22nd Century’s proprietary Very Low Nicotine
cigarettes demonstrate that the FDA’s planned mandate for
cigarettes with non-addictive levels of nicotine is both achievable
and realistic.
Leading regulatory expert, Dr. James
Swauger, will lead and oversee the re-submission to the FDA of the
Company’s MRTP application for BRAND A Very Low Nicotine Content
cigarettes.
Current Cash Balance is the Highest in
Company History.
22nd Century Group, Inc. (NYSE American:XXII), a plant
biotechnology company that is focused on tobacco harm reduction and
hemp/cannabis research, announced today the Company’s third quarter
2017 financial results and will provide a business update for
investors on a conference call to be held on Friday, November 10th,
at 3:00 PM (Eastern Time).
Henry Sicignano, III, President and Chief Executive Officer of
22nd Century Group, together with John T. Brodfuehrer, Chief
Financial Officer, will conduct the call. Interested parties are
invited to participate in the call by dialing: (800) 263-8506 and
using Conference ID 5632189. The conference call will consist of an
overview of recent business highlights and a summary of the
financial information presented in the Company's third quarter 2017
Form 10-Q. Immediately thereafter, there will be a question and
answer segment open to all callers.
Although 22nd Century has not yet received revenues from
licensing or from broad commercial sales of the Company’s
proprietary Very Low Nicotine tobacco, third quarter results show
that 22nd Century is continuing to experience the benefits of newly
signed manufacturing agreements. Revenues for the third quarter
increased to approximately $4.5 Million – a 46.3% increase over the
revenues for the third quarter of 2016 and the highest quarterly
revenue in the Company’s history. 22nd Century continues to project
that year-end revenue will exceed $16 Million – a new record for
the Company. In addition to climbing revenues, 22nd Century
currently has approximately $65 million in cash, the highest amount
of cash on hand in the history of the Company. 22nd Century’s cash
reserves are sufficient to meet all regular operating expenses for
at least the next 5 years.
On July 28, 2017, the FDA announced its plans to mandate the
lowering of nicotine levels in all combustible cigarettes sold in
the United States to minimally or non-addictive levels. The FDA
announcement stated that “lowering nicotine levels could decrease
the likelihood that future generations become addicted to
cigarettes and allow more currently addicted smokers to quit
smoking.” The Washington Post called the FDA’s nicotine mandate,
“…the most important public-health initiative of the century.” On
July 31, 2017, we announced that we are already capable of
achieving the FDA’s new reduced nicotine standard. Our proprietary
Very Low Nicotine tobacco, with up to 95% less nicotine than
tobacco contained in conventional cigarettes, is grown on
independently-owned farms in the United States – without any
artificial extraction or chemical processes. 22nd Century’s
proprietary Very Low Nicotine cigarettes have demonstrated that the
FDA’s planned mandate for cigarettes with non-addictive levels of
nicotine is both achievable and realistic. The Company believes
that the implementation of an FDA mandate that lowers nicotine
levels in all combustible cigarettes sold in the United States will
save millions of lives and billions of dollars in healthcare costs
per year. Matthew Myers, the president of anti-smoking group
Campaign for Tobacco-Free Kids, asserted in an August 9, 2017
Bloomberg News article that the new FDA plan could lead to “the
most fundamental change the tobacco industry has ever seen.”
On August 23, 2017, we also announced that, over the last 6
years, agencies of the U.S. federal government have invested more
than $100 million in independent clinical research with our
proprietary SPECTRUM cigarettes, with the results of these
independent studies supporting the conclusion that lowering
nicotine levels in combustible tobacco cigarettes would drastically
improve public health. There are at least 17 completed independent
clinical trials using our proprietary Very Low Nicotine tobacco and
at least 25 on-going clinical trials using our proprietary Very Low
Nicotine cigarettes. We have also previously publicly announced
that we stand ready to partner with the FDA and with any companies
that are committed to improving the health of American smokers.
On September 25, 2017, we announced that the 2013 Research
License and Commercial Option Agreement between 22nd Century and
British American Tobacco had ended. With the end of that agreement,
22nd Century regained sole control of our extensive intellectual
property portfolio. As a result, we have since recommenced
discussions with global tobacco companies and international
pharmaceutical companies that have expressed interest in developing
a business relationship with 22nd Century.
On October 5, 2017, Dr. Dorothy Hatsukami publicly revealed at
The Vermont Center on Behavior and Health’s Tobacco Regulatory
Science Conference the findings of a highly anticipated Phase III
clinical study conducted with 1,250-patients over a 20-week study
period that investigated which application of Very Low Nicotine
cigarettes is best: (i) an immediate reduction in nicotine to
non-addictive levels or (ii) a gradual reduction in nicotine to
non-addictive levels. Though the Phase III study is still under
peer review prior to publication, Dr. Hatsukami indicated at the
Vermont conference that an immediate reduction in nicotine poses a
“greater likelihood of more rapid smoking cessation.” 22nd Century
provided all the research cigarettes used in this landmark Phase
III study.
