22nd Century Group, Inc. (NASDAQ:XXII) net revenues for the third quarter of 2022 were $19.4 million, an increase of 148.2% from 2021. The increase was due to increased contract manufacturing volumes as well as the addition of GVB Biopharma revenue for the full third quarter.
Q3 2022 Financial Highlights
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Gross profit for the third quarter was $619,000, an increase of 111.9% compared to $292,000 in the prior year third quarter.
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Total operating expenses for the third quarter of 2022 increased to $15.9 million, compared to $7.9 million in the prior year quarter.
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Operating loss for the third quarter of 2022 was $15.3 million, compared to $7.6 million in the prior year period.
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Net loss was $13.1 million, representing a net loss per share of $0.06.
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Adjusted EBITDA was a loss of $11.0 million.
Balance Sheet and Liquidity
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As of September 30, 2022, the company had $43.7 million in cash, cash equivalents, and short-term investment securities.
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The company is selectively deploying capital to accelerate the launch of VLN, expand tobacco manufacturing operations, invest in GVB’s production capacity, and increase inventory levels to meet the growing demand for both hemp/cannabis and tobacco products and for research and development.
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22nd Century’s cash requirements are anticipated to decrease, reflecting higher sales volume of higher margin contract manufacturing operations cigarettes and VLN products through fiscal 2023, and continued organic growth of GVB’s operations, providing adequate liquidity from the current balance sheet to complete its planned strategic initiatives.
James A. Mish, CEO of 22nd Century Group, stated: “The past few months have demonstrated tremendous commercial progress in 22nd Century’s reduced nicotine tobacco and hemp/cannabis businesses. Our VLN product launch has expanded from the exceptional pilot in Chicago to now five states. We plan to expand that base to as many as 18 states over the next twelve months. Doing so would give us access to more than half the $80 billion U.S. tobacco market and position us in most, if not all, of the states that have enacted MRTP excise tax provisions favorable to our unique product authorization. Even just a 1% share, which we view as eminently achievable based on our pilot results, would be transformative to our revenue line. The FDA is also continuing to advance its interests in transformative menthol and reduced nicotine policies, and 22nd Century is positioned at the forefront of this opportunity with the only MRTP authorized 95% reduced nicotine combustible cigarette and years of clinical research documenting the benefits of our products."
Other Highlights
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22nd Century Group acquired GVB Biopharma, a global-scale specialty ingredient supplier and contract development & manufacturing organization, on May 13, 2022. The acquisition expanded 22nd Century’s hemp/cannabis research and development activities to include a revenue-producing business positioned for growth.
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Lucie S. Salhany was appointed to the company’s board of directors in September 2022.
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The company announced that the position of president and chief operating officer was eliminated, effective September 30, 2022. James A. Mish assumed the responsibilities of corporate president, and operations have been integrated into the tobacco and cannabis business teams.
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Photo by Mackenzie Marco on Unsplash
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