22nd Century Group, Inc. (NYSE:XXII), a plant biotechnology company focusing on tobacco harm reduction, announced this morning that the company’s 2013 Research License and Commercial Option Agreement with British American Tobacco (NYSE:BTI) is now finished. BAT no longer has rights to any intellectual property or other assets of 22nd Century. The company is once again in sole control of its highly disruptive intellectual property portfolio of patent-protected low-nicotine tobacco plants. In light of FDA regulations on tobacco use, the importance of this biotech news can’t be overstated.
Accordingly, 22nd Century has restarted discussions with global tobacco companies and international pharmaceutical companies that have expressed strong interest in a business relationship with 22nd Century but were, until now, unable to enter into a licensing agreement due to restrictive terms contained in the BAT agreement.
Under the restrictions of the BAT agreement, annual royalties to 22nd Century were capped at $25 million per year. Now that the agreement has been terminated, XXII is free to engage in licensing agreements and strategic partnerships with any and all tobacco companies – with no restrictions, limits, or caps on licensing royalties. This development is especially significant in light of the announcement made at the end of July by the United States Food and Drug Administration.
On July 28, 2017, the FDA publicly announced that it is exercising its authority under the Family Smoking Prevention and Tobacco Control Act to mandate lower nicotine – at minimally or non-addictive levels – in all combustible cigarettes sold in the United States. 22nd Century is the only company in the world capable of growing tobacco with just 0.4mg/g nicotine content – a 95% reduction in nicotine.
As a result of the FDA’s newly announced plan, minimally or non-addictive Very Low Nicotine tobacco will be a required ingredient of every cigarette sold in the United States. This unprecedented FDA action represents a paradigm shift for the tobacco industry and, according to Stanford Professor Robert N. Proctor, PhD, “could save more lives than any other act of a government agency in all of human history.”
Called “the ultimate harm reduction strategy” by former FDA Commissioner Dr. David Kessler, the planned FDA mandate to reduce nicotine levels in cigarettes to minimally or non-addictive levels is the result of a multitude of independent clinical studies. As reported in the October 2015 New England Journal of Medicine, independent researchers found 22nd Century’s proprietary Very Low Nicotine SPECTRUM cigarettes were “associated with reductions in smoking, nicotine exposure, and nicotine dependence, with minimal evidence of nicotine withdrawal, compensatory smoking, or serious adverse events.”
To facilitate dozens of additional completed and ongoing independent clinical studies, 22nd Century has manufactured more than 22 million SPECTRUM® government research cigarettes containing the Company’s proprietary VLN tobacco. Agencies of the U.S. federal government have invested more than $100 million in independent clinical research with SPECTRUM cigarettes that supports the conclusion that lowering nicotine levels in combustible tobacco cigarettes would drastically improve public health. In total, more than 100 completed and on-going independent clinical trials, scientific commentaries, and other publications relating to 22nd Century’s VLN tobacco have captured the attention of public health advocates and tobacco industry executives around the world.
Philip Morris International CEO Andre Calantzopoulos explained to Reuters that he believes the FDA’s plan is “one of the best articulated positions in many years.” Mr. Calantzopoulos also does not believe it is inevitable that the industry will pursue litigation to fight regulators on the issue.
“It appears that BAT is so far behind Philip Morris International in its heat-not-burn product development that BAT has now myopically narrowed its focus to non-combustible devices instead of reduced exposure combustible cigarettes,” said Henry Sicignano, III, President and CEO of 22nd Century Group. “In this new world, where the FDA and the World Health Organization have called for mandated, dramatic reductions of nicotine in cigarettes, we are absolutely thrilled to once again be in sole and complete control of our technology and the incredible licensing opportunities that lay before us.”
“22nd Century’s proprietary Very Low Nicotine cigarettes – with minimally or non-addictive levels of nicotine – will save millions of lives and billions in healthcare costs. Our Company is proud to have such an important role in this public policy imperative,” Mr. Sicignano concluded. In light of this analysis, 22nd Century may be the most critical name in biotech news right now, and it is well worth investment.
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