22nd Century Group Is Revolutionizing Multiple US Industries Right Now

By USDR

We are entering a brave new world of bioengineering that’s getting a helping hand from federal regulators and some companies are poised to take advantage of it.

At a March meeting this year of the Society for Research on Nicotine & Tobacco, industry leaders, scientists, public health officials, and regulators studied and analyzed the ramifications of reducing nicotine in cigarettes. The outcome: lower nicotine results in lower cravings and hence lower cigarette consumption.

Fast forward a couple of months and the U.S. Food and Drug Administration (FDA) announced in July that it would try to severely limit and in some cases eliminate the level of nicotine in tobacco products even as it takes a more conservative approach on other regulatory goals.

At the event, FDA Commissioner Scott Gottlieb made these remarks to attendees:

“…examining the presence of nicotine in combustible cigarettes has to be part of a much broader strategy. I’ve pledged a deep commitment to taking aggressive steps to address the epidemic of addiction to opioids. I view our opportunity to confront addiction to nicotine with the same obligation. I’ll pursue efforts to reduce addiction to nicotine with the same vigor…

Gottlieb’s audience included a “who’s who” of regulators, policymakers, researchers, and industry leaders. He went on to say:

What’s more, the World Health Organization (WHO) recently published an Advisory Note titled Global Nicotine Reduction Strategy. The purpose of the data is to help health officials develop policies for limiting the sale of cigarettes to brands with a nicotine content that isn’t strong enough to cause or maintain addiction.

The WHO, in its report, determined that this goal could be reached with a 95% reduction in nicotine versus the conventional cigarette brands on the market today.

This outcome dovetails perfectly with the operational efforts and technological capabilities of one company – 22nd Century Group Inc (NYSEAMERICAN:XXII).

22nd Century Group boasts an important distinction among other plant biotechnology entities: it’s one of the only firms in the world that possesses the proven technology to grow tobacco leaves that contain nicotine beneath the FDA’s recommended threshold for addiction. Further, and just as importantly, the company can regulate the level of nicotine in tobacco plants without diminishing the elements of the tobacco leaf that convey characteristics such as taste and aroma.

22nd Century’s proprietary technology is able to slash levels of nicotine and other nicotinic alkaloids in the tobacco plant through plant breeding and genetic engineering. The company has the capability to make cigarettes with nicotine levels 95% lower than traditional cigarettes, falling in line with both the recommendations of the WHO (as outlined above) and the regulatory efforts initiated at the recent FDA event (again, as outlined above).

This opens the door to a host of revenue streams, including licensing its technology out to large tobacco producers so as they can fall in line with regulatory changes and, beyond that, the production of its own brand of tobacco products that allows it to be first to market with a regulatory-compliant cigarette brand.

As relates to the former of these two revenue streams, the company announced on September 25 that a so-called “Research License and Commercial Option Agreement of 2013″ between it and tobacco behemoth British American Tobacco (LSE:BATS) is now completed.

The end of this restrictive agreement unshackles 22nd Century in the sense that British American Tobacco can no longer claim rights to any intellectual property or other assets of the company, which gives the latter complete control of its innovative intellectual property portfolio. Subsequently, the company has initiated talks with large transnational tobacco and pharmaceutical companies that previously made overtures to 22nd Century but were hamstrung by the agreement between XXII and BAT.

Relating to the latter revenue stream, the production of its own brand of low nicotine cigarettes, the company intends to conduct Phase III clinical trials of its proprietary leading extremely low nicotine product, dubbed X-22. Slated to start in early 2018, the study is intended to prove that X-22 can function as an effective aid to help smokers quit cigarettes.

In line with this, news just hit press (October 6) that a brand called SPECTRUM, which is created using the same technology and that forms the root of some long-term government trials investigating 22nd Century Group’s cigarettes as smoking cessation aids, successfully completed a phase III study.

This implies that the company should have no problem replicating success with the above-mentioned X-22 brand as and when it moves into a pivotal study in the US.

And it’s not all about tobacco.

The marijuana industry is booming, but as traders and investors are becoming increasingly aware, cannabis isn’t just for recreational use. Biotechnology companies are learning to adapt marijuana plants in ways that keep the benefits but extricate the harmful or psychoactive substances that induce euphoria and foster addiction, and, using this concept, researchers are adapting marijuana to help people kick a range of addictions, from nicotine to cocaine to opioids.

22nd Century’s technology can be adapted to create THC-free marijuana, a product that is coveted by farmers, medical scientists, and agricultural programs across the U.S. The company’s experienced researchers are now creating enabling tools that facilitate the focused bioengineering of cannabinoid production in the cannabis plant, with the goal of forging new strains of industrial hemp plants with lower levels of cannabinoids for new drug treatments and agricultural applications.

Among the company’s key initiatives, outside of the medical space, is the development of a new strain of hemp containing zero THC, the main psychoactive compound found in cannabis. THC produces the high in the brain that earns marijuana its federal ban.

A THC-free plant would have huge ramifications for the industrial hemp industry, which is all but crippled here in the U.S. because of regulations dictating that it must contain little to no THC at maturity. Hemp is one of the world’s most sustainable and practical basic materials yet has been (effectively, due to a farmer’s inability to ensure zero THC in the mature plant) illegal since 1970. This illegality necessitates the $300 million plus importing of the plant into the US from Canada and China every year and 22nd Century could be about to completely revolutionize this space.

Bottom line: 22nd Century (market cap: $278.7 million) is a small-cap stock that’s nonetheless large enough to survive the roller-coaster nature of canna-business and that can also potentially compete with big tobacco in the low nicotine arena.

The company just raised $54 million by way of a registered direct offering (RDO), meaning that it has a cash balance in excess of $60 million. That’s enough to support all regular operating expenses for more than five years, something that just isn’t found in a company of this size or in this space.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.
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