Good afternoon, and welcome to Arcadia Biosciences Second Quarter 2021 Earnings Conference Call. Today's presenters will be Matt Plavin, President and CEO and Pam Haley, Chief Financial Officer of Arcadia. This call is being webcast and you can refer to the press release at arcadiabio.com. Before we start, 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 Q. With that, I'll now turn the call over to Matt Plavin, President CEO.
Thank you, Josh, and hello, everyone. Welcome to our Q2 conference call, and thank you for joining us. Our Q2 marks the first time Arcadia has recorded sales from its newly acquired consumer products, namely our broad portfolio of on trend CBD and wellness products under the Leaf Brands umbrella. Because the deal was closed on May 17, Our new Leaf Brands revenue are only realized during half of the quarter, but their impact over the prior year is still quite apparent. Revenues for the quarter were fivefold of those in the prior year Q2 and were up fourfold on year to date revenues.
When we spoke in May, we focused much of our discussion on how the Leaf transaction signaled Arcadia's transformation to a dynamic consumer products company by adding an established CVG brand business with meaningful recurring revenues to our P and L and new growth opportunities. Today, I want to build on that theme, discussing our post acquisition results and placing the Leaf transaction in the broader context of our path forward as a consumer focused enterprise driven by health and wellness brands. In particular, the Leaf integration is progressing well. In just the last 90 days or so, we've accomplished a lot, and overall, we are on track with our plan. Immediately upon the close of the acquisition, We began integrating the leaf manufacturing team into the Arcadia organization, leveraging overhead synergies and building out processes And management routines that will enable us to scale capacity within our existing manufacturing facility to meet our anticipated lead brand volume growth.
We are also quick to secure automation equipment to further optimize our output, improve our gross margins and ensure product quality as we scale. After some port entry delays due to the global shipping congestion, we've recently begun receiving this equipment and have started installation and testing. We've also made solid progress developing our forthcoming GoodWheat products and planning our market launch. We're excited to begin this conversation with retailers and highlight the exceptional intrinsic nutritional benefits of our product. Retail buyers are constantly seeking new breakthrough and on trend innovation to Satisfy consumer needs, particularly in the health and wellness category, and GoodWheat delivers exactly that.
So we're eager to get our delicious products in front of the key retailers that we're targeting. I'll speak more to that in a moment about our launch plans. As we accelerate our way through these integration activities And look to the future, our leadership team is highly energized and fully aligned with our new mission and vision and more importantly, How we're going to get where we're going. During the quarter, we've taken steps to build strategic capacity, evolve our market positioning and hone our go to market strategies to create a solid foundation designed to further support the successful integration of our operations as well as pave the way for what we strongly believe will be meaningful top line growth for the company. Among our major priorities over the last quarter has been to significantly increase our management capacity CPG capabilities by recruiting top talent, redeploying our internal resources so we can best support our go forward strategy and identifying external partners with the expertise to improve our communications.
And we've made significant progress on this front too. As we announced in mid July, we've hired our 1st Chief Marketing Officer, Laura Pytlik. Laura is a highly accomplished CPG marketer with a proven track record of building numerous popular food and beverage brands. She's well equipped to guide our go to market strategies and establish GoodWheat and the Leaf Brands as international household brand names. And she's already at the ground running.
With our Chief Growth Officer, Chris Cuvelier, formerly the CEO of Zola, heading our sales strategy and Belinda Yao, formerly of the Danone Company leading our operations. We now have deeply experienced professionals in these three critical roles. We've also added to our roster of CPG talent beyond the executive roles, Having attracted key individuals in finance and procurement positions who bring tenured experience from leading CPG companies. With these new hires, we're staffing at all levels with the expertise we need for full commercial success as a CPG company. In addition to increasing our talent base internally, we have retained a new strategic communications firm, the LAK PR Group.
L. A. K. Will be working closely with Laura Chris and me to support Arcadia with both corporate and brand communications as well as improving our communications with The Street. The firm has developed a particular niche working with businesses and brands at critical inflection points, and we're fortunate to have the benefit of their insights as we move forward.
And like Laura and Chris, they've already had a meaningful impact, which leads me to the next priority area of focus for us. As we further establish Arcadia as a producer a marketer of innovative plant based and wellness products. LAK will help us to convey our unique value position proposition and competitive advantage more effectively and more broadly. Our evolution, the path that got us to this point is an exciting story Tell because it sets the stage for tangible near term value creation. We are here because we accomplished precisely what we set out to do as a biosciences company.
