Marrone Bio moving HQ to North Carolina amid profit struggle. Here’s who’s staying in Davis

Financially troubled biotech company Marrone Bio Innovations has never made a profit in its nearly 16-years of operations. Now, the company has moved its corporate headquarters from Davis to Raleigh, North Carolina in what officials say is a plan to be closer to international agricultural markets and finally get into the black.

Marrone, a maker of environmentally friendly pesticides and other farm products, moved around 10 top executives to the new Raleigh headquarters at the end of 2021, said spokeswoman Angela Keyser.

She said the company will keep around 100 employees in Davis, including its research staff.

Marrone issued a press release announcing the corporate move on Thursday.

“International expansion is a key element of our long-term growth plans, and this move provides us greater proximity to global markets,” said Chief Executive Officer Kevin Helash in a press release.

The company said in its 2020 annual report, the latest available, that 20% of revenues came from the European Union and Latin America compared with 6% of revenues in 2019.

Helash wasn’t available for an interview and it’s unclear if North Carolina’s low 2.5% corporate tax, scheduled to be eliminated in 2028, played a role in the corporate relocation. California charges companies more than 8%.

North Carolina has seen 4,000 new biotech jobs announced in 2021, according to statistics from the North Carolina Biotechnology Center, a state-funded initiative to create new biotechnology jobs there.

Sacramento area economic development officials say they are not worried.

The President and CEO of the Greater Sacramento Economic Council Barry Broome said Marrone Bio Innovations has seen economic ups and downs and may have been able to take advantage of economic incentives or new funding as part of its move to a new state.

“It may be an opportunity to strengthen the company,” he said.

Keyser said she knew of no incentives given to the company for moving its corporate headquarters to North Carolina.

The prospects for a much larger biotech and life science industry in the Sacramento area are very strong, Broome said, despite the loss of the Marrone Bio Innovations headquarters.

He said construction is scheduled to start next year on UC Davis’ Aggie Square, a mixed-used innovation district adjacent to the UC Davis Medical Center in Sacramento.

He said the $1. 1 billion Phase I of the project will add more than 1 million square feet of research, labs, commercial space and housing. including IBM and the Alice Waters Institute for Edible Education, with more announcements from market-leading companies coming this year.

“It’s going to take a while, but by 2024 we’re going to have a major reputation in this biotech, life science space,” he said of the Sacramento area.

Marrone Bio Interventions has been part of the Davis community for nearly 16 years.

Davis resident and scientist Pat Marrone started the company that bears her name in June 2006, taking Marrone Bio Innovations public in 2013, after raising $57 million from investors.

She retired as CEO in 2020 but still remains on the board.

But Marrone Bio Innovations had seen operating losses every year since the company started in June 2006, its most recent annual report said.

“The market for biological products is highly fragmented,” the company said in the report, noting it’s difficult for growers to distinguish between products.

Marrone has been narrowing its losses more recently. In 2020 it lost $20.2 million compared to $37.2 million in 2019. For the first nine months of 2021, losses were reported at $11.2 million compared with $16 million for the same period in 2020.

The company also carries a high debt load of around $350 million.

Marrone Bio Innovations was also rocked by an accounting scandal in 2016. The U.S. Securities and Exchange Commission charged it with inflating financial results to meet projections it would double revenues in its first year as a public company. Marrone BIo Innovations agreed to pay a $1.75 million penalty to settle the SEC’s charges.

Pat Marrone was not implicated in the scheme but the SEC said she paid back $15,234 to the company, money that she received in incentive pay because of the inflated earnings.

The company’s Chief Operating Officer, however, was charged with various federal fraud charges.

Hector Absi pleaded guilty in 2019 to one count of conspiracy to commit mail fraud, wire fraud, and securities fraud.

He is awaiting sentencing.