Arcadia Biosciences Inc (RKDA) 2020 Q4 法說會逐字稿

Good afternoon, and welcome to Arcadia Biosciences Year-end 2020 Earnings Conference Call. Today's presenter will be Matt Plavan, President and CEO; Randy Shultz, Chief Technology Officer; and Pam Haley, CFO of Arcadia. This call is being webcast and you can refer to the company's 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 for 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-K and again on Page 7 of today's press release.

With that, I'd now like to turn the call over to Matt Plavan, President and CEO. You may begin.

Thanks, Towanda, and thank you, everyone, for joining us, and welcome to our fourth quarter and 2020 year-end conference call. 2020 was a remarkable year for Arcadia. Having achieved record revenues and having greatly strengthened our financial wherewithal, we also established new direct-to-consumer sales channels, introduced new consumer products, enhanced our IP portfolio and we fundamentally evolved to a viable commercial enterprise.

I'd like to spend a few minutes highlighting these accomplishments, and then we can turn to how they position us for success in 2021.

Beginning with revenues, we recorded an all-time high of $8 million in total revenues in 2020, which is approximately 80% of the $10 million in revenue guidance that we had set at the beginning of the year. That guidance was largely based upon the exuberant economic expectations for the global hemp markets following the passage of the 2018 Farm Bill and the pre-COVID economic outlook. Although the composition of actual revenues is different than that forecasted, in other words, GoodWheat license revenues versus product revenues, we remain very pleased with this performance in light of the impact the pandemic had on the nascent hemp industry and the overall ability to conduct business as usual in 2020.

The strategic transaction with Bioceres and the licensing of our GoodWheat distribution rights that enabled record revenues for the year resulted in a liquidity event for the company totaling more than $25 million in cash and stock value today with potential future milestones and royalty payments of up to $12 million. This liquidity and the additional capital raises executed since that time significantly bolster our balance sheet for 2021 and beyond.

Importantly, we expanded our product offerings and added pathways to market, targeting both B2B and B2C channels for each of our products. In 2020, we broadened our product categories to a total of 6. Entering 2021, we are poised to generate revenues from GoodWheat pasta products, GoodWheat flour products, GoodWheat grain sales, GoodHemp CBD seed sales, CBD oil and our GLA consumer product sales.

Now with regard to our wheat sales channels, we developed the digital assets to serve as the backbone for our e-commerce and retail sales for the GoodWheat suite of products, beginning with the launch of our Three Farm Daughters branded pasta and flour products, for which we will provide an update a little further along in the call. We built these e-commerce capabilities for scale and to be utilized for all consumer products we may offer, including food and wellness products alike.

With regard to the sales of our CBD hemp seed and extract sales channels, together with our outside expert legal counsel, we've successfully navigated the confusing patchwork of federal and state regulations, surrounding the cultivation, manufacture and sales of hemp and hemp extracts. And we now see a compliant pathway to continue the production and introduction in 2021 of our Hawaiian premium CBD. Having persevered in 2020 the cultivation and extraction prohibitions in Hawaii last year and to now be one of the only operations with scale still standing puts us in an enviable position to possibly be the only premium Hawaiian CBD coming to the market in the U.S. Mainland in 2021.

With a clear green light on cultivation and CBD production, Vivion Specialties is a key B2B channel partner for our Hawaiian CBD, providing formulation and quality assurance along with product distribution into the U.S. Mainland. They have developed a number of interesting and proprietary topical formulations and are preparing the groundwork for seamless integration of our CBD products into their current customer base as well as targeting new customers who will benefit from premium Hawaiian brands. We also plan to leverage our digital e-commerce backbone developed for our GoodWheat pasta launch in order to also sell our CBD topicals into the consumer retail markets in late '21 or early 2022.

