22nd Century Group Inc. reported Thursday a larger loss in the fourth quarter, again primarily caused by increased production expenses.
The loss was $3.73 million, compared with a loss of $2.75 million a year ago.
The plant biotechnology company had an earnings loss of 3 cents a share, unchanged from a year ago. There is no analyst forecast for 22nd Century from Zacks Equity Research.
22nd Century, based in Clarence, N.Y., bought the cigarette-manufacturing equipment of defunct Mocksville-based Renegade Tobacco Co. in 2013 for $3.22 million in a bankruptcy proceeding.
Recently, the company more than doubled its local workforce to 70 at the 61,000-square-foot production plant that Renegade once owned off Farmington Road as part of landing a national filtered cigars supplier contract. It has 79 employees overall as of Feb. 23.
Revenue was a record $5.94 million, up 78.1 percent from a year ago.
The bulk of 22nd Century’s revenue comes from production of traditional tobacco products, such as filtered cigars, and from very-low-nicotine cigarettes, its Spectrum-branded line, sold to government agencies for use in public-health studies. The company landed a new filtered-cigars production contract in May.
The company has not received revenue “from licensing or broad commercial sales of its very-low-nicotine tobacco” products.
The company posted a fiscal loss of $13.02 million, compared with a loss of $11.58 million in fiscal 2016.
22nd Century exceeded its revenue projection of $16 million by reaching $16.6 million, up 35.2 percent. However, the cost of products rose 36.2 percent to $17.3 million.
The revenue growth and larger earnings loss come as the industry spotlight on 22nd Century brightens.
The company could play a pivotal role in the Food and Drug Administration’s quest to drastically lower nicotine levels in traditional cigarettes.
Approval of the very-low nicotine cigarettes could lead to a sharp increase in revenue and a potential buyout by a global tobacco manufacturer.
The FDA released July 28 its very-low-nicotine recommendations, which must gain approval from other federal agencies before being implemented. That process could take at least a year.
The company’s theory behind producing very-low-nicotine cigarettes is that by making them less addictive, smokers would smoke fewer cigarettes.
The company said that if it gains FDA authorization for X-22, its prescription-based smoking-cessation aid, it will pursue a joint venture partner or other capital sources to help pay for a phase III clinical trial in 2018.
During the quarter, British American Tobacco Plc announced Sept. 25 ending a low-nicotine traditional cigarette development partnership with 22nd Century that had been worth $14 million over four years.
On Oct. 9, 22nd Century announced it had sold 20.57 million shares in a direct public offering that yielded gross proceeds of $54 million.
The company sold the shares at $2.62 each, representing a sizable discount off the Oct. 6 closing share price of $3.41 — just nine cents shy of its 52-week high.
The company said it has enough cash reserves — at $62.63 million — to pay regular operating expenses through 2023.