“Revenues at XXII will explode after their MRTP application is approved and the VLN cigarette product can be properly marketed.”
22nd Century (XXII) Q2 Revenues up 30% YoY, a New Board Member and a Good Level of Liquid Assets
Good day everyone,
We are continuing coverage on 22nd Century Group, Inc. (NASDAQ: XXII), a leading plant-based, biotechnology company that is focused on tobacco harm reduction, very-low nicotine content tobacco, and hemp/cannabis research and hops.
Current price $3.37/share (at Market close Sep.1, 2021)
After XXII shares retreated in early trading during the Wednesday session, I said the shares would find support at $3.30/share and both trading volume and the share price would increase throughout the day. That’s exactly what happened. We note that the company shares are up in after-hours trading.
Earlier in August, XXII released its Q2 earnings report. Revenues for the quarter, ended June 30th were $8.37M (+30%) compared to $6.44M in the same quarter in 2020. Loss per share was at $.03, the same as the loss per share in Q2 2020. Revenues are mainly generated from the sale of VLN cigarettes.
The Q2 earnings report also reported $2.0M in cash and $60.2M in marketable securities that were mostly money market funds.
There are more than 1 billion global and 34 million U.S. adult smokers. More than two-thirds of adult smokers want to quit, yet less than ten percent of them can quit successfully. XXII believe that smokers are actively seeking alternatives to addictive combustible cigarettes. Based on their consumer perception studies, 60% of adult smokers indicate a likelihood to use VLN®.
I believe revenues at XXII will explode after their MRTP application is approved and the VLN cigarette product can be properly marketed. The company has stated they are ready to mass produce within 90 days of the MRTP approval.
I watched a video interview with CEO James Mish, recorded on August 19th. He discusses the company product sectors, even the hop plant (without naming it). It’s worth watching.
7/23/2021 Cowen Initiated Coverage Outperform $5.00
XXII has been smart in their approach to the cannabis market. They have chosen to invest in, and partner with existing companies in the sector CannaMetrix, genetics to deliver differentiated traits to maximize yield of a specific cannabinoid or deliver a certain taste or fragrance profile, KeyGene, and commercial-scale plant breeding and cultivation of disruptive plant lines as well as year-round ingredient extraction/purification (Extractas Bioscience, Sawatch Agriculture, Folium Botanical, Aurora Cannabis, Needle Rock Farms, and Panacea). The company is limiting its US research to the hemp plant as cannabis is still illegal.
The entry into the hop plant sector seems to be a logical move for the company. With their technology and know-how, XXII is likely to find eager partners in the sector. Just as it is in the cannabis sector, XXII will be able to approach existing companies in the sector and say, “whatever compounds you need from the plant, we can engineer it to produce more of them.” The XXII technology has the potential to reduce the hop plant modification timeline from 10 years to 2 years. And remember, XXII is already 6 months into the process.
On August 19th the company announced the appointment of Anthony Johnson to its Board of Directors. Mr. Johnson is an accomplished life sciences and biotechnology executive leader with broad expertise in corporate strategy, technology development, marketing, and business development. Mr. Johnson has an impressive resume along with global experience. You can read about his history at the link.
The Traders News Group
original reports below
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Updated coverage:
22nd Century (XXII) Made a Good Choice Bringing the Hop Plant into Its Family of Plants to Modify
Will the FDA Give Traction to Their VLN Cigarettes Soon?
Good day everyone,
We are continuing coverage on 22nd Century Group, Inc. (NASDAQ: XXII), a leading plant-based, biotechnology company that is focused on tobacco harm reduction, very-low nicotine content tobacco, and hemp/cannabis research.
Current price $3.3/share (at 10:00 AM EDT)
After closing at $3.57/share in the Tuesday session, XXII shares began looking for a level of support in early trading today. I believe a support level at $3.30/share will bring buyers in and we will see increasing volume and price throughout the day.
Remember, tobacco is still the flagship product at XXII and generates their revenues. For the FDA, the decisions on Juul and other manufacturers could represent a milestone as it tries to execute an ambitious tobacco regulation agenda. The FDA in April said it was taking steps to ban menthol cigarettes. And it continues to work on a potential requirement that nicotine levels in cigarettes be set at minimally addictive levels, a possible game-changer that the White House would need to approve. It’s possible XXII may see a mandate and approval announced together.
The hop plant market is not as highly regulated as tobacco or hemp/cannabis, providing a faster path to commercialization. If you have followed XXII you know they have been waiting a while for the FDA to approve their ability to advertise their VLN cigarettes as a safer alternative to standard tobacco. We all know that cannabis remains classified as a schedule one drug by the US government.
Hop and hemp/cannabis plants have many similarities. Both are part of the Cannabaceae family of alkaloid flowering plants and the active ingredients found in both plants offer potential health benefits for managing anxiety, inducing calm, addressing sleeping disorders and resolving stomach problems, among other wellness applications.
The fact that hop, and cannabis plants are similar is important because XXII has already done a lot of R&D, including that done by its cannabis partner companies, that may apply to hop plants creating new proprietary plants. Let’s remember that XXII has valuable plant modification IP and know-how including utilizing double haploids, gene-editing, molecular breeding, and other technology they have developed in tobacco and cannabis.
The hop plant has been grown and used to make beer for centuries (possibly millennia) without modification. XXII has picked a plant to be the third leg in in its plant modification tripod that is ready to be improved and expanded.
The Traders News Group
original report below
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22nd Century (XXII) Announces the Completion of Its Trifecta of Market Sectors with Tobacco, Cannabis, and Now Hops
Massive IP portfolio on the Tobacco and Cannabis Plants. Now hops also? I would say they have all major areas covered. (I will dive more into that later) no pun intended.
