22nd Century exposes short seller as a
promotor of incorrect and self-serving “fake news”
22nd Century Group, Inc. (NYSE American: XXII), a plant
biotechnology company that is a world leader in tobacco harm
reduction, Very Low Nicotine Content tobacco, and hemp/cannabis
research, today commented on a grossly misleading article published
yesterday by an anonymous self-professed short seller of the
Company’s stock. Publishing under the pen name “Fuzzy Panda,” the
author – who will not even identify who he is – continued his
baseless smear campaign against the Company in an effort to depress
the share price of 22nd Century stock and to make a personal profit
by duping shareholders into selling their shares.
Although 22nd Century does not normally respond to “short and
distort” articles or to “hit pieces,” the Company believes the
grossly misleading mischaracterizations and wrongful innuendo
contained in the subject article warranted a Company response.
Accordingly, 22nd Century states the following facts:
1. The short seller incorrectly suggests that all 22nd Century
patents protecting the gene known as QPT have expired. The true
facts as stated in the Company’s most recent Annual Report on SEC
Form 10-K for the year ended December 31, 2018, are that only a
portion of the Company’s QPT patents have expired. As further
stated in the Company’s 2018 SEC Form 10-K, any attempt by a
third-party to try to create Very Low Nicotine Content (VLNC)
tobacco cannot be achieved by the use of the QPT gene alone, but
will require the use of the other intellectual property for which
the Company continues to have patent protections and, thus, the
Company is still able to block any competitor from developing VLNC
tobacco. Big Tobacco companies have publicly agreed with this point
as further described below. The unidentified “short and distort”
writer also fails to state that the Company’s Vector 21-41 VLNC
tobacco is protected by another form of intellectual property known
as plant variety protection, which restricts third-party access
through the year 2023.
2. The short seller falsely states that Big Tobacco companies
can supposedly create a VLNC tobacco plant with alleged “low
nicotine patents” and that Big Tobacco companies can supposedly
meet the upcoming low nicotine rule being created by the U.S. Food
and Drug Administration (FDA). However, Big Tobacco companies have
publicly admitted that (i) it will take them between 12 to 20 years
to potentially develop a VLNC tobacco plant, (ii) 22nd Century
controls the intellectual property (IP) necessary to develop VLNC
tobacco plants, and (iii) the Big Tobacco companies are opposing
the FDA’s planned nicotine reduction rule because the Big Tobacco
companies claim it is not feasible for them to comply.
In comments submitted to the FDA on June 13 2018, RAI Services
(which is part of Reynolds American, a wholly owned subsidiary of
British American Tobacco (BATS.L)) explained:
- “If FDA adopts a standard of 0.3, 0.4,
or 0.5 milligrams of nicotine per gram of tobacco filler… the
process could easily take more than 20 years” [emphasis
added]
- “RAI [Services] believes that the
industry is at least 20 years away from producing tobacco at a
commercial scale that would meet the range of low-level nicotine
discussed in the [FDA’s] ANPRM” [emphasis added]
- “Commercialization of such products
[tobaccos with very low levels of nicotine] is also made difficult
by: (1) the fact that genome editing technology (CRISPR-cas9)
currently does not appear to be available to tobacco companies; and
(2) the various patent restrictions on the use of certain
genetic-engineering techniques (the patents on nicotine synthesis
pathway genes, for example, are held almost exclusively by 22nd
Century Group)” [emphasis added]
- “Although some success was achieved in
lowering nicotine levels by suppressing QPT, use of this technology
does not achieve the ultra-low levels discussed in the [FDA’s
Advanced Notice of Proposed Rulemaking]”
Furthermore, on July 16, 2018, Joe Murillo of Altria Client
Services (NYSE: MO) reported to the FDA that “At least 12 years is
the absolute minimum amount of time necessary to attempt to address
the many issues that must be resolved before VLNC tobaccos could be
commercially produced at necessary volumes and cigarettes using
those tobaccos could be designed and manufactured to replace
currently marketed cigarettes.”
In contrast, 22nd Century’s proprietary VLNC tobacco
plant varieties are already commercially viable, genetically stable
plants with acceptable yields and proven nicotine concentrations.
