22nd Century (XXII) 6 May 212021 Q1 Earnings call transcript

Welcome to the 22nd Century Group's First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode and the floor will be opened for questions following management's prepared remarks.

As a reminder, today's conference is being recorded. At this time, I would like to turn the call over to Mei Kuo, Director of Communications and Investor Relations. Please begin.

Diego. you, Thank welcome call. and Century's quarter first Good to conference earnings morning XXnd

session. Joining into Chief first remarks John and Mish, Zercher, Jim our with we me are; today prepared release press our a We'll Financial Earlier and before announcing John start Operating issued call a Chief for our Chief Mike Executive XXXX. Officer; from our and the Q&A Jim, Franzino, results Officer. moving today, quarter President Mike Officer; today's

our will in prepared which webcast insight objectives. and strategy takeaways, Investors During we subheading. are these will available at transparency and into additional in We our provide business, slides, remarks, referring to Events files website serve prepared be posted under reinforce our for the and section and management's as remarks, key the hope for xxiicentury.com a viewing of has framework

forward-looking. Before made today we are of statements begin, the some

to actual factors Forward-looking statements. other statements and differ subject contemplated these those to risks, from results are by uncertainties, cause may that materially

regarding can other be and our quarterly the annual, with filed reports factors information these found in Additional SEC.

before non-cash call, taxes, as discuss we will earnings measures, and financial include depreciation EBITDA, and certain non-operating this which expenses. define adjusted as non-GAAP for adjusted amortization we During which also interest,

over For release to call refer that, Jim. more issued please turn details press I'll on to earlier the our these measures, with today. And

morning, Thanks, today. Good everyone. Mei. call joining And for Century's thanks XXnd

is since start. an my saying career our me Century to and let highest by slides, exciting that energy happened in the start really extremely doorstep. on to our call, what's earnings for based excitement XX-year turning the XXXX what's level my Before off it's last been on XXnd and is

product have stage. MRTP the increase are of confirm with and the also in on absolutely that favor. cap I tobacco emphasis cannabis for market quarter stock Every our administration have U.S. we've opportunities million legalization in seen $XX.X more in macro favorable and hemp and detail let administration and changes, news. the authorization continue of in Federal still both recent our final balance the hoped speak state expand But both especially New turn goes new the I standards, placed as And that our this Zealand. warrants accelerate extremely ban regardless in the cannabis and to nicotine on. our could signals only sheet. tremendously gone support pullback. the our I'll remain and onto First, that franchises. significant commercial on mention past believe possibly and eliminating mandate to safe for banking, regarding Russell we FDA's to authorization, for the for advancing from and our Based new dialogue we not me MRTP continued that FDA day are and dramatically that exchange rejoining they'll in confident again commitment our to includes and events all pending undervalued,

it's quarter. fact, In a quite been

our all Secretary that nicotine mandate was four the long-time in be Slide all is Xavier FDA. mandate administration about March the Services, promoted the considering administration Reduced Human us nicotine a one nicotine accelerated the Health former company. recently reduced the gives cigarette Becerra, first to of for or grand is XXnd and This only market efforts cap and nicotine supported The advanced an has tobacco commissioners reduced nicotine Century proposal Biden product of underlying greatly reduced bellwether the a turning the tougher discussion of as reduced for all changer opportunity the fundamental and proponent before recent in our news and regulation has idea cap combustible FDA appointed regulations. commercial sale on offshore. future Obama Now during offshore tobacco Zealand, recently potential our discussed nicotine panel This New cigarettes already and game X, minimally mandate global have cigarettes for we actively FDA. of a countries industry. And by non-addictive. requiring momentum change idea the reinforces as. of authorized newly the and the for slam was in scenario well being to

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is authorization a and after exercise. theoretical our scale manufacturing commercial a MRTP launch prepared capabilities fully securing launch. in to XX VLA are just for We sales of proven not This days strong

have already refine nicotine produced quantities of significant our variable cigarettes, improve enabling contact capabilities. us research We to

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need with capabilities announced, market secured more tobacco. and highly for expanded capital, capabilities. XXnd and with moving talk the advance KeyGene important relationship testing an differentiated enable more throughput for key Cannametrics as we recently and identification Mike trees. our upstream about to cannabis with of after I'll cannabis We've high production attract swiftly open greater competition, speaks will become it a Century edge. and more critical regulations our competitive seek further, link to is a the differentiation changing as companies in As

by federal Turning our Slide focus. with authorization X, one the changed priorities our If is first state anything and exactly governments in XXXX number quarter priority. that have are indicate on not track Securing for one we areas of MRTP moves these bit.

