22nd Century Group Inc (XXII)

[Zedster]

Key Tobacco Talk Conference Call Takeaways With XXII
• XXII Recently Became A Signatory to the MSA Via Acquisition – Greatly
Expands Potential Distribution Since Many Wholesalers/Retailers Do Not
Carry Non-MSA Brands
• Red Sun Cigarette Brand is Super Premium and Caters to Consumers Seeking
a Highly Differentiated Offering
• Magic Low-Nicotine Cigarette Brand Being Rolled out in Europe – Difficult to
Sell Right Now in U.S. Given That Manufacturers Cannot Label “Low Nicotine”
Cigarettes as Such
• XXII Meeting with FDA in Early November to Discuss Low Nicotine Offerings
• XXII Developing Novel Cannabis Plant Varieties With Partner Anandia –
XXII’s Technology Can Tailor Cannabanoid Profiles – XXII Should Benefit
From “Huge Migration” to Legal Market from “Underground” Market
• U.S. Cannabis Market Could be Worth as Much as $30B – Big Tobacco Will
Likely Enter In Our View Once There is More Regulatory Clarity
• X-22 Low-Nicotine Cigarette Currently Undergoing FDA Approval Process to
Become a Prescription Smoking Cessation Aid
• XXII Recently Entered into a JV in China to Market Its Products
• XXII Essentially Has “Monopoly” on Tobacco Plant Genes that Produce
Nicotine and Nicotonic Alkaloids
• “Brand B” Has Less Than Half the Tar:Nicotine Ratio of Average Cigarettes –
Which Results in Smokers Inhaling 50-60% Less Smoke
• 50-50 Partnership with BAT Leverages Big Tobacco’s Deep Pockets and Vast
Reach, Opening the Gates to 180 Markets
• Plant R&D and Product R&D Results in a Full Product Pipeline
• XXII “Incredibly Excited” About Asian Opportunities
• Magic Zero to have Consistent Branding Across Europe- European Counsel to
Guide XXII on Labeling even as Shipments to Netherlands are Put on Hold
WELLS FARGO SECURITIES, LLC
Tobacco Talk: XXII Conf Call Key Takeaways EQUITY RESEARCH DEPARTMENT
3
• XXII Can Use Same Type of Patented Technology on Cannabis Plants as it Uses
on Tobacco Plant – XXII and Partner Anandia Only Companies with
“Freedom” to Operate in “Entire Cannabinoid Biosynthesis Pathway”
• Smoker Friendly Partnership – Volume From That Alone Would Cover
Overhead Costs of North Carolina Factory
• Red Sun Implied Value “Would Approach $1B” With 0.2% Market Share Given
Natural American Spirit’s Value
• China Opportunity Could Be Big – Size of Business XXII Has Partnered With
in China Is Large
• XXII Has 4 $1B Opportunities Ahead of It – Red Sun, X-22, Potentially
Modified Risk Products and Asian Opportunities
• Spectrum Cigs Being Purchased by National Institute of Health (NIH) to be
Used in Studies XXII Can Use for its Modified Risk Applications
• Magic and Red Sun Production to Roll Out at End of October 2014
• XXII’s Doesn’t Have “Agenda to Manufacturing in North Carolina” but Will
“Selectively” Take On “Unique” Additional Manufacturing Opportunities