KEY BUSINESS DEVELOPMENTS<\/b><\/p>\n
\n\u2022 Subsequent to quarter-end, Bioceres acquired from Arcadia Biosciences Inc. (\u201cArcadia\u201d) earlier today the remaining ownership interest in Verdeca LLC (\u201cVerdeca\u201d), a joint venture launched in 2012 to develop second generation biotechnologies for soybean and to commercialize HB4 Soy globally. By assuming full ownership of Verdeca, the Company expects to accelerate the execution of its HB4 Soy strategy, in particular by expanding breeding and go-to market collaborations with partners in new and existing geographies. Complete ownership will also enable Bioceres to capture more of the underlying economic value of HB4 Soy on a per hectare basis. As part of the transaction, the Company will own Verdeca\u00b4s vetted soybean library of gene-edited materials for developing new quality and productivity traits, as well as exclusive rights to all Arcadia technologies applicable to this crop.\n<\/p>\n
\n\u2022 Under the terms of the above-mentioned agreement, Bioceres has also been granted Latin American rights to Arcadia\u2019s wheat traits and Good Wheat\u00ae brand. This platform of genome-edited materials includes wheat varieties with 65% less gluten, 10-times the dietary fiber, and oxidative stability (which extends the shelf life of whole flours and derived products), while being substantially equivalent in all other aspects to conventional wheat. Some of the rights acquired are subject to clearances by third parties.\n<\/p>\n
\n\u2022 In consideration for the acquisition of Arcadia\u2019s interest in Verdeca, the wheat rights discussed above, and other intellectual property assets, Bioceres is paying $20 million at closing, through a combination of $5 million in cash and $15 million in equity (1,875,000 Bioceres\u00b4 common shares priced at $8) that is subject to a six-month lock-up period. One-third of these shares are pledged in favor of Bioceres and will be released when the aforementioned third-party clearances to the licensed wheat rights have been granted. Post-closing, the Company will pay: i) $2 million subject to obtaining Chinese import clearance for HB4 Soy or achieving penetration of the HB4 Soy technology in a minimum number of hectares, and ii) payments equivalent to 6% of the net HB4 technology royalties realized by Verdeca, until a $10 million aggregate amount is met. The overall total consideration is $32 million, excluding $1 million in fees and transaction costs to be reimbursed to Arcadia post-closing and non-Verdeca related royalties.\n<\/p>\n
\n\u2022 On October 8, 2020, Bioceres\u2019 drought tolerant HB4 Wheat was commercially approved in Argentina, subject to import approval being granted in Brazil, Argentina\u2019s main wheat trading partner. This approval is the first for HB4 Wheat anywhere in the world and marks an historical milestone in the biotechnology sphere for this crop.\n<\/p>\n
FISCAL 1Q21 FINANCIAL & BUSINESS HIGHLIGHTS<\/b><\/p>\n
\n\u2022 Total revenue increased 8% on a comparable basis to $42.2 million, with Adjusted EBITDA rising 30% to $10.5 million.\n<\/p>\n
\n\u2022 Bioceres\u2019 cash position rose more than five-fold through more efficient sources of capital versus the same period in fiscal year 2020, including $17 million raised through the August 2020 local public offering of Rizobacter bonds bearing zero percent interest.\n<\/p>\n
\n\u2022 The Company\u2019s Net debt-to-EBITDA ratio was 2.12x at quarter-end, compared to 2.15x in fiscal 1Q20.\n<\/p>\n
\n\u2022 HB4 Wheat and HB4 Soy inventory ramp-up processes advance as discussed in Bioceres\u2019 previous Earnings Report. A dry winter season hindered wheat production in Argentina, but was conducive to highlighting the full potential of HB4 drought tolerance as this crop\u2019s harvest approaches in the southern hemisphere.\n<\/p>\n
MANAGEMENT REVIEW<\/b><\/p>\n
\nCommenting on the Company\u2019s transaction with Arcadia,Mr.Federico Trucco, Chief Executive Officer of Bioceres, said, \u201cMy first relevant transaction as CEO of Bioceres back in 2011-12 was the agreement with Arcadia Biosciences for the constitution and financing of Verdeca LLC. At that time, Bioceres could barely pay the due diligence and legal costs associated to the transaction, HB4 was a technology promise, our ability to de-regulate a GMO event was disputable, and the overall investment required to transform this promise into a commercially approved product was estimated at over $100 million by industry experts. To be able to say that we have successfully overcome these initial difficulties and are today re-gaining full control not only on HB4 Soy but also on other very attractive earlier stage technologies and technology platforms within Verdeca\u2019s portfolio, fills me with enormous pride. I would like to thank Arcadia for trusting us back in 2012 and for helping us advance Verdeca\u2019s pipeline to its current state. We also take this opportunity to welcome Arcadia as a new shareholder of our company.\u201d <\/i><\/p>\n
\nMr. Trucco added, \u201cWe are announcing this important transaction little over one month after Argentina\u2019s regulatory clearance of HB4 Wheat, becoming the first company globally to have a commercially enabled path to market for a drought tolerance trait in this staple crop. Encouraged by this development, we are adding to our portfolio of wheat technologies Arcadia\u2019s genome-edited varieties, especially designed to tackle major consumer health concerns. This expanded wheat portfolio will allow us to further leverage our investments in closed growing systems which, in addition to strong identity preservation and traceability capabilities, remain of paramount importance as we engage with growers and consumers for which our technologies are relevant.\u201d<\/i><\/p>\n
\nMr. Enrique Lopez Lecube, Chief Financial Officer of Bioceres, said, \u201cOur recent agreement with Arcadia together with the HB4 Wheat approval in Argentina, both significant achievements for Bioceres, were preceded by the growth momentum that we maintained going into the new fiscal year. Sales for the first fiscal quarter grew 8% year over year, while Adjusted EBITDA increased 30% despite a slow start to the growing season, due to limited rainfall. The resilience of our core business, along with our strong balance sheet and cash position, are a solid foundation for generating substantially higher levels of growth as we continue to make further headway with our HB4 strategy. By acquiring full ownership of Verdeca we are now in a position to capture significantly more of our core technology\u2019s underlying economic value, ensuring that we maximize ROI as we further invest in ramping up our inventories and in accelerating our commercial efforts.\u201d <\/i><\/p>\n
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