22nd Century Group (XXII) Signs Large New CMO Customer
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Insights
The announcement of a new contract manufacturing agreement by 22nd Century Group signifies a notable expansion in their production capacity, with a projected increase in carton production volumes by over 20%. This development is particularly relevant for investors as it directly correlates with the company's revenue growth potential. The timing of the contract's commencement is also strategic, aligning with the company's operational targets to improve gross margin and achieve breakeven operations by the first quarter of 2025.
It's important to consider the broader industry context. The tobacco industry is mature with slow growth, so a 20% increase in production volume is a significant deviation from the norm. This could indicate that 22nd Century Group is capturing market share or expanding its customer base. However, investors should be aware of the potential risks such as regulatory changes, which could impact the company's operations and profitability.
From a financial perspective, the disclosure of the new contract's expected impact on revenue and gross margin is a important piece of information for shareholders and potential investors. The company's explicit goal to reach breakeven operations by early 2025 provides a clear financial trajectory. This contract could be a catalyst for improving investor confidence, as it demonstrates tangible progress towards the company's financial goals.
However, the impact on the stock price will depend on the execution of the contract and the company's ability to manage increased production efficiently. Investors should monitor subsequent earnings reports and management discussions for updates on the contract's implementation and its effect on the company's financial health.
The new contract underscores 22nd Century Group's strategic focus on both its contract manufacturing business and its proprietary VLN® products, which are centered around tobacco harm reduction. This dual approach could differentiate the company within the tobacco sector and potentially position it favorably as consumer preferences shift towards less harmful alternatives.
Moreover, the emphasis on nicotine harm reduction aligns with global health trends and regulatory shifts that favor reduced-risk products. The company's ability to innovate in this area may offer long-term competitive advantages, but it will also require continuous investment in research and development, as well as marketing to educate consumers on the benefits of their VLN® products.
New Contract Will Commence in Second Quarter, Ultimately Boost CMO Volumes by More Than
Mocksville, North Carolina--(Newsfile Corp. - April 4, 2024) - 22nd Century Group, Inc. (NASDAQ: XXII), a tobacco products company focused on nicotine harm reduction, today announced that it has signed a significant new contract manufacturing agreement for the production of branded conventional cigarette products. The contract, which will commence revenue generation in the second quarter of 2024, is expected to increase carton production volumes at 22nd Century's manufacturing facility by more than 20 percent when fully implemented.
Said Larry Firestone, Chairman and CEO: "We are excited to announce this new contract, the first result of our efforts to profitably grow our contract manufacturing business in North Carolina while also working to build our VLN® franchise through the development of a new category focused on tobacco harm reduction. In line with the operating targets outlined on our most recent results call, this agreement helps us to scale revenue, improve gross margin and achieve our goal of breakeven operations by the first quarter 2025."
About 22nd Century Group, Inc.
22nd Century Group, Inc. (NASDAQ: XXII) is an agricultural biotechnology company focused on tobacco harm reduction, reduced nicotine tobacco and improving health and wellness through plant science. With dozens of patents allowing it to control nicotine biosynthesis in the tobacco plant, the Company has developed proprietary reduced nicotine content (RNC) tobacco plants and cigarettes, which have become the cornerstone of the FDA's Comprehensive Plan to address the widespread death and disease caused by smoking. The Company received the first and only FDA Modified Risk Tobacco Product (MRTP) authorization for a combustible cigarette in December 2021. 22nd Century uses modern plant breeding technologies, including genetic engineering, gene-editing, and molecular breeding to deliver solutions for the life science and consumer products industries by creating new, proprietary plants with optimized alkaloid and flavonoid profiles as well as improved yields and valuable agronomic traits.
Learn more at xxiicentury.com, on Twitter, on LinkedIn, and on YouTube.
Learn more about VLN® at tryvln.com.
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements, including but not limited to our full year business outlook. Forward-looking statements typically contain terms such as "anticipate," "believe," "consider," "continue," "could," "estimate," "expect," "explore," "foresee," "goal," "guidance," "intend," "likely," "may," "plan," "potential," "predict," "preliminary," "probable," "project," "promising," "seek," "should," "will," "would," and similar expressions. Forward-looking statements include, but are not limited to, statements regarding (i) our strategic alternatives and cost reduction initiatives, (ii) our expectations regarding regulatory enforcement, including our ability to receive an exemption from new regulations, (iii) our financial and operating performance and (iv) our expectations for our business interruption insurance claim. Actual results might differ materially from those explicit or implicit in forward-looking statements. Important factors that could cause actual results to differ materially are set forth in "Risk Factors" in the Company's Annual Report on Form 10-K filed on March 28, 2024. All information provided in this release is as of the date hereof, and the Company assumes no obligation to and does not intend to update these forward-looking statements, except as required by law.
Investor Relations & Media Contact
Matt Kreps
Investor Relations
22nd Century Group
mkreps@xxiicentury.com
214-597-8200
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/204419
FAQ
What type of products will 22nd Century Group, Inc. be producing under the new contract?
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What is the expected increase in carton production volumes at 22nd Century's manufacturing facility?
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