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So hard to predict. I’d say “springtime”, but impossible to tell - could be sooner, could be later. Not helpful, I know, but that’s what I’m anticipating. I’d love to see the FDA come back by the end of the month and approve, as I believe they’ve already made up their mind to move forward with XXII and TPSAC was simply part of the process they have to go through, but I’ve been wrong before...
Once again, here are the FDA’s preliminary conclusions as set out in the pre-TPSAC briefing materials. I didn’t here anything during the TPSAC meeting that would alter these conclusions:
(1) Substantiation: The three proposed claims are substantiated. [The claims are: 1. 95% less nicotine 2. Helps reduce your nicotine consumption 3. Greatly reduces your nicotine consumption.]
(2) Consumer understanding: Consumers understand the addiction risk of using the products relative to normal nicotine content cigarettes, but it is unclear whether they understand the other relative health risks of using the products; they perceive the products to be lower risk than
other cigarettes.
(3) Morbidity and mortality: The proposed modified risk products can substantially reduce dependence among individual tobacco users. The magnitude of the reduction in other morbidities and mortality from reduced dependence remains unclear.
(4) Population health impact: Nonsmokers have low intentions to use the products, and current smokers have moderate intentions to use the products. All smoker groups have higher
intentions to purchase VLN™ cigarettes compared to Marlboro Gold cigarettes.
Very positive TPSAC meeting; why the share price dropped is odd. Final summary from TPSAC Chair: (1) it would be dishonest NOT to tell smokers that these cigs contain 95% less nicotine, and that the public should indeed be told this fact; (2) various TPSAC members stated that they were “pleased with” and “sympathetic to” the concept and product; (3) the only reservation was about potential misperception of the cigs being “healthier” than “normal” highly addictive cigarettes. Some suggested that the disclaimers/statements could be amended, but that’s not a big deal. Mitch Zeller’s statement at the end was positive as well. Finally - remember that TPSAC merely “advises” the FDA - the FDA is under no obligation to either accept or reject TPSAC’s vote/recommendation. The FDA already came out with a press release outlining why they are planning to approve the MRTP application. My summary: nice job XXII team; now it’s time to plan on next steps once the approval comes through.
Apologies if this has already been posted. Those interested should consider signing.
https://petitions.whitehouse.gov/petition/non-addictive-levels-nicotine-should-be-mandated-all-tobacco-products
MRTP filed!
Great job, Henry and team!
I think the FDA’s plan is to approve XXII’s PMTA & MRTP. I also think the FDA is under pressure from Congress finally to approve a worthy MRTP application. That, combined with how XXII’s application and timing perfectly dovetails with the FDA’s proposed mandate, bodes well for us.
Juul should probably reach out to XXII - seems like that would make a lot of sense, now more than ever.
But that would ruin their anonymity and then everyone would know it’s Dick Saffire and Angelo Tommasello.
I agree. Terren’s been at this a while now. He needs to get a life. XXII ended their relationship with him because I think they realized how shady he is.
Seeking Alpha shorts just came out with a scathing article about XXII. It’s BS. Shorts are getting scared, and thus trying their hardest to scare long term investors - hence the Seeking Alpha article, TTommy’s and Gio’s recent uptick in postings, etc. Ignore them. There will be a positive breakthrough for XXII in the next couple of months.
Nice mention of XXII in a Bloomberg article from today:
https://www.bloomberg.com/news/articles/2018-10-12/tobacco-stocks-drop-on-concern-fda-plans-strict-nicotine-rules
Great find - thanks for publicizing this.
I’d say that’s a VERY interesting submission, coming from Dr. Hatsukami. Glad she took the time to put her thoughts on public record with the FDA. Thanks for finding this and sharing it.
American Heart Assn et al - Letter to Dr Gottlieb October 2017.
I don't recall seeing this posted previously, but given where things stand currently, it's invaluable having institutions such as the ALA, AHA, CAN and CTFK also advocating for the FDA to move forward on their reduced nicotine initiative.
Google "Partners letter to Dr Gottlieb October 2017" if the link below doesn't work.
The letter to FDA Commissioner Gottlieb (with copy to Mitch Zeller) is signed by the heads of the Cancer Action Network, American Heart Association, American Lung Association, Campaign for Tobacco-Free Kids and the Truth Initiative and strongly endorses setting a firm deadline for completing a Final Rule to reduce levels of nicotine while also calling upon FDA to fast track approval of innovative products that promote smoking cessation.