On October 10, 2017, we closed a registered direct common stock
offering with institutional investors to receive approximately $54
million in gross proceeds through the sale of shares of our common
stock – without any warrants. This was the largest capital raise –
at the highest offering price per share – in the history of 22nd
Century. The net proceeds of the financing will be used for general
corporate purposes, including working capital as we enter licensing
and strategic partnership discussions with major companies around
the world.
On October 19, 2017, we announced that we had successfully
completed our hemp field trials with the University of Virginia
(“UVA”) in which we used multiple oil and fiber varieties of hemp
and UVA identified proprietary varieties of our unique hemp plants
that have excellent agronomic properties for growth in the
Commonwealth of Virginia. 22nd Century and UVA are currently
working on expanded plantings of the most promising varieties of
our proprietary hemp plants to optimize plant growth in the legacy
tobacco region of the United States. 22nd Century is also working
with UVA on the development of high-value medicinal cannabinoid
varieties and specialized cannabinoid extraction processes for use
in human therapeutics, as well as the use of our unique hemp plants
for phytoremediation to clean up and reclaim polluted soils in
Virginia. We also announced that we are expanding our hemp
activities in our home State of New York after the announcement by
New York Governor Andrew Cuomo that New York State intends to
become a leading grower and producer of hemp and hemp-derived
products. To take advantage of the favorable hemp climate in New
York, 22nd Century has obtained a New York hemp research and grower
license and looks forward to expanding its Buffalo, NY-based
laboratory to include important new hemp research.
On November 2, 2017, we announced that the Company appointed
James E. Swauger, Ph.D., as our Senior Vice President of Science
and Regulatory Affairs. Dr. Swauger was previously the leader of
the scientific and regulatory functions at Reynolds American Inc.
Dr. Swauger’s primary responsibility at 22nd Century will be to
lead and oversee the scientific and regulatory activities of the
Company, including the re-submission to the FDA of our Modified
Risk Tobacco Product (“MRTP”) application for BRAND A Very Low
Nicotine Content cigarettes. Dr. Swauger will also work with 22nd
Century in support of the FDA’s plan to mandate the reduction of
nicotine levels in cigarettes to minimally or non-addictive
levels.
Third Quarter 2017 Financial Summary
As mentioned above, net sales revenue for the third quarter of
2017 was $4,530,865, an increase of $1,433,217, or 46.3%, over net
sales revenue of $3,097,648 for the three months ended September
30, 2016. Net sales revenue for the nine months ended September 30,
2017 was $10,659,588, an increase of $1,715,226, or 19.2%, over net
sales revenue of $8,944,362 for the nine months ended September 30,
2016. The increase in net sales revenue for the third quarter of
2017 was primarily the result of a new filtered cigar manufacturing
agreement that commenced in mid-May of 2017.
For the three months ended September 30, 2017, the Company
reported an operating loss of $3,274,081 as compared to an
operating loss of $2,595,812 for the three months ended September
30, 2016, an increase in the operating loss of $678,269, or 26.1%.
The increase in the operating loss was primarily due to an increase
in operating expenses of approximately $522,000 and an increase in
the gross loss on product sales in the amount of approximately
$156,000. For the nine months ended September 30, 2017, the Company
reported an operating loss of $9,526,555 as compared to an
operating loss of $8,655,046 for the nine months ended September
30, 2016, an increase of $871,509, or 10.1%. This increase was
primarily the result of an increase in the gross loss on product
sales of approximately $577,000 and an increase in operating
expenses of approximately $294,000.
The Company’s net loss for the three months ended September 30,
2017 was $3,316,634, or ($0.03) per share, as compared to a net
loss of $2,679,988, or ($0.03) per share, for the three months
ended September 30, 2016. The increase in the net loss of $636,646,
or 23.8%, was due primarily to an increase in the operating loss of
approximately $678,000, partially offset by a decrease in net other
income of approximately $42,000. The net loss for the three months
ended September 30, 2017 included non-cash expenses consisting of
equity based compensation totaling approximately $259,000 and
depreciation and amortization in the approximate amount of
$235,000.
The Company’s net loss for the nine months ended September 30,
2017 was $9,293,535, or ($0.10) per share, as compared to a net
loss of $8,834,794, or ($0.11) per share, for the nine months ended
September 30, 2016. The decrease in the net loss of $458,741 or
5.2%, was primarily the result of an increase in the operating loss
of approximately $872,000, offset by an increase in net other
income of approximately $413,000. The net loss for the nine months
ended September 30, 2017 included non-cash expenses consisting of
equity based compensation totaling approximately $582,000 and
depreciation and amortization in the approximate amount of
$695,000.