And lastly, 2 other fundamental accomplishments in 2020 were the acquisition of Industrial Seed Innovations to bolster our GoodHemp portfolio of seeds and securing an agreement with Tritium 3H to be our exclusive seed distributor in Canada. We successfully integrated ISI's breeding activities and their Northwest production operations with our operations in Central California and laid the foundation for 2021 sales, leveraging their installed base and strong reputation for quality genetics and grower support. And as Randy will discuss further in the call, we shipped what is expected to be our first of several certified seed orders this year to Tritium, a good start given it's early in the planting season.

A final milestone highlight for 2020 is our transition to a commercial entity and the fundamental evolution of our innovation engine to developing new food formulations, leveraging our broad trait platforms in wheat and hemp. Let me explain a little bit more about that. As a reminder, to date, our development platform, ArcaTech, as we've called it, has been focused on trait discovery using our proprietary non-GM advanced breeding technologies. These efforts have yielded great results, having discovered and patented a base of platform traits, which we are now using as the foundation for innovating new food and wellness ingredients to serve the vast addressable markets in hemp and wheat.

Therefore, we've shifted the focus of our R&D innovation to one of food science innovation, targeting nutrition and wellness products development. We'll still have breeding and introgression work to perform as we complete the agricultural requirements for traits existing in our R&D programs as well as for new food formulations. A very positive byproduct of this evolution is a more cost-efficient process of innovation. The cost of our food science R&D will be significantly less than the traditional trait discovery work. And we've already begun redirecting these available costs in 2021 to revenue-generating activities, including the customer acquisition programs and e-commerce assets that we've developed to support our GoodWheat launch, which is a good segue into a GoodWheat launch update.

According to researchandmarkets.com, the global wheat flour market in 2019 totaled $181 billion and is expected to reach $220 billion by 2027. It's also estimated by the USDA that approximately 1/5 of the daily recommended calories consumed by people in the U.S. are from wheat. Therefore, the market opportunity for nutritional improvements in wheat are significant not only because the wheat market itself is vast but also because of the "share of stomach" that we represent.

Furthermore, multiple studies have found a population-wide deficiency in fiber, with barely 5% of the people in the U.S. meeting the Institute of Medicine's recommended daily target of 25 grams of fiber for women and 38 grams per men. Considering then that most people today are not getting enough fiber or protein in their daily diets, the incomparable nutrient density of our non-GM GoodWheat technology can improve the dietary intake of fiber and plant-based protein for the average consumer by increasing their fiber consumption by 8x and protein by 1.5x while reducing their calorie intake by 30%, all without a significant change to the way that they currently eat. So then we believe it is the intersection of these 3 factors: one, the global fiber and protein diet deficiencies; two, the share of calories in the average diet that wheat represents; and three, the superior nutrient density of GoodWheat that opens the door wide for GoodWheat to become a gold standard in wheat, the world's largest global food crop.

Becoming the gold standard in wheat will not happen overnight. It will require a well-developed global strategy executed in partnership with our existing collaborators as well as others. So as we continue to advance GoodWheat commercialization in cooperation with our existing partners that include Corteva, GoodMills, Ardent Mills, Bay State Millings and Arista, we're even more committed to expand our reach to new markets and customers. We have, therefore, engaged external resources with deep and tenured experience in the ag and food space to work with the Arcadia team to deliver a comprehensive, near- and long-term strategy and an operational plan to fully leverage the GoodWheat platform. The plan will include a comprehensive review of the company's products and their intersection with the appropriate partners' end markets as well as the development of an optimal forward resourcing strategy as our business scope is increasingly about consumer packaged goods.

And the timing for this exercise is ideal, particularly in connection with the departure of Kevin Hodges, our Vice President of Commercial Operations. As part of this plan, we intend to bring on key B2B and B2C leadership experience to enable vision, breadth and execution down this new path. I look forward to keeping you updated on our strategy development progress.

