projects at the levels we have historically.

These projects are no longer relevant to our forward business strategy and they divert critical resources away from essential GoodWheat breeding, production and commercialization activities that are underway.

As such we expect these revenues to be lower this year as our current contract research agreements and government grant projects concluded and are not replaced.

In addition, we do not anticipate future upfront licensing fees under our new business model and is described more fully in footnote 5 of our 10-Q filed today with the implementation of the accounting pronouncement ASC 606, we can no longer amortize such upfront license fees into revenue over time.

As a result, 82,328 of license revenues for the quarter and for the full year of 2018 respectively, which were scheduled to be amortized into revenue were reversed out of deferred revenue and charged to retain deficit effective January 1 of this year. For these reasons, we expect licensing revenues to continue to decline during the year.

Turning to Slide 7, we see the impact of these factors on our overall revenue in the second quarter and the first half of the year.

Our legacy revenue sources are beginning to wind down prior to the onset of our new revenue sources, driving a 56% reduction in revenues this quarter over the prior year second quarter and 68% reduction for the first six months of this year over the prior first six months last year.

Importantly, however, we have compensated for the impact of this revenue dip through our continued cost containment efforts having reduced our operating expenses by $642,000 or 7% to $9.1 million in the first half of 2018 when compared to the same period in 2017.

Taking a closer look at the operating expenses, we can see the effect of our transformation to a commercialization phase here too. Total R&D expense was $125,000 higher for the quarter and $302,000 lower year-to-date as compared to 2017.

The increase for the quarter was due primarily to higher expenses incurred in relation to our Verdeca joint venture and the continued progress towards the launch of our HB4 soybean.

This increase was partially offset by the lack of certain in license and subcontract research costs in 2018 that were [ph] present in 2017 as well as less sub-contracting activity in support of government grants in 2018.

The agreement terminations had a greater impact on the first half of 2018 versus just the quarter substantially driving the $302,000 decrease from the first half of 2017. Total SG&A expenses were relatively flat in the second quarter of 2018 as compared to the second quarter of 2017 and $425,000 lower year-to-date.

This decrease in SG&A expenses was mostly due to lower salary and benefits due to fewer headcount. In addition, strategic advisory costs incurred in the first half of 2017 and not in 2018 contributed to the favorability, partially offset by higher bonus and intellectual property legal fees incurred in the first half of 2018.

Now putting all this activity together, net loss and net loss attributable to common stockholders for the second quarter of 2018 was $6.7 million, a 66% increase from the $4 million loss in the second quarter of 2017.

Net loss and net loss attributable to common stockholders for the first half of 2018 was $17.3 million, compared to $8.2 million for the first half of 2017.

Importantly, the increase for both periods was driven primarily by the initial recognition and then the subsequent fair value remeasurement of the liabilities associated with the PIPE financing as well as offering costs associated with both the PIPE and the registered direct offering.

These combined amounts totaled $2.2 million and $9 million for the second quarter and first half of 2019 respectively. With regard to our liquidity and capital resources, cash on hand, cash equivalents and short term investments totaled $28.6 million, this was substantially bolstered by our financings in Q1 and Q2 of this year.

Our net cash used for the quarter was $4.3 million unchanged from the prior year second quarter and our net cash used in operating activities for the first six months of 2018 was $7.6 million, $1.3 million decrease from the $8.9 million used during the first six months of 2017.

Both of our financings completed in Q1 and Q2 involved liabilities and the PIPE included significant non-cash charges to the P&L during the first half of the year. Please refer to our footnote 9 in the 10-Q we filed today for a detailed description of the accounting for these transactions.

That wraps up our financial highlights for the first half of 2018 and we thank you very much for your time. Back to you, Raj..

GoodWheat, HB4 drought tolerant soybeans and Extended Shelf Life tomatoes will launch commercially in the next twelve to eighteen months. We are excited about our new journey in the health and nutrition ingredients business and look forward to reporting our continuing positive results next quarter.

With that I would like to turn the call over to your questions now..

[Operator Instructions] Your first question comes from the line of Raghuram Selvaraju with H. C. Wainwright. Your line is open..

Hi, there. This is Julian on for Raghuram Selvaraju.

First, can you talk a little more about what the commercial launch of Resistant Starch GoodWheat would likely look like in 2019?.

I think what we are expecting is to work with some food companies to get product into a commercial introduction.

We are working with several different food companies and in terms of volume it would be an introductory volume, limited by the seed multiplication that we are doing now, but also ensuring that we get the product into the right test markets..

Okay, thanks. That's helpful.

I know it might be a little early, but I was just curious if there has been any feedback so far from farmers in the FBN network regarding GoodWheat seeds?.

We are just beginning the conversations with farmers.

We already – before our engagement with FBN, we already had been working with a select group of farmers with whom we've had experience with in the past and the feedback has been generally very positive, everybody in the wheat world starting with farmers and owned on the value chain is excited about traits that can bring value to wheat.

Wheat really has not had much innovation over the years unlike corn and soybeans. So innovations in wheat are really welcomed by farmers. And that's what we're hearing talking to people across the wheat growing regions that we have been talking to..

Okay, got it and just a quick housekeeping question.

Are you able to provide any guidance on how stock based compensation will likely trend over the next few quarters?.

You know that – that's difficult to predict, but I don't think we expect it to change materially from what it’s been.

We’ve been running between $800,000 to $1 million, $2 million a year, but we don't have any reason to believe that that's going to change materially, but as you know with a volatile stock using the Black Scholes Merton model to determine what the charges can sometimes surprise you.

But I think we're not anticipating substantial changes in our granting amounts. And so, I think that's probably our best estimate of how this is going to perform over the next year or two..

Okay, great. Thanks very much..

Thanks, Julian..

There are no further questions at this time. I will turn the call back over to Raj Ketkar..

Thanks for everyone for joining the call today and your continued interest and support of Arcadia. We look forward to speaking with you again during our third quarter conference call..

This concludes today's conference call. You may now disconnect..