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

Robert Burns – H.C. Wainwright Robert Smith – Center for Performance Investing.

Good afternoon, and welcome to Arcadia Biosciences Third Quarter 2018 Earnings Conference Call. Today’s presenters would 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 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, Hailey, and thanks to everyone who is joining us on the call today.

Turning to Slide 3, at the outset of this call, based upon our progress up to the third quarter, we believe that three Arcadia-developed technologies will achieve first sales in the next 12 months to 18 months, representing three uniquely different trades in three crops around the globe.

These products include the GoodWheat portfolio of improved wheat quality products in the Americas; HB4 Drought Tolerant Soybeans in Argentina; and extended shelf life tomatoes by Shriram Bioseed in India.

After years of development, we are excited and motivated to bring these products to our customers and are taking all the steps necessary to successfully launch these products. Now let’s talk about the specifics of what we are doing to bring these products to our customers. Turning to Slide 4.

I’m very pleased to report we made substantial progress on the strategic imperatives for each of our major product categories. Just yesterday, we announced our collaboration with Ardent Mills for the development of innovative wheat technologies. The first product will be the recently patented extended shelf life and improved taste whole wheat.

We advanced a number of our products, including products in our GoodWheat portfolio towards commercialization. To enable these launches, we continue building partnerships across the supply chain. We demonstrated strong agronomics of our GoodWheat products and production trials in multiple locations.

We received the regulatory approval for HB4 Drought Tolerant Soybeans stacked with herbicide-tolerant traits in Argentina. We also achieved an important technical milestone towards the commercialization of extended shelf life tomatoes in India.

And finally, we hired top talent to enhance our commercial organizational capabilities, which are so essential to our future success. Moving to Slide 5. Yesterday, we issued a joint press release announcing our strategic partnership with Ardent Mills to develop whole wheat with extended shelf life and improved taste.

For a number of reasons, this is a very exciting milestone achievement. Ardent Mills is North America’s premier milling company, with more than 40 milling operations across the U.S., Canada and Puerto Rico.

The project with Ardent Mills introduces this trait designed to extend whole wheat shelf life by slowing the enzymatic processes that produce bitterness in most whole wheat products. As a side note, you may have also seen in our recent press release, Arcadia received a U.S.

patent for this extended shelf life wheat, and we are continuing to further strengthen our intellectual property covering this trait.

Though the consumption of whole grains is encouraged, 95% of Americans do not eat the recommended three servings of whole grains per day, missing the opportunity to gain many of the health benefits associated with whole grain.

Research has shown moderate whole grain intake, which is generally defined as three servings a day, has important health value by decreasing a cluster of risk factors associated with cardiovascular disease, stroke, obesity, metabolic syndrome and type-2 diabetes.

In addition to these health benefits, Ardent Mills and Arcadia, together, believe this project will lead to tastier whole wheat flour, which stores better, last longer and reduces waste, overcoming some of the barriers to whole wheat adoption today.

The value of the whole grain food market is estimated to be $46 billion globally and growing at 6% per year, according to Stratistics MRC, a market research company.

Ardent Mills is an innovator in wheat and grains, as demonstrated by their altered grain, white whole wheat line of products, which allows customers who favor the taste of white flour foods to increase their whole grain intake.

Together, Ardent Mills’ expertise and market reach, combined with Arcadia’s trait innovation, can drive the growth of the whole grain food market and help food and foodservice companies reduce supply chain costs and help consumers get the whole grain attrition benefits from the foods people love to eat. Now turning to Slide 6.

In recent calls, we have talked about a number of exciting wheat quality products that we are developing to meet the health and nutrition needs of consumers. I’d like to take a minute to walk through the various products and technologies under development.

The GoodWheat portfolio of non-GM wheat ingredients includes Resistant Starch or high-fiber wheat products, reduced gluten wheat products and other innovative traits under development. We have at least two additional products in development and several other concepts under evaluation.

All of these GoodWheat products will be available in various classes of wheat, like hard red spring, hard red winter, durum wheat, et cetera. And they will also be available for applications in both human food and animal feed. Our products will be commercialized by food companies and partners that we are working with around the world.

The Extended Shelf Life Wheat technology being developed through our Ardent Mills partnership is a great complement to the product in our GoodWheat portfolio. Together with Ardent, we are working with university partners to breed this trait into commercial wheat variety.

