22nd Century Group, Inc. (XXII) stock prices were down 1.74% as of the market closing on June 15th, 2021, bringing the price per share down to USD$4.52 at the end of the trading day. Subsequent pre-market fluctuations have seen the stock rally by a marginal 1.11%, bringing it up to USD$4.57.
The company is allocating efforts towards the securing of Modified Risk Tobacco Product (MRTP) authorization for the company’s proprietary VLN. XXII is confident that its MRTP application submitted to the U.S Food and Drug Administration is in its final stages of review, with no currently outstanding requests for further information or filing.As such the company is poised to capitalize on the commercial launch of its VLN King and VLN Menthol King products, which it will do so within 90 days of securing the MRTP designation. This includes the use of marketing campaigns to raise brand awareness.
Impending Changes in Nicotine Regulation
XXII also believes that the FDA is considering implementing a product standard that would require all cigarettes to be minimally or non-addictive. Of course, this sets VLN up to capitalize on the increased market space, given that it already meets that requirement. The company is confident that the paradigm shift in conjunction with the enactment of a nicotine cap will result in favorable market conditions. XXII has reported being ready and willing to license its reduced nicotine tobacco technology to all the cigarette manufacturers hoping to regain compliance with the newly imposed mandate.
Promising Financial Reports
Net sales revenue reported for the first quarter of the fiscal year 2021 came in at USD$6.8 million, as compared to the USD$7.1 million reported in the same time period of the prior fiscal year. Gross profits were up to USD$647,000 in Q1 2021, representing a USD$360,000 year-over-year increase. Accordingly, gross profit margins improved by 540 basis points. This represents the fifth consecutive quarter that has seen year-over-year improvements, signaling XXII’s ability to successfully execute its ongoing business plans.
Stellar Liquidity Position
XXII reported a strong liquidity position, with USD$30.9 million in cash, cash equivalents, and short-term investment securities as of the end of the first quarter of 2021. This is a massive improvement on the USD$22.3 million reported as of March 31st, 2020. This difference is primarily attributable to the USD$11.8 million generated from the completion of the cash exercise of warrants during February and March of 2021. The company currently has no further warrants outstanding.
Future Outlook for XXII
Armed with a solid liquidity position and stellar financial reports, XXII is poised to capitalize on the increasingly likely changes in tobacco regulation. Current and potential investors are hopeful that management will continue to leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.