What happened
Shares of 22nd Century Group Inc. (XXII 1.21%), a plant biotechnology company focused on tobacco-harm reduction, popped 12.3% higher before settling to a gain of about 6.9% as of 3:22 p.m. EDT during Wednesday's session. The company made some big claims about its possible role in a shifting U.S. market for non-addictive tobacco.
So what
Earlier this year, Food and Drug Administration (FDA) Commissioner Scott Gottlieb made noise about lowering acceptable nicotine levels for tobacco products to levels that would render them non-addictive. 22nd Century Group holds numerous patents for genetically engineered tobacco plants that would suddenly become very popular if the FDA actually followed through with a non-addictive tobacco mandate.
Image source: Getty Images.
In fact, 22nd Century Group claims it's the only company in the world capable of growing tobacco with non-addictive levels of nicotine. The company announced record revenue of $3.9 million in the second quarter this year, mainly due to a new filtered cigar-manufacturing agreement. Despite the top-line boost, the company's operations lost about $3.3 million during the three-month period.
Now what
According to 22nd Century's latest annual report, the company began the year with about $13.5 million in cash. So far this year, the company's operations have lost about $6.0 million, which means the company will probably need to raise more capital from shareholders by the end of the year.
Sure, the FDA could finally issue a long-awaited tobacco-product mandate in the months ahead, but don't hold your breath. This isn't the first time I've heard rumblings about a low-nicotine tobacco mandate, and I doubt it will be the last.