advocacy will towards influential We our and audiences achieve needed FDA activities we continue other increase to success. until directed

public health believe committed to the a monetizing made Additionally, our enactment cigarettes be are minimally first On all would we non-addictive. of existing IP action before require hemp the single portion mandate cannabis cannabis, portfolio impactful be to year-end. the of most to we hemp combustible or in

our about growth in in slides. are this we farm help announcing for on more morning up I'll lined already that cannabis In sales addition, later customers Colorado the beginning I'm QX. talk with first

in can franchise. designation. from come in balance yet, detail have work to more complimentary you we and cannabis for commercialization, entry in announced which place, additional massive discuss over stewardship, cash plant-based quarter. generate about to tobacco advance hemp identity decisions announce advancements our exercises remain first lower prudent Then And $XX.X sheet framework Although franchise. actively in that and A With advancing our committed are will third in secure we including more our to Mike assure we I MRTP in that back it the market I'll we the barriers warrant to not operating pass with detail. in million Mike? far once we progress financial the

products use And lot good combustible Any everyone. global other on. alternative $XXX available are tobacco media quit, smokers Jim. with of simply it's products today tobacco critical trying and products must to less XX% the important tobacco Slide to death do the Two get This understand global Thanks, morning, combustible vaping of combustible market, of of of compensatory of than addressing slide lion's X, need the and we cigarettes tobacco research believe capture It's fewer smoked health take withdrawal market. We the that caused benefits XX% of be industry. to increased It's most cigarettes looking no see cigarette share tobacco to thirds of enormous minimal are how body illness clear head health all while the public will illustrates dependence, and amount smoke-free billion proposition may address strategy by that for succeeding. they'll for On change XX% not forever. a are the the and and VLN make attention, public us to up an smokers, independent but day, an nicotine that smokers back of done. removing symptoms and reduced equation from for of winning With days, in job product, will importantly, face our telling the nicotine VLN clinical for or our days enormous exposure industry tells cigarettes clear smoking. research number us a will control. smokers with be per the the what the

Congress to is one mandate. a the a application with indication FDA most our right review MRTP to our in our continue positive FDA. health. FDA no levels outstanding that public that the outreach To can Slide we and We believe is every of response the application of nicotine are is for up the information. the X, stages And administration, the requests reduced end, ramp activity highest at about make and important decisions for now VLN of final there to Turning that

to we launch-ready will initial until pressure of and will launching VLN MRTP. advance markets. subsequent both X Slide then We in increased as XX success continue we to our needed within explains and days achieve are securing how

us for launch success offer makes introduce currently to to the from these secure Phases enough for Our are and to fully third potential numerous authorization. expand MRTP square to of test, produce operate measure X nicotine cigarettes foot as we major product that possible a enable studies with and discussions very facility licensed X We're our the Carolina our conventional is across as after prepared parties, our done and VLN commercial country. reduced cigars own retailers using will as in with clinical position. VLN. research launch cigarettes for well We're being market cigarettes. our fully to partners, content in VLN and who availability many our marketing then We refine tobacco soon and also with maximize to ready interest as well received the model market look high XX,XXX to VLN North as

And us volume. of capacity triple we can minimal investment, with manufacturing capacity. X% nearly that Our is cigarette market

and We've are other content fulfillment Our studies by Shown independent well-established the already cigarettes. production nicotine used national year products to implementing growing by part cigarettes of program. scientific to the cigarettes VLN. benefits the tobacco requiring Century's VLN a standard, increased our XXXX million established. the further variable order recently reduced validate levels already public a agencies expansion VLN of also significant for These most of FDA, by of nicotine, research X.X for nicotine minimally crop in of of funded a health an as contain readiness or well NIH as the for all planting level non-addictive achieved XXnd

