22nd Century Group to Sell GVB Biopharma for $2.25 Million
New York-based 22nd Century Group recently announced its plans to sell off its GVB Biopharma unit, a CBD maker, for an estimated $2.25 million. This decision comes less than 18 months after the company purchased GVB for around $60 million.
GVB Biopharma specializes in drug development services and is a contract supplier of CBD and other hemp derivatives to the pharmaceutical and consumer goods industries.
Cost Cutting and Sale Details
According to a press release, 22nd Century is selling GVB to Specialty Acquisition Corp., a Nevada business affiliated with current GVB employees, in an effort to cut costs. The purchase price includes $1 million in cash, and the buyer is issuing a 12%, $1.25 million promissory note. Additionally, the seller has the right to recoup an unresolved $9 million insurance payout from a 2022 fire at a GVB manufacturing facility in Oregon.
CEO’s Statement
John Miller, interim Chief Executive Officer of 22nd Century, stated that “The sale of our hemp/cannabis franchise will immediately and materially further reduce the cash and operating demands within our business.”
Plans Dashed and Financial Situation
When 22nd Century Group acquired GVB Biopharma, there were expectations for positive cash flow and a significant increase in income. However, these plans did not come to fruition, leading to the decision to sell off the unit. The company has suffered significant losses in recent years, including ~$72 million through the first three quarters of this year, ~$52 million in 2022, and approximately ~$33 million in 2021.
Company’s Background
22nd Century Group is an agriculture biotech company with interests in reduced-nicotine tobacco, hemp, marijuana, and hops. In 2021, the company claimed to have sold more than five billion doses of CBD. Despite its potential in the industry, the company has been struggling financially, consistently reporting millions of dollars in losses each year since going public in 2011.
As the company moves forward with the sale of GVB Biopharma, it remains to be seen how this decision will impact its future operations and financial stability.
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