22nd Century Group Inc (NYSE: XXII) is primed for gains as alluded in our previous update. Price action activity signals a potential upswing on the stock hitting a bottom after a steep pullback in the first half of the year.
22nd Century Group Price Analysis
An impressive earnings result affirming a stable financial position, as well as revenue growth, are some of the catalysts supporting a bounce back from current lows. The Company making a pre-market tobacco application for its VLN cigarettes is another milestone that affirms long-term prospects.
The formation of a double bottom at the $1.90 level could as well indicate that the stock has hit a bottom and due for a correction higher. Immediate resistance standing in the way of further upside action is seen at the $2.30 mark.
Above the $2.30 mark, 22nd Century Group remains supported for further upside action as a bounce-back play. However, for the stock to turn bullish, it needs to take out the $ 2.55 mark, which happens to be 2019 highs.
A sell-off followed by a close below the $1.90 mark could trigger sell-offs that could result in the stock plunging lower back to this year lows.
What Does 22nd Century Group Do?
22nd Century Group is a plant biotechnology company that provides a technology used in regulating the level of nicotine and cannabinoids in hemp/cannabis plants. The Company is also engaged in the distribution of premium cigarettes under the RED SUN and MAGIC brands.
22nd Century Group has started showing signs of trending higher after delivering a first-quarter earnings report that underscores growth. The Company exited the first three months of the year with cash and cash equivalent totaling $51.9 million. Net sales revenue in the quarter increased 2.9 % to $6.3 million.
The Company achieved significant milestones in the quarter in addition to enjoying revenue growth. For starters, it completed a study involving its Very Low Nicotine Content cigarettes that showed subjects had 97% less nicotine in their blood compared to other highly additive commercial cigarettes
The study also showed significantly reduced cigarette craving and urge to smoke on the consumption of the Very Low Nicotine Content cigarettes.
“Overall, the results of this study suggest that (i) VLNC cigarettes have a lower potential for abuse than conventional cigarettes, and (ii) VLNC cigarettes have a potential for abuse that may be comparable to using nicotine gum,” 22nd Century Group in statement.
During the quarter, the U.S Food and Drug Administration completed a comprehensive inspection of the Company’s manufacturing facility in Northern Carolina. If approved, the facility will play host to production operations for the proprietary Very Low Nicotine Content VLNC tobacco.
The inspection follows the submission of Modified Risk Tobacco Product (MRTP) and other related PMT applications to the FDA late last year. With the application, the Company is seeking authorization to commence commercialization of its Very Low Nicotine cigarettes to consumers.
“Our extraordinary VLN™ cigarettes contain at least 95% less nicotine than any of the 100 leading cigarette brands in the U.S. The FDA’s inspection of our manufacturing facility is another important milestone in the FDA review process that we expect will ultimately result in VLN™ cigarettes becoming the world’s first FDA-approved MRTP combustible tobacco cigarettes,” explained CEO Henry Sicignano.
22nd Century Group is at an inflection point pending the approval of its Very Low Nicotine Cigarettes. The approval would mark an important milestone in the Company’s evolution after years of research and development that has seen the Company spent over $10 million.
Given that studies have shown that VLN cigarettes contain 95% less nicotine compared to most brands in circulation, enhances the chances of the Company securing regulatory approval.
As it stands, 22nd Century is on the cusp of disrupting the $80 billion U.S Tobacco industry with its game-changing VLN cigarettes. Supported by a solid financial position, the Company remains well positioned to broaden brand awareness and embark on aggressive commercialization, once regulatory approval is secured.
For early movers, 22nd Century Corp is an exciting pick as it is trading at a discount relative to its long-term prospects. The stock is already showing signs of racing higher as investors take note of the opportunities for growth ahead.
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Disclosure: We have no position in XXII and have not been compensated for this article.