22nd Century Group, Inc. (Nasdaq: XXII), a leading plant
biotechnology and intellectual property company focused on
improving health and wellness through plant science, today
announced entry into the global specialty hops market, its third
and newest plant franchise. The Company released an update letter
to shareholders from CEO James A. Mish describing its opportunities
and plans in this market. The Company also posted an overview deck
describing its entry into the hops market in the Investor Relations
section of the corporate website at www.xxiicentury.com/investors.
Dear Fellow Shareholders,
Following the exciting progress in our tobacco and hemp/cannabis
franchises detailed on our second quarter results conference call
earlier this month, 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.
Specialty Hops Market
The key hops market participants are located in Europe and many
of our commercial partnerships will be in that continent. To
reinforce our presence there, we are establishing a new
subsidiary in the Netherlands, 22nd Century Group Europe
B.V., to open new revenue opportunities in hops, as well as serve
our tobacco and hemp/cannabis plant franchises through an expanded
global footprint. The proceeds of our recent common equity
financing are being used to accelerate advancements in this new
market and each of our plant franchises.
Ninety-five percent of global hop flowers are used in the
brewery industry, with the remainder of the market being a small
but rapidly growing segment for active ingredients used in the
flavor and fragrance, dietary supplement, and pharmaceutical
markets. The rising demand for microbrew and craft beers is driving
a large segment of the specialty hops market where distinctive
flavors, aromas and nutritional uses are particularly important in
creating unique and differentiated products. Additional growth
drivers in mainstream specialty hops include demand for yield
optimization to reduce input costs for brewers, increase of active
ingredients for dietary supplements/pharmaceutical companies, and
the need for improvement in disease and pest resistance. Demand for
organically grown hop plants is increasing, accelerated by new
European regulations limiting the use of traditional pesticides and
insecticides, which makes new disease and pest resistance traits,
as well as other valuable agronomic traits, critically important to
the future of the hop plant industry. Importantly, the global hop
plant market is not as highly regulated as tobacco or
hemp/cannabis, thereby providing a faster path to commercialization
than those two plant franchises.
Hop and hemp/cannabis plants have many similarities. Both are
part of the Cannabaceae family of alkaloid flowering plants. They
share many similarities, including gene families, cultivation
methods, dioecious traits that distinguish male and female plants,
flowering organs that create similar alkaloids, and an emphasis on
terpenes that produce distinctive tastes and flavors. In addition
to their widely-known uses in consumer products, 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.
Our Value Proposition in Hops Market
Our value addresses both scientific methodology and
speed to market. We will leverage our existing know-how
with the tobacco and hemp/cannabis plants along with the
proprietary tools and technologies possessed by our upstream
partnerships with CannaMetrix and KeyGene to bring hop breeding
into the 21st century. Our relationships with the world’s leading
alkaloid plant producer-breeders, including Extractas Bioscience,
Sawatch Agriculture, and Folium Botanical, will facilitate
year-round growing capabilities at locations in both the southern
and northern hemispheres.
Our R&D program objectives include creating new proprietary
hop plants and valuable IP using our know-how and technologies,
utilizing double haploids, gene-editing, molecular breeding, and
other non-GMO technology. Non-GMO products are critical for success
in international markets where such products are preferred or GMO
products are banned.
We are well-positioned and advancing disruptive hop plant
varieties and valuable IP in a fraction of the time it takes using
traditional plant breeding methods still used by virtually all hop
breeding companies today. This traditional process typically takes
more than a decade to create a new hop plant variety, entailing
high cost and risk due to this extended time and uncertain outcome
– whereas our approach can reduce this development time to two
years for the underlying plant technology and IP, similar to our
hemp/cannabis program.
We are advancing commercial partnerships rather than competing
with global hops producers, beer developers and marketers, flavor
and fragrance suppliers, and nutritional/pharmaceutical companies
in the hop plant space. The market participants are very well
recognized brands, with Germany and the United States being the
dominant global hops producers. The largest suppliers of hop plants
include several large international growers in this market space
that is uncrowded, namely Hopsteiner, Barth-Haas Group, Yakima
Chief, Kalsec, and HVG. The largest manufacturers and marketers of
beer are Anheuser-Busch InBev, Carlsberg, Molson Coors, and
Tsingtao.
