Description of Arcadia Biosciences Inc's Business Segments
Productivity Traits, the Yield and Stress Pipeline
Arcadia is a recognized leader in the area of yield and abiotic stress and our
business was built on the premise that mitigating the impact of environmental
stresses, whether chronic or transient, would generate meaningful yield gains
in the most important crops in the world. We believe our yield and stress pipeline
holds significant promise, as evidenced by our internal data and data generated
by our partners in rice, wheat, soy, corn and cotton varieties. The commercial
value of these types of traits will be fully unlocked as the traits are introgressed
into elite germplasm by breeding partners and tested broadly in the field under
different environments and agricultural practices. Therefore, while it is our
view that the Arcadia pipeline is fairly advanced, significant development and
testing has yet to be completed on several of our products as referenced in
Phase 3 and Phase 4 of development.
Nitrogen Use Efficiency (NUE)
Our NUE technology enables plants to utilize nitrogen fertilizer much more efficiently
than conventional plants. This allows crops to achieve significantly higher
yields under normally applied levels of nitrogen fertilizer, or to achieve the
same yields as conventional crops while using 30 to 50% less nitrogen fertilizer.
Nitrogen fertilizer is a primary plant nutrient and key driver of crop yield.
Nitrogen fertilizer is also a significant component of crop production cost.
Plant Biotechnology Journal reported that only 30% to 50% of added nitrogen
fertilizer is taken up by agricultural crops, with the remainder left unutilized
and potentially becoming a significant environmental pollutant.
Our NUE technology platform was initially based on a trait discovered at the
University of Alberta (Canada), and we hold an exclusive, global license to
the technology for use in all crops, with unlimited sublicense rights. Efficacy
of this NUE technology has recently been demonstrated in field-grown rice, wheat,
and canola by multiple groups. While we had planned to test NUE cotton lines
in the U.S. in 2016, those lines will instead be field tested by our partner,
Mahyco.
We are collaborating with Dow AgroSciences on development of NUE in corn from
technology originating at Dow Agrosciences. Dow AgroSciences is currently evaluating
this technology by means of multiple-location U.S. field efficacy tests in hybrid
corn.
Positive field test results for our Dow AgroSciences corn collaboration will
also help our research team determine whether to apply this separate NUE technology
to additional crops like wheat and soybean. We plan to use a combination of
NUE technologies in trait stacks to help us maintain and extend our technical
and commercial advantage for this important trait area.
The target crops and markets for NUE include all major agricultural crops and
markets. Our NUE technology has now been incorporated, or is under evaluation
by our commercial partners, in major global crops, including rice, wheat, cotton,
sugarcane, and multiple forestry species. Field trial data to date in multiple
major commodity crops has shown yield improvements greater than 10% attributable
to our NUE trait.
Water Use Efficiency and Drought Tolerance
Our Water Use Efficiency (WUE) trait enables plants to better tolerate two distinct
types of stress: reduced or inconsistent water availability, and severe drought.
The WUE trait has been demonstrated to improve crop yield under conditions of
episodic water stress and to help crops recover from severe drought conditions.
A related but distinct technology, Drought Tolerance, helps plants maintain
yields under conditions of prolonged water stress.
Modern agriculture is highly water intensive, using approximately 70% of world
water withdrawals, according to the United Nations Educational, Scientific,
and Cultural Organization, or UNESCO. UNESCO also estimates that future global
agricultural water consumption will increase by about 19% by 2050 and could
be even higher if the efficiency of agricultural production does not improve
dramatically.
Water-limiting conditions can result from prolonged drought, leading to severe
reductions in crop yields, or can result from periodic dry conditions, leading
to reduced crop yields. Whenever water limitations occur, economic losses and
impairment of the food supply result.
Our WUE trait technology was jointly discovered by researchers at the University
of California, Davis and Technion—Israel Institute of Technology. We hold
an exclusive, global license to the technology, with sublicense rights, for
use in all crops. Greenhouse and field trials of our WUE traits have been completed
in agronomic crops such as rice, wheat, cotton, peanuts and alfalfa. We are
currently working with collaborators in rice, potato, sugarcane, cotton and
multiple tree species.
Our Drought Tolerance (DT) technology was discovered by researchers at National
Scientific and Technical Research Council (Argentina), and further developed
by Bioceres, S.A. Verdeca, our joint venture with Bioceres, Inc., holds exclusive
global rights and is developing and commercializing this technology in soybeans.
Our Drought Tolerance technology is most advanced in soybeans. Multiple seasons
of field trials under yield reducing conditions that represent the average yield
of soybean production in North and South America have shown significant yield
improvements relative to controls with no decrease in yield under optimal conditions.
