22nd Century exposes short seller as a promotor of incorrect and
self-serving “fake news”
WILLIAMSVILLE, N.Y.–(BUSINESS WIRE)–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.
Contacts
22nd Century Group
James Vail, Director of Communications
716-270-1523
jvail@xxiicentury.com