On November 6, 2023, 22nd Century Group Inc (XXII, Financial), a leading biotechnology company specializing in advanced plant technologies, released its third-quarter financial results for the period ending September 30, 2023. The company reported a net loss of $72.72 million, a significant increase from the $13.1 million loss reported in the same period last year.
Financial Performance
The company's revenues for the third quarter stood at $17.81 million, a slight decrease from the $19.38 million reported in Q3 2022. The cost of goods sold was $19.77 million, resulting in a gross loss of $1.96 million. The operating expenses, including sales, general and administrative expenses, and research and development costs, totaled $69.51 million, leading to an operating loss of $71.48 million.
Expansion and Challenges
Despite the financial loss, the company made significant strides in expanding its VLN® footprint from approximately 1,100 stores in 14 states as of June 30, 2023, to over 4,550 stores spanning 19 states. However, the expansion did not translate into immediate revenue due to the brand's limited recognition and marketing capabilities. The company also initiated sales in its first nationwide drug store chain, diversifying the range of channels through which its products are accessible.
Strategic Alternatives and Debt Reduction
On September 5, 2023, 22nd Century Group Inc (XXII, Financial) announced its intent to explore strategic alternatives to maximize shareholder value. The company enlisted TD Cowen as its advisor and received indications of interest regarding its assets, in addition to tobacco. To supplement these measures, the company reduced its debt by over $8 million in October.
Regulatory Developments
The company is closely monitoring developments regarding the FDA’s proposed menthol ban and rule-making initiatives aimed at reducing nicotine. The FDA has expressed its intent to announce the rule by year end. The company is actively advocating for an exemption for Modified Risk Tobacco Product (MRTP) authorized harm reduction products.
Balance Sheet and Liquidity
As of September 30, 2023, the company had cash and cash equivalents of $2.85 million, short-term investment securities of $18.19 million, and accounts receivable of $6.49 million. The total current assets stood at $40.61 million. The total liabilities were $50.40 million, and the total shareholders' equity was $13.79 million.
Explore the complete 8-K earnings release (here) from 22nd Century Group Inc for further details.