This is evidenced by the fact that 22nd Century has been and
continues to be the only company in the world that has provided
VLNC tobacco since the year 2011. Used in more than 100 independent
clinical studies that were funded by more than $125 million from
U.S. federal government agencies, 22nd Century’s proprietary VLNC
cigarettes have important potential public health benefits that
have been detailed in dozens of peer-reviewed articles (such as the
New England Journal of Medicine, the Journal of the American
Medical Association, and many others). Indeed, research conducted
with the Company’s VLNC cigarettes is the scientific foundation of
the proposed rule by the FDA to require that all cigarettes sold in
the United States contain only minimally or non-addictive levels of
nicotine.
As 22nd Century clearly stated in its public response to the
FDA’s Advanced Notice of Proposed Rulemaking (ANPRM), 22nd Century
has been the sole source since the year 2011 for the production and
delivery of more than 24 million (now 28 million) VLNC cigarettes
for use in the above-referenced clinical studies, which shows that
the FDA’s planned nicotine reduction rule is immediately feasible
by 22nd Century. In contrast, and contradicting the short seller’s
article, the Big Tobacco companies continue to oppose the FDA’s
planned nicotine reduction rule because the Big Tobacco companies
have publicly admitted that they are not able to comply with such
new rule because 22nd Century holds all the necessary IP; 22nd
Century is the only company in the world to have produced very low
nicotine tobacco with 95% less nicotine than conventional
tobacco.
22nd Century has also advanced further ahead of the Big Tobacco
companies by already successfully developing the next generation
non-GMO very low nicotine tobacco varieties. 22nd Century
has publicly stated that it has successfully developed flue cured
(bright) and burley varieties of non-GMO very low nicotine
tobacco varieties. The Company is also in the process of developing
an oriental variety of non-GMO very low nicotine tobacco.
These new VLNC tobacco varieties have superior agronomic and
sensory characteristics and are expected to form the foundation of
new VLNC tobacco products to be introduced by the Company in the
near future. Considering 22nd Century’s achievements, as well as
Big Tobacco’s own public statements, it is clear that the rest of
the world is playing a long game of catch-up to 22nd Century’s very
low nicotine tobacco technology.
The near-term application for 22nd Century’s VLNC tobacco
technology is making possible the Company’s Modified Risk Tobacco
Product (MRTP) application to the FDA for VLN™ cigarettes. Upon
approval by the FDA, 22nd Century will be the first and only
company to have an authorized MRTP claim (e.g., “95% Less
Nicotine”) for a combustible tobacco product.
3. The “short and distort” article also incorrectly states that
British American Tobacco (BAT) supposedly terminated its prior
research agreement with 22nd Century because of the expiration of a
portion of the QPT gene patents that are supposedly essential for
the Company’s Vector 21-41 VLNC tobacco. The true facts are that
the QPT gene and the Company’s Vector 21-41 VLNC tobacco were never
part of the BAT research agreement. That said, only a portion
of the QPT patents expired in 2018 and, as admitted by the Big
Tobacco companies (see above) and as detailed in 22nd Century’s
2018 SEC Form 10-K, the QPT patents, by themselves, are not
sufficient to create VLNC tobacco. What’s more, as stated
previously, the Company’s proprietary Vector 21-41 VLNC tobacco
also continues to enjoy plant variety protection through the year
2023. In reality, BAT was trying to create a non-GMO VLNC tobacco
plant under its prior research agreement with 22nd Century because
GMO plants are not able to be commercialized in the European Union
market. BAT was not successful in its research. Subsequently,
however, 22nd Century succeeded where BAT failed; 22nd Century
publicly announced last year that 22nd Century has developed
proprietary non-GMO very low nicotine tobacco plants in both the
flue-cured (bright) and burley tobacco varieties. Thus, once again,
22nd Century has been able to achieve what Big Tobacco companies
have not been able to achieve in the unique world of VLNC
tobacco.
4. The short seller’s “hit piece” article also falsely and
wrongfully accuses 22nd Century and its CEO, Henry Sicignano, of
supposedly “stealing” the IP rights of Global Tobacco. The true
facts are that Global Tobacco and 22nd Century previously had a
business disagreement that was resolved with a settlement rather
than wasting resources litigating the issue, after which Global
Tobacco separately proposed that 22nd Century contract manufacture
Global’s little cigar tobacco products. Thus, Global Tobacco is now
a customer of 22nd Century’s NASCO manufacturing facility. It is
completely false for the “short and distort” article to allege that
the manufacturing contract between Global Tobacco and 22nd Century
is somehow not an arms’ length contract. All of 22nd Century’s
business dealings, whether in contract manufacturing or otherwise,
are done on an arms’ length basis, including but not limited to the
Global Tobacco contract.