Now for a brief update on the status of our GoodWheat Three Farm Daughters brand launch activities. In Q4 of 2020, we began designing the fundamental building blocks for a successful e-commerce and retail business for our GoodWheat pastas and flour. This entailed, one, the development of our Powered by GoodWheat brand positioning; two, the development of the Three Farm Daughters consumer brand positioning; three, the design of our back-end e-commerce website functionality as well as lining up co-manufacturing supply chain and consumer package designs. At the end of Q4, we initiated a small regional launch with a local grocery retailer. We're now in 38 regional grocers throughout North Dakota and Minnesota. We also defined and identified a sales channel partner to develop a strategy for optimizing distribution and building retail sales throughout the U.S. in 2021.

So we entered 2021 with a functioning website and an SEO and digital media marketing plan to begin the design, test and prove cycles needed to confirm our e-commerce scale-up strategy. We began that effort in mid-February of this year. Our initial results were very favorable in driving traffic to our site. But initially, we experienced sub-par sales conversions. We've since made modifications to our SEO formulas and are now seeing much better conversion rates. Next will be to begin increasing our ad spend and optimization in April and May to continue to drive increased sales volumes, and we look forward to revisiting and reviewing these results with you in our Q1 call in May.

So now I'd like to turn the call over to Randy for an update on our breeding, research and hemp production operations.

Thank you, Matt, and greetings to everyone on the call today. As Matt mentioned, the past year has been truly remarkable for Arcadia.

On the GoodWheat front, we've continued to expand our intellectual property portfolio with an impressive 10 new patents granted since January of 2020, further solidifying our leadership position in bringing new game-changing innovation to a staple crop like wheat. We also continued to evaluate and advance next-generation improvements across the GoodWheat family of products and have made significant progress in deploying our traits into commercial elite germplasm, building the foundation for scalability as the business grows. We are currently in the midst of wrapping up our counter-season activities in Yuma, Arizona and preparing for regional trials this summer across the U.S. where we will evaluate the performance of these new pre-commercial lines in different geographies and under various agronomic production conditions, setting the stage for data-driven commercial advancement decisions in the fall of 2021.

In hemp, we've been driving 3 major objectives: first is to establish GoodHemp seeds as the leader in quality genetics and to gain significant market share in the hemp CBD and wellness space; second, build an intellectual property estate that not only protects our current business but provides the potential to enable partners throughout licensing; and third, to ensure a solid foundation of genetics and agronomic production knowledge to ensure the success of our premium Hawaiian hemp CBD business. I'm pleased to report significant progress over the past year across all 3 of these objectives.

In August of 2020, we completed the purchase of Industrial Seed Innovations, ISI, as Matt mentioned, which not only brought 2 new commercial varieties, Rogue and Umpqua, into our portfolio but also accelerated our own internal breeding program by 2 to 3 years by bringing inbred germplasm assets into our program. Importantly, one of the reasons we were attracted to ISI is that their breeding strategy was fully aligned with our own, both of which are focused on commercializing true F1 hybrids rather than varietals. This not only enabled a seamless integration of the 2 programs, but hybrid breeding is the key to rapidly improving yield and uniformity, much like the path modern corn breeding programs have followed. Since the ISI acquisition, we've launched a new commercial variety, Santiam, and we'll be trialing multiple new pre-commercial varieties this summer for potential commercial release in 2022.

As a testament to the quality and uniformity of our hemp genetics portfolio, we had 4 varieties reviewed and approved by the Association of Official Seed Certifying Agencies, or AOSCA, in February of 2021. This approval not only provided an independent validation of our genetics and an assurance to farmers that they can rely on their performance but, importantly, AOSCA approval and the production of certified seed is a key requirement to sell seed into Canada through our distribution partner, Tritium 3H. Our partners at Tritium tell us that even with the backdrop of a turbulent market, they're seeing strong interest for our genetics in the Canadian marketplace and have reiterated confidence in achieving our targets. Indeed, in preparation for early season sales and Health Canada approval, we have already begun shipping seeds to our Canadian partner.

