22nd Century Group Inc (XXII)

[gilbe]

I read through the Phillip Morris Annual Shareholder meeting material today. I liked the way they framed up the harm reduction discussion. They represent it with a formula that goes something like this…

Harm Reduction = (The Reduced Risk the product offers) X (Number of people who switch)

The Number who switch depends on product attractiveness and consumer preference. This is the most important part of the equation and is something I feel XXII is posed to capitalize on. This quote sums it up nicely.

“It is important to appreciate that a virtually harmless [product used] by only 1% of the population will have a lesser impact on the reduction of tobacco-related diseases than a somewhat more harmful [product used] by 80% of the total smoking population. ”
-Dr. Ernst Wynder

Reading this quote, I can’t help but think of both Brand A and brand B.

A lot of smokers simply are not interested in ecigs, heat not burn, or any other of the new reduced risk tobacco products that are coming onto the market. For those people, Brand A and Brand B are obvious options. I think the total Harm Reduction that XXII’s products can yield is far greater than any other company. Simply because of that last variable. A large number of people will use their products!