Tag: 22nd Century

  • VLN Relaunch in Korea

    VLN Relaunch in Korea

    Image: Tobacco Reporter archive

    22nd Century Group announced a new agreement for full-scale commercial rollout of its VLN reduced-nicotine content cigarettes in South Korea. The new agreement with 22nd Century’s local partner, Nico-Tech Korea Inc., follows an initial test launch conducted in 2022 that identified product updates needed to align with local South Korean cigarette characteristics and appeal to the specific preferences of adult smokers in Korea.

    “South Korea is a unique market characterized by high smoking rates and a corresponding high commitment from its government to reduce the harms of smoking,” said Larry Firestone, chairman and CEO, in a statement. “Based on the pilot launch in 2022, we made key product modifications to better align with specific characteristics of combusted cigarettes preferred by South Korea’s adult smokers. We have made those changes and are now ready to fully enter the market with VLN export shipments to South Korea anticipated to begin later this year.

    “This relaunch with our original partner, Nico-Tech, demonstrates their commitment to smoking harm reduction and making VLN products a key part of the South Korean market through the diverse array of local retail channels they serve. We are working with Nico-Tech to plan a full launch event for the fall of 2024, including on-site support.”

    South Korea represents an estimated $1.6 billion tobacco market and was the first international market to commence sales of VLN reduced-nicotine content cigarettes. While tobacco product use has declined since signing into law the 1995 National Health Promotion Act and subsequent government actions, the prevalence of smoking remains high in certain segments of the South Korean population. It is estimated that one in three adult men in South Korea are smokers, and an estimated 6 percent of adult women smoke.

    Nico-Tech will be responsible for all local marketing activities to generate consumer demand and awareness in South Korea. The new agreement includes minimum order quantities to support the initial stocking and restocking needs of the planned South Korean distribution.

  • 22nd Ups Performance on Lower Cost

    22nd Ups Performance on Lower Cost

    Photo: 22nd Century Group

    22nd Century Group reported an operating loss of $4.4 million for the first quarter of 2024 compared with $10.4 million in the comparable period of the previous year. Net loss from continuing operations for the first quarter of 2024 decreased to $5.5 million compared with $10.8 million in the prior-year comparative period.

    Adjusted earnings before interest, taxes, depreciation and amortization declined to a loss of $3.5 million from a loss of $9 million in the prior-year comparative period.

    Net revenue from continuing operations was $6.5 million, as the company further refined its revenue mix away from negative margin filtered cigars in favor of higher margin VLN and conventional cigarettes.

    “The first quarter and subsequent events in Q2 2024 demonstrate that we are rapidly transforming 22nd Century’s operating results as we shift our revenue mix and implement a lean operating cost mantra across the company, and strengthening the balance sheet,” said 22nd Century Group chairman and CEO Larry Firestone in a statement.

    “Operating costs declined dramatically, to just $3.3 million, well below our target of $4 million. We also recently announced two significant new customer contracts to drive additional revenue and improve our margin profile, including a 20 percent increase in our CMO production unit volumes. Those contracts commenced in April 2024 with revenue ramping in the second quarter.”

  • 22nd Adjourns Meeting for Shares Proposal

    22nd Adjourns Meeting for Shares Proposal

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    22nd Century Group conducted its Jan. 24, 2024, special meeting of stockholders and adjourned the meeting solely with respect to Proposal 2 set forth in its Definitive Proxy Statement previously filed with the Securities and Exchange Commission. Proposal 2 is a proposal to increase the number of authorized number of shares of common stock. All other proposals were passed at the special meeting with strong support from stockholders.

    “We sincerely appreciate the support of our stockholders on these important items as we work to swiftly effect a turnaround of the business,” said Larry Firestone, chairman and CEO of 22nd Century, in a statement. “In the seven weeks since I joined the company, we have fully focused the business on our tobacco operations, implemented aggressive operating cost reductions and extended our balance sheet runway. We are also actively working to improve our tobacco business margins and increase the returns from those assets as we work to make this company self-sufficient, including efforts to increase the channels and channel support for VLN sales.

    “While I am pleased with the progress on these and other initiatives we have underway, Proposal 2 is still critically important to ensuring that the company can address any strategic needs as we bridge to self-sustaining operations as quickly as possible. We hope that the adjournment will enable additional shareholders to vote for this proposal, or those who may have voted against to reverse their vote and support our efforts to complete the turnaround process.”