I draw your attention to the following portions of the letter:
Page 2, last two paragraphs: The FDA has an historic opportunity to reduce the death and disease caused by tobacco and dramatically reduce government healthcare costs… 1) The first key to the success of your plan is for the FDA to take decisive, concrete steps, such as those enumerated below, to reduce the use of cigarettes and all other combusted tobacco products as dramatically and as rapidly as possible. This needs to be FDA’s highest tobacco specific priority. It will require a multi-faceted strategy using all the many tools Congress provided to the FDA. We support the objective of reducing the level of nicotine in cigarettes to render them minimally or non-addictive…… (emphasis in red added)
Page 4, last paragraph: 2) It is critical that FDA begin action promptly, and set a firm deadline for completing, a Final Rule to reduce the levels of nicotine in cigarettes. As you explained, if nicotine were reduced to minimally addictive levels and such a product standard were actively enforced, we could save young people who experiment with cigarettes from a lifetime of addiction to these lethal products and could dramatically reduce the number of current smokers who die from tobacco use. However, this potential can be realized only if the FDA takes concrete steps to implement a nicotine standard as promptly as possible.”
Link: www.lung.org/.../partners-letter-to-commissioner-gottlieb-tobacco-product-reg.pdf
A lot better than a sharp stick in the eye.
No - to be clear - she thanked XXII at the end of her presentation for providing the research cigs; she then made her comment advocating for the reduced nicotine cigs policy at the end of her Q&A session following her presentation.
She also strongly advocated for reduced nicotine levels to be mandated ASAP. Her final statement before closing: “Let’s not wait to think about reducing the level of nicotine in cigarettes for another 10 or 20 years - let’s really think of this as an immediate future approach.”
I just finished watching the Hatsukami talk from the conference where she described the results of the Donny study. “Immediate” reduction of nicotine was more effective in helping people reduce their smoking, although “immediate” (unsurprisingly) was more difficult for smokers. She also thanked XXII at the end for providing the research cigs.
I can't get the document or the link to copy. Here's the text - not especially helpful as the chart formatting is completely off (I;ve therefore deleted it), but the first page (which describes Bonnie's conversation with Henry and Wells Fargo's take on XXII) and the second page (re Wells Fargo's take on the FDA process going forward) are probably the most interesting.
October 1, 2017 | Equity Research
Tobacco Talk: XXII Mgmt Mtg Takeaways
FDA Disrupts the Old Order, Making Way For the Small & Nimble
? XXII Management Meeting Sheds Light on The FDA’s New Approach towards Nicotine & the Potential Implications for the Tobacco Industry –
We recently hosted an investor meeting with Henry Sicignano III, CEO of 22nd Century Group, Inc. (XXII). XXII is a plant biotechnology company whose proprietary genetic engineering and plant breeding technology enables it to tailor levels of nicotine (and other nicotinic alkaloids) in the tobacco plant as well as tailor cannabinoid profiles in the cannabis plant. XXII owns, or exclusively licenses, more than 200 patents and has more than 50 patents pending. The meeting was an excellent opportunity to hear from a small, but important player in the business of tobacco-related nicotine - the subject at the core of the FDA’s new directive to lower nicotine in combustible cigs to minimally or non-addictive levels. Key takeaways: (1) The FDA won’t rush the process: While we think there is a sense of urgency at the FDA, we still believe it will take 3-5yrs before any potential changes are implemented given the sheer complexities & risks involved (see pg 2); (2) critical decision is how quickly to reduce nicotine: we expect the scientific community to rally around an immediate vs gradual reduction in nicotine levels in cigs – a potential headline risk for big tobacco. It’s our understanding there’s an additional study that could be released by the end of the year which could find an immediate and sharp reduction of nicotine in cigs is ideal; (3) “sweet spot” could be an 85% reduction: recent science suggests reducing nicotine levels in cigs by 85% is optimal (see pgs 2- 4); and (4) The FDA’s vision creates supply challenges: the cost of stripping nicotine out of tobacco presents cost & quality challenges for cig mfrs, but this should be largely manageable for co’s with strong cash flows & reduced-risk product (RRP) portfolios (e.g., MO). Bottom line - Uncertainty remains as to what the FDA may ultimately propose and how the industry may adapt. However, we continue to believe in an environment where nicotine levels in cigs are reduced, conversion to RRPs will accelerate and MO is strongly positioned with iQOS.
