Should have google searched first. I remember reading this way back in July when I first invested in 22c.
In 1999, XXII exclusively sublicensed their first-generation proprietary technology and VLN tobacco to the fifth largest cigarette company in the U.S., Vector Group Ltd. As part of this licensing agreement, XXII agreed not to grow VLN tobacco or market VLN cigarettes using this proprietary technology. In 2003, Vector launched a "step down" cigarette called Quest® using XXII's technology and tobacco in eight states to gather data for the F.D.A. approval process of using Quest® as a smoking cessation aid. The "step down" Quest® product had three brand styles that had the same tar yield but decreasing nicotine yields, with the last step being the "nicotine free" cigarette. Vector completed a successful Phase 2 trial in 2006 and reassured their intention to proceed to Phase 3 trials. A few months later in August 2006, Vector filed an 8-K announcing they would be terminating their genetics operation and would no longer pursue the F.D.A. approval of Quest® as a smoking cessation product: http://www.sec.gov/Archives/edgar/data/59440/000095014406011131/g04483e8vk.htm Why? I believe the company was shopping itself to Imperial Tobacco, the fourth largest transnational tobacco company and, at that time, the idea of having a smoking cessation product in its portfolio wouldn't add value. One week before this 8-K was filed in August 2006, Vector announced that it was restating earnings for the last two+ years resulting in higher earnings of $8.1M: www.sec.gov/Archives/edgar/data/59440/000095014406010807/g04334e8vk.htm Six months later, in February 2007, Imperial Tobacco purchased not Vector, but Commonwealth Brands, a U.S. cigarette company of similar size to Vector at the time: www.imperial-tobacco.com/index.asp?page=56&newsid=463&type=18&year=2007 The millions of dollars of royalties XXII generated during these 8 years were reinvested back into R&D, mainly to identify the remaining genes in tobacco responsible for nicotine production. This turned out to be a great success in that 22nd Century now has a monopoly on all the key nicotine biosynthesis genes. In fact, the company's second generation technology turned out to be an improvement over the first generation technology that had been licensed to Vector. Furthermore, after two years of litigation with Vector, XXII was awarded monetary damages, but most importantly, a "right of reference" to Vector's investigational new drug application (IND) for the Quest® smoking cessation aid which allowed XXII to use Vector's F.D.A. submissions AND the trial results for XXII's own IND at F.D.A.! All the rights to the patents and the tobacco licensed to Vector were returned to XXII. Quest® was taken off the market.
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