Arcadia gets $15M to launch first commercial product
Sacramento Business Journal - by Celia Lamb Staff writer
Backed by a deep-pocketed investor, Arcadia Biosciences Inc. has raised $15 million to launch its first product at a time when other early-stage biotechnology companies face a cash crunch.
Assuming it receives U.S. Food and Drug Administration approval, the Davis company plans to start selling specialty safflower oil in December. It has contracted with a Canadian company, Bioriginal Food and Science Corp., to sell the oil in nutritional supplements. Eric Rey, Arcadia’s president and chief executive officer, said his company has not decided how much it will charge for the oil.
The crop biotech industry is dominated by huge corporations such as Monsanto Co. and Dow Chemical Co.
“Arcadia wants to move into the market as a stand-alone company, which is a pretty brave approach,” said Jorg Riesmeier, who manages the Boston office of Life Science Partners, a venture capital company based in the Netherlands. “But they have a pretty strong investment backer. I’m looking forward to watching Arcadia grow over time.”
The investor is John Sperling, founder of the University of Phoenix and No. 321 on the Forbes list of the 400 richest people in America, with a net worth of more than $1.5 billion. Sperling, 87, is CEO of Exeter Life Sciences Inc. of Arizona.
Exeter was the first of Arcadia’s investors and led the $15 million funding round. Other participants included CMEA Ventures, BASF Venture Capital America Inc. and Saints Capital.
Rey did not know whether the company would seek more investment in the future, but said it has enough money to launch its first commercial product. He expects the company will make a profit by 2010.
Arcadia employs about 80 people in Davis, 15 in Seattle and six in Phoenix.
“We’ve got solid and committed investors who are not fixed in any particular position that they want to sell everything off or they want to hold on too tightly,” Rey said. “It’s all pragmatic, based on what the company needs to grow.”
Aracadia’s safflower oil comes from plants selected to produce higher-than-usual amounts of an omega-6 fatty acid called gamma-linolenic acid. Omega-6 fatty acids are dietary essentials because the body cannot produce or store them.
Researchers are studying whether dietary supplements that combine omega-6 and omega-3 fatty acids can protect against inflammatory diseases such as asthma or atherosclerosis.
Farmers have begun harvesting the safflower, grown in the northern Sacramento and southern San Joaquin valleys, Rey said. Harvest will probably continue through December. The company expects to produce roughly 4,000 to 8,000 pounds of oil from a few hundred acres of safflower this year.
Next year the company tentatively plans to grow about 1,500 acres of safflower in California, Idaho and possibly Oregon, Rey said.
Arcadia is also developing crops such as canola, corn, wheat and rice that need less nitrogen fertilizer and water than conventional plants.
On Wednesday Arcadia said it has signed an agreement with Spanish seed company Semillas Fito to develop and commercialize extended shelf-life tomatoes. It expects the first new varieties will be ready for commercial sale in 2011.
There are some long-term trends driving the demand for agricultural biotechnology that don’t affect other technology sectors as much, said Pam Marrone, founder and CEO of the Davis biopesticide company Marrone Organic Innovations Inc., including the expanding demand for a variety of foods to supply the growing middle class in China and India and concerns about the environmental impacts of agriculture and greenhouse gas emissions.
Marrone Organic Innovations raised $10 million in a funding round that closed in August.
“Everybody in the agriculture industry did very well last year, and that opens up the market for more innovation,” Riesmeier said. “Still, it’s tough. In the case of Arcadia there’s an individual giving a lot of money because he believes in it, and only a smaller amount of money is coming from traditional venture capitalists.”
clamb@bizjournals.com | 916-558-7866
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