In the U.S., we are seeing some headwinds in the GoodHemp business driven primarily by an overall contraction in hemp acreage in the U.S., particularly acreage dedicated for CBD extract. Many growers have found it difficult to secure offtake contracts in a market that is still experiencing an oversupply of biomass and CBD, and the industry is really unlikely to experience explosive growth until the FDA provides a regulatory framework to enable large CPG players to enter the industry.

On the bright side, we've noticed a new source of demand for our seeds coming from an emerging global smokable CBD hemp market. There has been significant investment in this infrastructure in the U.S. over the past year, and we expect GoodHemp seed sales to service this emerging industry in 2021 and beyond. We've also begun to get some early traction in the marketplace, resulting in modest sales as we enter the prime Q2 selling season. Additionally, we've expanded our access to markets by listing our seeds on partner websites, including the International Hemp Exchange and Hemp Seed Florida, both well-established seed dealers.

On the intellectual property front, we made significant strides in 2020, including filing 4 foundational utility patents, 4 plant patents and 5 new applications for plant variety protection rights, or PVP rights. Although we will continue to be aggressive in building our intellectual property in the hemp industry, we feel pretty good about our current position in protecting our portfolio of products.

Next, I'd like to transition to an update on our Hawaii operations through our JV with Legacy Ventures. In our Q3 earnings call, we reported that regulatory developments have forced us to temporarily pause operations in Hawaii. As Matt mentioned, I'm pleased to update you all today that the team, along with legal counsel, has charted a compliant path to resume operations, and we are currently in the midst of planting our first 40-acre season as we speak. We expect to have extraction from the first season completed in the third quarter of 2021 and have been developing both B2B and B2C sales channels to begin meaningful sales on that same timeline.

With successful execution, we believe we will be the only legal supply of Hawaii-grown hemp and extracted CBD in the world and expect to maintain that exclusive position for 12 to 18 months. We're also excited because some initial consumer testing we completed came back with strong support as consumers recognized the unique value proposition of CBD extracted from premium Hawaiian-grown hemp.

With that, I will now turn the call over to Pam. Pam?

Thank you, Randy. I'd like to take a few moments now to share the financial highlights for the year with you. As Matt mentioned at the onset of the call, we were very pleased to execute the series of transactions with Bioceres, our former joint venture partner in November, generating GoodWheat license revenues in the amount of $6.7 million and bringing in cash and stock to the balance sheet. Total revenues recognized for the year were $8 million compared to $1.2 million during 2019 with the majority of the increase driven by the revenue generated from the GoodWheat licenses to Bioceres. GLA product revenue increased as well.

Total operating expenses of $20.8 million in 2020 was very close to the $20.6 million recognized in 2019, although the composition differed. Cost of product revenues of $5.2 million in 2020 was significantly greater than the $885,000 recognized during 2019 as we recorded several inventory write-downs during 2020, resulting from net realizable value and quality adjustments to wheat and hemp seeds. Changes in the regulatory framework in the hemp industry triggered a write-down of our Archipelago hemp inventory earlier in the year as well.

Research and development expenses were $8 million in 2020 as compared to $7.1 million in 2019. The increase was driven primarily by higher employee-related expenses as we expanded our research teams earlier in the year to accommodate the acceleration of hemp-related discovery work. We recognized a gain in the amount of $8.8 million on the sale of our portion of Verdeca to Bioceres this past quarter which served as a credit against total operating expenses. There was no such gain recorded in 2019, although we did recognize the credit in the amount of $1 million in 2019 for the change in the fair value of contingent consideration relating to an acquisition in the early years of the company.

Selling, general and administrative expenses totaled $16.5 million in 2020, a $2.9 million increase from the $13.6 million in 2019. Increased consulting activity, cash fees and stock compensation expense were the primary drivers, along with higher employee-related expenses, including severance associated with November's reduction in force. We also engaged in additional marketing and public relations activities and saw increases in rent and insurance premiums.

