22nd Century Group (XXII)

[Movieguy]

Is there a good Wayne Andrews type at XXII? I called once and could not reach anyone. I really need someone to explain, with proper nuances, what this stock is all about.

[admin]

Movie, heree is a good intro article:
http://seekingalpha.com/instablog/897318...industries

Now, they did just license with the second biggest Tobacco company in the world (BAT). That's instant credibility for their technology (insofar as they still needed that), apart from upfront payment ($7M), and the likelihood of further payments and royalty agreements.

Now, the stock price went up and then went down on the news but this can be easily explained by the selling of their financing partner (which, after the BAT deal, they don't need anymore), which had 5M shares to sell since June.

Sooner rather than later, they'll be done and what effect that will have on the stock price I'll leave to your imagination..

[Movieguy]

Thanks, Admin. I am familiar with that article, as I think that is what got me interested in the company.

As we have learned (painfully) with IOC, a stock that has a lot going for it can still languish in pps. I feel I understand what IOC is about in that it has to monetize E/A and then make other deals with additional discoveries, etc. What is XXII's story? What will prompt its price to rise? It seems to have a great story and it just made a good deal. Is that enough to propel share price higher, or is the market waiting for something else specific. This is what I want a "Wayne" for.

[admin]

Not anywhere near complete, but

1. The end of Sabby (their former financing partner) selling
2. The granting of patents
3. The conclusion of other deals (in a June PR they suggested other licensing deals in the works)
4. Sales figures from the Benelux
5. Granting of the second $7M payment from BAT
6. Conversion of the BAT research license into a royalty license
7. Progress on a multiple US front (FDA trials and regulations)

Or just the simple recognition by more investors that XXII (a $50M company) has unique IP, in a multi-billion dollar market that has just found validation the second biggest company in the industry.

[Movieguy]

Thanks for all that. Where do you get your info? So there is no Wayne at XXII?  Maybe that is why the stock price does not move.

[admin]

Well, several sources. You get to know a great deal by reading the filings and PR's. There is a newsletter that covers it pretty well also, (but that cost you some $$, $100 or so per year, it's worth it)

[admin]

Interesting development. From the BBC:

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EU plans tougher tobacco restrictions on e-cigarettes

The proposals to regulate e-cigarettes are part of a series of new tobacco measures being considered by the EU

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Electronic cigarettes would become a medicinal product under new proposals from the EU Commission which are being considered by MEPs.

They will vote on a proposed update of EU laws regarding various tobacco products, with the aim of discouraging young people from taking up smoking.

Sales of tobacco-free e-cigarettes have boomed worldwide since bans on smoking in public places were introduced.

But campaigners say their growing popularity is dangerous.

They argue that e-cigarettes undermine years of anti-smoking efforts and could be especially damaging to children and non-smokers.

The devices are designed to replicate smoking behaviour without the use of tobacco. They turn nicotine and other chemicals into a vapour that is inhaled.

Manufacturers of e-cigarettes say the products have the potential to save millions of lives and should not be restricted because they could dramatically reduce smoking-related diseases.

The proposals to restrict e-cigarettes are part of a range of measures being considered by the EU during the first reading of a new draft tobacco directive which could become law in 2014.

Other proposed EU tobacco restrictions include:

• Bigger health warnings in text and pictures on cigarette packs sold in the EU
• A ban on strong flavours such as menthol or vanilla which can mask the bitter tobacco taste
• Words like "light", "mild" and "low tar" that are deemed to be misleading would be banned
• A ban on chewing tobacco - called snus - although Sweden will have an exemption
• A ban on packs of 10 cigarettes and slim cigarette, mostly smoked by women

There has been intense lobbying from tobacco companies, e-cigarette manufacturers and anti-smoking organisations who all want the proposals to be watered down.

But supporters of the measures say that young people especially are being tricked into taking up smoking.

"Tobacco products should look and taste like tobacco products," said EU Health Commissioner Tonio Borg, presenting the proposals.

The current requirement for health warnings on packets is 30% minimum coverage on one side and 40% on the other.

