22nd Century Sees Profitability in H1 2026 Amid Branded VLN Launches

22nd Century Group targets profitability in H1 2026 and is advancing branded VLN launches. The company's low nicotine tobacco strains are the basis for their 95% low nicotine VLN cigarettes. Management is focused on leadership in tobacco harm reduction and FDA approval is pending. The company is also working to launch its branded VLN products.

22nd Century Group, Inc. (XXII), a leading tobacco harm reduction company, has outlined its strategic focus on achieving profitability in the first half of 2026. The company, known for its proprietary low nicotine tobacco strains, is poised to launch its branded VLN (Very Low Nicotine) cigarettes, aiming to solidify its position in the tobacco harm reduction market.

During the second quarter of 2025, 22nd Century Group reported net revenues of $4 million, down from $6 million in the first quarter. Gross margin remained stable at a loss of $0.6 million, with operating expenses of $2.3 million, up from $2 million in the first quarter. The company attributed the decrease in revenue to a shift in its business mix, moving away from low-margin, high-volume CMO (Contract Manufacturing Organization) and export products to prioritize higher-margin branded products.

The company's President, CEO, and Chairman, Lawrence D. Firestone, emphasized the company's leadership in tobacco harm reduction, highlighting the proprietary low nicotine tobacco strains forming the basis of their 95% low nicotine VLN cigarettes. Firestone announced the beginning of shipments for Pinnacle VLN in August, calling it "the largest single deployment of VLN products in the company's history," with a full launch planned in October at a major retailer.

The company expects increased research and development spending over the next two years to maintain its position in low nicotine IP and bring additional products to market. Management anticipates profitability to be achieved in the first half of 2026, later than previously indicated. The timeline for profitability is driven by the pace of state registrations, store counts, distribution, and the rate of sale for high-margin branded products.

22nd Century Group is also working to expand its distribution network and secure the necessary funding to bridge to sustainable profitability. The company is in conversations with its debtor regarding debt rollover plans and expects to raise additional funds in the near term, though the size of the raise is expected to be smaller than in the past.

The company's focus on tobacco harm reduction is evident in its proprietary reduced nicotine content tobacco strains, which are already meeting the FDA's proposed new standard for nicotine content. The company is working closely with its partner brands to make its VLN products more broadly accessible to smokers looking for a new tool in the fight to control their smoking habit.

While the company acknowledges delays in execution and market adoption, management remains confident in its strategic progress and product launches. The company is committed to expanding distribution, managing operational costs, and securing the necessary funding to achieve sustainable profitability.

References:
[1] https://seekingalpha.com/news/4485491-22nd-century-targets-profitability-in-first-half-2026-while-advancing-branded-vln-launches
[2] https://finance.yahoo.com/news/22nd-century-group-reports-second-100000825.html