Q2 2019 Earnings Call

And Sarah writer Chief Commercial Officer. This call is being webcast and you can refer to the company's press release and slides that Arcadia bio dotcom before we start if you refer to slide two we would like to remind you that Arcadia bio sciences will be making forward looking statements on this call based on current expectations and currently available information. However, 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 Companys Safe Harbor language in their most recently filed 10-K and again on slide two of this presentation with that I'll now turn the call over to Raj Ketkar President and CEO .

Thank you, Josh and thanks to everyone, who is joining us on the call today.

We made major progress on several fronts in the second quarter of 2019 with are we sort and hemp initiatives.

Joining matter nine for the first time on the call today is there a writer a chief commercial officer I'll start by talking about some exciting new developments in Alberta cause soybean joint venture before turning it over to Sarah to discuss our wheel business and Matt to talk about our kgs specialty genomics.

Turning to slide three just last week Verdeca, our joint venture with five series crop solutions received approval from the U.S.D.A. for the deregulation of H. before drought tolerant trait stack with herbicide tolerant traits in soybeans.

You will recall the U.S.F.D.A. allowed H.B. for soybeans to be used commercially and human food and animal feed in August 2017.

We are now able to accelerate our discussions with potential U.S. germplasm partners interested in integrating our trade into their store varieties. This is a significant achievement as the trade has now somebody approved for commercialization in the three major soybean growing countries U.S., Brazil and Argentina.

Earlier in the second quarter, we received approval from the <unk>, Brazil regulatory authorities for the H. before trade. According to the regulatory process. The approval is now in a period of public comment and as soon as this period is complete we expect Brazil to grab for approval.

We now await approval from China for the import affordably in product in prior calls we had guided that this approval would be received in fourth quarter 2019 to enable launched in 2019.

We recently learned that we will not receive the approval in 2019 and the approval will most likely be received in 2020.

Delays in receiving regulatory approvals are not unusual and we will use this time for conducting large scale farmer demos and market research to prepare for launch in Argentina.

I'd like to now turn the call over to our Chief Commercial officer, Sarah writer for an update on our we'd business Sarah.

Thanks, Ross Hello, everyone.

In my role I oversee the sales business development, and productization, including pricing market research and supply chain and as we head toward first sales of good week in 2019 I'm pleased to have this opportunity to see few directly.

In the year, plus I've been with Arcadia, we've been focusing primarily on good wheat and building up our wheat seed and our grain supply chain.

Advancing our commercial relationships with major food and grain companies through business development product testing and sales.

I'd like to take a minute to talk in a little more detail about our good wheat family of products first it's important to keep in mind that good wheat is a portfolio of weak with added value attributes like high fiber resistant starch and reduced gluten.

Good we aim to de commoditize, we by adding nutritional values too well loved food ingredient it addresses the U.S. and global flower market. The U.S.D.A. economists valued the U.S. week flower market in 2018 at $9.7 billion today, Wholewheat captures about 5% of that market our market research and the findings from our food formulations research and our nutritional studies conducted by leading research universities demonstrate the attributes delivered by good we can create unique high nutrition, we segments of similar size.

I want to reiterate our earlier guidance that we'll begin sales of good wheat in 2019, we're planning to introduce good wheat as retail flower with reduced allergenicity and improved protein quality in fourth quarter.

We also anticipate first commercial sales of resistant starch good wheat in key territories before the end of the year.

We're working to be in a position to announce booked products sales in fourth quarter.

We'll launch the good wheat line of products to the baking industry at the IB I eat trade show in Las Vegas in September .

Well, we'll provide demos and samples of good wheat in a number of food like pasta waffles dessert.

And these foods will emphasize the familiar taste and the performance of wheat, while providing impressive nutritional benefit.

We expect good lead sales will grow in 2020, both through geographic expansion and because we'll capture the full year sales.

We've received inquiries regarding legal proceedings surrounding high Amolillo suites, wheat, which we call resistant starch wheat.

Well, we can while we understand a complaint was filed April 1st, claiming Arcadia infringes. The patents of Arista surreal technologies, we have not been served in that case.

Furthermore, on June 26, 2019, the court issued a joint stipulation in order to extend time to serve someone's on complaint until October 15th 2019, indicating that quote the parties have agreed on this stipulation seeking additional time in light of ongoing settlement discussions between the parties and the desire to preserve the litigation status quo for a short period of time in order to enable continuing settlement discussions close close.

