22nd Century Group Alleviates Near-Term Financing Risk After Raising $5 Million In Capital

Chardan Capital Markets reiterated its Buy rating on 22nd Century Group Inc XXII after it eliminated near-term financing risk by raising $5 million in capital.

The company will issue 6.2 million shares, as well as 1.5 million warrants with a $1 strike price. Also, about 5.5 million higher priced warrants, with strike prices of $1.21 and $1.25 per share, were repriced to a strike price of $1.00.

"This should give the company ample runway to capitalize on the numerous opportunities it has to monetize its broad intellectual property portfolio," analyst James Mcilree wrote in a note.

Mcilree said one of the most promising paths for 22nd Century, whose technology enables the control of nicotine levels in tobacco plants, is the pending application with the FDA for a reduced exposure designation for its Brand A, low-nicotine cigarette. 22nd Century said its patents are worth more than $200 million, or greater than $2.50 per share.

Another major effort of management is attracting a research partner to fund Phase III clinical trials for the X-22 smoking cessation product.

The bids for contract manufacturing, which has been the main source of revenue for the company in the past few quarters, could be a catalyst for the shares in the near term.

Further, the analyst said the company has the opportunity to pursue research efforts to produce cannabinoids in plants other than cannabis, including tobacco plants.

"Given the increased interest in the use of cannabinoids by researchers like GW Pharmaceuticals PLC- ADR GWPH, the ability to produce cannabinoids, independent of the cannabis plant, should be very valuable to multiple research partners," Mcilree highlighted.

The analyst has a price target of $4.50.

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Posted In: Analyst ColorNewsFinancingReiterationAnalyst RatingsChardan
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