22nd Century Group Reports Higher Gross Profits in 2021

FDA Grants Modified Risk Authorization to 22nd Century Group's VLN

22nd Century Group has released a report highlighting its financial results for the fourth quarter and fall year 2021. This report touched on 22nd Century Group’s VLN King and VLN Menthol King reduced nicotine content cigarettes securing FDA MRTP (Modified Risk Tobacco Product) authorization and other milestones associated with the VLN brand.

22nd Century Group (XXII) is a leading agricultural biotechnology company focused on tobacco harm reduction, reduced nicotine tobacco, and improving health and wellness through modern plant science. In the fourth quarter, 22nd Century Group’s VLN secured the first and only MRTP designation for a combustible cigarette product. VLN ,which stands for Very Low Nicotine), is available in two formats–VLN King and VLN Menthol King, 95 percent reduced nicotine content cigarettes. This was announced back on Dec. 23, 2021 by the FDA. Also, the FDA proactively added “helps you smoke less” evidence-based headline claim to the company’s requested claims.

22nd Century Group also announced that Circle K will be the the VLN pilot launch partner. This partnership means that initially VLN will be sold in more than 150 Chicago retail stores. This will help 22nd Century Group to improve its marketing efforts ahead of VLN’s national launch. VLN will be positioned in the premium pricing segment of the cigarette market with corresponding margins.

Financial wise, in the fourth quarter, 22nd Century Group reported that net sales for the fourth quarter of 2021 were $8 million. This was an increase of 8.9 percent from $7.3 million reported during the prior year. The company attributes the increase to an increase in contract manufacturing sales. Gross profit for the fourth quarter of 2021 was $387 thousand, compared to $588 thousand during the prior year. This change was due to what the company referred to as the “favorable effect of a large customer order that benefitted last year’s fourth quarter.” Also, total operating expenses for the fourth quarter of 2021 increased to $9.4 million compared to just $6.8 million in the prior year. This was driven by an increase in sales, general and administrative expenses and lower research and development expenses.