    The company has adjourned the special meeting solely with respect to Proposal 2 to provide its stockholders additional time to vote on Proposal 2. The special meeting will resume with respect to Proposal 2 at 11:00 a.m. Eastern Time on Feb. 15, 2024. The reconvened meeting will be held at 11988 El Camino Real, Suite 400, San Diego, California, 92130. The record date for determining stockholders eligible to vote at the special meeting will remain the same. To date, more than 48 percent of all shares outstanding as of the record date have voted in favor of the proposal.

    Stockholders as of close of business on Dec. 6, 2023, the record date for the special meeting, who have not yet voted are encouraged to vote over the internet at http://www.proxyvote.com/.

  • 22nd Century to Host Fireside Chat Event

    22nd Century to Host Fireside Chat Event

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    22nd Century Group will host a fireside chat event on Wednesday, Jan. 17, 2024, beginning at 1:00 p.m. Eastern Time. The event will be hosted by a covering research analyst and feature interactive Q&A with Larry Firestone, who was appointed chairman and CEO in December 2023.

    Firestone will address the new corporate strategy to create a lean operating cost structure focused on the company’s tobacco manufacturing and tobacco harm reduction products, return the company to growth and strengthen the balance sheet to ultimately self-fund the company’s development plans.

    “We have made significant progress at 22nd Century in a very short time, demonstrating our shared commitment to streamline the business, reduce costs and position the company on sustainable growth strategies that can lead to positive cash flows,” said Firestone in a statement. “We are by no means finished with our efforts and expect to further reduce costs, pay off our debt and diversify our continuing operations as the year progresses. This will enable the company to fully focus on the best path to achieving commercial success, particularly with our FDA [U.S. Food and Drug Administration]-authorized VLN harm reduction products.”

    A webcast link to join the live webcast or a replay of the event will be available on the investor relations section of the 22nd Century Group website at https://ir.xxiicentury.com under “Events and Presentations.”

  • 22nd Evaluates Alternatives for Tobacco Assets

    22nd Evaluates Alternatives for Tobacco Assets

    Photo: 22nd Century

    22nd Century Group has initiated a process to evaluate strategic alternatives with respect to the company’s tobacco assets. The process will include consideration of a range of strategic, operational and financial transactions and alternatives, such as business combinations, asset sales, licensing agreements, alternate financing strategies and other options.

    “We believe the current market capitalization of the company does not appropriately reflect the value of our assets or their long-term potential. After extensive discussion, our board has determined that the best way to maximize value for shareholders is to comprehensively evaluate the company’s strategic alternatives,” said Nora Sullivan, chair of the board of 22nd Century, in a statement.

    “Through the strategic alternatives process, we hope to identify ways to monetize the value or more effectively expand the market reach of our tobacco portfolio, including our innovative VLN tobacco harm reduction products, the first and only combustible tobacco product to receive a modified-risk tobacco product designation from the U.S. Food and Drug Administration.”

    The company has engaged TD Cowen as advisors in its review of strategic alternatives. There is no assurance that the strategic alternatives process will result in the approval or completion of any specific transaction or outcome.

    The company has not established a timeline for completion of the review process and does not intend to disclose developments unless and until its board of directors approves a specific transaction, concludes the review or determines that further disclosure is appropriate or is required.

  • 22nd Century Signs New Distribution Agreement

    22nd Century Signs New Distribution Agreement

    Image: Tobacco Reporter archive

    22nd Century Group has entered into a new distribution agreement with Hub, a key Midwest-based convenience store and multi-channel distributor with warehouses located in Missouri and Kansas.

    22nd Century’s VLN products are now available for purchase by eligible Hub customers as a part of 22nd Century Group’s state and regional rollout program.

    “Hub is a critical conduit to a growing list of regional, independent and tribal retail outlets in the Midwest and a highly regarded wholesale tobacco products distributor with more than 60 years in its served markets,” stated John Miller, president of tobacco products for 22nd Century Group, in a statement.

    “By adding distribution to Hub’s extensive customer list, 22nd Century can expand retail points of sale in both existing and new served markets for its innovative VLN reduced-nicotine content cigarettes, the first and only combustible cigarette to secure a modified-risk tobacco product authorization from the U.S. Food and Drug Administration. Our VLN brand contains 95 percent less nicotine than contained in U.S. conventional cigarettes. As demonstrated by leading independent scientists, reducing the nicotine level in cigarettes has the potential to substantially reduce the enormous burden of smoking-related death and disease.”