We want to reemphasize Arcadia respects, the intellectual property of others and will vigorously defend our own and there's nothing for it or we can say at this time.

Second quarter marked several key milestones for Arcadia in terms of progress made in building our good wheat supply chain.

We harvested our alternate season, we did grow and what is winter for most north American farmers.

Our winter production was significantly more efficient than we'd anticipated averaging about 140% of our plan.

During the second quarter, we also plan to our spring wheat in key geographies across the U.S. and our planning harvest in the third quarter harvest will stretch well into the fall.

And with that brief update on wheat, I'd like now to turn the call over to Matt to discuss Arcadia specialty generics and review financial results for the quarter, Matt Thanks, Sarah and good afternoon, everyone.

During the quarter, we made great progress with three of our key initiatives research and development and building our proprietary germplasm library and in corporate development turning to slide five clearly the most transformative achievement is the formation of our new joint venture to serve the Hawaiian and Asian markets Archipelago ventures.

Which we announced last week this new venture between Arcadia, and legacy ventures, Hawaii combined our genetic expertise and seed innovation history with legacy is growth capital and strategic advisory in the Hawaiian markets. Additionally, legacy brings to the partnership over six years of proven success and extraction product formulation and sales sales of cannabinoid oil and distillate products through its equity partner they've been CBD legacy was originally formed by Shane Victorino, the flying Hawaiian and two times World series champion to be a vehicle for its partners to pursue ham and CBD opportunities within the Hawaiian Islands.

Legacy is primary objective is to build world class cgmp extraction facilities to allow Hawaiian farmers to have an outlet to maximize their profits from growing hemp by converting to high grade CBD and other high value compounds legacies founders hope to help restore the flourishing agricultural industry that why once had as a major sugar and pineapple producer.

Legacies equity partner they've been CBD is a wholly owned subsidiary of Vape and M. J ventures, which is a publicly traded cannabis operator based in Phoenix, Arizona and is listed on both the Canadian and Frankfurt exchanges.

They've been CBD is focused exclusively on the processing of high quality non T.H.C. can add benoit its like CBD. They will be responsible for the construction and operation of our Hawaiian have extraction facilities.

Through this JV, we now own a vertically integrated supply chain from seed to sale.

Which we believe is the first kind in Hawaii.

We have worked hard this past quarter to be certain that we chose the right partner because we believe this to be a vital aspect of our quality control.

Archipelago is actively preparing for commercialization and scale up expanding our hemp production acres under the Hawaii have pilot program, which will be transitioned to the 2018 farm Bill via the Hawaii Department of agricultural guidelines, which were generally expecting to be implemented over the next 12 to 18 months.

We are also in the process of establishing our extraction capabilities on the island and expect to be ready to produce and sell our CBD oil in accordance with the regulatory authorization by the end of the year.

With a significant ramp in CBD sales expected in 2020 and beyond.

With that said, let's take a moment for a brief update on our research activities in both our Hawaii industrial hemp pilot program as well as our research activities here in Davis.

As you can see from the pictures on slide six we recently harvested our first hemp crop as part of our pilot program in Hawaii and were very pleased with the results having achieved major milestones towards commercialization.

Oh, Pam flower for CBD extraction.

First the A.S.G. research and development facility located in Molokai has demonstrated the capability to successfully grow and harvest multiple hemp varieties for flower in CBD production. This milestone represents the first successful HAMP harvest on Molokai and one of the first in the state of Hawaii, which demonstrates ASG as a leader in the Hawaiian have market.

Furthermore, this milestone de risks the next phase of ASG is growth in the Hawaiian market by establishing varieties that can deliver commercial level performance without exceeding the 0.3% THC threshold that defines industrial ma'am.

Now with regard to our health breeding program. We also achieved multiple milestones there, which lay the foundation for our expansion of HAMP breeding activities in the U.S. as shown on slide seven.

Our indoor growth facilities are operational and Davis, enabling teams to finalize the recipes and established breeding operations, which can be replicated in each of our research settings.

Our internal platform to analyze cannabinoid and Turpin profiles is also operational this enables our breeding program to select lines with altered potency and or changes in composition, our supercritical C. O. Two extraction research capabilities have been established in our.

Metabolic slab. This is important because it enables rapid devaluation of HAMP lines and sets the stage for new innovations in July the breeding team achieved a major milestone with the creation of our very first in house HAMP line. We see this as an important milestone for many reasons, but perhaps most of all it's a validation of our technological competency in hemp plant transformation.