The new packaging requirements would also apply to roll-your-own tobacco.

The legislation would allow member states the option of plain, non-branded packaging "in duly justified cases".

Healthcare costs

The Commission says packets must be big enough to ensure full visibility for the health warnings, so the recommendation is at least 20 cigarettes per pack.

 E-cigarettes run on a rechargeable battery and turn nicotine and other chemicals into an inhalable vapour.

Fourteen EU states already have 20 as the minimum, four stipulate a minimum of 19, and in the UK and Italy the minimum is 10. It is argued that bigger, more expensive packets are less attractive to young smokers.

The Commission says almost 700,000 Europeans die from smoking-related illnesses each year - equal to the population of Frankfurt or Palermo. The associated costs for healthcare in the EU are estimated to be at least 25.3bn euros (£20.6bn; $33.4bn) annually.

In 2009‐10, sales of tobacco products generated nearly £9bn ($14.6bn; 11bn euros) in taxes for the UK government, about 2% of all receipts from taxation, a government report said.

[admin]

Well, that didn't last long..

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Europe rejects curbs on e-cigarette sales

 Published: Tuesday, 8 Oct 2013 | 6:42 AM ET

By: Matt Clinch | Assistant Producer

European lawmakers have rejected proposals that aimed to clamp down on how the latest gadget to help smokers give up tobacco should be sold.

Electronic cigarettes, along with other nicotine-containing treatments, would have been one step closer to being classed as a medical product across the 28-country European Union if updated proposals for tobacco regulation were voted through by the European Parliament on Tuesday.

However, the proposal was rejected by 362 votes to 298. Lawmakers did vote in favor of product safety controls and regulations for marketing and advertising.

The new classification would have meant the product's availability to shoppers could have been be limited from 2014. Those below a certain nicotine content would have still been allowed on the consumer market but with health warnings.

Speaking after the vote, the European Conservatives and Reformists Group said that this was a victory for common sense.

(Read More: E-cigarettes could significantly cut tobacco use: Study)

"Many electronic cigarettes are produced by small businesses who would simply not have been able to afford the strict authorization demands the EU would placed on them. We could not stand by and allow MEPs to put companies out of business and people out of work," said Conservative MEP Martin Callanan on the group's website.

"It makes sense to find ways of making tobacco less attractive to younger people. Although some of the measures seemed on the zealous end of the scale, we are willing to accept them, but we could not have supported a measure that would cost jobs and push people off of electronic cigarettes and back onto the real thing."

E-cigarettes use heat to vaporize a solution containing nicotine into an aerosol mist and are designed to replicate smoking behavior without the use of tobacco. Tobacco is the most significant cause of premature death in the EU, responsible for almost 700,000 deaths every year, according to its own statistics.

(Read More: An e-cigarette boom could be around the corner)

While many were against the draft proposals, some lawmakers stated that their availability increases the number of people who could be attracted to smoking and hit out at glamorous advertising campaigns promoting the new technology.

Can tobacco companies adapt to e-cigarettes?

Erik Bloomquist, senior analyst at Berenberg, comments on the rise of e-cigarettes and what it mean for traditional tobacco companies.

"I have no doubt at all that electronic cigarettes could set millions of non-smokers on the path to nicotine addiction and should therefore be regulated as medical products," Struan Stevenson, and MEP for the Scottish Conservatives said during the debate.

"It's clear that less than a decade after their first appearance, they've already become a multibillion dollar industry with the major tobacco giants snapping up the key e-cigarette companies and with glamorous movie stars appearing in adverts. Former playboy models now advertising e-cigarettes, huge full page adverts, this is why Norway and Brazil have banned e-cigarettes altogether."

Top state law enforcement officials in the U.S. have also urged increased regulation on e-cigarettes in a market that has seen blossoming growth. Analyst Bonnie Herzog of Wells Fargo Securities believes "conservative data" already indicates that sales of e-cigarettes this year in the U.S. have already reached $700 million from traditional retail outlets like convenience stores. Estimated online sales of $500 million to $625 million could mean that total year-to-date sales would actually be above $1 billion, she said.