We’re also continuing to work with Ardent to jointly develop additional innovations in wheat. As shown on Slide 7, Arcadia is focusing on wheat and soybeans, which are among the world’s largest crops in terms of acreage grown and grain produced.

We estimate that the total serviceable market for Arcadia products and these key crops is $302 billion, as shown on the pie chart on the left.

Now as shown on the pie chart on the right, as we estimate penetration of our products into the various segments and global regions of these crops, we believe we have a potential total target market of approximately $1.5 billion. While collectively, $1.5 billion is a large number, it’s still a small share of the total market available globally.

When we consider the portion of Arcadia’s target market potentially impacted by our dispute with Arista, you can see that it approximates only about 10% of the total target market.

Due to the small percent of our target market potentially affected by the Arista matter, we do not anticipate the prosecution of our case will have a material impact on our ability to commercialize our product or to grow our business. Turning to Slide 8.

To prepare for commercialization of our wheat product, we are building partnerships with farmers, seed companies, millers and food companies to develop the supply chain needed for the successful launch of our GoodWheat ingredients.

The Ardent Mills agreement should given investors some insight as to the nature and breadth of the distribution partnerships we are cultivating, as we commercialize our products throughout the globe. We are seeing increasing demand for our products from around the world.

Thus, finding the right partners is critically important to minimizing our time-to-market and maximizing our ability to scale up sale. The number of prospective food companies testing or evaluating our GoodWheat expanded during the third quarter representing future distribution and sales into various geographies.

We now have active discussions underway with potential partners for each of our wheat products, representing four continents. We anticipate the total cycle period to be between 18 months to 24 months, with some partnerships coming to fruition and some that might not.

Although exact timing to closure is difficult to predict, we are confident we will secure partners in two or three of these geographies over the next few quarters. We completed harvest of field trials of GoodWheat varieties. Data from our harvest shows that we achieved our objectives for the trials.

Most significantly, we continued to increase the yield of our GoodWheat wheat varieties. Secondly, we demonstrated good agronomic performance in multiple states. We are now developing specific agronomic packages for each growing region that we will provide to farmers, who will produce commercial quantities of GoodWheat in the near future.

To further prepare for launch, this quarter, we initiated work with a major food lab that is developing recipes containing GoodWheat in popular wheat products, such as pancake and waffle mixes, muffins, pasta, crackers and flatbreads.

The goal is to develop products to show consumers that they are getting a healthier end product with the same taste, texture and mouth feel. We have stated in prior calls that we are building our commercial and supply chain teams to prepare for launch of our products. This quarter, we added a new commercial development lead to our team at Arcadia.

Grant Aldridge has more than 25 years of experience with major companies in agronomy, seed production and commercial development. Turning to Slide 9. In the third quarter, we began planning for the launch of HB4 in Argentina with two major events.

As we reported last quarter, Argentina had a severe drought last year, and the field trials of HB4 showed very positive results.

In preparation for the launch of HB4 soybeans, our joint venture with Bioceres, Verdeca, participated in the AAPRESID Congress, a major seed industry conference that is attended by many large growers in Argentina to introduce HB4 to key growers.

This was a successful effort, as many of these growers have signed up to potentially become early adopters when we launch the product. These same growers will also be conducting demo trials on their farms in the 2018, 2019 planting season, which will be planted soon in Argentina.

During the third quarter, we hired the first General Manager of Verdeca, Martin Mariani Ventura, who has more than 20 years of experience in the ag industry in Argentina and was involved in the launch of major new products. He will lead the efforts for commercialization of HB4 in South America, and we’re excited to bring him on board.

Early in the fourth quarter, we received approval from the Argentina regulatory authorities for approval of HB4 Drought Tolerant soybeans stacked with herbicide tolerant traits. This expands the market for HB4 technology in South America.

In the coming 2018, 2019 planting season, we will be planting lines containing HB4 alone and HB4 stacked with herbicide tolerant traits in Argentina to demonstrate this technology to soybean growers.

Also in the fourth quarter, we are completing the dossier for regulatory approval in Europe, a major step in the continuing progress towards commercialization of HB4 technology, and we expect to submit that by the end of the year.

As we have mentioned in past reports, we are awaiting approvals from the USDA and from China for import approval of soybeans. We expect to launch HB4 Drought Tolerant soybeans in Argentina as soon as we have the required approvals. Another ag productivity trait made important progress this quarter, as shown on Slide 10.