It also sets the stage for expansion of our breeding operations.

And the acceleration of our pursuit of New Hampshire, Righties, which is where we believe the greatest potential for creating sustained value resides.

Lastly, as we for told was our intent our aggressive germplasm acquisition plan has resulted in the development.

Of a new Germplasm library.

That contain sufficient genetic variation to fuel a robust breeding pipeline, which has always been an important objective of ours.

In addition to our progress in the lab and in the field. We've continued to evaluate other sources of near term have revenues in fact, when meeting with a number of US growers, who are looking to begin group growing hemp or are ramping up their hemp operations. We observed first hand, a vast shortage of quality hemp seed in many areas of the country. They are simply sold out or.

Are struggling with the performance of the seeds that they have been able to acquire as such we have and implemented our own seed production operations targeting select varieties for specific regions and are announcing for the first time today that we expect to begin serving the Hep C market, possibly as early as spring of 2020, we are really excited about this particular development because it is so squarely in our wheelhouse and based upon the current economic.

Economics, which look to remain robust for some time now that's quite compelling to us and should be a material contributor to our new revenues in 2020.

Now this is the part of the call right typically turn to review of the financials. However, with our second quarter 10-Q to be filed later today and available for your detailed review I'd like to just for a moment discuss our outlook on revenues and time to profitability.

With the quarter just described in this call as a backdrop I'm compelled to say that this is the most encouraged I have been since joining the company in late 2016 about our future I believe the prospects have never been better for one near term revenues from multiple sources.

Two.

Hi margin within those revenues and three revenues that have significant scale of potential in 2020 and beyond.

So if I were to someone I summarize the financial poor performance expectations that we laid out so far in this call. It would be number one we expect first revenues this year in Wheaton hemp with initial soy revenues following close on in 2020.

To that wheat, and HAMP revenues should scale significantly next year and new product categories from these crops should also come online in 2020.

And three we continue our steadfast focus on reaching and growing profitability.

The advances in our execution and the new market pursuits announced during the quarter give us confidence that we have meaningfully brought forward our timing to breakeven.

With regard to our liquidity and capital resources cash on hand, and cash equivalents as well as short term investments totaled 20 million at the end of the second quarter, which was bolstered by our financing that we brought in last month. We believe these cash resources are sufficient to execute near term key milestones and to drive value creation. We expect as part of this execution to see a significant increase in news flow regarding these achievements and our progress from here forward.

As I mentioned earlier for additional insight into the financial performance during the quarter. Please do refer to our 10-Q to be filed later today.

And now I will turn the call back over to Raj for a wrap up Raj.

Thanks, Matt before we get to your questions I'd, just like to summarize our results for the second quarter of 2019.

We had a successful winter season of production scale up for a good read varieties and we planted production trials across many wheat growing areas. We continue to position our good we'd products for for sales in fourth quarter 29 team with potential customers.

We received U.S. the approval for the entry for trade, which allows us to commercialize in the U.S. as we integrate penetrate into local germplasm.

We advanced the regulatory approval for H. before drought tolerant soybeans in Brazil, together with approvals in Argentina. The H. before trade is now approved in the three major soybean growing countries.

In our him business unit as Matt just stated we formed archipelago ventures joint venture that ensures reliable vertically integrated supply chain from seep to sale leveraging arteries research and cultivation facility in Hawaii.

We completed our first attempt harvest in Hawaii and achieved multiple breeding milestones, which lay the foundation for expanding our head breeding activities in the U.S. and we identified additional opportunities for near term HAMP revenues through production of high quality seeds targeting select varieties and specific regions.

Our focus for the rest of 2019 will be on continuing this momentum and achieve first revenues and read and have by the end of the year positioning us to significantly grow revenues in 2020, we look forward to reporting our continuing progress next quarter with that I'd like to turn the call over to your questions now.

Thank you ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key on your touched on telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key to prevent any background noise. We ask that you. Please. Please your line on mute. Once your question has been stated our first question comes from raw themselves.

<unk> Wainwright.

Proceed with your question.

Hi, Thanks, very much for taking my questions and congrats on what's clearly been a very eventful past few months you guys.

I just wanted to ask first and foremost about.