    Hub runs warehouse operations in St. Louis, Missouri; Kansas City, Missouri; and Galena, Kansas, serving as a multi-channel industry-leading cigarette, tobacco and comprehensive distributor of tobacco-related products. Hub is a leading distributor of cigarettes in the Midwest, providing a comprehensive catalog of tobacco and tobacco-related products to more than 2,500 customer locations in Illinois, Kentucky, Iowa, Missouri, Kansas, Oklahoma and Arkansas. Hub customers include regional, independent and tribal accounts across its served market that sell tobacco products.

  • 22nd Announces Reverse Stock Split

    22nd Announces Reverse Stock Split

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    22nd Century Group will conduct a reverse stock split of its outstanding shares of common stock, par value $0.00001 per share, at a ratio of 1-for-15 effective as of 12:00 a.m. Eastern Time on July 5, 2023. The reverse stock split is intended for the company to regain compliance with the minimum bid price requirement of $1 per share of common stock for continued listing on Nasdaq.

    “As a transformative plant science company, being listed on the Nasdaq Stock Market places 22nd Century among the top innovation-driven companies of the world. The board decided to take action now to resolve our compliance with the Nasdaq listing standards, providing investors with greater assurance around this important asset even as we continue to advance our mission focused on plant biotechnology and health improvement,” said Nora Sullivan, chair of the board, in a statement.

    “As [we] move into the second half of 2023, we are advancing the rollout of our VLN products in the three largest state markets as we further expand our commercial footprint,” said James A. Mish, CEO. “We also expect to benefit from our new extraction capabilities and the return of distillate production in our hemp cannabis business, plus expansion in our new multi-year vertically integrated license and distribution agreements with two major consumer brands. Combined, we are tracking to our full-year outlook of a record $105 [million] to $110 million in sales.”

    22nd Century common stock will begin trading on a reverse stock split-adjusted basis at the opening of the Nasdaq Capital Market on Wednesday, July 5, 2023. Following the reverse stock split, the common stock will continue to trade on Nasdaq under the symbol “XXII” with the new CUSIP number, 90137F202.

    In connection with the reverse split, the company will reduce its authorized number of shares of common stock at that same ratio as the reverse split, resulting in 33,333,334 authorized shares of common stock (from 500,000,000 authorized shares). No fractional shares will be issued in connection with the reverse stock split and all such fractional interests will be rounded up to the nearest whole number of shares of common stock. In addition, the reverse stock split will apply to the common stock issuable upon the exercise of the company’s other outstanding securities, with proportionate adjustments to be made to the exercise prices and number of derivates securities, and under the company’s equity incentive plans.

    The reverse stock split will consolidate the number of issued and outstanding shares of the company’s common stock to approximately 15.9 million.

  • 22nd Century Signs Deal with Old Pal

    22nd Century Signs Deal with Old Pal

    Image: Tobacco Reporter archive

    22nd Century announced its second exclusive license, manufacturing and distribution agreement in the hemp/cannabis industry, signed with Old Pal, a consumer company started in California and now operating in eight U.S. states.

    “Old Pal is the second leading consumer hemp/cannabis brand to adopt 22nd Century’s innovative strategic license, manufacturing and distribution agreement. This model enables brands to focus on product development, customer engagement and marketing while we provide expansive access to mass market channels urgently seeking new, high-margin, high-velocity products to meet growing consumer demand,” said James A. Mish, CEO of 22nd Century.

    Initially launched in California in 2018, Old Pal gained recognition for its nostalgic branding. In addition, Old Pal’s continuously growing line of apparel, accessories and home goods has firmly established it as a prominent cultural figure in the world of cannabis, according to 22nd Century.

    The exclusive license with 22nd Century covers Old Pal branded non-delta-9 THC, hemp-derived cannabinoid consumer products and accessories. Similar to 22nd Century’s first single-source integrated production, sales and distribution agreement in hemp/cannabis, signed with Cookies, the Old Pal agreement will leverage 22nd Century’s formulation, ingredient and manufacturing infrastructure plus the company’s turn-key sales and distribution platform for alternative consumer products in a complete go-to-market solution.

    Combined, the company estimates that its agreements with Cookies and Old Pal represent more than $140 million in revenue opportunity with attractive margins over the terms of the contracts. 22nd Century is now advancing its initial mass market retail efforts for these products across the United States, leveraging a network of more than 200 wholesale distributors. The company continues to pursue additional exclusive license opportunities with industry brands interested in its innovative integrated solution.