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NYSE American Profile (XXII) Displays Immediate Breakout Potential Backed By 5 Possible Catalysts

$7.00 Price Target From Dawson James Provides Over 90% Potential Upside From Wednesday's Close

July 15th

SCF Readers,

The opening bell is here so let's dive in quickly.

Previously, I brought this profile to you back on April 26th. That day it shot $.65 from the open to the high for an approximate 11% move.

Now, after the company dropped game-changing news yesterday that I've covered in my report below, it's time to get this NYSE American profile back on your radar quickly.

For July 15th, there is one specific Biotech company you need to watch closely:

*22nd Century Group, Inc. (NYSE American: XXII)*

22nd Century Group, Inc. is a leading plant biotechnology company focused on technologies that alter the level of nicotine in to-bacco plants and the level of canna-bin-oids in he-mp/can-na-bis plants through genetic engineering, gene-editing, and modern plant breeding.

22nd Century’s primary mission in to-bacco is to reduce the harm caused by smoking through the Company’s proprietary reduced nicotine content to-bacco smokes – containing 95% less nicotine than conventional smokes.

And, due to several potential catalysts, XXII needs to be on your radar. Above all, this first potential catalyst you need to check out was released yesterday:

No. 1 Potential XXII Catalyst - Wednesday's Big Breaking Strategic Partnerships News

22nd Century Group Adds Strategic Partnerships With Sawatch Agriculture and Folium Botanical for Next-Generation Commercial He-mp/Can-na-bis Plant Breeding and Commercial Scale-Up

  • Company Already Operating With Expert Alkaloid-Based Plant Breeders, Critical to Scaling Up New, Disruptive Plant Lines
  • Expands Company’s Operating Network in the Northern Hemisphere to Provide Indoor and Outdoor Alkaloid-Based Plant Line Breeding, Scale-Up, and Cultivation Program
  • Folium Botanical Is In Close Proximity to and Allows for Vertical Integration of Breeding Expertise With Needle Rock Farms
  • New Lines Already Completing the Initial Two-Year Development Cycle and Emerging From Company’s Vast Portfolio of He-mp/Can-na-bis Lines Poised to Be Monetized in the Fourth Quarter
  • Collaborations Key to Development of New, Commercially Valuable Plant Lines and Related IP in Two-Year Cycles, A Fraction of the Time Typically Required to Develop New Plants
  • Addition of Southern Hemisphere Breeder to Be Announced Shortly Will Provide 22nd Century with Year-Round Growing Capabilities

BUFFALO, N.Y., July 14, 2021 (GLOBE NEWSWIRE) -- 22nd Century Group, Inc. (NYSE American: XXII), [...], today announced that it has added strategic partnerships with expert commercial-scale plant breeders Sawatch Agriculture and Folium Botanical. The partnerships with these two northern hemisphere breeders add to the breeding capabilities that 22nd Century already has through its close partnership with Aurora Can-na-bis, and another southern hemisphere-based breeder that will be announced shortly, providing 22nd Century year-round growing capabilities.

With decades of combined specialized alkaloid plant breeding and plant biotechnology experience, these expert breeders have proven next-generation technologies and innovations on breeding, commercial scale-up, and cultivation, many of which are far beyond those of independent competitive breeders or in-house breeding in consumer product companies. Under 22nd Century’s direction, proprietary plants will be developed with optimum levels of canna-bin-oids that meet high-quality standards when grown at commercial scale.