Reasonable expectations ought to be in the wheat business. You had mentioned that you expect a the first revenues from the new business model and the weak business to come in before the end of this year can you give us some color on sort of what your initial customer arrangements have already been made if you have received certain order commitments already or when do you expect those might come in and also looking ahead to 2000, twentys specifically within the context, the wheat segment.

Do you anticipate that you might be in a position to provide us with some kind of a revenue guidance range long term expectations going forward.

Thanks for your question I think.

We'd be very comfortable.

Sharing our expectation to be able to share commercial agreements, perhaps in this call next quarter.

We are.

Currently in a number of confidential discussions but expect.

This time next quarter to be able to share more detail. We do also expect to be introducing a retail flower line. This year. So those.

Expectations are somewhat small for the remainder of this year honestly.

But will ramp pretty progressively in 2020.

And I look forward to being able to share much more information come third and fourth quarter call.

Great and then specification question regarding the weak business do you still expect reduced starch to be the principal driver or is it going to be sort of equally driven by reduced starch and reduce gluten or are there likely to be other varieties that are going to contribute significantly to the forward trajectory here.

So.

Again, thanks for the question good wheat is a platform a portfolio by which we can introduce a number of different attributes we believe research.

Resistant starch is.

Obviously, a very compelling offer resistant starch offer really goes to turning.

Wheat that we like to eat into a high fiber concept and so we think the market for that is really very compelling that said were equally excited about the reduced gluten offer we're doing a large amount of customer research to better understand it in terms of its appeal and we also feel like it has some secondary benefits in terms of protein characteristics that may make it just as compelling as the resistant starch technology.

I would say continue to watch this space as we begin to better quantify how big the reduced gluten opportunity can be for us.

And then with respect to what you had previously talked about regarding the revenue ramp trajectory being driven partially by the weak business and also by the business.

Could you maybe give us a sense of what you expect the relative contribution to the ramp trajectory to eat what do you expect one of those businesses to to significantly outstrip the other in terms of.

You will feature growth and what the margins are likely to be.

Each of those respective segments.

That's one of the qualitative assessment of the picture would be very helpful. Thanks.

Yeah, that's a great question Ron.

I think that the wheat businesses as we spool up production we expect.

Significant revenues from that business at.

No reasonable margins.

And I think we need to be careful not to get too too much more specific than that until we have decided.

Which partners are going to lead because depending on who you partner with and the actual model that we're utilizing.

Those margins can fluctuate a little bit but.

I think that on the health side, we're likely to see higher margins.

And at the moment I would tell you very high margins and were bracing for price erosion and planning for aggressive price erosion.

Despite that in those plans, we still see pretty positive gross margins on that hem b business, even three four years out, but I would say that when we look at our churn internal projections.

Backwards from three years from now I would say that.

We then have we'll be competing for the highest revenue numbers and expecting a little bit better margins on him.

Okay, then just a technical financial question the Ah.

Cash contributions Walt.

Guys are making it to the archipelago joint venture.

Firstly can you just give us a sense of what's the timing of cash outlay.

We'll be wasn't that's already been need and we did what timeframe, it's going to be meats, and secondly, how you're going to account for it.

Yeah, it'll it'll likely be over the next two to three quarters.

As were developing our extraction capabilities on the island.

And it is our intent.

To account for this as a consolidated entity as we own more than 50% of the joint venture.

Okay, and then last question.

Two.

Recent news items, Paul on the you will see approval of the drought resistant soybeans.

If we look at the overall soybean loans states clearly there's been a lot of the popular press articles about that save a lot of its going to be lessened solve all of its impact on the soybean business and so on.

Can you just give us some context on Dol, what extent is that really a swap that's all.

Let us answer to be taken into consideration when we look at expectations or future economic performance of this problem.

So the first country that we will be launching this product rahm is Argentina.

That's what we have been working on and planning towards right from the beginning.

Partners are in Argentinian company.

So we have approval and in Argentina.

And Brazil, as well, Brazil would be the second country that we would introduce it too and so really for either of those countries.

And approval from China is necessary.

And for import of soybean products, so they import beans, or other soybean products from Argentina and Brazil.

Yes, so as far as the tariff issues go or the trade War goes really doesn't really affect Argentina and Brazil.

Those are our initial targets as soon as we get approval in China.

Okay, great. Thank you so much.

Yes, thanks, Rob.

Thank you and our next question comes from Ben Klieve with National Securities. You May proceed with your question.

