Arcadia Biosciences shares traded 25% higher after reporting that it secured $3 million in pre-season GoodHemp seed purchase commitments in just 50 days after launching the product.
Arcadia Biosciences Inc. (RKDA:NASDAQ), which employs science-based approaches to enhancing the quality and nutritional value of crops and food ingredients, today announced in a letter to shareholders that "the company has secured in excess of $3 million in initial seed purchase commitments in just 50 days post launch of its newest product line: GoodHemp."
The company explained that GoodHemp is the firm's new commercial brand for delivering genetically superior hemp seeds, transplants, flower and extracts. The GoodHemp line's first commercial product, which Arcadia showcased at the American Seed Trade Association CSS & Seed Expo in Chicago in early December 2019, is a "disease resistant, USDA-compliant ultra-low tetrahydrocannabinol (THC) hemp seed."
The company's Chief Commercial Officer (CCO) Sarah Reiter commented, "Our new GoodHemp seed catalog has been met with enthusiasm from growers seeking compliant, reliable hemp seeds...Since our launch last month, we've received a significant number of inquiries, reflecting a strong market demand for quality genetics from a reputable seed provider. We can already see that Arcadia's 15+ years of proven results in crop improvement is highly valued by growers...We are fielding strong interest in our seeds and expect purchase commitments to continue over the next few months as farmers focus on securing quality genetics for their upcoming spring plantings."
The firm noted that revenues from these purchase commitments will be recognized upon delivery of seeds to the growers, which is anticipated to occur between Q2/20 and Q4/20. The company stated that these initial sales and future additional commitments will contribute meaningfully to the greater than $10 million total revenues previously forecasted for FY/20.
The company indicated that "GoodHemp's 2020 offering has expanded from the five new seed varieties previously announced during the GoodHemp launch. The company now offers ten varieties primarily focused on compliant cannabidiol (CBD) production, one of the biggest challenges facing U.S. growers in light of the USDA's new guidelines mandating that states test and dispose of "hot" crops that exceed 0.3 percent THC."
CCO Reiter added, "We work closely with our community of U.S. farmers to understand the very specific challenges of growing hemp in different geographies, climates and regulatory environments in order to develop and deliver solutions that support crop productivity and profitability...Our USDA-compliant Complia Bot+ seed variety is just the beginning of what we expect will be a robust and innovative seed portfolio designed to modernize the commercial hemp germplasm market."
Arcadia is headquartered in Davis, Calif., and states that it innovates crops to provide high-value, healthy food ingredients to help meet consumer demand for a healthier diet. The firm has developed a portfolio of agronomic traits that it states enables farmers around the world to be more productive amidst challenging economic conditions and minimize the impact of agriculture on the environment. In addition to GoodHemp, the company markets a line of GoodWheat™ branded ingredients.
Arcadia Biosciences started the day with a market capitalization of around $41.9 million with approximately 8.65 million shares outstanding and a short interest of about 8.6%. RKDA shares opened relatively unchanged today at $4.86 (+$0.01, +0.21%) over yesterday's $4.85 closing price. The stock has since traded higher between $4.86 and $6.48 per share today and at present is trading at $5.62 (+$0.77, +15.88%).
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