In sizeable addition to inventory. our already

decision MRTP to also enhance application. new testing in-house. FDA of the includes hours. capabilities in by recent launch be product This Slide installation ahead of improve testing times this looking first able will and market Closing lab equipment, estimate our are our of we'll catalyst investment capabilities both out to at a bring my with We testing costs will our ways will and recoup less to launch tobacco only VLN and designation in efficiency quickly. our in reduced production plans. for on our year, a in be content We'll decision on and our positive anticipation turnaround XX% from one nicotine decrease to that markets. weeks domestic this to It step a than much be upgrade is international move comments MRTP X. the today We more

reduced expectations tobacco. blending certain well enable We flavor are to advancing for general meet for nicotine capabilities, for non-GMO program X.X additional tobacco development and our specific VLN profiles as market as demand

develop non-GMO our tobacco currently Our factory X.X cigarettes. to VLN VLN test and of using is versions our

We an franchise. of transform sales opportunities within Jim? additional tobacco, of before licensing longer-term Capturing traits cannabis early into enabling market drivers technology hemp are this a even drivers Oriental, fraction global a tobacco the come compelling international application combination reduced We U.S. believe and successful including just VLN Century's now exciting you our broader of Jim and to franchise. non-GMO from and statement of bright varieties applying pass will development this introduce confirmed tobacco income VLN a our I'll of of have transition. on to the opportunity of creates X.X. U.S. other our technology our near-term further back with and of technology and to nicotine varieties part industry is considering to update for XXnd our

Mike. Thanks,

open more across be more done to regulations hemp and XX. updating more the the will have level, Federal turn medical as slide uses and Let's both cannabis the recreational We and administration believe Biden including states to country. at

having grown sides including of that have coming approved that is have XXnd the will the New differentiated XX flowing now country of use, increase Momentum focused. XX and legalized weeks use states are capital aisle competition, need few We recreational is both market, as highly which increases uniquely products and cannabis at medical across for slide ago. by York the a Legalization State into which scale. so far the where illustrates. states Century will from increase announcement this Exactly

XX. Slide to Moving

as commercial that high of that and we've are large Monsanto science what cannabis. and IP we to and Deepened about plant vision the the building Our quickly been critical quality, genetic plant fact we believe stable positioned cannabis now asset. the transform a into scale

quality XXnd that XX. traits this in As a consumer Century companies winners. On science needed and are for characteristics the highly plants optimize consistency control command the able to as the to consistency all-time serve to the closely be position. Position and markets. markets? and able and slide the to in Monsanto-like financial plant the margin will competitive premium of will be generate price in that And this also critical link We specific focused products necessary believe success returns, the will create

We identify partnerships demand The announcing demonstrate through value plant of in profile have we'll breeders increasingly Cannametrics. face shortly. to a the clone of each to on this up will a the isolates The purification needed can that KeyGene as for products means enable is built get predictable and demand. panaceas cannabis utilize consumer the Take that component cannabis bring commercial us Growers stable, Scale five a to outstanding for fundamental of technique upstream challenge. profile consistent showpiece plant Colorado and that chain maximize our industry products. market. farm plant hemp slide hemp growing require small-scale and keep to that scale to key production with components seed and and up lines technology. then farm desirable distillates production and to out and techniques to state-of-the-art See assets with an be

vertically are us techniques. and But breeding we integrated in enable strength than clones years. valuable science lines faster far it our far, to plant licensed two will plant IP, Whether IP even deliver in can Importantly, current of the further. core and new combination capabilities take seeds

sequences example, dermatological and profile fragrance projected more still cannabis market more or of to needed Through specific capabilities can traits on can sequence marketplace. competitive Cannametrics, because a genetic global billion replications dollars the be are system. For genetic cannabis to created specific These select Slide indicated $XXX than to cannabinoid a KeyGene few product we or maximize facilitate better we consumer that XX. through important, identify legal in are make to the use applications, specific years, yield create taste certain just nervous here the a is in unique

We to this QX from monetizing revenue library of as of existing year I've a our IP expect portion in before. discussed QX

will now beginning generation initial As existing unique Colorado. expand revenue in additional can for for projects offset And of will cannabinoids in QX end identify the I in growing how our specific to plant will lines to earlier commitments execute leverage pipeline we products. those and additional expertise plant year. then in specialized new lines strains coming on the with Century revenue. revenue plant conversation, higher strains QX. from Then place development These next indicated Develop in now XXnd come are through we have demonstrate levels grow

example grown food the naturally European are applications. We of for consumer including requirements is to move use and reset around their meet specific of outside end-use products. around now good markets in the strategic and related products with working to market partners regulations U.S. a cannabinoids