The net loss attributable to common stockholders for the year was $4.7 million compared to $28.8 million in 2019. A significant contributor to this $24.1 million favorability was the $6.6 million noncash gain resulting from the change in the fair value of common stock warrant liabilities in 2020, while 2019 included a noncash loss of $9.2 million. The number of warrants outstanding that are associated with these liabilities has been reduced following the May and July exercises in 2020. And the fluctuation in our stock price at the end-of-year remeasurement points contributed significantly to the year-end liability values and thus, the change that flowed through to the results of operations.

The balance of cash and cash equivalents totaled $16 million at the end of 2020, and this balance was significantly strengthened by the net proceeds of $23.3 million generated from the private equity placement transaction in January of 2021. Short-term investments at the end of the year of $11.6 million is comprised of the 1.875 million shares of Bioceres common stock that were acquired in November, valued at its stock price as of December 31.

This concludes our financial highlights for 2020. Thank you very much for your attention today, and I'll turn the call back over to Matt. Matt?

Thanks, Pam. In closing, we have increased our asset liquidity, built needed direct-to-consumer channels and capabilities, significantly repurposed our spend, all destined to drive near-term revenue opportunities. And at the same time, we refined our focus and further simplified our formula for value creation. All of this in 2020, despite the pandemic, underscores our agility and fortitude and the potential of this team to execute even better as things are expected to return to normalcy in the markets and why we are looking forward to the rest of 2021.

We look forward to keeping you abreast of our continued progress. And with that, I'll turn the call over to Towanda for questions.

Thank you. (Operator Instructions) Our first question comes from the line of Ben Klieve with Lake Street Capital.

First, a question on the R&D front. You commented on your intent to kind of move away from trait discovery to -- I forgot how you phrased it but kind of food -- more on the food side than trait side. Can you update us on what remains in the R&D pipeline from the trait discovery process both in hemp and wheat?

Sure. I'll turn it over to Randy to answer that question.

Okay. Thanks, Matt. Yes. So in trait discovery, we continue, as I mentioned in the call, to advance next-generation improvements across our wheat portfolio. So that would include oxidative stability, the high-resistant starch as well as the reduced gluten, which also has starch characteristics and fiber characteristics, and some additional yield traits that we -- have been in our pipeline. On the hemp side, we continue to develop new varieties, and we're doing that through traditional breeding approaches. Like I mentioned, we've got new varieties coming out this past year and several more in the pipeline. So we do continue to innovate. And I think what really Matt was referring to is the shift in a significant amount of our spend and our focus onto food innovation, really taking these trait innovations that we've developed over the years and getting them into the proper new and innovative formulations and into consumers' hands.

Yes, that's right. And that's why we hired Tracy Baker who's the Vice President of Innovation. So when we think about wheat, we've just scratched the surface with pasta and flour. I mean there's a number of other food executions that ought to contain the GoodWheat ingredients. And so this is an example of leveraging a base platform which is unparalleled in the wheat industry right now and the opportunity that, that represents just in terms of a different way of innovating, a less expensive way of innovating.

Got it. I appreciate that. That's helpful from both of you. A quick follow-up on the on the hemp side. Is a THC knockout still in the pipeline?

So we do still have that project in the pipeline.

Okay. Perfect. Pivoting over to wheat, I have a couple of questions. With so many variables going on at the same time, first of all, really exciting, but I'm wondering if you can kind of walk us through how you're constructing your plan to grow inventory over the next year. And specifically, around the GoodMills launch, are you building inventory in preparation for a launch in Europe this year? And if so, kind of what does that look like?

Yes. Those are the right questions, and it is a little bit tricky. And I just had a very good call with our partners at GoodMills this week. And transparently, COVID has slowed their ability to move as quickly as we'd wanted to. But I am optimistic in -- they were optimistic in their tone, and they gave us specifics with regard to when they're launching certain tests with consumers in certain countries. And so it is their intent to be launching in the second quarter within 3 different European countries to test 3 different formulations.

