22nd Century Group Stock Soars 39% on $9.5M Insurance Settlement
The cash infusion provides non-dilutive capital, bolstering the biotech firm's balance sheet and its stated path toward profitability.
Shares of 22nd Century Group (NASDAQ: XXII) surged nearly 40% in pre-market trading after the biotechnology company announced it has secured a for business interruption claims. The settlement provides a significant, non-dilutive cash infusion that strengthens the company's financial position as it moves toward its goal of profitability.
The payment resolves claims related to an incident at the company's Grass Valley facility in November 2022. For investors, the settlement is a welcome development, providing capital without issuing new shares and diluting existing ownership. This news comes on the heels of the company's recent efforts to clean up its balance sheet, having recently become debt-free. CEO Larry Firestone noted this transition allows the company to move from "survival capital to growth capital."
22nd Century Group is a company focused on designed to improve health. Its primary mission is to reduce the harm caused by smoking through its proprietary reduced-nicotine tobacco products. The company's flagship VLN® cigarettes, which contain up to 95% less nicotine than conventional cigarettes, have , a key designation for products that can help smokers reduce their nicotine consumption.
The $9.5 million in proceeds is expected to be received within 45 days and will be used to support general corporate purposes, including the continued commercialization of its VLN® products and other strategic growth initiatives. The company's management has previously stated that these strategic moves, combined with financial discipline, are positioning the company to achieve profitability by 2026.
While the settlement provides a positive catalyst, the company still faces challenges. In its second-quarter 2025 earnings report, 22nd Century Group reported a sequential decline in net revenue. However, the strengthened, debt-free balance sheet and the new injection of cash from the settlement provide critical resources to help the company navigate its growth phase and execute on its long-term strategy in the reduced-harm tobacco market.