(Read More: New Technologies That Could Change the World)

But many health organizations remain anxious about the sudden uptake of the product, before any rigorous, peer-reviewed studies are available which support the use of e-cigarettes as a safe and effective nicotine-replacement therapy.

[admin]

E-cigs are on a roll but XXII could replicate that..

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E-Cigarette Stocks Vs. Big Tobacco

by Dee Gill October 07, 2013

Tobacco companies have given shareholders wonderful post-recession returns, having doubled investor money before the rest of the market delivered a 30% gain. That’s particularly galling for thousands of investors who avoid the tobacco sector on ethical grounds.

You can see the price paid for sticking to those scruples in the stock chart below of total returns for Reynolds America (RAI), Phillip Morris (PM), Lorilland (LO) and Altria (MO) shares versus the S&P 500.

PM Total Return Price data by YCharts

Now, tobacco has a hot, some say honorable, new product. Sales of electronic cigarettes are booming, and they seem to be weaning some smokers away from traditional cancer sticks. E-cigarettes deliver, supposedly, the pleasure of smoking without tobacco, smoke or their particularly horrible consequences. So is there finally a way for socially conscious investors to make money from nicotine?

The core part of the investment thesis is very tempting. The global market for e-cigarettes, a mere $1 billion in 2012, is expected to top $3 billion by 2015, according to Citi analysts. Shares of Vapor (VPCO), an e-cigarette-only company that makes Krave, Smoke 51 and other popular brands, are four times higher than they were when it got into the business in late 2009. (But of course it’s a penny stock, trading for less than a dollar a share. A bit of investment research is warranted.)

VPCO data by YCharts

But the logistics of ethical investing here are tricky. First, even if they’re helping some to give up tobacco, aren’t e-cigarettes creating a new cadre of nicotine addicts? While the nicotine-laced vapor that e-cigarettes deliver is probably safer than tobacco toxins and smoke, it’s still nicotine. Regulators don’t allow the industry to market e-cigarettes as a tobacco cessation tool, although evidence is building that they’re at least as effective at this as (rather ineffective) nicotine patches.

It may not be impossible to invest well in e-cigarettes without lining the pockets of big tobacco. tobacco companies have been launching their own e-cig brands, but 99% of all smokes sold are still the old-fashioned kind. Lorilland bought leading e-cigarette companies in the U.K. and the U.S., but nearly 90% of its revenues will still come from menthol cigarettes.

PM Revenue TTM data by YCharts

There are few options for investing solely in e-cigarettes minus tobacco, and all of them are highly speculative. NJoy, which corners 40% of the market, is privately held. Vapor has a market cap of $54.6 million. VaporBrands International (VAPR) trades in the pink sheets, and Gilla (GLLA) is over the counter. Their tiny sizes should make investors wonder if the companies can afford this business once regulators and tax assessors get around to making demands of this baby industry, which they surely will. The last time the law cracked down on tobacco, the biggest tobacco companies gained market share as small independents collapsed under the expense.

It’s true that investors in small e-cigarette companies could make out in takeovers, as companies like Reynolds and Lorilland are hunting for those sorts of acquisitions. But if you’re buying the e-cig stocks as a more ethical alternative to tobacco shares, in takeovers you’d be collecting tobacco money just the same.

The traditional tobacco stocks aren't all that cheap, based on trailing PE ratio.

PM PE Ratio TTM data by YCharts

But they're prized for massive cash flow and, generally, fat dividend yields.

PM Dividend Yield (TTM) data by YCharts

Dee Gill, a senior contributing editor at YCharts, is a former foreign correspondent for AP-Dow Jones News in London, where she covered the U.K. equities market and economic indicators. She has written for The New York Times, The Wall Street Journal, The Economist and Time magazine. She can be reached at editor@ycharts.com. Read the RIABiz profile of YCharts. You can also request a demonstration of YCharts Platinum.

Read more articles about: Investing Ideas

[Movieguy]

Thanks for all that, Admin.