And the follow-on to that, if all goes to plan and the early results with regard to their formulation testing has been very, very positive, especially with regard to the way that the pasta is al dente and how it performs in a food service environment, which is critically important, can be cooked for 15 to 20 minutes, taken out, put in the refrigerator or put into prepared meals and have them taste extraordinarily well and undifferentiated from when they were first cooked, all of those are very positive results that they've reported back to us. So I would say they're kind of back on their track, but they're very apprehensive, as you might imagine, to give us real, real specifics on timing. But if all goes to plan, we would be ramping up and they would be selling in Europe in the back half of '21, provided that they launched these tests with these website strategies as they plan to in Q2. So I'm very cautious about setting any expectations around timing. I am not cautious about expressing it being a when, not if, kind of scenario.

Got it. That's helpful. And one more question for me, and I'll get back in queue. With regards to hemp, I certainly appreciate the challenges in operating in the environment with regulatory uncertainty. But I'm wondering, let's hypothetically say that there's, all of a sudden, visibility of that regulatory uncertainty clearing up, to what degree is your customer base in the U.S. and especially those that are legacy ISI customers, how comfortable are they with the infrastructure that's in place from a processing side in their geographies? And as such, how meaningful do you think an immediate boost would be to hemp sales, provided that the regulatory uncertainty clears up? Or do you think there's -- are these downstream hurdles still going to be pretty material even if that regulatory risk is removed?

I'll start with one point, and then I want to turn it over to Randy. But when we look at our projected sales, those are within the swim lanes of what has been demonstrated to be acceptable by the FDA at this point, which is really topical. Your question is what happens to all the other applications and are we prepared and are our customers prepared to take advantage of that should the FDA come out with clarity on the other areas or other applications, and I'll turn it over to Randy to answer that.

Yes. Thanks, Matt. So I think 2 business segments to comment on there. So on the hemp seeds, the GoodHemp seeds business, I think that -- look, I mean, farmers already learned how to grow this crop. And they're well poised to do so. There is significant extraction infrastructure in place and it's really -- so if the FDA were to come out with very clear guidance and the large CPGs felt comfortable entering the space and I mean, as we all know, they've been doing R&D in preparation for that as well, so I think it's a pretty rapid flip of a switch where that demand for new biomass, new extracted material comes pretty quickly, and we will continue to keep ourselves in position to capitalize on that when it happens.

On the oil side, the CBD oil side, I think it's kind of the same thing. So once that guidance comes out, those swim lanes, as Matt puts it, get well defined for us and for others, and so the demand for not only a wholesale oil, specifically a Hawaii premium, but also our own product portfolio and how we can deliver to consumers, I think, gets clarified and opened up. And again, I think we're in solid position to capitalize on that event when it occurs.

Got it. Very good. I think that does it for me. Best luck with all these initiatives, and I'll get back in queue.

Thank you, Ben.

Our next question comes from the line of Steven Ralston with Zacks.

Congrats on the top line.

Thanks, Steven.

With the licensing revenues coming from a Bioceres, you indicated it's coming from GoodWheat. Was there any HB4 involved in that?

Go ahead, Pam.

So Steven, the license revenue was all GoodWheat. We did recognize a gain of $8.8 million that resulted from the value attributed to the -- our share of the joint venture that we sold.

All right. Part of that licensing revenue, was that sale of product of GoodWheat?

No. That was all license revenue.

Okay. So that -- it's onetime.

That's correct. There's a potential for soybean royalties to be recognized in the future when Bioceres does reach commercialization of the Verdeca technology. But...

Yes. And of course, there's -- ultimately, the whole purpose of the license was that Bioceres would be bringing GoodWheat to South America, and we'll ultimately receive royalty revenue for the sale of seed into South America. But that's a couple of years down the line.

