10-19-2017, 12:40 PM
The term "greatly exceed" is now being replaced with a sales target in excess of $16 million for 2017 and significantly beyond $20 million by 2018. Even more important, the goal is for the manufacturing factory to reach cash flow positive next year, providing the company a business outlet to offset some of the risks surrounding obtaining FDA approvals.
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Back in February, the company got guidance back from the FDA on the Brand A product. Management will meet with the regulatory body's Center for Tobacco Products (CTP) this summer to discuss the MRTP application for this product. The CTP provided guidance that the company should break its previous application into separate Premarket Tobacco Product (PMT) application and a MRTP application to enjoy the benefits of a shorter review for PMT applications, while also providing more scientific data for the revised MRTP application.
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If that wasn't enough, 22nd Century has a guidance meeting scheduled with the FDA's Center for Drug Evaluation and Research (CDER) to discuss the X-22 cessation product. The meeting seeks to find an appropriate path for X-22 to become a subscription-based cessation aid for smokers in the U.S. Upon an agreed path with CDER, the company plans to conduct a Phase III trial in 2018 with "fast track" status due to the serious life-threatening nature of smoking and the desire of FDA to designate such products in the program for expedited review.
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The decline comes on the back of the company announcing a registered direct offering (RDO) that will see it gross $54 million from institutional investors and that, according to the press release outlining the offering, will take its cash balance to more than $60 million – enough to meet all regular operating expenses for more than five years. The company is selling 20.57 million shares in order to raise the cash and is doing so at a little over $2.66 a piece. That $2.66 is figure why it took a hit. RDOs always involve discount-to-market pricing but will often also involve warrants that serve as a sweetener for the investors buying the shares. In this instance, there are no warrants associated with the deal, meaning that while the discount isn't something investors will be cheering about (the $2.66 pricing represents an around 23% discount to open market at close prior to the RDO announcement), it could've been worse.