22nd Century Group – XXII

Disclaimer, first as always. I’m not a professional and don’t expect the investor jargon and lingo after every other word. I try to keep this as simple as possible.

22nd Century Group is hands down my favorite company to date in all the markets in regards to growth potential. I’ll go into detail below but, dare I say, this company has the potential to obtain monopolies, yes monopoly status, in two different billion-dollar industries across the globe with its’ technologies. The first being in the global tobacco & smoking cessation market and the second in industrial hemp. In this post, we’ll focus on the tobacco and nicotine technology potential.

If you’re not familiar with this company, allow me to catch you up on the buzz. Who is 22nd Century Group? In a nutshell, quoted from Yahoo Finance, they are a plant biotech company, providing technology that allows for the level of nicotine and other nicotinic alkaloids in tobacco plants to be decreased or increased through genetic engineering and plant breeding. It develops smoking cessation products and modified risk tobacco products for smokers who are unable or unwilling to quit smoking and who may be interested in cigarettes, which reduce exposure to nicotine or to certain tobacco smoke toxins and/or pose a lower health risk than conventional cigarettes. The results of these efforts has produced products such as Magic 0, very low nicotine (VLN) cigarettes sold in countries overseas, Red Sun, high nicotine cigarettes sold in the states and overseas, Spectrum, VLN research cigarettes sold to the gov’t and accredited research organizations, and the potential global blockbuster product X-22, their smoking cessation product in development. In fact, one of the objectives for 2017 is the pursuit of authorization from the FDA and regulatory agencies in other countries to introduce the X-22 smoking cessation aid in development into commerce as a prescription-based smoking cessation medical product. Basically, smokers will now have the first option to quit smoking by using a cigarette, with reduced levels of nicotine for dependence and it comes with no additional side effects, rather than using products like Chantix or Nicoderm CQ patches. The company has a meeting with the FDA this month of June regarding the path forward for X-22 and the company expects to submit a more robust  Modified Risk Tobacco Product (MRTP) application to the FDA for X-22 sometime in the following months. Also, XXII is also working towards finding a partner to conduct a Phase III smoking cessation clinical trial for X-22. It is anticipated that this will mean receiving a cash infusion of approximately $25 million or more from that partnership agreement for the trial and eventual distribution of X-22, an important catalyst for the stock.

In addition, here are more facts to consider about 22nd Century Group:

  • Yearly revenue growth above 40%, on track for same EOY 2017.
  • Cash on hand anticipated to last through April 2018.
  • Hedge fund Blackrock Inc. discloses new position in latest 13F holding.
  • Recent insider buying from Management, see latest SEC Form 4 filings.
  • Recent addition to Russell 2000 to be confirmed June 23, 2017

I classify 22nd Century Group as a relatively young company starting at when its current CEO Henry Sicignano, III first took the reigns. From what I gather in research, XXII’s previous leaders failed in guiding the company towards a profitable path. Henry has concrete experience from his time at Sante Fe Natural Tobacco Company and the current share price is reacting to the progress of his vision. Going forward, we can continue to expect very interesting and lucrative developments to come from 22nd Century Group and its transparent management. Upcoming catalysts should be the announcement of a partner for X-22 and possible industrial hemp deals, which I will discuss in my next blog. The current price target of $3.50, established by Chardan Capital Markets, will be due for an upgraded review once these catalysts have surpassed. Certainly more details to come.