22nd Century Group, Inc

Welcome to the 22nd Century Group's fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode, and the floor will be open 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 May Kuo, Director of Communications and Investor Relations. Please begin.

Thank you, Brock. Good morning and welcome to 22nd Century's Fourth Quarter Earnings Conference Call. Joining me today are Jim Misch, our Chief Executive Officer, Mike Serker, our President and Chief Operating Officer, and John Franzino, our Chief Financial Officer. Earlier today, we issued a press release announcing our results for the fourth quarter and full year. We'll start today's call with prepared remarks from Jim, Mike, and John before moving into a Q&A session. During our prepared remarks, we will be referring to slides which are available for viewing in the webcast and as posted in the investor section of our website under events at XXIIcentury.com. We hope these slides will serve as a framework for management's prepared remarks, reinforce key takeaways, provide additional transparency and insight into our business, strategy, and objectives. Before we begin, some of the statements made today are forward-looking. Forward-looking statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found in our annual, quarterly, and other reports filed with the SEC. During this call, we will also discuss non-GAAP financial measures, which include adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, and amortization as adjusted for certain non-cash and non-operating expenses. For more details on these measures, please refer to our press release issued earlier today. And with that, I'll turn the call over to Jim.

Thanks, Mae. Good morning, everyone, and thanks for joining 22nd Century's conference call today. 2020 was a tremendous year for 22nd Century Group. Since joining the company in June, we've really stressed communicating our strategic and tactical plan. The significant increase in our stock since reporting third quarter earnings is a testament to our commitment to our shareholders. Despite the recent volatility, and it's been driven by the positive impact of all of our remaining warrants being exercised and sold off, plus general market conditions. We've done nothing but consistently communicate news regularly to our shareholders to build confidence and credibility. Today's call is a continuation of Morgan news and what's to come in 2021. If you turn to slide three on the presentation, I'll touch on a few key highlights. We've never been more excited about our tobacco franchise and our prospects remain extremely high. Securing MRTP authorization for BLN and reducing the harm caused by smoking remains our number one priority. We are highly confident that we are in the final stages of the application process with the FDA. As Mike, John, and I continue to defer any variable pay until such time, our confidence level has only gone up based on the proactive efforts we have deployed over the last several months and other strong signals, including the recent change of administration at the White House. We believe that democratic control of both the Senate and the House of Representatives will draw the much needed focus on improving public health. The Biden administration is already showing signs of placing public health as a top priority. Last week, President Biden issued a proclamation to strongly committing to improving the prevention and treatment of cancer. We believe the favorable political climate will influence the timing of our NMRTP application, and even more importantly, the enactment of a mandate to require all combustible cigarettes to be made minimally or non-addictive. The renewal of a nicotine mandate is a game changer for public health and is becoming more and more of a reality. This will be our grand slam. This has all led to a refreshed sales forecast and an expanded VLN growing program that we've announced previously. Since reporting third quarter earnings, we have refocused our hemp cannabis strategy to target the upstream segment of the cannabinoid value chain. We have now secured and communicated new IP with Keygene and four of the five partnerships needed to maximize and support each component in the cannabinoid value chain and we are in advanced discussions with strategic partners to support the fifth breeding component. This network of partners will enable us to dramatically increase the speed at which we develop and offer new disruptive hemp cannabis plant lines in two years, a fraction of the time versus the current competitive options. We continue to demonstrate diligent financial execution, Our financial results were in line with our expectations for the year, and we continue to operate as efficiently as possible. Furthermore, our balance sheet is well funded to support our current operations and strategy. The positive result of $11.8 million of additional cash generated from the exercise of previously issued warrants over the last couple months provides us with even additional runway. I'm pleased to point out that following these transactions, our market cap has been liberated, and we are free from any warrants. Plus, as we have consistently communicated, we have no need or plans to raise additional capital. On slide four, we have a pivotal year ahead of us, and we are excited to embark on it. Outlined on this slide are our priorities and key areas of focus for 2021. This is all consistent with our long-term business strategy. Again, securing MRTP authorization is our number one priority. We are fully prepared and eager to launch VLN King and VLN Menthol King within 90 days of authorization. Furthermore, we will continue to support, advance, and advocate for the FDA to enact its proposed reduced nicotine mandate. We look forward to monetizing a portion of our existing hemp cannabis IP portfolio beginning this year, and we will continue to bring next-generation disruptive technology forward. Our third plant-based franchise is Massive. and has a natural intersection with our other two franchises. We are keen to turn our attention to the development of our third franchise once we secure MRTP designation. And finally, we will look to continuously improve our operating structure, identify areas of additional revenue opportunities, and invest in growth initiatives where we see the greatest return on investment. But our opportunities only start here. On slide five, you can see that our three franchises provide us with a continuous, rich pipeline of revenue opportunity for years to come. By leveraging our core strength and know-how in plant science, we'll be able to create an extensive pipeline of high-value commercial opportunities beyond our near-term prospects and across all of our franchises. MRTP is only the beginning of our journey for our tobacco franchise. It serves as a catalyst for our VLN brand, including VLN 2.0. and tobacco franchise will launch our business prospects even further into international markets. Our work in tobacco just doesn't end with reduced nicotine contact tobacco products. We will leverage our decades of research with the tobacco plant to develop additional tobacco-based technologies for multiple applications across various end-use markets, including solutions for the pharmaceutical industry. The hemp cannabis market is still early stage and underdeveloped. Our opportunity here starts with the monetization of a portion of our hemp cannabis IP this year, and the monetization of new disruptive next generation hemp cannabis plant lines in 2022. It is without a doubt that federal legalization of cannabis is in the near future. A list on cannabis prohibition will unlock enormous white space revenue opportunity for proprietary plant lines and IP, and we'll be at the forefront to capitalize on this occasion. Just a reminder, when the alcohol prohibition ended in the U.S., it took 15 years to satisfy demand. Our third franchise is large, growing, and a natural extension of our core strength and expertise. We've demonstrated a strong track record of successfully manipulating and developing new plant lines, technology, and IP. We believe we have a faster route to commercialization than our first two franchises. The third franchise operates in an industry It is not as highly regulated. We estimate that between our three franchises, we have more than $1.3 trillion of addressable market opportunity. Furthermore, I'd like to bring to light that there's a natural intersection of adjacencies across our three franchises and even more opportunities than we can currently imagine. I'll pass you over to Mike for more detail on our tobacco franchise. Mike?