5. The “short and distort” article also states that 22nd Century
has paid authors to write stock promotion articles; subsequently,
this allegation has been used to file class action and derivative
lawsuits. 22nd Century has previously publicly stated and continues
to assert that the claims made in the on-going class action and
shareholder derivative cases related to such matters are frivolous,
meritless and that 22nd Century and the individual defendants have
substantial legal and factual defenses to such claims.
6. Finally the self-serving “hit piece” article falsely alleges
that 22nd Century is supposedly under SEC investigation. As 22nd
Century has publicly stated on several occasions, 22nd Century has
not received any notice of, and the Company has no knowledge of,
any enforcement proceeding against 22nd Century by the SEC or any
other regulator.
In summary, the true facts are that (i) 22nd Century remains the
ONLY source in the world for VLNC tobacco plants that meet the
FDA’s planned nicotine reduction rule; (ii) a vibrant and growing
IP portfolio protects 22nd Century’s technology and proprietary
VLNC tobacco; (iii) 22nd Century has developed non-GMO flue cured
(bright) and burley VLNC tobacco plants when Big Tobacco companies
have failed to do so; (iv) Big Tobacco companies have publicly
recognized 22nd Century’s IP and VLNC tobacco as being dominant in
this field; (v) upon approval by the FDA, 22nd Century will be the
first and only company to have an authorized MRTP claim (e.g., “95%
Less Nicotine”) for a combustible tobacco product; and (vi) 22nd
Century continues to operate the Company in compliance with all
applicable laws, rules and regulations.
“By publishing such a grossly misleading ‘hit piece,’ the
anonymous short seller attempts to personally profit by creating a
self-fulfilling prophecy – of a declining share price of a target
company,” explained Henry Sicignano III, President and Chief
Executive Officer of 22nd Century Group. “We are done tolerating
this sort of anonymous and self-serving stock manipulation and are
now considering taking legal action against those responsible for
writing and disseminating the fake news articles penned by ‘Fuzzy
Panda.’”
Mr. Sicignano concluded, “22nd Century’s proprietary
technology portfolio, financial resources, regulatory prospects,
and commercial opportunities have never been stronger. We trust
that anyone interested in 22nd Century will ignore the grossly
misleading articles published by anonymous self-professed short
sellers of the Company’s stock and will instead reference the large
volume of public information – from credible, independent sources –
that is available on www.xxiicentury.com. We are confident that
investors who conduct their own due diligence will indeed conclude
that 22nd Century is a truly remarkable company… well on its way to
disrupting the entire tobacco industry.”
About 22nd Century Group, Inc.
22nd Century is a plant biotechnology company focused on
technology which allows it to increase or decrease the level of
nicotine in tobacco plants and the level of cannabinoids in
hemp/cannabis plants through genetic engineering and plant
breeding. The Company’s primary mission in tobacco is to reduce the
harm caused by smoking. The Company’s primary mission in
hemp/cannabis is to develop proprietary hemp/cannabis strains for
important new medicines and agricultural crops. Visit
www.xxiicentury.com for more information.
Cautionary Note Regarding Forward-Looking Statements: This press
release contains forward-looking information, including all
statements that are not statements of historical fact regarding the
intent, belief or current expectations of 22nd Century Group, Inc.,
its directors or its officers with respect to the contents of this
press release, including but not limited to our future revenue
expectations. The words “may,” “would,” “will,” “expect,”
“estimate,” “anticipate,” “believe,” “intend” and similar
expressions and variations thereof are intended to identify
forward-looking statements. We cannot guarantee future results,
levels of activity or performance. You should not place undue
reliance on these forward-looking statements, which speak only as
of the date that they were made. These cautionary statements should
be considered with any written or oral forward-looking statements
that we may issue in the future. Except as required by applicable
law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform
these statements to reflect actual results, later events or
circumstances, or to reflect the occurrence of unanticipated
events. You should carefully review and consider the various
disclosures made by us in our annual report on Form 10-K for the
fiscal year ended December 31, 2018, filed on March 6, 2019,
including the section entitled “Risk Factors,” and our other
reports filed with the U.S. Securities and Exchange Commission
which attempt to advise interested parties of the risks and factors
that may affect our business, financial condition, results of
operation and cash flows. If one or more of these risks or
uncertainties materialize, or if the underlying assumptions prove
incorrect, our actual results may vary materially from those
expected or projected.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190418005644/en/
22nd Century GroupJames Vail, Director of
Communications716-270-1523jvail@xxiicentury.com
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