22nd Century Reports Financial Results
22nd Century Group reported a gross profit of $1.4 million in 2020—an increase of 9,413 percent over the previous year. Gross profit for the fourth quarter improved by 161.8 percent to $588,000 compared to the prior-year period. The improvement in gross margin was primarily the result of higher volume, price increases and lower labor and overhead costs driven by factory efficiencies implemented in 2020.
For the fourth quarter of 2020, operating loss was unfavorable by $696,000 compared to the prior year period. This was primarily driven by an increase in selling, general and administrative expense and was partially offset by higher gross profit and lower research and development spend related to the company’s modified-risk tobacco product (MRTP) application in 2019.
For full-year 2020, operating loss improved by $4.4 million to $19.2 million compared to the prior year, driven by the combination of higher gross profit and lower total operating expenses. The decrease in operating expenses was primarily driven by a decrease in research and development expenses related to the MRTP application in 2019, a reduction in personnel expense and an intellectual property portfolio rationalization that resulted in higher impairment in the prior year.
The company reported net sales revenue of $7.3 million in the fourth quarter of 2020, up 0.6 from the comparable 2019 quarter. For full-year 2020, net sales revenue increased 8.8 percent to $28.1 million compared to the prior year. The increase for both periods was primarily driven by higher volume and increased pricing in the company’s contract manufacturing business.
“As we look to 2021, we see tremendous commercial opportunity for our tobacco and hemp/cannabis franchises,” said James A. Mish, CEO of 22nd Century Group, in a statement. “Our focus remains on our primary mission: to reduce the harm caused by smoking. Once we secure MRTP designation, we will capitalize on our VLN brand and begin to build our tobacco franchise through licensing and partnership opportunities in the U.S. and internationally.
“We have made significant progress in our hemp/cannabis research and look forward to monetizing a portion of our hemp/cannabis IP this year. With the majority of our hemp/cannabis operational partnerships now in place, we believe we will be able to commercialize our new disruptive, commercially valuable hemp/cannabis plants in development in two years.”