Extended shelf life tomato technology was developed by Arcadia and licensed to Shriram Bioseed, a major private seed company in India. After years of breeding and field development, Bioseed has reached an important milestone and is moving towards commercialization of the technology.

We expect Bioseed to introduce the technology to farmers with first sales expected by the end of 2019. Arcadia will receive milestone payments and royalties on the sales of tomato seed, according to our agreement with Bioseed. We do not anticipate total revenues from the Bioseed to be material.

However, it demonstrates the value of our science by introducing an Arcadia technology to growers. This technology allows the tomatoes to ripen on the vine before they’re picked, and the fruit retains 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 postharvest 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.

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

As we touched on, on our last quarterly call, our financial results in the near term will continue to reflect the impact of our transformation from an R&D out-licensing model to one of a consumer products, health and ingredients model.

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

With this new focus, it’s no longer strategically relevant for us to continue pursuing new contract research and government grant projects at the levels we have historically. And we expect these revenues to be lower this year, as our current contract research agreements and government grant projects conclude and/or not replaced.

In addition, we do not anticipate significant new upfront licensing fees under our new business model.

And as described more fully in footnote five of our Q3/4 10-Q filed today, and as well as our 10-K filed for 2017, 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, $82,000 and $328,000 of license revenues for the quarter and the full year 2018, respectively, which were scheduled to be amortized into revenue, was reversed out of deferred revenue and charged to retain deficit effective January 1 of this year.

For this reason, licensing revenues are down in each of the first three quarters of the year, a trend we expect will continue through Q4 as well. Now somewhat buffeting the decreases in both licensing and contract research and government grant revenue during the quarter was an increase in our GLA sales of 75% from the prior year quarter.

Turning to Slide 11. We see the net impact of the changes in our three revenue lines on overall revenue for the quarter and for the year-to-date.

Our legacy revenue sources are beginning to wind down prior to the onset of our new revenue sources, contributing to a 37% reduction in revenues this quarter over the prior year third quarter and a 61% reduction for the first nine months of this year over the prior year first nine months.

Importantly, however, we have compensated for the impact of this revenue shortfall through our continued cost containment efforts, having reduced our total operating expenses by $377,000 or 3% to $13.5 million in the first nine months of 2018 when compared to the same period in 2017.

Operating expenses for the current quarter were higher than in the third quarter of 2017 by $265,000 or 6%. This was primarily due to fees incurred in support of protecting our intellectual property.

As for net income, net income and net income attributable to common stockholders for the third quarter of 2018 was $4.5 million, a $9 million increase over the $4.5 million loss in the third quarter of 2017.

It’s important to note that the September 30 fair value remeasurement of warrant liabilities associated with the PIPE and the Registered Direct Offering transactions during this year is what generated recognition of this noncash income totaling $8.4 million for the quarter.

These warrant liabilities will be revalued at each quarter end until the warrants are either exercised or expired. The value is determined using the Black Scholes-Merton, which uses several input variables, including stock price and volatility and a risk-free interest rate.

A decrease in the value of the liability will generate nonoperating income, while an increase will generate nonoperating expense. Net loss and net loss attributable to common stockholders for the first nine months of 2018 was $12.8 million, consistent with the $12.7 million loss for the first nine months of 2017.

The 2018 year-to-date loss of $12.8 million included the $4 million loss from the initial recognition of the PIPE financing as well as $6 million of income for the subsequent fair value remeasurement of the warrant liabilities and $2.5 million of offering cost expense in support of both transactions.

When you take all of those ins and outs together as one, they net to about $560,000. And the other operating income netting against that means that the difference between the operating loss and the net loss was actually quite small, about $300,000.

With regard to our liquidity and capital resources, cash on hand, cash equivalents and short-term investments totaled $24.6 million, substantially bolstered by our financings in Q1 and Q2 of this year. Our net cash used for the quarter was $4 million.

And our net cash used in operating activities for the first nine months of 2018 was $11.6 million, a slight increase from the $11.2 million used during the first nine months of 2017. Now that wraps up our financial highlights for the first nine months of 2018. Thank you for your time and attention today. Back to you, Raj..

GoodWheat; HB4 Drought Tolerant soybeans; and extended life tomatoes, would launch commercially in the next 12 months to 18 months. We announced our collaboration with Ardent Mills, which is an exciting development towards the commercialization of our wheat technology.