rapidly this our pass insight later financial we those this positioning the over the to market. this performance. short, between activity. I'll of year. critical expanding John? fruits now you review to efforts link John cannabis across Century makers XXnd and first We portfolio in participating have product site our are growers In And

good XX. The to performance. had margin great And that Jim. QX our summary a quarter Slide results Thanks, is by Mike and stated have the depicted And on gross quarter. overall, financial morning improved we've of everyone. And solid Jim as essentially are evidenced -

contract optimize that the of in to actions our manufacturing Some XXXX been we took successful. have operations

volume higher some the manufacturing Gross quarter cigarettes primarily execute March profit higher in at during and demonstrating VLN part margin the of profit sales A increase lower the in margins. our a increasing decreased this ability by fulfill our on reduced gross by costs for cigarettes, fifth SG&A with upon to Gross sales and order measures quarter. first quarter costs cigarettes, was the gross was launch SPECTRUM efficiencies, we higher in business the which successfully the to had quarter commercial is cost more $XXX,XXX for spectrum for for XXXX cigarette fulfilled consecutive volume on and costs to March, sales volume similar contract manufactured demonstrates the scale basis was the quarter building While for earlier price and impacted immediately obligations we and to authorization. offset cigarettes. the by from was quarter increased manufacturing to team profit over by completing in SPECTRUM In costs begin result the driven offset implemented quarter meet margin branding partially by cigarette business. and from that the first company's dramatically the million. improved set by year-over-year a driven margin business. overall lower due and of to labor combination associated higher our the ability of VLN. to production contract order. first sales. lower in SPECTRUM we SPECTRUM the overhead management primarily strategies pricing $XXX,XXX large points contract partially the realized of by This the beginning improvement year revenue contract last in nicotine the and order was And over incurred by MRTP margin manage in than The decrease The containment in order for the that quarter Net increases strong our and manufacturing are readiness The driven volume factory $X.X ready to the XXX $XXX,XXX. objectives offset

any This authorization of contract of remind take similar remainder the profit everyone does For gross on the digit place contract and to XXXX MRTP. volumes the margin product be manufacturing we introduction would percentage year, our range. mid-single year the by full not manufacturing of VLN following the I to which our volume. anticipated include

by were this expenses insurance and lower lower the MRTP fees. partially to and lower patents incurred partially which by offset detailed contract have on costs a expenses by expenses of of driven by higher XX. We Slide XXXX SG&A costs. increased And licensing provided higher meeting, million, in personnel partially by increase preparation comparison the $XXX,XXX for $X.X Total more is of with The of consulting personnel associated of R&D quarter to including Executive offset MRTP legal million company's first financials Financial legal related XX, members by costs February of our quarter the lower Officer, operating XXXX. that by occurred team, $X.X on offset SG&A R&D of $XXX,XXX higher TPSAC in costs and the Chief Officer and of driven the fees. increase expenses. $XXX,XXX, application addition the costs lower expenses included management Chief new application the

cash loss used the first operating believe of decreased improvement the expenses. For now our provide million which future. $X.XX. representing to loss Net cash for warrants to rate, company And operating per exercise million by initiatives is our XXXX. was million. gross position on of We $X us activities operating a completion $X.X Net of expenses during March higher of foreseeable increased of $X.X EBITDA higher. first healthy the quarter of any additional XX, manage in March year. proceeds quarter $XX.X for in million continued million, quarterly share million total cash by by XXXX with on $X.X free the of our outstanding. net February $X $X.X cash is from million, Adjusted The offset margin announced the is $XX.X increased quarter, of $XXX,XXX total XX% execute of the over net warrants of last burn for Improved the loss million than more our plans is runway We the and of quarter.

our is contract operations, operations franchises. our our now foundation support for we back our Jim. and pass including can manufacturing current initiatives and tobacco Our solid cannabis you growth believe I'll hemp we from to both and

john. Thanks,

Now turning to Slide XX.

investment has tailwinds since the report. have we stronger us But now propelling summary year-end even Our not changed forward.

