22nd Century Group Inc (NYSEMKT:XXII) On The Verge Of A Breakout

22nd Century Group Inc (NYSEMKT:XXII) is one exciting name in small caps. XXII is on the verge of revolutionizing the global cigarette market. XXII has more than 200 patents relating to the genes in the tobacco plant responsible for nicotine production, 22nd Century is the only company in the world capable of producing virtually nicotine-free tobacco. The finished cigarettes containing 22nd Century’s proprietary Very Low Nicotine tobacco have the taste and sensory characteristics of conventional cigarettes, but contain only trace amounts of nicotine.Earlier this month, the Company met with administrators and assigned scientific reviewers at the U.S. Food and Drug Administration (FDA) to review the Company’s Modified Risk Tobacco Product (MRTP) application for BRAND A Very Low Nicotine (VLN) cigarettes. The FDA contacted 22nd Century immediately upon receiving the Company’s MRTP application and facilitated – less than 14 days after the Company’s submission – a meeting at FDA headquarters to discuss the application and the review process. In attendance were nine members of 22nd Century’s team, including executive management, consultants and attorneys, along with 22 FDA staff members; more than 20 additional FDA staff members attended telephonically.This is not the first time the agency or affiliates have expressed interest in the concept of a very low nicotine cigarette. As a reminder, nicotine is the addictive substance in cigarettes that smokers crave. Tar, among other chemicals, is the poison that causes cancer. The concept of a VLN cigarette is that if you reduce nicotine levels in cigarettes down to "non-addictive" levels, smokers would eventually lose interest in smoking. In June 2010, former U.S. FDA commissioner, Dr. David Kessler, MD, JD, stated, “The FDA should quickly move to reduce nicotine levels in cigarettes to non-addictive levels. If we reduce the level of the stimulus, we reduce craving. It is the ultimate harm reduction strategy.”Conclusive independent laboratory testing proves that 22nd Century’s BRAND A cigarettes contain less than 0.6 mg nicotine per cigarette and less than 0.05 mg nicotine yield per cigarette. In each case, this represents a reduction of at least 95% less nicotine relative to “Big Tobacco” cigarette brands, including Marlboro®, Camel®, Newport®, and Natural American Spirit®. The Company’s Modified Risk Tobacco Product application to the FDA requests that BRAND A packaging and marketing be allowed to disclose to consumers that the product contains 95% less nicotine than conventional brands and drastically reduces smokers’ exposure to nicotine.XXII has already shipped 4.95 million SPECTRUM research cigarettes for the National Institute on Drug Abuse (NIDA), a department of the National Institutes of Health (NIH). 22nd Century was chosen by NIDA to supply its proprietary cigarettes as a subcontractor under a federal government contract. The main SPECTRUM product line consists of a series of cigarette styles that have a fixed “tar” yield but varying nicotine yields over a 50-fold range – from very low to high. Altogether, SPECTRUM features 24 styles, 11 regular and 13 menthol versions, with 8 different levels of nicotine content. SPECTRUM is strictly for research purposes and is not sold as a commercial cigarette.

The available scientific literature, gained in part through independent clinical trials utilizing SPECTRUM research cigarettes, shows that smoking 22nd Century’s VLN cigarettes results in reduced nicotine exposure with minimal compensatory smoking behavior and no greater exposure to harmful or potentially harmful toxicants. New clinical trials using 22nd Century’s SPECTRUM® cigarettes are already underway. Most notably, a Phase III study featuring 1,250 participants and sponsored by the University of Pittsburgh, in collaboration with the National Institute on Drug Abuse (NIDA) is comparing two different approaches to help smokers lose their addiction to nicotine: an immediate reduction in nicotine content in cigarettes to non-addictive levels versus a gradual reduction in nicotine content in cigarettes to non-addictive levels.

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Without SPECTRUM cigarettes, many important research projects investigating the exposure and behavioral effects of different nicotine levels in cigarettes would simply be impossible to conduct. Most recently, SPECTRUM cigarettes were an integral part of the study conducted by Eric C. Donny, Ph.D., et al and the Center for the Evaluation of Nicotine in Cigarettes and published in The New England Journal of Medicine. In this study, researchers determined that SPECTRUM’s Very Low Nicotine style cigarettes were found to reduce exposure to, and dependence on, nicotine and to reduce cravings while adverse events were generally mild and similar among groups. Moreover, in the 30 days following the trial, smokers of SPECTRUM’s very low nicotine style cigarettes reported they attempted to quit smoking at a rate double that of participants who smoked standard nicotine style cigarettes (34.7% vs. 17%).

22nd Century cited the Donny trial, in addition to extensive data gathered from several other independent clinical trials, in the Company’s recently submitted Modified Risk Tobacco Product (MRTP) application to the U.S. Food and Drug Administration (FDA). 22nd Century’s MRTP application seeks a reduced exposure order so that 22nd Century’s “BRAND A” Very Low Nicotine cigarettes may be introduced into commerce in the United States. The Company’s application to the FDA requests that BRAND A packaging and marketing be allowed to disclose to consumers that the Company’s proprietary Very Low Nicotine cigarettes reduce smokers’ exposure to nicotine.

At present, the United States is completely devoid of any “reduced exposure cigarette” option. If 22nd Century’s application to the FDA is successful, the Company’s Very Low Nicotine cigarettes will offer millions of American smokers the first reduced exposure cigarette choice. The exciting part for shareholders is that if we see an FDA approval for modified risk labeling, the catalyst in our opinion becomes a buyout by someone like British American Tobacco Plc (NYSEMKT:BTI) which already has a licensing deal with 22nd Century Group.

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Currently trading at around a $100 million market cap, 22nd Century Group has the potential to be a billion dollar company. Consider that one billion consumers spend $700 billion a year on tobacco products. 22nd Century’s proprietary technology regulates nicotine content in tobacco plants without adversely affecting other leaf compounds important to a tobacco product’s characteristics, namely taste and aroma. One of their proprietary tobacco varieties contains the lowest nicotine content of any tobacco ever commercialized, approximately 97% less nicotine than tobacco in leading “light” cigarette brands.

22nd Century Group is one step closer to market. Once it happens, the stock is off to the races. Be sure to sign up to Insider Financial and get the latest updates on XXII. We will be updating Insider Financial as soon as developments occur. Don't miss out!

Disclosure: We have no position in XXII either long or short. We have not been compensated for this article.