We produced an intrinsically superior non GMO wheat. And because of that success, we have the opportunity to literally and figuratively Take what we've grown and commercialize it. The fact that our origins are in science, that we have an innovation oriented mindset is the conductive tissue of the past to the present and indeed the future. To that end, there are 2 fundamental ways that we believe we are distinctly different from most other CVG companies. The first is simply our wheat.
Developing and perfecting an intrinsically superior non GMO wheat establishes the foundation for us to create a major disruption in the wheat industry, wherein we have the opportunity to set a new global standard for nutrition in wheat based foods. Because our superior nutrition is intrinsic to the wheat, which means the nutritional value is delivered naturally from the wheat itself, No additives or special processes are needed. Our nutrition profile is unmatched by conventional wheat. This affords us the opportunity to fill a fiber and nutrition gap in consumer diets globally. Studies have found a population wide deficiency in fiber with only 5% a people in the U.
S. Meeting the Institute of Medicine's recommended daily target of 25 grams of fiber for women and 38 grams for men. This is a staggering deficiency and makes for a tremendous market opportunity for our GoodWheat products to change the health of the planet with very little Acquires the addition of other ingredients like inulin or chicory, which often degrade the taste experience and increase the cost to manufacturers and consumers. Moreover, these ENHANZE products typically have formulation challenges and frequently sacrifice taste for nutrition. Now the second way we are distinctly different from most other CPG companies and is in that the innovation has been central to our business since Arcadia's inception.
That same innovation mindset that drove the discovery of our crop technologies continues to be core to the development of our GoodWheat products and our other health and wellness brands. This mindset will continue to be the key driver for our business. As we discussed on our last call, Our product lineup now includes multiple SKUs across brands, including SolSpring, Provault, Savvy Naturals, Zola Coconut Water and soon GoodWheat, all of which are designed to enhance quality and health benefits in an array of consumer product categories. Our forward focus is to develop and execute robust go to market strategies for e commerce, retail and in some instances, food To that end, I'd now like to provide you with a high level overview of the advances we've made Our product development and digital launch plans for the balance of the year. We've indeed made great advances in our proprietary GoodWheat product development and have multiple pasta skews teed up for launch.
Our pasta products have unmatched levels of fiber and are in fact an excellent source. They have more protein and fewer calories than conventional pasta, and our pastas have only one simple ingredient, our GoodWheat. In addition to these products that in addition, these products are USA Farm Ground and Non GMO. These claims truly and uniquely differentiate our GoodWe Pasta from the competition in this category. Our planned launch in late Q4 Will be a soft e commerce launch beginning with 1 SKU of our GoodWheat pasta, at which time we will ensure our site is fully optimized and our supply logistics are rigorously stress tested for scale up.
Then in January, after the holidays, the time when consumers are seeking healthier options Coming out of the always indulgent holiday season of Q4, we will execute a significant marketing campaign to launch multiple course, is to aggressively drive traffic to our site. Package designs for this launch is underway and shortly we will begin testing these designs To ensure we launch with consumer preferred packaging that clearly and persuasively communicates our key points of difference and breaks through the clutter online and on the shelf. In parallel with these e commerce activities, we've begun marketing our GoodWheat Pastas to key retailers aligned with category shelf reset cycles for 2022. When considering the global potential of GoodWheat and the number of channels, Category and SKU opportunities before us, focus and orderly execution are more critical now than ever. So when we meet next, we will share with you more about the next categories we will enter and the associated expected timing.
Switching to our leaf brands, our optimized e commerce sites for SolSpring, ProVault and Savvy Naturals are all planned to launch by the end of 2022. As we launch these new sites, we have significant digital advertising and social media marketing investments planned against each designed to drive greater consumer awareness of the brands and high traffic to the sites. Now I'd like to touch on our good hemp activities. With the 2021 hemp season effectively concluded, we are continuing with our breeding projects To further enhance the vigor and vitality of our proprietary varieties, keeping a close eye on pending hemp legislation for potential regulatory measures that would add clarity to the outlook for seed sales in 2022. With respect to our operations in Hawaii, we are excited to be nearing the first sizable harvest of our Hawaiian CBD through our joint venture Archipelago Ventures.
The crop looks great, and we are expecting a bountiful harvest in Q3 from more than 20 acres of biomass. Because Hawaii only very recently has allowed for processing of CBD on the islands, We have developed a cost effective means of transporting our hemp to the mainland where we will outsource the extraction of our Hawaiian CBD. Once at our lead facilities in Chatsworth, our formulation specialists will determine the optimal proprietary formulations to maximize our in market Brand Value Capture. Until our launch, we're keeping further details confidential for maximum competitive advantage. Before turning the call over to Pam for a review of the financials, I'm pleased to share a very positive cash resource highlight.