Adjusted EBITDA (as described in the paragraph and table below)
was a negative $2,780,021, or ($0.03) per share for the three
months ended September 30, 2017, as compared to a negative
$2,179,791, or ($0.03) per share for the three months ended
September 30, 2016. Adjusted EBITDA for the nine months ended
September 30, 2017 was a negative $8,249,029, or (0.09) per share,
as compared to a negative $7,323,390, or ($0.10) per share, for the
nine months ended September 30, 2016.
Below is a table containing information relating to the
Company’s Adjusted EBITDA for the three and nine months ended
September 30, 2017 and 2016, including a reconciliation of net loss
to Adjusted EBITDA for such periods.
Three Months Ended September 30, 2017
2016 % Change Net loss $
(3,316,634 ) $ (2,679,988 ) 24 % Adjustments: Warrant liability
loss - net 55,886 46,995 19 % Depreciation and amortization 234,645
211,161 11 % Loss on investment - 29,997 -100 % Interest expense
6,984 9,315 -25 % Interest income (20,317 ) (2,131 ) 853 % Equity
based compensation - Officers, directors and employees
259,415 204,860 27 %
Adjusted EBITDA
$ (2,780,021 ) $ (2,179,791
) 28 %
Nine Months Ended September 30, 2017
2016 % Change Net loss $ (9,293,535 ) $ (8,834,794 )
5 % Adjustments: Warrant liability loss (gain) - net 138,813
(14,602 ) -1051 % Depreciation and amortization 695,128 623,707 11
% (Gain) loss on investment (346,180 ) 172,068 -301 % Interest
expense 22,544 29,011 -22 % Interest income (48,197 ) (6,729 ) 616
% Equity based compensation - Third-party service providers -
30,873 -100 % Officers, directors and employees 582,398
677,076 -14 %
Adjusted EBITDA $
(8,249,029 ) $ (7,323,390 )
13 %
Adjusted EBITDA is a financial measure not prepared in
accordance with generally accepted accounting principles (“GAAP”).
In order to calculate Adjusted EBITDA, the Company adjusts the net
loss for certain non-cash and non-operating income and expense
items listed in the table above in order to measure the Company’s
operating performance. The Company believes that Adjusted EBITDA is
an important measure that supplements discussions and analysis of
its operations and enhances an understanding of its operating
performance. While management considers Adjusted EBITDA to be
important, it should be considered in addition to, but not as a
substitute for or superior to, other measures of financial
performance prepared in accordance with GAAP, such as operating
(loss) income, net loss and cash flows from operations. Adjusted
EBITDA is susceptible to varying calculations and the Company’s
measurement of Adjusted EBITDA may not be comparable to those of
other companies.
About 22nd Century Group, Inc.
22nd Century is a plant biotechnology company focused on
technology which allows it to increase or decrease the level of
nicotine in tobacco plants and the level of cannabinoids in
cannabis/hemp plants through genetic engineering and plant
breeding. The Company’s primary mission in tobacco is to reduce the
harm caused by smoking. The Company’s primary mission in cannabis
is to develop proprietary cannabis/hemp strains for important new
medicines and agricultural crops. Visit www.xxiicentury.com and
www.botanicalgenetics.com for more information.
Cautionary Note Regarding Forward-Looking Statements: This press
release contains forward-looking information, including all
statements that are not statements of historical fact regarding the
intent, belief or current expectations of 22nd Century Group, Inc.,
its directors or its officers with respect to the contents of this
press release, including but not limited to our future revenue
expectations. The words “may,” “would,” “will,” “expect,”
“estimate,” “anticipate,” “believe,” “intend” and similar
expressions and variations thereof are intended to identify
forward-looking statements. We cannot guarantee future results,
levels of activity or performance. You should not place undue
reliance on these forward-looking statements, which speak only as
of the date that they were made. These cautionary statements should
be considered with any written or oral forward-looking statements
that we may issue in the future. Except as required by applicable
law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform
these statements to reflect actual results, later events or
circumstances, or to reflect the occurrence of unanticipated
events. You should carefully review and consider the various
disclosures made by us in our annual report on Form 10-K for the
fiscal year ended December 31, 2016, filed on March 8, 2017,
including the section entitled “Risk Factors,” and our other
reports filed with the U.S. Securities and Exchange Commission
which attempt to advise interested parties of the risks and factors
that may affect our business, financial condition, results of
operation and cash flows. If one or more of these risks or
uncertainties materialize, or if the underlying assumptions prove
incorrect, our actual results may vary materially from those
expected or projected.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171109006494/en/
22nd Century GroupJames Vail, 716-270-1523Director of
Communicationsjvail@xxiicentury.com
22nd Century (AMEX:XXII)
Historical Stock Chart
From Mar 2024 to Apr 2024
22nd Century (AMEX:XXII)
Historical Stock Chart
From Apr 2023 to Apr 2024