All right. Moving to the U.S., Three Farm Daughters, you say it's now in distribution at 38 grocers. Does that extend beyond the Hugo's grocery chain?

It does.

Can you lay any details?

I -- Hornbachers and who else?

Kowalski's.

Kowalski's. They might be -- these are really nascent, I should point out. These are really strong results for a small team of folks going out and basically, through word of mouth, doing some testing on distribution. I mentioned also in my prepared comments that we'd identified and we've now contracted with a formal sales organization who will begin and have begun the process of really getting this out into Tier 1, 2 and 3 retail and that's where we're really going to see some expansion in the retail sales. At this point, we're really pleased with what we've seen. But I do want to caveat it that it is essentially an internal sales effort.

I understand. But I also do my due diligence, and I think on the last call, I mentioned I did buy it direct on the website, have gone to Hugo's and have 2 linguines in the shopping cart right now. And I'm looking at it. When you said that you had increased ad spending slated for April and May, is this in support of that regional effort there in North Dakota and Minnesota?

No, this is the e-commerce launch. So yes, we're just making sure that we understand our demographics and our targeting to ensure that when we place those ads, we have the proper conversion to revenue. That's really what we've been working on to make sure that as we put meaningful dollars against it, that we're producing meaningful revenues.

Okay. Oh, I forgot to mention that I also saw it on Amazon. Moving over to hemp, do you have a timetable for when the revenues will gain traction? And could you address specifically how -- what do you expect from your Canadian partner and also from Hawaii?

You bet. I'll turn it over to Randy to talk about that.

Okay. Thanks, Matt. So timing with seed sales, GoodHemp seed sales, in the Continental U.S., obviously, is tied with the growing season. And so not just hemp but really across the majority of crops, you see really Q2 being the major component of revenue with some trailing to either end. So we picked up some revenue over the last couple of months, in Q1, and we would expect to pick up a little bit trailing off in Q3 as well. That can be mitigated by selling into areas that have multiple seasons, for example, Hawaii would be one or South America. But at this juncture, we anticipate the majority of our GoodHemp revenues to be in Q2 with a little bit of trail-off into Q3.

As far as the Hawaii operations go, we're going full steam ahead as far as planting. We expect to -- we have the optionality to do 3 seasons. But at this juncture, we plan to do 2 and have some land developed for a third. And we expect those timings to be -- kind of Q3 would be when we would have everything harvested, have it extracted, kind of ready for delivery to a B2B channel. And as we mentioned, we're also, in parallel, leveraging some of the infrastructure and expertise that we built around taking GoodWheat products directly to market and building our strategic business plan around also leveraging those assets to create a B2C channel for the Hawaii premium oil as well.

And concerning Canada, you said they have interest and they've -- you've shipped seed to them, but it's obviously contingent on Health Canada's approval.

Right. So yes. So the indications from Tritium in Canada. So Canada is on essentially the same Q2 sales cycle as the as the rest of the Northern Hemisphere. And with the bulk of their sales coming just a little bit earlier, in kind of the April/May time frame when they get in the ground up there, so we don't expect the timing to be much different. The indications, so Canada as the much more restrictive market as far as the number of varieties that farmers have access to, is controlled, unlike really in the U.S., and so it actually creates a less competitive environment for us.

So we're seeing pricing a little bit more stable there, and the demand is still strong. And the varieties that we're together bringing to market there have a competitive advantage because they finished really early, which is important in that geography. So we feel pretty good about our position there. And we've already started shipping seeds, as I mentioned. We expect several more shipments to come through that selling season. And really, it's the Health Canada approval that we're waiting for, and we expect that any day now.

I'm not showing any further questions. I would now like to turn the call back over to Matt for closing remarks.

Thank you, everyone, for joining the call and your continued interest and support. We do look forward to continuing our real-time reporting of our key milestone achievements in the lab, the field and in commercial markets, and we wish you all safety and good health. Thank you, and have a good afternoon.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.