The Early Food Safety Evaluation process has been completed by the U.S. Food
and Drug Administration (FDA) for the plant protein responsible for our Drought
Tolerance trait. The trait has full approval for food safety and international
commerce in Argentina. Regulatory approval application was submitted in 2016
to the FDA and remains under review. Additionally, regulatory approval applications
have been submitted in Uruguay and are pending final approval. Regulatory submissions
were made in 2016 for import approval of Drought Tolerant HB4 soybeans into
China. We plan to submit for commercial release in 2017 with the U.S. Department
of Agriculture. Further, we plan to submit for production approval in Brazil
in 2017 and import approval in the European Union in 2018.
Salinity Tolerance
Our Salinity Tolerance trait allows plants to maintain yields under conditions
of elevated salinity and is applicable to a wide range of crops, including wheat,
rice, soybean, and cotton. Our salt-tolerant plants have also been demonstrated
to bind excess salt from the soil into the plant, potentially providing the
benefit of rehabilitating salinized land over time.
The global cost of lost crop yield to salt-induced land degradation is estimated
to be $27.3 billion per year according to the United Nations Natural Resources
Forum. Of the current 230 million hectares of irrigated land, 45 million hectares,
or about 20%, are salt-affected. Crops grown under salt-affected conditions
may be inhibited in two ways. First, the presence of salt in the soil reduces
the ability of the plant to take up water, leading to reductions in growth rate.
Second, if excessive amounts of salt enter the plant, there can be injury to
the cells, which may cause further reductions in growth. Modern agriculture
is highly water intensive and the ability to manage crops in saline environments
will reduce agricultural demand on critical fresh water supplies.
Our most advanced Salinity Tolerance trait technology is based on technology
from the University of Toronto, the University of California, Davis, and the
National Institute of Agrobiological Sciences (Japan), all of which have granted
us exclusive licenses for all crops. In addition, we are conducting research
on additional salinity tolerance genes under a funded research agreement with
the United States Agency for International Development, or USAID.
Target markets for the Salinity Tolerance trait are areas where water or soil
salinity decrease crop yield. Such areas occur globally where irrigation is
prevalent, where ground water supplies are salinized due to seawater intrusion
and where soils are salinized due to mineral deposits. These conditions are
common in North America, India, China, additional countries in Asia, Australia,
and other major crop production countries. Our Salinity Tolerance trait has
been licensed to partners in rice, wheat, cotton, and oilseeds.
Crops with tolerance to soil and water salinity are in various phases of development
with our primary licensee and partner for the Salinity Tolerance trait technology.
Our partner previously tested the most promising rice lines with our trait in
a field in which controlled amounts of salt were applied to the replicated plots.
In 2015, a field trial was executed on naturally high saline farmlands in India,
where grain yields typically are very low, and we saw results similar to those
in prior trials. Our partner has developed wheat lines that show significant
salinity tolerance under greenhouse conditions, with some lines outperforming
the controls by more than 30%, and additional wheat lines are in development
to expand the scope of our partner’s first greenhouse evaluations. For
salt tolerant cotton, our partner is preparing to conduct outdoor field trials
in India.
Yield
Through our Dow AgroSciences collaboration we are evaluating several yield traits
in corn through multiple-location U.S. field efficacy tests in hybrid corn.
Positive field test results for our Dow AgroSciences corn collaboration will
also help our research team determine whether to apply these yield technologies
to additional crops like wheat and soybean. We plan to use a combination of
these yield traits in stacks to help us develop a competitive technical and
commercial advantage for this important trait area.
Our non-transgenic wheat yield program, supported by USDA SBIR, aims to increase
yield in wheat using TILLING, a non-GM reverse genetics tool, to identify novel
alleles of candidate wheat yield genes in tetraploid and hexaploid wheat. These
alleles are being evaluated for the ability to alter wheat architecture and
improve yield in the field. As a non-GM technology, products from TILLING can
rapidly advance to commercialization and do not face market or regulatory restrictions.
With a conservative 5% increase in yield, the yearly value creation to the U.S.
farmer is estimated at over $30 per hectare. In addition, the value of higher
yielding wheat varieties to a seed company arising from this research in the
U.S. alone is more than $40 million annually. By incorporating favorable alleles
of plant architecture genes into a commercial wheat breeding program, we believe
we can make a significant contribution to improving yield in this vital food
crop.
Herbicide Tolerance
Our Herbicide Tolerance program is currently focused on wheat. We have developed
a non-GM source of tolerance to glyphosate, a widely used non-selective herbicide.
We believe that the discoveries under this program are applicable to other chemistries
and are likely to result in similar opportunities in other major crops.
According to the International Service for the Acquisition of Agri-biotech Applications,
or ISAAA, from 1996 to 2013, herbicide tolerant crops consistently occupied
the largest planting area of biotech crops. In 2013 alone, herbicide tolerant
crops occupied 99.4 million hectares, or 57%, of the 175.2 million hectares
of biotech crops planted globally. For the first 17 years of commercialization
(1996 to 2012), benefits from herbicide tolerant crops were valued at $47.7
billion, which accounted for 41% of global biotech crop value. For 2012 alone,
herbicide tolerant crops were valued at $6.6 billion or 35% of global biotech
crop value.