All right. Thanks, a handful here first of all Sara a couple of questions for you on the weed initiative.

And especially on kind of your plans for the expansion next year that you referred to.

Really can you just talk about that broadly where are you looking to expand do you have growers contracted yet.

Is the supply chain in place in those geographies to a chore identity preservation.

Any any any comments you have from that perspective would be helpful.

Yeah. Thanks, Ben.

We are standing up the identity preservation production.

For both.

The reduced gluten wheat as well as for.

Ah resistant starch wheat.

Both in the United States and in a key and a few key international markets.

Supply, obviously needs to sit close to where we think it's going to go.

And so you can expect that we would be looking in the main we consuming market.

I'm not in a position to tell you who were contracting with at this point, but I think you can probably guess based on where most wheat gets consumed around the world I'm certainly our reduced gluten product is going to come to market first in the United States that one one very clear for us and we continue to.

Be positioning for commercial announcements on resistant starch as we head into the second half.

Oh your question about the farmer, yes, yes, we do have farmers.

We've worked with a number of farmers at as we develop our technologies, we work with farmers very closely.

And and we've been contracting a number of farmers for seed production, which changes into grain production. The next season. So for US. This will be 2020 represents an expansion more farmers will be needed for that kind of scale that we need but its just replicating what we already do so its for us feels like its right in our wheelhouse.

Okay perfect. Thank you.

And then.

A couple of questions on H. before and commercialization in the U.S. I guess first can you talk about I know this is probably a little ways off but can you talk about kind of the geographies.

That you think you're going to be looking to target is this is this going to be kind of a targeted launch in say the western corn belt or some some other kind of dry or region that you think will be particularly appropriate or do you think that that there's there's opportunity here for this to be.

You won't be launched maybe not nationwide, but but had a broader reach what are you looking out geographically.

So so.

Ben for the.

Drought tolerant trait itself.

Obviously, the more drought prone areas the drier areas would be the initial target.

But since we have the herbicide tolerant traits and stacked with the drought trade this actually becomes a broader.

Product that could be used in other areas that are prone to.

We have pressure.

And particularly apply for say resistance weeds as well so.

Rethink or both of those attributes the drought tolerant and the herbicide tolerance.

Brings value to farmers.

Clearly in the.

Central Midwest.

Hi, Illinois areas.

You are not going to have a drought problem there, but you know so we will be targeting a fairly broad geographies not not all of the United States, but we are working through that now to identify.

The.

The specific go to market.

International law Okay.

Got it and you know in advance of that can we expect.

On the kind of a similar relationship to develop at some point along the lines of what you have a bias series I mean are you looking for private partners to help you.

Great that trade into germplasm, and eventually commercialize it or is this something that you are going to be doing.

With with.

You know like University partner or something of that nature.

So this will be a vertica initiative Vertica is our joint venture with Biod series, So I want to be judged Arcadia, it would be a verdict.

You know five series have their own germplasm, but it's a really a adapted for Argentina.

At the moment, so we would be looking for a private partners mainly here in the U.S.

As vertica to work with two and progress these trades into U.S. adapter jump up.

Got it okay perfect. Thank you.

And then maybe a question for you on the cannabis front.

You talked about expanding acreage can can you talk a bit about I believe you said there is.

10 acres of production currently can you talk about where you think maybe that production acreage will be.

By the end of next year say.

I want to be careful then, especially in the Hawaiian market I think it's going to be.

One where competition is going to be an issue because it's such a favorable climate.

I will say that we're also evaluating opportunities in the mainland.

But one thing that I am very encouraged by is the ability to generate substantial revenue off a fairly small acreage.

And especially when you look at some of the germplasm that we're evaluating.

And the ability to improve the amount of CBD for example in a ham strain.

I would say that it would not be surprising for us to be on.

You know a couple of thousand acres between the mainland and and Hawaii.

Or something north of that it's.

I think we need a little more time to really let things play out with the regulations. Because that's also really important is that within each state.

Their guidelines are going to have to be.

Established based on Ustašas guidelines. So I think we want to be kind of careful but I am at the same time very encouraged with the revenue potential and the high margin revenue potential associated with.

Not a lot of acreage.

Got it perfect. Thank you and.

And just last one for me just kind of a big picture question here are different and given the.

Disruption in South America, right, now, especially with the Argentinian peso can you elaborate on kind of your currency risks.

Both in Argentina, and Brazil, what the contract structure is.

