22nd Century Group, Inc. (XXII)
Big Tobacco
Although statistically speaking far fewer Americans are smoking today than ever before, the tobacco industry remains alive and booming.
The U.S. market for tobacco related products reached 124 billion in 2018.
FDA
The U.S. Food and Drug Administration (FDA) has an ongoing initiative to lower nicotine levels in cigarettes.
22nd Century Group has produced such a cigarette.
VLN (Very Low Nicotine), the company's cigarette has 95% less nicotine than most leading cigarette companies.
XXII most recently submitted VLN to the FDA for permission to market and commercialize their cigarette.
If the company receives FDA approval and their cigarette is licensed by a larger tobacco company, the market cap for 22nd can soar from its current levels (323 million) to at minimum, 1 billion. Which is a tiny fraction of the tobacco industry's annual sales.
A billion dollar valuation would place the share price at around $10, representing a gain north of 300% from current levels. Obviously we are not there yet, but 22nd Century Group is positioning themselves.
If Big Tobacco allocates a fraction of what they paid the states in taxes and legal settlements (27.5 billion) in 2018 on VLN as a part of a harm reduction initiative; then things can get really interesting from a valuation stand point.
The question is:
Is there a place for a low nicotine cigarette in the tobacco industry?
Although statistically speaking far fewer Americans are smoking today than ever before, the tobacco industry remains alive and booming.
The U.S. market for tobacco related products reached 124 billion in 2018.
FDA
The U.S. Food and Drug Administration (FDA) has an ongoing initiative to lower nicotine levels in cigarettes.
22nd Century Group has produced such a cigarette.
VLN (Very Low Nicotine), the company's cigarette has 95% less nicotine than most leading cigarette companies.
XXII most recently submitted VLN to the FDA for permission to market and commercialize their cigarette.
If the company receives FDA approval and their cigarette is licensed by a larger tobacco company, the market cap for 22nd can soar from its current levels (323 million) to at minimum, 1 billion. Which is a tiny fraction of the tobacco industry's annual sales.
A billion dollar valuation would place the share price at around $10, representing a gain north of 300% from current levels. Obviously we are not there yet, but 22nd Century Group is positioning themselves.
If Big Tobacco allocates a fraction of what they paid the states in taxes and legal settlements (27.5 billion) in 2018 on VLN as a part of a harm reduction initiative; then things can get really interesting from a valuation stand point.
The question is:
Is there a place for a low nicotine cigarette in the tobacco industry?
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