Our Herbicide Tolerance technology is in Phase 3 of development and was developed
using our non-GM TILLING platform. This work is fully funded by a collaborator
who has the option to obtain a non-exclusive commercial license to this trait
in certain countries. We retain the right to further license this technology
to additional collaborators in major wheat markets.
Testing results have shown tolerance in multiple alleles to levels of glyphosate
herbicide, which may be sufficient to control many weed species in wheat production
in certain markets. Individual glyphosate tolerant wheat lines are being combined
via plant breeding to combine additional sources of tolerance and create products
with increasing levels of tolerance.
Heat Tolerance
Our Heat Tolerance technology program is carrying out discovery research funded
by USAID in collaboration with the International Maize and Wheat Improvement
Center, or CIMMYT, and the Indian National Bureau of Plant Genetic Resources,
or NBPGR. Our work targets metabolic approaches to reduce the heat sensitivity
of starch synthesis in wheat and increase membrane thermostability. With CIMMYT,
we are investigating identified natural genetic diversity that affects membrane
thermostability and induced genetic diversity in starch synthesis, developed
by us, in order to improve wheat heat adaptation in a fundamental way.
Among major staple crops, global wheat yields may be the most impacted by climate
change, according to a number of climate change models. And while wheat is the
most drought-adapted of major crops, improving heat adaptation would make wheat
a climate resilient staple. Developing countries are both significant producers
and importers of wheat. According to CIMMYT, demand for wheat will increase
by 60% by 2050 in developing countries. As we saw with the global food price
crisis in 2008, poor yields in major wheat exporting countries such as Australia
can have a significant impact on global prices.
Agronomic Trait Stacks
Trait stacks are combinations of multiple individual traits. Trait stacks can
be made by using conventional plant breeding to cross plants with different
traits, and can also be made by combining multiple traits in a molecular stack
that is then inserted into a target crop. Our collaborators are generally allowed
to combine multiple traits of ours either by breeding or molecular stacks. Deep
portfolios of agronomic stress tolerance traits are rare in the industry, and
the ability to pyramid multiples of such traits is even rarer. In order to validate
the efficacy of particular trait stacks, we perform our own research and field
trials.
We are advancing two molecular yield and stress trait stacks and have field-tested
them in example crops. Efficacy of a trait stack in one crop suggests the probability
that the stack will also work in other key crops. The history of single traits
functioning in multiple crops, along with the evidence of stacked traits working
in more than one crop, suggests that stacked traits are likely to function in
multiple crops.
Our most advanced and tested trait stack—the combination of NUE, WUE,
and Salinity Tolerance—has been field tested in rice over multiple seasons.
We have tested this trait stack under varying levels of nitrogen, water availability,
and salinity. Rice plants with this stack out-yielded control plants by 5% to
22% under different levels of nitrogen fertilizer, by 19% to 32% under different
types of water stress, and by 27% to 42% under high salinity conditions.
In order to provide a compelling package of trait stacks to corn growers we
entered into a strategic collaboration with Dow AgroSciences. Under the collaboration,
Arcadia and Dow AgroSciences will jointly develop yield and stress traits, including
several traits that have already completed advanced field trials in corn. These
traits would then be combined with Dow AgroSciences’ crop protection traits
such herbicide tolerance, insect resistance and disease resistance, to create
highly competitive trait stacks for commercialization. As part of the agreement,
Arcadia can also use the agronomic trait data that we jointly develop in corn
to develop and commercialize yield and stress trait stacks in other crops.
Agricultural Product Quality Traits
Gamma Linolenic Acid (GLA) Oil
Under a license agreement we have with Abbott, we developed a new source of
vegetable oil with very high levels of gamma linolenic acid, or GLA, an omega-6
fatty acid. To our knowledge, our GLA safflower oil product has the highest
concentration of GLA available in any plant oil at 65%; conventional plant oils
range from 10 to 22% GLA. We sell the oil in the United States and Canada to
manufacturers of nutritional supplements, medical foods, and other products.
Our key customers include significant participants in those markets, such as
GNC, Lindora Nutrition, and others.
GLA has multiple clinically-demonstrated nutritional and medical benefits, including
anti-inflammation effects, improved skin condition and healthy weight management.
Multiple parties have expressed commercial interest in incorporating an enhanced
GLA oil into their foods, dietary supplements, or medical products where conventional
sources of GLA are not sufficiently concentrated to deliver amounts that are
cost- and performance-effective.