We completed harvest of the production trials and are now developing the agronomic packages to provide to growers of good [indiscernible] We initiated development of recipes of popular foods containing GoodWheat and added food companies around the globe who are testing GoodWheat in their products. We received the U.S.

patent for extended shelf life wheat, which adds to our overall portfolio of intellectual property relating to wheat.

Based on the positive data from last year’s trials, we are preparing for the launch of HB4 in Argentina by introducing the technology to growers in Argentina and signing these growers up for testing the product on their farms this year.

We received regulatory approval for HB4 stacked with herbicide tolerant trait, which will expand the market for HB4. And extended shelf life tomatoes developed via our non-GM TILLING technology reached an important milestone on this commercialization path in India.

We’re excited about our new journey in the health and nutrition ingredients business, and we look forward to reporting our continuing positive results next quarter. With that, I’d like to turn the call over to your questions now..

Thank you. [Operator Instructions] Our first question comes from Ram Selvaraju of H.C. Wainwright. Your line is now open..

Hi. This is Rob on for Ram. Thank you for taking my questions.

I just have two, if I may, first one being, when do we expect to – for you guys to provide additional granularity as to your commercial model? And then the number two, which of your wheat varieties, for example, the Resistant Starch, Reduced Gluten or longer shelf life? Do you expect to have the greatest commercial value moving forward?.

So let me – your – could you state your earlier question, again, please, Rob?.

Yes.

When can we expect to see – have – additional granularity as to your commercial model, in particular, the economic packages that you’re developing as well as the ongoing move in Argentina?.

So I think what we talked about was the agronomic packages that we are developing. These are really the agronomics that we provide to farmers on how to grow our product. As far as the commercial models, we are developing those – so for the ones in Argentina, for example, we’re developing that with our partner in Argentina, Bioceres.

We are expecting, as we said, that in the next 12 months to 18 months, we would get a approval from China for launching the product in Argentina some time in the next 12 months to 18 months. That’s what we are anticipating.

So I think, over this next year, we would have more information, granularity, as you said, in terms of acreages and so forth in terms of what we would penetrate.

But we know – we have stated in some of our past calls, Rob, that – so again, staying with the Argentina model that the percentage of the acres in Argentina that are susceptible to drought conditions represent about 30% of the total acres. And I think that translates to something like around 12 million acres.

So it’s a fairly large market that’s out there. We expect to be the first company to launch a drought tolerant product there in Argentina. So I think that’s what we are basing our models on, and we can provide more granularity as we go forward..

Thank you. Our next question comes from Robert Smith of Center for Performance Investing. Your line is now open..

Thank you. Thanks for taking my questions.

Why isn’t the Bioseed agreement more robust as far as prospects go?.

Well, the tomato seed market in India is extremely fragmented. There are dozens of companies that sell tomato seed. Bioseed is a fairly important seed company in India. They are fairly large, and they participate in a number of different crops. So we licensed the technology to them several years ago for them to put it into their varieties.

And so far, they have tested it in a couple of varieties. They have the introgressed the genes that we provided them into two or three different varieties that they have been testing. And they feel now are ready to take to farmer scale, large trials, which they will do very soon now.

And then they expect, after they get the results from that, they would launch it. The model essentially was that we would – we had access fees – in order to provide them the technology access, we got access fees for that. We’ll be getting milestone fees as they reach specific milestones. And then after they commercialize, we’ll be getting our royalty.

Does that answer your question, Robert?.

So you can take this technology elsewhere as well..

Yes, we can. Yes..

And so are you actively seeking to do so?.

Yes, we are. We have licensed it to a seed company here in the U.S. Unfortunately, we are not at liberty to divulge that at this point because we’re – they’re in the very early phases of introgressing the seed into – the trait into their seed..

And what would that market opportunity be?.

I think the tomato seed market in the India – in the U.S. is fairly large. We think that’s a good opportunity. That is – that process of introgression and testing has just started. And we’ll talk more about that as we get closer to commercialization. But it’s a pretty large opportunity.

It’s not – it doesn’t show up in our charts at this time because it’s so early in the game, but that will definitely be an opportunity for us..

Thank you. Ladies and gentlemen, this concludes today’s question-and-answer session. I would like to turn the call back over to Raj Ketkar for any closing commentary..

Thanks, Hailey. Thanks, again, for everyone for joining the call today, and your continued interest and support of Arcadia. We look forward to speaking with you during our year-end conference call. In the meantime, if you have further questions, feel free to e-mail us or contact us outside. Thank you..

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program, and you may all disconnect. Everyone, have a great day..