Why 22nd Century Group, Inc. Are Climbing Higher Today

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What happened

Shares of plant biotechnology company, 22nd Century Group, Inc. (NYSEMKT: XXII) hit a new 52-week high Friday, gaining 12.1% as of 3:52 p.m. EDT. Recently presented results from a big clinical trial suggest the company's patented tobacco technology helps smokers drop the habit.

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So what

Although the details of the 1,250-patient study are still under peer review, preliminary results from the University of Pittsburgh sponsored study bode well for 22nd Century Group. The lead investigator stated that smokers whose nicotine intake was immediately reduced by switching to cigarettes filled with the company's very low nicotine (VLN) tobacco had a better chance of rapidly quitting than smokers who were gradually weaned off the addictive substance.

Friday's announcement comes at a good time for 22nd Century Group. Earlier this year, recently appointed Food and Drug Administration (FDA) Commissioner Scott Gottlieb promised to finally flex the regulatory muscle congress enacted about eight years ago. 22nd Century Group claims it's the only company capable of supplying America's $130 billion industry with VLN tobacco.

Now what

It's important to note, 22nd Century Group didn't release any data from the study. We don't know how many patients given VLN cigarettes ceased smoking permanently, or if there was a statistically significant difference between the groups.

While Friday's announcement does little to improve the company's outlook, becoming the U.S. tobacco industry's exclusive supplier of cigarette tobacco would expand the company's recent $357 million market cap many times over. The FDA hasn't given any timing details regarding a possible VLN cigarette mandate, and none of the industry heavyweights have signed any big contracts yet. Until they do, investors better stay braced for volatility.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.