22nd Century Group – XXII (update)

The FDA Center for Tobacco Products just did WHAT last week?!! If you haven’t heard by now, a low nicotine tobacco/cigarette policy initiative is being enacted by the FDA. The purpose, lowering nicotine in cigarettes to non-addictive levels which is the same purpose of XXII. Here’s a link. I wouldn’t be surprised if the “non-addictive” nicotine levels determined by the FDA are the same levels found in 22nd Century Group low nicotine products, such as Brand A, of less than one milligram.

If you have been following XXII, then you know how exciting this is as the company may have a monopoly on this technological ability and know the recent spike in share price is attributed to the market realizing the potential. Even Bloomberg has published an article highlighting the company. The question now is, can management turn this directive into a significant revenue generating opportunity? Of course, we will need to wait for specific details of how the FDA is to implement this initiative. In my opinion, I see a couple things that could possibly happen. One, tobacco companies will continue to sell both their regular brand and its low nicotine counterpart or two, cigarettes may be replaced altogether for electronic delivery systems. My guess is either of these transitions will happen over a long period of time. In this time, the tobacco arm of 22nd Century will continue its efforts on achieving FDA approval of their X-22 product and moving forward with clinical studies of their Brand B product.

I do not expect to see or hear much from XXII directly following this latest FDA development. Although it would be nice to hear that a partnership has been formed with another entity, for the purpose of financing the Phase 3 trial for X-22, and that just maybe the FDA announcement may have been an indirect driver. I still have some concern that currently the company may not find an agreeable partner for the phase 3 trial and may have to finance the trial with its own cash. If any developments are in the works, it should take at least a few months before a deal may be signed. Even with all that said there is still significant upside for any who may be contemplating an entry or adding more to their current position. I’m holding my price target of $3.50 until word of a possible deal becomes public. Time will tell…

 

A little fyi, regarding the Phase 3 “Strategies for Reducing Nicotine Content in Cigarettes” study, word is it may be a couple months (possibly October) before results are released.

22nd Century Group – XXII (continued)

This is the second continuation blog about 22nd Century Group to talk about their industrial hemp arm of the company. I recommend reading my earlier blog, if you haven’t done so already. Disclaimer plugin, 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. Always do your own research.

As I mentioned earlier, this company’s second globally disruptive breakthrough is its success in producing hemp with 0% tetrahydrocannabinol (THC) via genetic engineering. Oh wait, I forgot to add 0% “guaranteed.” No guessing for the farmers nor the regulatory agencies when using seed produced and certified from XXII. Today’s global hemp producers and especially in the U.S. must grow hemp crop that contains less than 0.3% THC. Any more than that threshold results in the destruction of the entire crop. Because of that requirement, many crop insurers do not yet provide insurance for hemp growers, a possible severe loss for the farmer. For example, recently in Kentucky approximately $20K was ordered to be burned for exceeding the THC limit. Many industrial hemp seed suppliers tout 0.2% THC or less but any farmer and business will find comfort in a 100% guarantee of 0% THC over a less than 100% guess.

If you’ve been under a rock recently, let me be the first to tell you the medical marijuana and hemp industries have been re-emerging into the mainstream here in the US. Growing industrial hemp is still illegal at the federal level but many states have removed legal barriers to permit growing of hemp. Kentucky is the state that produces the most hemp today leading Colorado, Oregon, North and South Carolina, and New York just to name a few. The uses for hemp include a large range of products. In fact, the market for hemp products is projected to increase by as much as 700% by 2020 and includes medical marijuana uses. The revenue potential for 22nd Century group, through its Botanical Genetics subsidiary, could exceed hundreds of millions of dollars if their technology becomes the sole global source for industrial hemp.

In the position detail section, I have readjusted my target price to $3.50 from the previous $1.60 which has already been surpassed. The potential with XXII is extremely enormous in the short term from both the tobacco and hemp technologies! More details to come…