Progress To Date in Hops Market
We are approximately six months into our initial hops two-year
development cycle and expect monetization of hop plant varieties
and IP with upfront license fees beginning in 12 to 18 months.
We are advancing programs with established global hops
producers, beer developers and marketers, flavor and fragrance
suppliers, and nutritional/pharmaceutical companies in the hop
plant space, and accelerating the development of disruptive hop
plants and IP on applications delivered to consumers in traditional
product formulations as well as in revolutionary new ingredients
for functional foods and beverages such as “smart beer.”
In summary, we will not make your beer, we will make it better.
The high interest among hops growers and their customers for new
proprietary varieties with enhanced alkaloid profiles and specific
agronomic traits, yield optimization, and disease/pest resistance
is a perfect match to 22nd Century’s expertise in plant science and
modern plant breeding, which will allow us to rapidly develop new,
proprietary hop plants with distinctive flavors, aromas, and other
valuable traits. We believe this significant expansion of our
addressable market with the addition of hops as our third plant
franchise is an exciting opportunity to leverage our capabilities
and partnerships, accelerate the development of new revenue
sources, and expand our global footprint.
Executing Across All Franchises
While we are extremely excited about our entry into the hops
market, we also continue to advance our primary mission in our
tobacco franchise and efforts in our hemp/cannabis franchise, which
lie at the heart of our business. Earlier this month we announced
that we are highly confident our MRTP 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.
The Company continues to refine and prepare its pilot launch
plans for the U.S. and has initiated the launch process for VLN® in
multiple international markets where adult smokers have a strong
affinity for new, reduced risk tobacco products and where we
believe regulations will allow us to bring VLN® to market with
MRTP-type claims with minimal or no interaction with regulators. We
plan to launch VLN® outside the U.S. by the first quarter of next
year.
We also expect to begin to monetize our hemp/cannabis plant
lines and IP by the end of this year, including upfront license
fees for parts of our IP as well as revenue from our current crops
growing at our showcase farm in Colorado. Next generation,
disruptive hemp/cannabis plant lines are being accelerated for our
2022 and 2023 revenue programs.
We were thrilled to uplist to the Nasdaq Capital Market and ring
the closing bell on August 16. Nasdaq aligns 22nd Century with
other innovative and growth-oriented global science and technology
companies. It is truly an exciting time for our company and
shareholders, and based on my conversations with many of you, I am
grateful that you share in our enthusiasm for the important and
valuable work underway.
Sincerely,James A. MishChief Executive Officer, 22nd Century
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.
Learn more at xxiicentury.com, on Twitter @_xxiicentury, and on
LinkedIn.
Cautionary Note Regarding
Forward-Looking StatementsExcept for historical
information, all of the statements, expectations, and assumptions
contained in this press release are forward-looking statements.
Forward-looking statements typically contain terms such as
“anticipate,” “believe,” “consider,” “continue,” “could,”
“estimate,” “expect,” “explore,” “foresee,” “goal,” “guidance,”
“intend,” “likely,” “may,” “plan,” “potential,” “predict,”
“preliminary,” “probable,” “project,” “promising,” “seek,”
“should,” “will,” “would,” and similar expressions. Actual results
might differ materially from those explicit or implicit in
forward-looking statements. Important factors that could cause
actual results to differ materially are set forth in “Risk Factors”
in the Company’s Annual Report on Form 10-K filed on March 11,
2021. All information provided in this release is as of the date
hereof, and the Company assumes no obligation to and does not
intend to update these forward-looking statements, except as
required by law.
Investor Relations & Media
Contact:Mei KuoDirector, Communications & Investor
Relations22nd Century Group, Inc.(716)
300-1221mkuo@xxiicentury.com
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