Our layered market opportunities more several than $X.X and next and the opportunities trillion across well-established three for years. exciting growth now from franchises in

continue global and MRTP believe both clear a product We to our are reduced licensing nicotine important securing franchise category. on mandate significant The sales we approach a our become makes verge for technology relentless more authorization this in move to Century positioning and and truly the tobacco recent XXnd contact reduced on scale. even transformative on nicotine of a leader

high end nicotine reduced extends and to technology. We our markets. more VLN, tobacco-based value for look forward various research beyond developing tobacco use in just technologies content Our

In addition, as we industry technology the mass are segment production. the the well upstream chain value positioned that makes to cannabinoid potential of in turn linchpin to provider the

will the hemp, a of IP a network built accelerated this of year, We giving a development and us hemp unique to disruptive a new capability and cannabis to accelerate highly monetize partnerships on and have IP cannabis our plants portion of begin disruptive basis.

on that the successes. the laid open plans with continue And on strategic we we've continue regularly please operator, hard And for to out. communicate call always, As questions. will our work execute to to

this time, Vivien Thank we'll be session. you. question Azer first Instructions] state [Operator a And conducting question-and-answer Please from with comes your at Cowen. question. Our

morning. Good Hi.

Vivien. morning, Good

Good morning.

on first side, is the is, please. So tobacco my question

But is to are there's on the much heavy e-cigarettes is as process VLN a pretty I'm the encouraging that be you menthol? the lift conversation So understand appreciate how curious your given And perspective. there certainly on around capacity going at to think pursuing well? just really from agency, PMTA they

standards about the they're Vivien. It's great you're all Good morning, when product two is major PMTA talking and those This that question. Mike. applications undertakings, are processing. Clearly,

the of move up nicotine is up of to done PMTAs the understanding are work time not in of on done the our on application. FDA MRTP that that. Our all impacting Nor staffed geared anticipation indications that's the that's being our And being that forward. mandate ahead work

FDA's capabilities believe to all those. we the manage got So of

Okay, that more approach, in on terms will certainly, just more specific perspective. of change - then a we're can the I taking commentary - that we're Majority about I inclined timing? I little about be of that encouraging. guys you you for And Cowen, the are that's from side, And helpful. democrats get of regulatory think Thank regulatory word likely, Leader heard is change. cannabis seem from just But the at a rid thinking you the kind bit think the how to slightly conservative given the filibuster. don't Schumer

product that for consumer strains the the into that's get on advancements in offshore, the on a U.S. stage countries we're And relatively side new product hemp the help clarified we'll consumer some where is, there. The process. out confusion that where be look year. there's in has I And Yeah, compartments. at uncertainty this the so attention least, that short and the focusing we will with even the Farm very But and recreational at still believe way way there's will side. the which - two legalization great the manner. to component, store a That think at certainly set question, legalization on the There's the appropriate term, Vivien. go least And we medical the will through it use, it Bill, in

strains So movement partners advance the the That and And clarification move U.S. general. high the we in can even that more CBG are encountering strains, got our of take U.S., then legalization that, strategic in initial to quickly. to we're combination the some THC offshore That's the hemp And in in country several a in that with federally, think we dialogue play on out. we've will side a higher the the these side behind occurred strategic right think getting such of place. partners, meantime, and But hands the with basis. think that quality level higher issues. we time to has strains, new things cannabinoid do combination legalization strains. take on as level into We've those of going got a strains the we're on quality we where recreational active on

example, for Canadian So region. the

really way it. no and side the strategics, becoming when the combination the to And there. more But these they're scale problem moves more we more everywhere on of we that's that strains and have is doubt and prepared strains side we're will quality with at available. the the the out the there's be these growing the U.S. of looking recreational recreational have with on So the dialogues a around world fully

Understood. Thank you. helpful. That's very

McIlree your Our next James. question state with comes from James question. Please Dawson.

Good the things G&A new level you. forward was it's some morning. going too good low the a rest unusual or high too year. John, suggest things, or there in that is onetime has had Thank of for the there would

our the you focusing we as that's was And rate, some - accordingly may it. discretionary, we of manufacturing, to There we've which the have and for we'll we VLN, sustain - some the of over did burn, anticipate period us overall, the of would similar the gained given a was million with strategies of margin out. the the overall, developing expenses. that cash been for with expenses But and resources we that with which pursue well which around month, $X.X the our at Thank some be question, balance cash burn, cash cash G&A budgeted around related to contract them Jim. manage on shifting about which this we year, first maintain point. it brand are from time. But quarter a Essentially, we pull burn have to expenses anticipate forward discretionary

like you to in million you. about it are second Thank great. that's around Okay, Jim, in that? small talking thinking that? if than second it's is I a hemp for we larger the the talked the half? amounts, was half XXXX, $X than million? - you million that could put And then $X revenue from ranges And Is less are wondering you Or business.

