22nd Century Group, Inc · NASDAQ:XXII
22nd Century — Q3 2020 Earnings Presentation
22 slides from 22nd Century's earnings presentation, Nov 5, 2020
Slide 1: Third Quarter 2020 Earnings Supplemental
THIRD QUARTER 2020 EARNINGS SUPPLEMENTAL NOVEMBER 5, 2020
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements concerning our business operations and financial performance and conditions, as well as our plans, objectives, and expectations for our business operations and financial performance and conditions tha
Slide 3: Q3 2020 Business Highlights
Q3 2020 BUSINESS HIGHLIGHTS • Remain focused on primary mission of reducing the harm caused by smoking • Intensified proactive efforts to secure Modified Risk Tobacco Product (MRTP) authorization from the U.S. Food and Drug Administration (FDA) for VLN® • Plans in place to commercialize VLN® in the
Slide 4: Third Quarter 2020 Financial Highlights
THIRD QUARTER 2020 FINANCIAL HIGHLIGHTS 1. Gross profit margin is calculated by dividing net sales revenue by gross profit. 2. Adjusted EBITDA, which the Company defines as earnings before interest, taxes, depreciation and amortization, as adjusted by the Company for certain non-cash and non-operati
Slide 5: Year-to-Date 2020 Financial Highlights
YEAR-TO-DATE 2020 FINANCIAL HIGHLIGHTS 5 $5.1M Improvement in operating loss YoY $20.8M Net sales revenue +12% YoY 520BPS Improvement in gross profit margin1 YoY 23% Improvement in Adjusted EBITDA2 YoY $7.1M Improvement in net loss YoY 1. Gross profit margin is calculated by dividing net sales reven
Slide 6: Tobacco Franchise Update
TOBACCO FRANCHISE UPDATE • Securing MRTP authorization from the FDA for VLN® is our number one priority; intensified proactive efforts to secure MRTP designation • Launch plans include national roll-out with large, well-recognized retail chains in the U.S. and a marketing campaign; received extremel
Slide 7: VLN Has Massive Global Market Opportunity
VLN® HAS MASSIVE GLOBAL MARKET OPPORTUNITY 7 SMOKERS ARE ACTIVELY SEEKING ALTERNATIVES TO ADDICTIVE COMBUSTIBLE CIGARETTES 95% of smokers who do not participate in a smoking cessation program fail5 1. Foundation for a Smoke Free World; https://www.smokefreeworld.org/wp-content/uploads/2019/08/FSFW_G
Slide 8: Consumers Express High Interest in VLN
CONSUMERS EXPRESS HIGH INTEREST IN VLN® 8 Based on our consumer perception studies, of adult smokers indicate likelihood to use VLN®2 IN A 2019 U.S. CENTER FOR DISEASE CONTROL AND PREVENTION (CDC) SURVEY, 80% OF U.S. SMOKERS FAVOR LOWERING NICOTINE LEVELS IN CIGARETTES1 12% 14% 15% 34% 16% 9% Somewh
Slide 9: Features and Benefits of VLN
FEATURES AND BENEFITS OF VLN® 9 22ND CENTURY SUPPLIES A UNIQUE 95% REDUCED NICOTINE CONTENT COMBUSTIBLE CIGARETTE ALTERNATIVE THAT IS UNLIKE ANY TOBACCO PRODUCT AVAILABLE IN THE MARKET TODAY Proprietary Technology in Reduced Nicotine Content • VLN® cigarettes contain 95% less nicotine content than c
Slide 10: Our Manufacturing Capabilities
OUR MANUFACTURING CAPABILITIES 10 62,000 sq. ft. manufacturing facility in NC Producing reduced nicotine content research cigarettes since 2011 Manufacturing capacity equal to approximately 1% of the U.S. tobacco market; ability to increase capacity to 2-3% of the market with minimal investments in
Slide 11: Substantial Whitespace in Tobacco
SUBSTANTIAL WHITESPACE IN TOBACCO 11 Decades of research supported by modern technologies provide unique opportunities to accelerate development capabilities in tobacco across multiple end use market applications. 22ND CENTURY POSSESSES THE KNOW-HOW AND INTELLECTUAL PROPERTY TO CAPITALIZE ON ADDITIO