“We are thrilled to announce the addition of these world-class alkaloid-based plant breeding specialists to complement 22nd Century’s capabilities in our upstream value chain. Our four breeding partnerships complete our portfolio of comprehensive plant science capabilities, enabling the rapid creation and scale-up of stable, tailored, highly disruptive plant lines with predictable yields critical to the mass cultivation of he-mp/can-na-bis, which will be absolutely necessary to meet the rapidly growing market demand for improved, stable genetics. We are giving growers a competitive advantage by substantially improving crop yield and optimizing the time that it takes to develop new lines to a two-year cycle, a reduction from the 7 to 10 years that would typically be necessary to create new lines using our proprietary capabilities,” said James A. Mish, chief executive officer of 22nd Century Group. “Along with new lines progressing in development, we have lines emerging from our vast portfolio of he-mp/can-na-bis lines that are completing the initial two-year development cycle. We look forward to the monetization of these lines and our current he-mp/can-na-bis IP portfolio, with our first revenue from our he-mp/can-na-bis franchise expected in the second half of 2021. Our complete upstream he-mp/can-na-bis capabilities enable us to rapidly offer additional disruptive, commercially valuable he-mp/can-na-bis plant lines at large scale and with increased, stable yields to very attractive end-use markets.”

Strategic Partnerships Maximize 22nd Century’s Canna-bin-oid Value Chain

With today’s announcement of these expert breeding partnerships, 22nd Century has secured all key partnerships needed to maximize and support each of the segments of its canna-bin-oid value chain: plant profiling (CannaMetrix), plant biotechnology (KeyGene), plant breeding, commercial-scale plant cultivation, and ingredient extraction/purification (Sawatch Agriculture, Folium Botanical, Aurora Can-na-bis, Needle Rock Farms, and Panacea).

22nd Century’s plant science mission and expertise serve as the crucial link between these partner companies to create the specific traits needed to optimize he-mp/can-na-bis products at commercial scale. Mass cultivation is quickly becoming a critical challenge in the he-mp/can-na-bis industry. Most existing plant lines do not exhibit the stable genetics, predictable yield, or specific composition of canna-bin-oids required to fully unlock the value of the he-mp/can-na-bis industry. 22nd Century’s upstream capabilities provide for optimized plant products and scale-up as the industry evolves toward mass production.

The Company’s goal is to provide leading brands in the life science, consumer product, and pharmaceutical end-use markets a license to utilize the new lines or ingredients (flower, distillate, isolate, etc.) derived from the most stable, predictable, and reliable he-mp/can-na-bis lines with differentiated traits. These licenses or ingredients will serve to enhance their respective products, consumers’ experience, and commercial success. Using its genetically engineered he-mp/can-na-bis plants and ability to scale, 22nd Century can accelerate development and speed to market of products with desired end-user benefits based on specific cannabinoid and terpene profiles at scale in a fraction of the time of competitors.

Multiple He-mp/Can-na-bis Revenue Streams in 2021 and a Long Growth Runway

The Company is actively pursuing multiple he-mp/can-na-bis revenue streams in 2021 and beyond. These include monetization of a portion of the Company’s valuable he-mp/can-na-bis intellectual property, including through its recently announced strategic partnership with Aurora Can-na-bis, and offtake commitments for the Company’s high CB*D and CB*G plant lines currently growing in its prime Colorado he-mp/can-na-bis growing location, 22nd Century’s world-class Needle Rock Farms, for commercialization in the forms of flower, distillate, and isolate. Additional new plant lines coming through the development pipeline will expand revenue generation opportunities for years to come creating a long growth runway.

Read the full article here.

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No. 2 Potential XXII Catalyst - $7.00 Price Target From Dawson James Securities

On June 11th, 2021, James McIlree of Dawson James Securities provided XXII with a $7.00 price target.

From Wednesday's close, that provides this NYSE American profile with over 90% potential upside.

Here are some key highlights from the report:

  • 22nd Century raised $40Mn in gross proceeds, $38.2Mn net, from the sale of 10 million shares to one in-vest-or, bringing pro forma cash to almost $70Mn, or over 5 years of cash at recent burn rates. However, we believe the burn rate can decline with successful monetization of the company’s to-bac-co IP and initiatives in he-mp and can-na-bis. The stronger balance sheet will, in our view, provide greater negotiating leverage to the company in the case where a low-nicotine mandate is implemented, provide greater resources to roll out a VLN cig-a-rette if and when the MRTP is approved, build out the he-mp/can-na-bis franchise and acquire additional IP in the existing or new franchises.
  • The company reiterated its expectation of licensing and revenue to begin in the second half of this year from the IP it shares with Aurora Can-na-bis (NASDAQ: ACB, $9.89, Not Rated). Recently, Aurora announced the formation of a Science & Innovation Business Unit to commercialize technology that enables canna-bin-oid biosynthesis in plants and microorganisms. Aurora and 22nd Century Group share the global intellectual property (IP) rights to certain patents and patent applications relating to genes in the he-mp/can-na-bis plant required for the production of canna-bi-noids in the cann-a-bis plant. The two are working closely together to enforce their IP against infringing parties and explore commercial development opportunities.
  • A new Canadian subsidiary has been created to allow the company to pursue opportunities in recreational and medical cann-a-bis. 22nd Century has exclusive rights in the U.S. and co-exclusive rights, with Aurora, everywhere else in the world (except Canada) to patents and patent applications of genes required to produce canna-bin-oids in the cann-a-bis plant. This subsidiary allows greater flexibility to pursue R&D projects given the changing legal status of he-mp and cann-a-bis globally.
  • Valuation: Our $7 price target is the sum of: $3.08/share for the VLN asset, $3.18/share for the low-nicotine mandate and $0.74 for the he-mp/cann-a-bis franchise.

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No. 3 Potential XXII Catalyst - Restructuring Of Panacea In-vest-ment And Expansion Of Franchise Capabilities

22nd Century Announces Restructuring of Panacea In-vest-ment, Expansion of Cann-a-bis Franchise Capabilities

22nd Century Takes Ownership of Needle Rock Farms, Provides North American Cultivation Base of Operations

BUFFALO, N.Y., July 01, 2021 (GLOBE NEWSWIRE) -- 22nd Century Group, Inc. (NYSE American: XXII), [...], today announced it has signed a definitive agreement to restructure its strategic investment in Panacea Life Sciences, Inc., in line with the ongoing development of 22nd Century’s strategic partnership network.

[...]

“This exchange is an exciting leap forward for 22nd Century as we advance our upstream value chain strategy to bring highly disruptive he-mp and cann-a-bis plant lines to market. It is also highly attractive to 22nd Century on a financial basis, creating immediate value, asset-backed future value and potential future liquidity from an existing in-vest-ment,” said James A. Mish, chief executive officer of 22nd Century Group. “Needle Rock Farms is a world-class farming operation in a prime growing location where we already have plants in the ground toward our goal of revenue recognition from our cann-a-bis franchise in the second half of 2021. We will also retain access to Panacea’s extraction, purification and testing equipment located in Golden, CO for the benefit of our customers.”

“Rapidly growing demand means that mass cultivation is quickly becoming the critical challenge in the cann-a-bis industry. Most existing plant lines do not exhibit the stable genetics, predictable yield or specific composition of canna-bin-oids required to fully unlock the value of the cann-a-bis industry,” continued Mish. “22nd Century can provide the stable, predictable plant solutions required to achieve true commercial scale, and do so in as little as two years versus 7-10 years through traditional processes.

Read the full article here.

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No. 4 Potential XXII Catalyst - Oversold Leaning Technicals / Healthy Reversal

Check out the XXII 1-year chart below:

image

You see how XXII has been in a downtrend since the start of July.

When a profile goes into a downtrend like this, a potential reversal could be right around the corner.

Here's the definition of a "reversal" from Investopedia:

"A reversal is a change in the price direction of an asset. A reversal can occur to the upside or downside. Following an uptrend, a reversal would be to the downside. Following a downtrend, a reversal would be to the upside. Reversals are based on overall price direction and are not typically based on one or two periods/bars on a chart."

Now, here are some key technicals that could signal XXII to be oversold and on the verge of a potential reversal.

They are as follows on Barchart (as of close Wednesday):

  • 9-Day Relative Strength Index: 22.96%
  • 14-Day Relative Strength Index: 31.04%

When these numbers drop down to the 30% range and lower, they can be viewed as being in oversold territory. While in this territory, they can paint the picture of a profile that is undervalued.