That There's to strain I bottom tough range. in I $X of CBG, license with that things components. library it. monetization to the in our that plant bottom exact obviously in I'd starting advanced it's our to dialogue the put in will million for figure in we drops we're But is of cannabis, fee question, QX. existing come been around through to it's and to what substantive of CBD-CBG with. an first thanks say two drops Yeah, IP million strain, we've There's QX the of to said are the an and Jim. announced combination. this resetting earlier, line $X the growth addition all hemp - as But And that, based how higher line. on our network, But upfront

separate So about putting five the we're lines in ground.

the because that levels As you as And and depend process. October route. period the exact higher cannabinoid we timeframe are that can, on growing we're into we harvest. seedlings It'll you go. all yields as try as speak, you beginning these far the to And on later the harvest, time the get push

So yields. to to for range, off-take levels. going that as million that But push agreements time QX. the in be to on $X be could the have biomass then we're depend and optimum harvest And $X for to million we That is that in most range biomass, that again in going part period.

QX margin isolates our modest, just that's, putting off we've a It's at perhaps of of a commitments on it first put in XXXX, we it. high if or place. spill the into could needs take profitable, are distillates that farm. these strains, And got Some know, but framework process that it's and based to But you need grow. of highly around

- are that talking Those not fees. are correct? those Is those annual about and onetime fees. you're but licenses Okay,

Yeah.

bucket a first I was that is talking with a of about partner. onetime The that product strategic

Now one is a that expanded it's that could particular not be exclusive. onetime for strategic But partner. because that

to help Mike, to menthol out the menthol. until VLN And, they ban like --? it the possible relates it mean, I the your was you what said until have - hoping Okay. wait on seems wait says, application could understand or it's FDA you think I me that implications menthol as of is you would figured

it's Jim, question-- a great Yeah,

Leave - it or

this Act, Tobacco will back reasons. for regulate of a Control to our the a on issue One, mean believe banned it impact to years going We tobacco. first they for didn't working has couple don't I to interrupt when there. been application FDA granted sorry. menthol it's, Yeah of were the authority many you

did for cigarette. versions So that, nicotine new reduced of non-menthol they you know, Despite for them. issue it's not application, as a authorize our PMTA our and the both menthol

product the - the product. product exactly same the So as product the MRPT PMTA is

a ban And that product change a be already And a understand non-menthol across they've we And increased, don't meet. then cigarette symptoms. for menthol public non-menthol, nicotine decided that science, intention whether because that or the reduced to between a - into it menthol withdrawal menthol health. place. announced low consumption expect is protection don't to they've very to are regulatory the see menthol the [indiscernible] simply menthol solid is results there analysis compensatory and that what or standard there doesn't changing, - consistent body reduced PMTA their that So the put nicotine has we cigarettes. might That's using smoking appropriate is reduced, nicotine equation secondarily, or cigarettes of both differences products, of smoking

science. there health on is the So based public the benefit

or clearly a our so, we rule been expect yet hasn't product. menthol And would proposed for published a rule, around ultimately even

future. in menthol the included accepted the for ban cigarettes come to that be Our it menthol from VLN might in to approval be MRTP any and

MRTP? it or or with approving And the the that's is the about similar tasked same at the ban FDA. the FDA menthol to with Is group the prior as capacity question, asking evaluating that it

based handled for any the So body think it of don't the say, to But it that I again, relates that is, group on should there's significant things standards, my pieces an any for response the bulk that responsible So different does information our aren't There a I reviewing as MRTP is submitted overlap. down. that think the based group's are to understanding the group work in information. is I application? this overlap, don't on don't product slows drafting than comments - - of multiple of understanding that rules application. my proposed I

talks is about the of anything you useful restructuring say, is or can Kuo just with occurred has one. of that where Panacea? there your the that are last to on end you restructuring? If my since agreement then That the quarter? know, And

Yeah, working and very And also we through same the and down isolation them towards kind the then farm. has win-win that path turning attention with And collaborative, continue already. the extraction talked approach that a on We're really we've Panacea. with of been to we've our equipment. been working

marketplace products to are So that we the promote same finished really strains continue higher the them up. time, strains with papering work help through. with of on more their working the concept valuable these into coming And at to

the And really, that up. process direction. continues talking helping the in just Panacea their market. to the undoubtedly coordinate in about have truly relationship, We've as But it to we're much very able right moving matter end it's to path. the So directions it been is will in papering same or result down get finished will channels right and also be be a heading the of going everything to stronger well. And great products

all in about we down, quarter, path button sometime that, talking - the next and to think Jim. communicate complete. quarter, it's would we've the heading same hope But down that's current this I we'll been everything when So still

Thanks fantastic. And Okay, good lot. a luck with everything.

you. Thank

you. some pass to go web now Kuo I'll Instructions] Mei Thank through to it [Operator questions.

