New York-based biotech company 22nd Century Group, Inc. said it has started integration with GVB Biopharma after swapping $60-65 million in stock for 100% of the Las Vegas-based CBD company in April.
James A. Mish, 22nd Century Group’s CEO, previously suggested the acquired company could generate positive cash flow “in the near term,” and double his company’s income, pegged at ~$31 million in 2021.
The acquisition will “add significant commercial scale to 22nd Century’s existing hemp/cannabis franchise,” GVB said in a press release.
A penny stock traded on NASDAQ, 22nd Century Group is an agriculture biotech company with interests in reduced-nicotine tobacco, hemp, marijuana and hops. The company claims it sold more than five billion doses of CBD last year.
A decade of losses
22nd Century Group, which also owns Goodrich Tobacco Company, LLC, suffered losses of ~$33 million last year, according to its most recent annual report, and had further losses of $8.9 million in Q1 2022. Past yearly reports show the company has consistently lost millions each year since going public in 2011.
GVB provides drug development services and is a contract supplier of CBD and other hemp derivatives to the pharmaceutical and consumer goods industries. The company has said it expects 2022 revenue of roughly $48 million, up from ~$31 million (+58%) the year previous. William Swindells of GVB, which is private, told HempToday that the company is “cash positive,” but did not indicate if it is profitable.
Aggressive push in UK
22nd Century may be banking, in part, on GVB’s aggressive push to claim a part of the UK’s growing CBD market, estimated at £690 million (~€814.5 million; ~$905.7 million) in 2021. GVB claimed in a press release April 7, 2022 that it is the largest supplier of white-label CBD formulations on a list of CBD products preliminarily approved by the UK’s Food Safety Agency (FSA) last month, with most of those coming through RX Pharmaceutical, a separate company based in the UK with which GVB does business.
RX Pharmaceutical topped the FSA list, being associated with 431 products among a total of roughly 6,000 still “live” in FSA’s approval process for new or “novel” foods. The company entered its products in the UK’s CBD sweepstakes through EIHA Projects GmbH, a consortium organized by the European Industrial Hemp Association.
GVB and RX operate independently but expect to merge in the near future, according to Swindells. The company is also pursuing other partnerships in Europe, Swindells added. GVB has “multiple international joint ventures in Europe to co-develop and co-own processing and distribution companies,” according to the press release.