Against a commercial target of 40% GLA concentration, we developed, deregulated
and commercialized GLA safflower oil containing up to 65% GLA concentration
in fewer than six years. This is significantly fewer than the 13 years it takes,
on average, to commercialize a seed using advanced breeding or biotechnology,
according to Phillips McDougall. We produce GLA safflower oil by contracting
with farmers in Idaho and process the seed under contract with a manufacturer
in California to make refined oil. We sell GLA safflower oil under the brand
name, SONOVA, with multiple concentrations and formulations.
In January, 2017 we received notification from the FDA that our GRAS petition
(generally recognized as safe) for the use of SONOVA GLA in medical foods and
nutritional beverages had been accepted, which means that we can now market
and sell this product in a new market segment. We also filed a petition with
the FDA’s Center for Veterinary Medicine for the use of SONOVA GLA in
dog food. That petition is currently pending and we expect approval in the first
quarter of 2017. We anticipate the pet food approval to generate additional
revenue opportunities for our GLA business.
Arachidonic Acid (ARA) Oil
Arachidonic Acid (ARA) Oil has high levels of the fatty acid ARA, which is a
key ingredient in more than 90% of U.S. infant nutrition products. ARA contributes
to benefits such as fostering infant eye and brain development. We estimate
the global market for ARA at $160 million and believe that our ARA product will
cost significantly less than currently available sources of ARA.
Our ARA Oil is being developed under agreements with Abbott and DuPont Pioneer,
each of which licensed intellectual property to us for this program. In exchange
for licenses to intellectual property, these agreements provide product access
rights to Abbott and DuPont Pioneer, as well as certain royalty payments on
product sales to third parties.
We have multiple safflower lines with oil compositions that have the potential
of being direct replacements for current sources of ARA in infant nutrition
products. We are evaluating near term market distribution opportunities in 2017
with our downstream partners.
Enhanced Quality Grains
We have multiple programs aimed at developing wheat and other small grains with
improved nutritional qualities. One such program generated bread and pasta wheat
lines with high levels of amylose, a type of resistant starch. Resistant starch
increases the total dietary fiber content of wheat and reduces its glycemic
index, which are both desirable nutritional qualities that are important in
the management of diabetes and healthy blood glucose levels. In 2016 the FDA
approved the use of qualified health claims for corn-based resistant starch
in the risk reduction of type 2 diabetes, thus establishing a key precedent
for the health benefits associated with this fiber. In 2012, the average American
consumed 40% of the recommended level of daily dietary fiber, with whole grain
consumption representing only 15% of targeted fiber intake and 80% of teenagers
eating no whole grains. Grain products make up the largest fiber source in US
adults, and thus are the ideal vehicle to deliver improved health benefits to
a wide population.
A second program aims at improving the flavor profile and shelf-life of whole
wheat flour, and is funded by Ardent Mills, which combines the operations of
ConAgra Mills and Horizon Milling, a Cargill-CHS joint venture. A third program,
funded by the National Institutes of Health, or NIH, is aimed at reducing gluten
in wheat and other grains. All three of these programs utilize our TILLING platform,
and the resulting products are non-GM.
Resistant Starch Wheat. Our Resistant Starch (RS) wheat provides a source of
wheat with inherently high levels of resistant starch, increasing the total
dietary fiber content of food products without the need for fiber additives
from other sources such as corn, potato, green banana and cassava. Resistant
starch is a key product in two market segments: dietary fiber additives and
modified starch additives. According to MarketsandMarkets, the global dietary
fibers market is projected to reach $4.31 billion by 2020 and the modified starch
market is projected to $11.1 billion in 2020, with food and beverage applications
accounting for approximately 50% of this market. Major growth in these markets
is being driven by the convenience health food sector and functional food sector.
Flour from our RS wheat lines has resistant starch levels that are 12 to 20
times higher than the control wheat, and total dietary fiber, or TDF, which
is more than eight times higher than the control. RS wheat flour has been tested
in applications in bread, where loaf quality was comparable to bread made with
conventional wheat flour, and pasta, where it had the highest consumer preference
rankings in tests carried out by a major consumer products company.
Improving Shelf Life of Whole Grain Flour. The USDA recommends that “at
least one serving of grains per day must be whole grain-rich” due to evidence
that a diet containing whole grains provides a multitude of benefits, including
lower risk of obesity, cardiovascular disease, and type-2 diabetes. Despite
these health benefits, consumption of whole grain products is negatively affected
by the bitter and rancid flavors and odors that accumulate in whole wheat flour
after milling. Our improved stability and flavor wheat lines greatly reduced
the production of rancid and bitter compounds in aged whole grain flour. Whole
wheat flour from these lines is being tested further for sensory characteristics
and improved shelf life stability. These new traits, singly and in combination,
could help improve the shelf life and flavor profile of whole grain products,
thus reducing formulation costs and increasing consumer preference and palatability
for whole grains.
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