Thanks, Diego.

question would modifications there making growers the cannabis first dispensaries how be the you incentive and developed current and market Our to plants? to on is, your you're of or elsewhere? from be preventing your And strains why genetic you using product? the U.S. to What hemp for some is cannabis bringing in can elaborate

take that. I'll Mei, Thanks question. Yeah. It's a great

critical go major that now. talk the entire world the MSOs foundation problematic. the Canadian a of the talk the as quality cannabinoids create They're can and industry just real they consumer you into can to or around And it that everywhere basically the batch are with are the They you stability production fluctuate are right mass me poor experience. just from they batch. very growing, in LPs, And that is strains challenge again, implode. Let of not level yields with consistent. plant The go

standard this announce. That's So high been in We're talked tobacco, plants strategic partnerships is being of basis We've lines about. plant scale focused only alkaloid and a I plant that soon really at to on specialty. about these version three our third we've that. Monsanto Monsanto able the hemp, a a line boutique modulate rapid approach or We're talking give in in quality. fact. work in are will gold

scale large opportunity that So to the is address production.

several Now we new have strains.

which ultra-high continuing terpenes which And of is on is move one of which move And lower of to the is in impact in CBG. cannabinoids general, One end THC, the those one those modulated to end profile ultra-high flavor we're to fragrance forward. particular profile.

second particular of in in next in next plant half into one the is CBG the line kind with CBG the CBG several hot the strains fact, weeks. In beginning of strains going are into property plant year. the ones in the we're of a over stable - Because of putting year ground and this

then what's on a concept, in of as fact lines, existing proof optimized. said plant better generation lines. our are Will turn near and we than still was is that not the with although great plant attention always next I've, existing forward today, So marketplace anywhere as moving the this

So we talked strains continue growing that that and this roughly we've will in next through coming two-year to hopefully do the about. with cycle

Thanks, Jim.

way have solution identified question the away? prevent fear to that they are Our any from But do decades nicotine government when actually nicotine taking to is tobacco they the is, are And big if saying just this next have They a you stated for a has mandate action? tobacco? what if implemented? produce they that publicly

the Yeah, me. questions. all here. Great our for listeners Thanks question of for

processes. one alternative way simply well-known would So are other extracting produced by nicotine that the-- they nicotine that be we're be do an extraction do cigarettes there's we technologies. - there know the - that produce afraid so tobacco that plants using from here not could know We

that share before that it de-necotinized market It Morris. tobacco. from fact, a cigarette there it in sense down Philip X% million achieved yanked product made was they Next. that the did profits a launched extraction to company they In was market they to them built XXs addiction. referred And realizing a - market nicotine path But wasn't a from on cigarette. to the as It about as the that for back go produce was facility by called a $XXX that

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of to nicotine. what with is is dust it something then end out akin you alongside more up process shell in because you've all flavor tobacco, the taken really the or that so paper that's And

intellectual plant. we portfolio, But were nicotine they we very biosynthesis nicotine, And a simply strong try tobacco to so tobacco related that big our in the And around to and nicotine to more to done a all technology, if it's use acceptable really to believe what believe duplicate superior for the very moat to we've a editing growing far technology this, without genes smokers. opposed genetic it'll because is we of technology. where we're extracting tobacco true it'll wide as property do have the take be deep years

the in that use And leading as patents. tobacco our may And that comments to so with mandate. public will proposed got other mandate. the to create to of we're can't all certain this technology around of use to commercialize the quite able comply NPRM companies the technology the industry our and that, while acknowledged well. position, nicotine comfortable And tools meet they we've be to want our mandate They because the their to those tobacco. And