Slide 12: Hemp/Cannabis Strategy & Update
HEMP/CANNABIS STRATEGY & UPDATE • Refocused hemp/cannabis strategy to target upstream segments of the cannabinoid value chain and related intellectual property in areas of plant biotechnology research including, gene modification and engineering, modern plant breeding and development, and extraction
Slide 13: The Cannabis Industry Is Global and Rapidly Growing
THE CANNABIS INDUSTRY IS GLOBAL AND RAPIDLY GROWING 13 North America LatAm Europe Asia Africa Oceania Legal Recreational Medical $ in billions ~$38B 53% 47% 57% 43% ~$39B 86% 14% ~$13B 50% 50% ~$3B 73% 27% ~$9B 56% 44% ~$2B THE GLOBAL CANNABIS MARKET IS PROJECTED TO BE A $100+ BILLION INDUSTRY BY 20
Slide 14: Our Differentiated Approach to Hemp/Cannabis
OUR DIFFERENTIATED APPROACH TO HEMP/CANNABIS 14 1.UN World Drug Report 2020 22ND CENTURY’S SCIENTIFIC AND SOLUTIONS-ORIENTED APPROACH IS CREATING VALUABLE NEW PLANTS AND IP IN THE HEMP/CANNABIS SPACE. Commoditized Industry Participants The 22nd Century Advantage • Total cannabinoid yield is typicall
Slide 15: Targeting the Upstream Segment of the Hemp/Cannabis Value Chain
TARGETING THE UPSTREAM SEGMENT OF THE HEMP/CANNABIS VALUE CHAIN 15 • The U.S. formulated CBD and hemp-based consumer products market is already saturated. • 22nd Century will differentiate itself by focusing on the upstream segment of the hemp/cannabis value chain. This will provide us with a compet
Slide 16: Driving Innovation Through Partnership with KeyGene
DRIVING INNOVATION THROUGH PARTNERSHIP WITH KEYGENE 16 A legacy of open innovation with crop improvement through molecular breeding Experience with more than 30 food and horticultural crops Developed 40% of the vegetable crops sold in Europe and Japan Developed tobacco molecular breeding programs fo
Slide 17: Strategic Spotlight: Priorities & Objectives
STRATEGIC SPOTLIGHT: PRIORITIES & OBJECTIVES Refocus hemp/cannabis strategy to target upstream segments of the cannabinoid value chain; concentrate efforts on initiatives related to exclusive partnership with KeyGene 03 Secure MRTP Authorization from the FDA and execute on commercial product launch
Slide 18: Financial Details
18 FINANCIAL DETAILS
Slide 19: Financial Snapshot
FINANCIAL SNAPSHOT 19 $ in millions Select Financials Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net sales revenue $ 7.3 $ 6.5 $ 20.8 $ 18.5 Operating loss $ (4.0) $ (7.6) $ (12.9) $ (18.0) Net loss $ (4.2) $ (10.2) $ (13.3) $ (20.4) Adjusted EBITDA $ (3.4)
Slide 20: Adjusted EBITDA Definition
ADJUSTED EBITDA DEFINITION Adjusted EBITDA, which the Company defines as earnings before interest, taxes, depreciation and amortization, as adjusted by the Company for certain non-cash and non-operating expenses, as well as certain one-time expenses, is a financial measure not prepared in accordance
Slide 21: Adjusted EBITDA
ADJUSTED EBITDA 21 2020 2019 % Change fav / (unfav)1 2020 2019 % Change fav / (unfav)1 Net loss (4,221) $ (10,245) $ 6,024 $ (13,307) $ (20,360) $ 7,053 $ Adjustments: Impairment of intangible assets - $ 1,142 $ (1,142) $ 146 $ 1,142 $ (996) $ Impairment of Panacea warrant - $ - $ - $ 1,062 $ - $ 1,
Slide 22: Contact Information
CONTACT INFORMATION INVESTOR RELATIONS & MEDIA CONTACT Mei Kuo Director, Communications & Investor Relations 22nd Century Group, Inc. (716) 300-1221 investorrelations@xxiicentury.com