Good day everyone,
We are updating coverage on 22nd Century Group, Inc. (NASDAQ: XXII), a leading plant-based, biotechnology company that is focused on tobacco harm reduction, very-low nicotine content tobacco, and hemp/cannabis research.
Current price $3.57/share (at market close Aug. 31, 2021)
On August 16, 2021, XXII moved to the NASDAQ Exchange from the NYSE-American. The company participated in the closing bell ceremony on the same day. The company believes the move will increase their visibility and exposure to investors.
When I look at the company stock chart, I see how XXII has come off recent dips this year. On April 26th, the shares peaked at $6.07, then dipped to $3.56 on May 13th. On July 1st the shares had climbed back to $4.63 before consolidating to today’s level. XXII shares have now crossed their 200 DMA of $3.34 and are approaching their 50 DMA of $3.67/share in a bullish manner.
I often note insider holdings as a value metric because the insiders have a vested interest in the company’s success. Insider ownership isn’t very high (under 3%) at XXII, but the institutional ownership (all data per YF) is at 36.4% of the outstanding shares. Some of the big guns are holding XXII shares like Blackrock (5.99%) and Vanguard (4.68%). ETF Managers Group is holding 7.38% of the company’s shares. Hedge funds prefer the companies they invest in to perform sooner rather than later.
When we last covered XXII in July, we talked about the company’s trifecta of core products, tobacco, cannabis, and an unknown third leg. I spent some time trying to figure out what that third product was going to be. Since XXII was already in the tobacco and cannabis sectors I thought the new market would be psilocybin. Boy was I wrong. While psilocybin is an exciting and developing market, it is still relatively small and in it’s infancy. XXII doesn’t chase small markets.
In a letter to shareholders published Monday, August 30th, CEO James Mish said “I am proud to announce our third plant-based franchise – the global specialty hops market. Like our existing franchises, the hop plant market is ripe for disruption and offers opportunities for 22nd Century to provide unique and significant competitive advantages to commercial partners. The addition of hops, a critical input for the $500 billion global brewing industry as well as a growing source of medically-important molecules, expands our total addressable markets to an estimated $1.3 trillion.”
95% of all hops are used to make beer. The rising demand for microbrew and craft beers is driving the specialty hops market where distinctive flavors, aromas and nutritional uses are important in creating unique and differentiated products. The XXII R&D program objectives include creating new proprietary hop plants and valuable IP using their know-how and technologies, utilizing double haploids, gene-editing, molecular breeding, and other non-GMO technology.
XXII is establishing a new subsidiary in the Netherlands, 22nd Century Group Europe B.V., to open new revenue opportunities in hops, as well as serve their tobacco and hemp/cannabis plant franchises through an expanded global footprint.
XXII is on the move now with a move toward globalization and a new product pipeline that may generate revenues quickly. The demand for proprietary, specialized, non-GMO hops is high and XXII has the tools to provide them.
7/23/2021 Cowen Initiated Coverage Outperform $5.00
On the tobacco front, earlier in August, the company announced that they were highly confident their MRTP (modified risk tobacco products) application has completed the FDA’s scientific review process and is now in the documentation process, the final stage before the FDA announces its decision. While the company’s VLN cigarettes were approved for sale in 2019, this important designation will allow 22nd Century to communicate key features of VLN® King and VLN® Menthol King, including the headline claim of “95% less nicotine.” VLN® tastes, smells, and smokes like a conventional cigarette. Both the FDA and the Biden administration have been looking for ways to curb illness, and consequently healthcare expenses, associated with cigarette smoking.
On the cannabis front, XXII has been building its network of partnerships to maximize the upstream segment of the cannabinoid value chain since 2019. Components of 22nd Century’s proprietary value chain include: plant profiling tailored to the needs of customers (CannaMetrix), genetics to deliver differentiated traits to maximize yield of a specific cannabinoid or deliver a certain taste or fragrance profile (KeyGene), and commercial-scale plant breeding and cultivation of disruptive plant lines as well as year-round ingredient extraction/purification (Extractas Bioscience, Sawatch Agriculture, Folium Botanical, Aurora Cannabis, Needle Rock Farms, and Panacea).
The XXII “trifecta” of market sectors it participates in is now complete with tobacco, cannabis, and hops. As CEO Mish pointed out above, these three sectors address an estimated market of $1.3T. Sometimes we get lost with those numbers but each 1% of a $1.3T market potential is $13B.
Stay tuned for more of our coverage on 22nd Century Group coming very soon.
The Traders News Group
About 22nd Century Group, Inc.
22nd Century Group, Inc. (Nasdaq: XXII) is a leading plant biotechnology and intellectual property company focused on improving health and wellness through plant science. 22nd Century uses modern plant breeding technologies, gene-editing, and molecular breeding to deliver value to its customers in the life science and consumer products industries by creating new, proprietary tobacco, hemp/cannabis and hop plants with optimized alkaloid and flavonoid profiles as well as improved yields and valuable agronomic traits. 22nd Century was founded to build intellectual property related to nicotine biosynthesis in the tobacco plant and to commercialize its proprietary reduced nicotine content (RNC) tobacco plants, which have become the cornerstone of FDA’s comprehensive plan to address the enormous amount of death and disease caused by addiction to smoking. The Company has also begun to leverage its plant science expertise and existing partnerships to create and commercialize new, proprietary hemp/cannabis and hop plants to optimize their genetics and create valuable new intellectual property.
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