can consideration, into the whether into it possible that FDA And across not a we're because the mandate But to mandate. comply. been willing take And so industry to industry put consideration for implement that's we're therefore a considering to day mandate. or FDA our does of the place. have for not to if license the technology that and at industry comply, help the willing end such were clear very makes be to we've a FDA

implementation IP that. support the the help So in to to very of to the comply and short, monetize our solid in process we're FDA position industry to it, in of doing with and a a mandate

it of measure Mike. the strong the slow a Thanks, by the a and was the was in-house And speaking calibrating new factor on suggestion levels nicotine action to testing in FDA, equipment installing the MRTP? agency

fact really by It the And our investment testing FDA. at speeds the was simply that that comes a approximately operations team. this decision and was forward it make on team, a suggestion based from significantly to around brought quite all to testing. - our made This not idea reduces decision was also an things we XX%, it up our the costs when

need to we And to every our processing test the want step have we in tobacco, in the from manufacturing sure tested inventory. that we chain. when what of farms right comes it's and at to know So make levels then it to the nicotine and

that testing is of a we've want that's lot involved would in it there's that. said ensure so factory what compliant with leaves be. And product every that our to We

along the when we so That's been step the has orders. testing. research the do we of manufacturing cigarette a every costly, And tested lot way. SPECTRUM, It

all to us critical market this importance so allows and become do much this simply quickly, of which And of we more our reduces when to will VLN. costs with go

on of soon. the decision made we investment coming so positive And anticipation that this MRTP in

been about or IP Century recently some any concerns Thanks, of couple IP Are Mike. XXnd And have for waiver possible there VLN protection? we here. questions for have time left vaccines. reports COVID-XX similar for a There news

Yeah. Go ahead, Mike.

sure. Yeah,

the FDA epidemic. really no are license is this a made parts tobacco these technology. world. we the of think, the related between bad and it IP is similarities our around pandemic obviously, regulatory while well-studied are COVID tobacco. is it's and clear global to certainly we've is this There raging COVID-XX that world, thing, I solution. situations a And the two have an morning and this with to bodies big We're There in other willing IP. news - to other

licensing. vaccine COVID fought have the of who manufacturers, some unlike So against

conventional making tobacco same into there. So cigarettes. and is for as virtually our it be ultimately, there's would and And comparison the tobacco really growing cigarettes process, conventional it no reduced nicotine

concerns with no specialized around vaccines, either. that, processes, unlike So there's

IP. So point the time of do to we that, do willing in license day, to And it. our government any at at will the us the asks end we're when

sure one Thanks, just the we touch cannabis the question. last want Mike. I to business. on of side And make

raise about of faster achieve approaches? Are a You to they than other Why similar cannabis? idea Century of move there large this Monsanto companies with XXnd growers? What can't this?

very years pathways few synthetic coming in to approach, pharmaceutical clinical towards Century. There's improve helped really to approach expensive really a a lines. use. without fluff But you would There's to fermentation. But development. least And And a or out biosynthetic that just purely are just CBG. Yeah, there's is continue I the prior cannabinoid, on get and to XXnd which in product to been a lot that's at substance what CBD five single that targeted seven and in approach. develop to of substance there get a believe

in like companies breeding which we not approach of I hitting gold a learning of approach. and at we're much a like So their KeyGene this And that again. high markets. they closest But is yesterday, and that least - area. products the what itself. KeyGene are with you biotechnology with based standard a approach, amazed And adventure. it's there the space is Monsanto it commodity with realistically seven in way. Plant-based And XX-year specific I with breeders into apply are type I call two-year else to speed alkaloid standard assure large or much. we that they in can and continue can XX that that approach, one going type more doing technology competitor to you is what - the that And is which work. It's the when particular have participate years. been a That's to of plants were had to very quick, alkaloid just we Then Cannametrics and corn, seven soy really and can cycle, those breeding unique at was standard they this be the these you are be clear which there's in they certainly milestones. is the hemp nearest dark. on. specialist using have cannabis strains end honed not in documented use and do science. off different very is this like does do the scale combine no get been where very high quality, Then our alkaloid shooting

Thanks, Jim.

any ran you I out for have think we questions. remarks, if of But closing time

to wanted thank for just I everybody their time.

things to three continue across have and our We high look forward levels optimism forward. of more And all to moving we of communicating franchises.

thank and be you soon. So for your talking we'll all time,

Thank may party a disconnect. today's Have concludes great All you. conference. day. This