As you have likely seen per our required SEC filings, We successfully sold the Bio Series shares we previously acquired as partial consideration for the sale of our partnership interest in Vertica. With this sale And the upfront payments received at the time of the transaction, we have successfully monetized over $27,000,000 in cash from the sale of our interest in the HB4 Drought Tolerant Soybean Technology. Importantly, we retain further royalty rights up to $10,000,000 upon commercialization of HB4. This infusion of capital significantly bolters our resources and ability to execute the plans I've just outlined. The reason for a full divestiture of our holding Now versus holding the position into the future was due to the requirements under the Investment Company Act of 1940.
Under the Act, Arcadia is required to dispose of substantially all of the Bioceres shares by November 2021, the first anniversary of the date that we acquired these shares or we'd have to bear the full burden of compliance with the laws and rules under which True investment companies must operate. As such, with the lack of liquidity in the stock today, the BioSiri stock, and the fact that the market prices of BioShary's shares has increased by more than 100% since we acquired them in November of 2020, We felt it prudent to lock in this significant gain for our shareholders now and eliminate the very real downside risk of having to sell a significant number of shares in a short period of time, thereby placing significant downward pressure on stock. With that, I'd like to turn the call over to Pam for an update on the financials. Pam?
Thank you, Matt. I'd like to take a few moments to share the financial highlights for the quarter and year to date with you now. As Matt mentioned, we were very pleased to have made the asset For the quarter were $1,400,000 compared to $281,000 in Q2 2020, with the majority of the $1,100,000 increase driven by the acquisition of Aleafia's and Zola portfolio of health and wellness products, in addition to Good Hemp Seed sales this quarter. The acquisition was also the main driver in the year to date increase of $1,600,000 as it generated $837,000 of revenue. In addition to Good Hemp Seed Sales This Quarter and GoodWheat Grain Sales Earlier This Year.
Total operating expenses of $9,100,000 and Q2 of 2021 were $1,900,000 higher than the $7,200,000 recognized in Q2 of 2020. Cost of product revenues of $1,600,000 increased by $97,000 from the Q2 of 2020 to the Q2 of 2021, due primarily to the increase in cost of product revenues associated with the product sales of the portfolio of newly acquired brands, partially offset by lower inventory write downs. Year to date cost of product revenues was $2,400,000 compared to $1,600,000 in 2020 year to date with the $821,000 increase related primarily to the acquisition as well as increased good hemp and good wheat product sales. R and D expenses for the quarter were $1,100,000 in 2021 as compared to $2,000,000 in Q2 2020 and $2,300,000 Q2 year to date compared to $4,200,000 Q2 2020 year to date. The decrease for both periods This was driven primarily by lower employee related expenses as we right sized our research teams with a shift away from true research and discovery work and towards the development and commercialization of our consumer products.
In addition, we no longer have the Vertica related in 2021 that were present in 2020 with the sale of our share of the joint venture in November of last year. Selling, general and administrative expenses totaled $6,400,000 in the Q2 of 2021, a $2,700,000 increase from the $3,700,000 recognized in the Q1 of 2020. The increase is due in part to the acquisitive activities this quarter, including Investment Banker success fees, legal diligence and transaction fees and additional salaries and benefits with the increased headcount. Marketing, advertising and consulting activities increased during 2021 as expected in preparation for our product launches. Net loss attributable to common stockholders was $5,300,000 in the Q2 of 2021 compared to $9,700,000 in the Q2 of 2020 $3,200,000 in the first half of twenty twenty one compared to $7,200,000 in the first half of twenty twenty.
We've covered the revenue and operating expense activity, So I'll give a little more detail on the other items. The Q2 of 2021 included a realized gain in the amount $2,800,000 from the 1,875,000,000 shares of BioSeries stock we sold during the 2nd quarter, which resulted in a year to date realized gain of $10,200,000 We recognized unrealized gains in previous periods as a result of the appreciation of the stock price. We also had non cash expense of $498,000 for the change in the fair value of warrant liabilities from the end of Q1 to the end of Q2 2021, while Q2 of 2020 included $3,100,000 of non cash expense. The balance of cash and cash equivalents was $44,000,000 at the end of the 2nd quarter, which was up $11,200,000 from the end of the Q1 of 2021. This boost to the balance sheet was driven by the proceeds generated from the sale of the BioCeres shares, which appreciated nicely from the acquisition price back in November, along with the capital raised for the Pipe transaction in the Q1 of 2021.
This concludes our financial highlights for the Q2 and Q2 year to date of
Thank you. Please stand by, we can file the Q and A roster. Our first question comes from Ryan Myers with Lake Street Capital. You may proceed with your question.
