22nd Century Group, Inc. (ticker: XXII) wants you to quit smoking. But it also wants you to feel better. The biotechnology company is primarily focused on reduced nicotine tobacco and is also working on hemp/cannabis plant genetics research and development.
In an interview with IPO Edge, Chief Executive Officer James Mish and Chief Operating Officer Michael Zercher said the Williamsville, New York-based company is looking to expand globally in pharmaceuticals and consumer products. The full interview is below:
IPO Edge: How are you poised to disrupt the tobacco and cannabis industries?
22nd Century is poised to disrupt both the tobacco and hemp/cannabis industries as a plant-based, life science company. Our mission is to develop and provide unique, plant-derived commercial solutions to the life science, consumer products, and pharmaceutical markets that enhance and broaden the consumer experience. Using genetic engineering and modern plant breeding techniques, we are able to modulate the levels of nicotine that naturally occur in the tobacco plant and have created our proprietary reduced nicotine cigarette, VLN. VLN has 95% less nicotine than conventional cigarettes and, pending the U.S. Food and Drug Administration (FDA) authorization, will be the first and likely the only combustible cigarette to ever receive a Modified Risk Tobacco Product (MRTP) designation. We have plans in place to commercialize VLN in the U.S. 90 days after we receive our MRTP authorization.
VLN is a remarkable product and addresses a very large market opportunity. In the U.S. alone, there are over 30 million smokers and over 1 billion smokers world-wide. Global tobacco sales total approximately $800 billion, with $100 billion of sales in the U.S., and nearly 90% of global tobacco product sales are from conventional cigarettes. According to the Center of Disease Control and Prevention (CDC), two-thirds of adult smokers want to quit smoking and roughly 50% of smokers attempt to quit each year, however, less than 10% actually succeed in quitting. Based on our internal research, 60% of adult smokers indicated likelihood to purchase VLN, including 25% of respondents indicating that they are very likely to use the product. We believe VLN has massive market opportunity and is attractive to adult smokers looking to reduce their exposure to nicotine.
Furthermore, our reduced nicotine cigarettes support the FDA’s comprehensive plan on tobacco and nicotine regulation. The FDA’s plan proposes a new product standard to lower nicotine in cigarettes to minimally or non-addictive levels.
Can you talk about how your VLN product will help smokers quit?
We do not claim that VLN will help smokers quit smoking. Such a claim would require the FDA’s approval of a drug claim, however, based on the large body of independent clinical science conducted using our reduced nicotine content cigarettes, we believe VLN will strongly appeal to adult smokers looking to reduce their nicotine consumption. Importantly, the research also shows that former and non-smokers will have little interest in the product.
To date, we have provided more than 28 million research cigarettes for use in dozens of independent scientific clinical studies. These comprehensive studies, with an estimated cost of more than $100 million, were conducted primarily by numerous independent researchers at universities and institutes around the world and funded in large part by several agencies of the U.S. federal government, including the FDA and the National Institutes of Health (NIH). The studies show unequivocally the benefits of reduced nicotine content cigarettes for smokers and public health.
This research shows that smokers – even those with no intention of quitting smoking – who use our reduced nicotine content cigarettes:
- smoke 50% fewer cigarettes per day, on average,
- show reduced levels of biomarkers of nicotine and other toxicants,
- show reduced nicotine dependence, with minimal evidence of nicotine withdrawal or compensatory smoking,
- have more days where they smoke no cigarettes (cigarette-free days), and
- increase their attempts to quit smoking.
What sort of timeframe are we looking at for the FDA authorization?
In December 2019, following a rigorous science-based review of our Premarket Tobacco Product Application (PMTA), the FDA authorized the sale of our reduced nicotine content tobacco cigarettes. In doing so, the FDA determined that our reduced nicotine cigarettes are “appropriate for the protection of the public health,” which is the standard as mandated by statute that all PMTA products must meet. However, this authorization does not allow us to make any claims about the product or even describe to smokers what makes it different from every other cigarette on the market.
To do that will require FDA’s authorization of our second application, which is our MRTP application. This application is in what the FDA calls the “final action” stage of the review process. An MRTP designation will give us the permission to market our reduced nicotine cigarettes under the brand name VLN with pack and advertising claims that speak to the unique features and benefits of the product for adult smokers. In May of this year, the FDA closed the public comment period on our MRTP application, marking the final milestone in the FDA’s scientific review of VLN. We are optimistic that we will receive a positive decision from the FDA later this year. Based on recent authorizations for non-combustible modified risk tobacco products, we believe bringing a combustible modified risk product to market is a priority for the FDA.
