New York-based biotech company 22nd Century Group, Inc. said it began integration with GVB Biopharma after it traded $60-65 million in stock for 100% of Las Vegas-based CBD in april.
James A. Mish, CEO of 22nd Century Group, previously suggested that the acquired company could generate “near-term” positive cash flow and double his company’s revenue, pegged at around $31 million in 2021.
The acquisition “will add significant business scale to 22nd Century’s existing hemp/cannabis franchise,” GVB said in a press release.
A NASDAQ-listed penny stock, 22nd Century Group is an agricultural biotechnology company with interests in tobacco, hemp, marijuana and reduced-nicotine hops. The company claims to have sold over five billion doses of CBD last year.
A decade of losses
22nd Century Group, which also owns Goodrich Tobacco Company, LLC, suffered losses of about $33 million last year, according to its latest annual report, and recorded losses of an additional $8.9 million in the first quarter of 2022. Previous annual reports show that the company has consistently lost millions every year since its IPO 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 said it expects revenue of around $48 million in 2022, up from around $31 million (+58%) the year before. William Swindells of GVB, which is privately held, told HempToday the business was “cash positive” but did not say whether it was profitable.
Aggressive push in UK
22n/a Century could be banking, in part, on GVB’s aggressive efforts to claim a chunk of Britain’s growing CBD market, estimated at £690m (~€814.5m; ~$905.7m) in 2021. GVB claimed in a press release on April 7, 2022 that it is the largest provider of white label CBD formulations on a list of UK Food Safety Agency (FSA) pre-approved CBD products on the month the latter, most of these going through RX Pharmaceutical, a separate UK-based company with which GVB does business.
RX Pharmaceutical topped the FSA’s list, being associated with 431 products out of a total of approximately 6,000 still ‘alive’ in the FSA’s approval process for novel or ‘novel’ foods. The company entered its products into the UK CBD competition 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 “several international joint ventures in Europe to co-develop and co-own processing and distribution businesses”, according to the press release.