? XXII Century Is Positioning Itself to Compete in New, Low Nicotine Environment – XXII has historically focused on the very small, smoking cessation market, but now finds itself in the unique position to have its core, Very Low Nicotine (VLN) product aligned with where the FDA envisions taking the combustible cig industry. In this new environment, XXII’s competitive advantage is its patented technology to genetically modify tobacco plants and, to the best of our knowledge, no other company possesses the same capability or scale in genetically modified VLN tobacco.
? XXII Century Sheds BAT Intellectual Property (IP) Agreement, Targets New Strategic Partnerships – We expect there will be increasing interest from combustible cig manufacturers seeking ways to meet new nicotine standards to be potentially mandated by the FDA. XXII’s unique ability to grow tobacco at very low nicotine levels (0.4mg/g, which is a 95% reduction) should be attractive to companies seeking new lines of supply that are void of the flavor/color/smell challenges that come with chemically stripping nicotine from tobacco.
Please see page 5 for rating definitions, important disclosures and required analyst certifications. All estimates/forecasts are as of 10/01/17 unless otherwise stated. 10/01/17 20:32:36 ET
Wells Fargo Securities, LLC does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report and investors should consider this report as only a single factor in making their investment decision.
Tobacco
???
Bonnie Herzog
Senior Analyst|212-214-5051 bonnie.herzog@wellsfargo.com Patty Kanada, CFA Associate Analyst|212-214-5029 patty.kanada@wellsfargo.com Adam Scott Associate Analyst|212-214-8064 adam.scott@wellsfargo.com
??????????????????
Tobacco Equity Research
Long, Multi-Year Road Still Ahead –
With the FDA’s announcement occurring just ~2 months ago (7/28), there are still many steps ahead before a potential comprehensive and enforceable nicotine standard can be put into effect (no less than 2 years, by law). The next step is for the FDA to issue an Advance Notice of Proposed Rulemaking (ANPRM), through which it will solicit comments/input from major stakeholders to help inform the rulemaking process. The comment period is typically 30-60 days, but for more complex rulemakings such as this one, it could be 180 days or more. During this period, the FDA will respond to comments and request more information to help form the basis of a viable, scientifically-grounded regulatory plan. Once the FDA is satisfied with the evidence, it will issue a Notice of Proposed Rulemaking (NPRM or “Proposed Rule”) which explains the agency’s plan to address the problem and accomplish its goal. A new comment period follows, after which the FDA issues its Final Rule and announces an Effective Date for compliance. For more specifics on the process, see “A Guide to the Rulemaking Process” by the Office of the Federal Register.
Exhibit 1
Next steps: FDA solicits stakeholder comments via an ANPRM & NPRM, followed by a Final Rule
?????????FDA Review Procedure
Next Steps in Moving Toward Implementation of a Potential New Nicotine Strategy
???????Step FDA Rulemaking Process Description Timing / Other
1.
2.
3.
??Advance Notice of Proposed Rulemaking (ANPRM)
Notice of Proposed Rulemaking (NPRM or “Proposed Rule”)
Final Rule
FDA solicits comments/input from major stakeholders to help inform the rulemaking process; FDA responds to the comments
FDA explains the agency’s plan to address the problem and accomplish its goal
FDA issues its final rule (i.e., regulatory standard) and sets an Effective Date for compliance
30-60 days typically, but 180 days or more for complex rulemakings
Opens new comment w indow similar to the A NPRM
Throughout the process, the FDA could reconvene the Tobacco Products Scientific Advisory Committee (TPSAC)
????????Source: Office of the Federal Register
As discussed, this is realistically a multi-year effort, perhaps as much as 3-5 years in our view. While we agree that there could be added incentive for Commissioner Gottlieb to expedite the process given that he may have as little as 3.5 years left in his role as a Presidential appointee (unless reappointed), we think the sheer complexity of the mandate could potentially require more time than Gottlieb has as FDA Commissioner .
What is the Current Science on Nicotine & How Close is the FDA to Having the Scientific Evidence Necessary to Support Its Case? – This gets to the heart of one of the more complex and controversial areas of concern: will the FDA be able to sufficiently ground its effort in science and build enough consensus to avoid: (1) unwanted litigation; (2) unintended consequences, and/or (3) political embarrassment? The critical questions in our mind are: What is the absolute threshold of nicotine addiction? How fast should the FDA reduce nicotine levels in cigs (gradually? immediately?)? While the absolute threshold for nicotine addiction differs by smoker and circumstance, the consensus among researchers and the WHO seems to be that the threshold for addiction is likely close to 0.4mg of nicotine per gram of tobacco (this compares to a standard-strength cigarette at 15.8mg of nicotine).1 That said, a 2015 study published in the New England Journal of Medicine2 found that reducing nicotine levels by at least 85% (to 2.4mg from 15.8mg) led to reduced cravings and compensatory behavior, suggesting this may be the ‘sweet spot’ for regulatory purposes.