Our MRTP application seeks authorization from the FDA to allow us to make the following unique marketing and advertising claims, under the brand name VLN, distinguishing the product from all other conventional cigarettes:
- Contains 95% less nicotine than conventional tobacco cigarettes;
- Helps reduce your nicotine consumption; and
- Smells, burns, and tastes like a conventional cigarette, but greatly reduces your nicotine consumption.
Public health is a major topic right now. Can you talk about how VLN is aligned with this goal?
VLN is well aligned with the FDA’s landmark 2017 Comprehensive Plan for Tobacco and Nicotine Regulation, which focuses on helping addicted adult smokers quit and on significantly reducing tobacco-related disease and death in the U.S. – a huge public health issue.
Our goal is to help ensure the adoption of a reduced-nicotine product standard to require all cigarettes sold in the U.S. to be “minimally… or non-addictive”, to successfully commercialize VLN, and to make our technology available to the entire tobacco industry so that they can comply with the reduced nicotine standard. Licensing VLN to tobacco companies will be the core focus of our commercialization efforts, allowing the industry to deliver on their commitments to reduce combustible cigarette consumption and to comply with the reduced nicotine standard.
Introducing VLN to the U.S. market will play a key role in supporting public health. By limiting the nicotine content of all combustible cigarettes to levels achieved in VLN, the FDA projects that 5 million adult smokers would quit one year after implementation and over 8 million American lives would be saved by the end of the century.
In addition, the COVID-19 pandemic has brought into sharp focus the importance of respiratory health and the wide ranging indirect, as well as direct, harms of cigarette addiction. Action is urgently needed to reduce exposure to nicotine among adult smokers and among youth who may experiment with nicotine and smoking.
In a world without COVID-19, almost half a million Americans are killed every single year as a result of cigarette addiction. Faced with a global pandemic, people addicted to cigarette smoking now also face worse health outcomes. We firmly believe the time for change is long overdue and call upon all levels of government to unite against the tragic toll of cigarette addiction.
Commercialization of VLN and implementation of the FDA’s plan will be an important opportunity for adult smokers and public health.
You’re also in the cannabis space. What can you tell us about these efforts?
Our strategy is to develop a hemp/cannabis franchise with both internal investments and external relationships focused on key cannabinoids and terpenes and the associated genetic markers that will allow us to create high-value proprietary plant lines for commercial use.
With strategic partnerships in place and in development, we are focused on establishing a leadership position in the legal hemp/cannabis industry built on science-driven differentiation, leveraging our leading technology to develop proprietary ingredient solutions.
We are making significant progress towards creating a next generation genetic database for use in the acceleration of the development of unique and valuable hemp/cannabis plants.
Tell us about your research and your bioinformatics platform.
In partnership with KeyGene, we have assembled a high-quality genome sequences of two hemp/cannabis lines and established a new, proprietary hemp/cannabis bioinformatics platform. Both are believed to be among the highest quality, hemp/cannabis reference genomes in the world.
These new developments are already enabling the rapid breeding of new and proprietary hemp/cannabis plant lines with truly remarkable and potentially novel medicinal cannabinoid profiles.
Our research partnership with KeyGene will bolster our existing, proprietary hemp/cannabis plant lines and accelerate our molecular breeding work focused on the creation of valuable, new hemp/cannabis plant varieties, and related intellectual property.
These are tremendous achievements and we look forward to even more exciting and valuable results in our hemp/cannabis plant genetics research.
What else are you looking into as the company grows?
Ultimately, 22nd Century is a plant-based, life science biotechnology company that utilizes both its internal expertise and external strategic resources to create disruptive and proprietary technology with important commercial applications. We currently own or control the rights to commercialize over 200 issued and pending patents. To date, our primary focus has been on nicotine modulation in tobacco. Going forward, we plan to expand our efforts within the tobacco and hemp/cannabis franchises to penetrate additional global markets in pharmaceuticals and consumer products. And, finally, we have recently identified a third franchise that we plan to share with shareholders and the investment community in the coming months.
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