  • 14-Day Raw Stochastic: 4.11%
  • 14-Day Williams %R: 95.89%

As the Raw Stochastic nears the 10% range and lower and the Williams %R nears the 90% range or higher, these technical indicators may also be viewed as oversold and undervalued.

Keep an eye on these technicals closely today.

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No. 5 Potential XXII Catalyst - The Creation Of VLN

22nd Century could be disrupting an approximately $817Bn to-bacco market and catering to an underserved segment of the population looking to quit.

Of the approximately 1 billion adult smokers in the world today, and roughly 34Mn U.S. adult smokers, about ⅔ want with less than an estimated 10% successfully doing so.

So, what did 22nd Century do? Created VLN.

VLN is a unique, proprietary, approximately 95% reduced toxin combustible smoke alternative. It is simply unlike any other to-bacco product in the market today. Don’t take my word for it, though. Talk to the consumers. According to 22nd Century’s consumer perception studies, about 60% of adult smokers indicated a likelihood to use VLN.

What seems to be exciting people so much about VLN?

For one, VLN has a familiar combustible product format that replicates the conventional smoking experience, including the sensory and experiential elements of taste, scent, smell, and “hand-to-mouth” behavior.

VLN also contains approximately 0.5 mg of toxins per gram of to-bacco. Based on clinical studies, the FDA cited this amount to be “minimally or non-addictive.”

Plus, since 2011, 22nd Century’s reduced toxin smokes have been used in more than approximately 50 independent scientific clinical studies conducted by universities and institutions and primarily funded by U.S. government agencies at over an estimated $100Mn.

These science-backed clinical trials already show encouraging results. Many of these results include the following:

  • Reduced toxin exposure and dependence
  • Partake in fewer smokes per day
  • Experience reduced withdrawal symptoms
  • Minimal or no compensatory smoking
  • Increase number of smoke-free days
  • Double quit attempts
  • No increase in adverse effects in persons with mental health disorders

Because of these encouraging results, VLN might be on the cusp of receiving final FDA approval for an MRTP designation.

The FDA has already authorized 22nd Century to sell its reduced toxin content smokes in the U.S. However, with an MRTP designation, VLN could carry the headline claim of “95% less toxins” on packaging and market the product under the brand name VLN, distinguishing the product from conventional smokes.

An MRTP designation can potentially unlock multiple U.S. and international licensing and partnership openings for reduced toxin content to-bacco technology and IP. This type of FDA authorization is considered the gold standard in public health by regulators around the world.

The company is highly confident that the FDA is in the final stages of the review process. For now, though, it will continue working with legal advisers, regulatory consultants, and government affairs specialists to highlight the public health importance of MRTP application.

Because the company knows it could be on the cusp of something groundbreaking, it’s already prepared for a full commercial launch. In fact, if/when the FDA grants that MRTP application to 22nd Century, it’s fully prepared to already manufacture approximately 1% of the U.S. to-bacco market share through an entire company-owned manufacturing facility. If the company wants to, they could potentially triple manufacturing capacity with minimal investment, too.

Within 90 days of receiving MRTP authorization, the company expects an initial roll-out of VLN in select markets, with a plan to position VLN in the premium pricing segment of the smokes market.

The company is already in advanced discussions with many independent, regional, and national retailers. 22nd Century is also developing plans to build and scale VLN through licensing opportunities and strategic partnerships and plans to accompany the launch with a strong marketing campaign.

Find Key VLN Details Here.

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Top 5 Potential Catalysts Recap: What To Know About XXII

#1. Wednesday's Big Breaking Strategic Partnerships News

#2. $7.00 Price Target From Dawson James Securities

#3. Restructuring Of Panacea In-vest-ment And Expansion Of Franchise Capabilities

#4. Oversold Leaning Technicals / Healthy Reversal

#5. The Creation Of VLN

Coverage is officially initiated on XXII. When you have a second, do this:

image

If there are any updates today, I'll get them out to you quickly.

Sincerely,

Axel Adams

Editor, SCF


(Always Remember The Stock Prices Could Be Significantly Lower Now From The Dates I Provided.)​

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