Potential Headline Risk 1: FDA Favors Immediate Reduction of Nicotine Levels in Cigs - The problem however is that many studies are relatively short-term (e.g., 6 weeks in the above cited one) and are not necessarily designed to monitor long-term behavior and the potential for smoking relapse. So it raises the next important question: how quickly should the FDA reduce nicotine levels in cigs? We understand that findings from a potentially important study led by Dorothy Hatsukami may be published as early as this fall that could suggest an immediate reduction in nicotine levels by the FDA would be more effective than gradual reduction in terms of discouraging compensatory behavior. This could potentially create headline risk for tobacco manufacturers of conventional cig products and extend the FDA overhang on valuations. We note at least 41 NIH-funded nicotine-related tobacco studies underway this year (see Exhibit 2). We expect funding and research to ramp as the FDA solicits help from the scientific community.
1See WHO Advisory Note – Global Nicotine Reduction Strategy (2015). 2See “Randomized Trial of Reduced-Nicotine Standards for Cigarettes,” published on October 1, 2015, in the New England Journal of Medicine (NEJM).
A 3.5 year timeframe is optimistic, in our view
85% reduction in nicotine levels could be the “sweet spot” from a regulatory standpoint
Recommendations for an immediate reduction in nicotine levels would likely create headline risk for big tobacco
???????????????2 | Wells Fargo Securities, LLC
Tobacco Talk: XXII Mgmt Mtg Takeaways Equity Research
Potential Headline Risk 2: “Stripping” Nicotine Out of Tobacco Could Be Costly & Damaging to Quality –
A regulatory standard that requires a more immediate than gradual reduction in nicotine levels in cigs (should the FDA lean this way) could certainly make it more challenging for the tobacco industry from a cost, timing and even quality perspective. While we have no real sense as to how this will play out, we expect tobacco manufacturers will be faced with the option of either stripping nicotine from their tobacco plant supplies or licensing the technology to accomplish this organically (at the genetic level). While we don’t have a good grasp on what this might cost, we understand that it could potentially cost the manufacturers an incremental cost per pack (possibly around $0.10-0.20/pack per year) to perform this process or possibly license this technology. In addition to cost, another potential downside to stripping nicotine out of tobacco is that the stripping process often strips out more than just nicotine from the tobacco plant, resulting in a degradation of taste, flavor, color, and smell. The alternative is to license the means to have nicotine stripped genetically from the tobacco plant. So far, XXII is the only company we know that owns patents to do this. While we note this as a potential headline risk for MO (MO, 1, $63.42), we remain confident that it can weather the challenge especially as we expect iQOS to make up an increasingly larger part of its total volume (54% by 2025, by our estimates).
Sorry if someone has already posted this, but here's a link to an Oct 1, 2017 report by Bonnie Herzog.
https://mail.google.com/mail/u/0/?ui=2&ik=a5536ec320&view=att&th=15edd77151b3e250&attid=0.1&disp=safe&zw
Thx - never left - although rarely post anything or look at stock boards for that matter as I'm squarely in the long-term holding category. Amazing FDA announcement, eh? Confident that things with XXII have finally turned the corner with no looking back. Good luck.
I think it's 360 days from the date of filing with the FDA - not from the date on which the FDA acknowledged receipt. (I don't know why it took the FDA almost 3 months to acknowledge receipt of XXII's MRTP submission, but there you go.) We'll hear something back from the FDA by Dec 31st if not sooner. I would presume that XXII has been in close contact with the FDA and has been asking the FDA if they need any additional info etc and generally trying to be proactive, although I think the FDA is simply taking their time, despite what many of us believe should be a slam dunk.
You're in the ballpark.
XXII has patented technology that allows them to manipulate the amount of nicotine in tobacco that they grow. (They also have similar patented technology which allows them to manipulate the amount of THC in cannabis and hemp.) XXII therefore can reduce the amount of nicotine in cigs to levels that can help smokers who either want to quit or cut down how many cigs they smoke. Numerous independent studies have concluded that reduced nicotine content in cigs can significantly assist with smoking cessation.
