22nd Century Group Inc (NYSEMKT: XXII) has been a very interesting stock to watch lately. While the stock has seen some strong days in the market as of late, the shorts have held the stock back from the massive gains that I believe it deserves. Today, we’ll talk about what XXII is doing, why I believe the stock deserves to soar, and what we’ll be watching for ahead.
XXII Is Changing The Way We See Tobacco
Tobacco is a topic that’s near and dear to me. You see, I smoked cigarettes for years, and quitting them was one of the hardest things I’ve ever done. In fact, I still struggle when I see or smell one. As most know, the chemical that drives the addiction associated with cigarettes is nicotine, and once you’re hooked, well, you’re hooked!
This is where 22nd Century Group comes in. The company is focused on relieving this addiction by creating a strain of tobacco that has incredibly low nicotine levels. In fact, the tobacco that the company has come up with has nicotine levels so low that is is considered non-addictive! Where was that when I tried smoking for the first time?
Why I Believe XXII Will Soar
The reality is that I’m not the only person that shares a fundamental hate for the chemical known as nicotine, nor am I the only person that sees a dire need to do something about nicotine use in the United States. Neither is the team at XXII. In fact, the United States Food and Drug Administration has waged a war on high-nicotine combustible cigarettes. In a recent statement, FDA Commissioner Scott Gottlieb had the following to say with regard to the war on nicotine:
“The overwhelming amount of death and disease attributable to tobacco is caused by addiction to cigarettes – the only legal consumer product that, when used as intended, will kill half of all long-term users.”
Dave Dobbins, COO at the tobacco-control group known as Truth Initiative just so happens to agree. Here’s a recent statement from him:
“The only actual thing that is happening right away is delay… There’s no excuse for not regulating those products as quickly as possible…”
So Where Does 22nd Century Group Come In In All Of This?
Well, the truth is that XXII follows the same beliefs that the FDA follows. They want to see nicotine lowered to non-addictive levels, and they are proving that it can be done in cigarettes. In fact, all you need to do to learn about the incredible work that the company is doing is check out their website. This is the first thing you’ll see:
“Our proprietary genetic engineering technology and plant preeding expertise allow us to regulate the level of nicotine (and other nicotinic alkaloids) in the tobacco plant. As a result of our unique technology, we are able to grow tobacco with up to 07% less nicotine than conventional tobacco – as well as plants with relatively high nicotine levels. The applications for this technology are extraordinary, in independent clinical studies, our very low nicotine (VLN) tobacco has demonstrated remarkable efficacy as a smoking cessation aid. On the other hand, for smokers who do not wis to quit, our high nicotine tobacco enables us to produce a cigarette with what we believe to be the world’s lowest tar to nicotine ratio.”
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The Bottom Line Here
The bottom line here is simple. We have a product on the market that is proven to kill a massive amount of people when used as intended. The FDA is working to combat that product. However, in order to do so, they need a venue that makes it an easier transition. XXII is a company that’s offering that transitional product. With the very low nicotine tobacco the company has generated, the FDA can now say that cigarettes must contain a low amount of nicotine and must not be addictive. In doing so, they wouldn’t be cutting big tobacco at the knees. Instead, they would be giving big tobacco an option to stick around while not causing addiction. XXII plays a key role in that.
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on XXII. In particular, we’re interested in following the ongoing work the company is doing to make cigarettes a safe product. We’re also interested in watching the FDA to see if they actually do make a change to laws, forcing tobacco companies to end the addictive nature of cigarettes. Of course, if this does happen, we’re likely to see massive gains out of XXII ahead.
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