Our U.S. dollar denominated.

Payments that you're expecting versus local currency can you just help us understand how you're looking at that.

Risk down the road once you actually commercialization before.

Sure.

Most of the commercial contracts and commodities or a particularly export related products.

In both Argentina, and Brazil are typically dollar denominated so it out but we don't have that peso conversion a concern though certainly.

Got it okay perfect I think that does it for me I'll jump back in queue. Congratulations on all the news and.

And yes, we will get back in queue. Thanks, Thanks Ben.

Thank you and our next question comes from Robert Smith with Center for performance. You May proceed with your question.

Hi, good afternoon, thanks for taking my questions. So looking at a.

Your future naturally.

I assume you haven't.

Long term planning function, whether it'd be three years or five years.

So the question in my mind is whether you'll be able to out run.

The need for further financing by commercializing your product line you made a statement. Thanks.

You're well positioned over the near term I don't know how are you.

Well what are your thoughts that you use as a as a near term sector, but I'd like to get to you.

Some additional color on how you feel the.

The acreage and acquisition of additional acreage for planting.

How that might those tailwinds in your plan for.

For the commercialization and the need for not going back to the well for additional money for some time.

Robert You know that is that's the $64000 question since then.

Yes so.

Turning to spend years in science experiment now your when the customer so to speak Yeah. The question is how do we value.

Yes, yes.

Yes, well I think as I had mentioned in my prepared comments, we've never been I've never been more bullish and I would say that everyone. In this room, probably feels the same way about our ability to begin generating significant revenues at a meaningful trajectory.

Whether that's.

Hi enough trajectory to not need additional capital.

Is is is not it's not something we're in a position to speak specifically to but what I can say is that we are highly confident that.

Our milestone achievements that we will that we will report with the resources that we have should be sufficient to significantly improve the current valuation of the company and should we be in a position to.

Require additional capital either to grow more quickly.

Or through strategic arrangements, we will be in a far better position from a valuation standpoint to do so.

I'd be much less dilutive than any financings that we would have done in the past so.

It truly is it's difficult to project and I think it would be wouldn't be prudent for us to get more specific than that.

But it is a time, where we have good visibility into multiple sources of revenue in the near term.

No. So the excitement is palpable question when you say near term are we talking about.

12 months is that what you would call near term.

I would call.

Near term the next 12 to 24 months.

Okay. That's good enough and could you share with me what's your thoughts on what are the processes of increasing the acreage. How do you approach. This I mean, what are the what are the possibilities of different tax that you might think.

Well it depends on the geography, but there are states, where there are farmers growing significant amounts of hemp that we might be interested in acquiring processing and using for our for our own.

Supply chain.

If it were if it's if it's in Hawaii in particular it is.

Our opportunities for expanding acreage there are additional licenses.

Contracting with other licensees there are 30 licensees covering 170 acres in Hawaii.

And so.

That we believe will expand significantly once the 2018 farm role or farm farm Bill guidelines are in place.

So.

I think you know whether you're looking in the mainland or Hawaii I don't think it will be long before it's wide open for farmers to plant and grow HAMP and so if you look at any of the analyst reports that are out there. The expectation is that the hemp acreage is going to grow dramatically over the next three or four years from what was almost nothing just two years ago. So we don't anticipate access to land being a gating factor for us.

All right and sorry can you describe at present since so much.

Our focus is now on commercialization.

Can you say something about the R&D functions in the organization I mean, you had a quite a number of other things on your plate so to speak I understand the emphasis just wondering.

What can be said about all the other avenues or.

As a result during you've been interesting.

We've we continue to to be a R&D focused company. In addition to a commercialization company.

I think one thing its important to point out is as a non GM company. We can do a whole lot more with a lot less money.

So we don't anticipate.

That that the investment in R&D will substantially increase.

In the coming years, we don't expect a decrease and with.

Randy Schulz, our new head of R&D, we we continue to expect to.

Remain.

Very fair.

Productive.

And in new innovation.

A major part of how we continue to feed our growth pipeline.

Okay. Thanks, so much for use external information and again there. Thank you Robert thing.

Thank you I would now like to turn the call back over to Raj Ketkar for any closing remarks.

Thanks, Josh and thanks to 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 2019 conference call.

Thank you ladies and gentlemen, thank you for participating in today's conference. This does conclude todays program and you may all disconnect everyone have a wonderful day.