In respect of the FDA submission and XXII's MRTP application - the FDA has 365 days to respond - not necessarily 365 days to approve (or not). My personal opinion is that the FDA will respond (soon - either before Dec 31st or close to that date, as required by law), but will likely have questions/request clarifications. I'm confident that XXII's MRTP application will be approved - which indeed will make it the first and only company to have an MRTProduct on the market, and which I think almost everyone agrees will be a game-changer for XXII (and us shareholders); however "approval (or not) by December 31st" is not accurate.
Happy Crede Warrant Expiration Day, everybody...
New press release: World Health Organization (WHO) Study Group on Tobacco Product Regulation (TobReg) has recommended “a policy of limiting the sale of cigarettes to brands with a nicotine content that is not sufficient to lead to the development and/or maintenance of addiction.”
http://www.businesswire.com/news/home/20160711006006/en/
Exactly. I never had much faith in TP - I could see him pushing some shady arrangements which would benefit him more than his "partner", XXII. I actually think that in the long run, XXII will be able to find an Asian partner that will be more beneficial than what TP purportedly was promoting. Personally, I'm glad TP is out of the picture.
Exactly. I never had much faith in TP - I could see him pushing some shady arrangements which would benefit him more than his "partner", XXII. I actually think that in the long run, XXII will be able to find an Asian partner that will be more beneficial than what TP purportedly was promoting. Personally, I'm glad TP is out of the picture.
I'm almost certain they have not had to defend any patents.
22nd Century owns or exclusively controls 128 issued patents and 52 pending patent applications in 96 countries. The Company’s strong IP position led to a licensing agreement with British American Tobacco (“BAT”), the world’s second largest tobacco company.
Nice post - you hit the nail on the head. Given XXII's current run rate and its need to continue moving forward with its product launches, which obviously is in shareholders' best interests, we needed cash soon from somewhere. The alternative funding options you mention aren't feasible for the reasons you state. Overall this is by far the "least bad" way forward. In 12 months, the dilution this causes will largely be forgotten; I'm confident that the size the XXII's overall pie will be much larger then.
It's my understanding that TP wanted Joe to be removed - very difficult to see them conspiring together now - I think that would be far fetched.
No - I don't work for XXII - but have been an investor for the past 4+ yrs.
I'll chip in as an "optimistic long". Not to speak for friends who also hold 1M or more shares, but the reason why all has been quiet is that there is not much to comment on currently IF one is looking at XXII's medium- to long-term prospects. We haven't lost faith at all; to the contrary, we're as bullish as ever and are not worried about the current share price/low volume. 2014 was a great year for XXII in terms of getting our ducks in a row in order to start producing revenue in 2015. I'm 100% confident that Henry will be successful in focusing XXII and producing results that will significantly lift the share price in 2015. I wasn't expecting any meaningful announcements prior to year end. Whereas Joe's MO was to over promise and hope for the best even though things were out of his control, Henry is taking a different approach. I haven't sold a share and am not planning on selling. Current share price is irrelevant without any new developments; looking forward to 1Q and 2Q of 2015.
Spot on. I'm one of the warrant holders and I know most of the others personally. We've been invested in XXII for years and are long all the way; this company is just hitting its stride - none of the warrant holders I know are planning on selling even though the holding period has now expired - way too much potential and we are confident that Joe & Henry and team can deliver.
Interesting article from latest Forbes issue on Philip Morris; isn't BAT working on something like this with XXII's technology?
http://www.forbes.com/sites/danielfisher/2014/05/28/philip-morris-international-bets-big-on-the-future-of-smoking/
This just in: xxii in the russell 2000 final predictions list; with 2.8mil shares to buy.
For a company formed via reverse merger (XXII), the NASDAQ req is $4/share for 30 out of the prior 60 trading days.
I'm not sure if there are outstanding warrants out there among outside investors - possibly. I've been an investor in XXII for years and exercised our warrants a couple of months ago for additional shares. The offer a few days ago that came in from an institutional investor via Chardan was to purchase our restricted shares (locked up for 6 months) at a discount, i.e. to cash us out of our lockup. Not sure what the uptake was, but the offered price was about 1/2 of the current share price.
I think that Quest chemically alters the tobacco in order to reduce the nicotine content; I'm not a smoker but have heard that this process significantly alters the taste profile of the cigarette. 22C's special sauce is that by being able to grow tobacco which has reduced amounts of nicotine, the taste of the resulting cigs is much more comparable to "full nicotine" cigs.