Yes. Hi, guys. Thanks for taking my questions. First one for me. So just kind of digging through some of the 8 ks filings, it looked like the acquired brands posted $1,500,000 in the Q1 of 2021, which is a little bit lower than the quarterly run rate from the $6,600,000 it looked like it posted in Fiscal year 2020, not a huge decline, but can you just walk us through how these brands have performed over the last 4 quarters and maybe if they saw a boost due to the Pandemic Pantry Loading.
Thanks, Ryan. This is Matt. The brands have performed fairly consistently over the year last year except really in the Q1 of 2020, I think that's where they saw the greatest impact from COVID. But I think when you look at Zola, for example, it's actually continued our coconut water has continued to perform actually quite strongly throughout the last five quarters. And I would say that the other brands have also held their own, and that is really just in the retail channel.
So What you'll see us focusing on now and I'd like to make a quick correction to something I had said in my prepared comments When I talked about the e commerce launch for ProVault, Savvy and SolSpring, I mistakenly said that they would be launched By the end of 2022, I want to make a correction, that's by the end of 2021. So that is the hyper focus right now For us is taking these products that have been very successful in the retail channel and have had virtually no investment online. We think there's a significant opportunity in the near term as we develop these websites and the SEO formulations to drive traffic to these sites and really complement the sales that we have in retail. So I think if you can bear with us, Q3 ought to be that opportunity for us to give you a better look backwards on a full quarter of revenue in both the retail channel and the online channel.
Okay. That's helpful. And then it looks like the 3 Farm Daughters has been sold out of all their products for the past few weeks. Just wondering, is this due to demand outpace in supply? Or is there something else going on here internally with them?
Thanks for that question because there's been a number of folks asking about that. So as we talked about in our last earnings call, The decision amongst ourselves and 3 Farm Daughters was that they preferred to take a license to the Arcadia technology. And so we agreed that if that's that was their preference that we would honor that. And so we have. It's really that matters in their hands.
And they're evaluating How they want to take Free Farm dollars forward. And so they basically just kind of put a halt on their activities as they're evaluating what they want to do. And of course, we have wasted no time in developing our own GoodWheat brand, which is we're in the process of Evaluating our packaging and testing that with consumers and getting really, really good feedback about that GoodWheat brand, which is what we suspected and why we were actually quite supportive of $300 taking a license and us taking full Over the GoodWheat brand and the entry into the multiple channels that we see as opportunities for GoodWheat.
Okay. And then How does the difficult crop conditions across the weed market affect your guys' raw ingredient supply over the next year? And kind of how are you addressing these Conditions as you look into next year's planting goals.
So we are in an enviable position of having a sufficient amount of inventory in stock to serve what we would need probably for the next 2 years. And therefore, we really I feel well positioned and don't see any current concerns around production for our pasta and in fact RRG Wheat.
Okay. That's helpful. And then last one for me. What's a good number for us to be using as an operating Expense run rate for the business going forward now that you got the new brands in there?
So, operating expenses is there's a lot of moving parts right now, having Pulled together the two operations and evaluating kind of go forward what do we really need to spend money on to drive revenue versus not. So frankly, we're looking at opportunities to further streamline. And so we've really worked through that process. I wouldn't want to give you a number right now, but I think it will be clearer and something we can talk a little bit more discretely about in Q3 once we've had this acquisition under our belt for a full quarter and got a pretty good feel on where those opportunities are to To maybe streamline further, and where we want to make our investments in operating expenses. And I say that not to be evasive, but there truly are so many moving parts.
And in particular, as we launch these online initiatives For these brands that are very successful now, we're going to, on a weekly basis, evaluate against our digital marketing plans. And oftentimes, as we've seen with other brands in the market that have a heavy emphasis on e commerce, It is certainly possible that we start to get good traction and accelerating our marketing digital marketing investments To drive a greater or higher trajectory on those revenues is something we want to be poised to do. And so that's another reason it's difficult to give A number that you could a flat line number that you could depend on. We'll just have to see as the months roll by here in Q3, how operating expenses play out.
Great. That makes sense. Thanks for taking my questions.
Thank you, Ryan.
Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Matt Plavin for any further remarks.
Thanks, Josh. Again, I'd like to thank you all for joining us today. We're very pleased with the progress we've made on a number of critical funds and expect a very busy second half of the year. With our augmented CPG bench strength, the addition of key strategic resources And the pace of our integration process, we feel very well positioned to execute on the plans we have in place, and we look forward to reporting our progress to you. Have a great day.
Thank you.
Thank you. Ladies and gentlemen, This concludes today's conference call. Thank you for participating. You may now disconnect.