$XXII to Emphasize Disruptive and Proprietary Smoking Harm


22nd Century to Emphasize Disruptive and Proprietary Smoking Harm Reduction Products

22nd Century Group, Inc. (NYSE MKT: XXII), a plant biotechnology company that is a leader in tobacco harm reduction, released today the following letter that was included the Company’s 2015 Annual Report to Shareholders:

Dear Fellow Shareholders:

The year 2015 was a transformative year for our Company and the year 2016 will be a time of even greater opportunity for 22nd Century.

In 2015, our Company expanded our already dominant intellectual property portfolio and attracted the interest and attention of public health officials around the world. We submitted a Modified Risk Tobacco Product (“MRTP”) application to the U.S. Food and Drug Administration (“FDA”) for our BRAND A Very Low Nicotine cigarettes that contain approximately 95% less nicotine than conventional cigarette brands. The New England Journal of Medicine published two articles (N Engl J Med 2015; 373:1340-1349 and N Engl J Med 2015; 373:1289-1291) about the results of a landmark clinical trial utilizing 22nd Century’s proprietary SPECTRUM® research cigarettes. Funded by the FDA and the National Institute on Drug Abuse (“NIDA”), a division of the National Institutes of Health (“NIH”), the study found that smokers of our SPECTRUM® Very Low Nicotine cigarettes consumed far fewer cigarettes per day and doubled their quit attempts versus smokers of cigarettes with conventional nicotine content.

Simultaneous to these important milestones, 22nd Century began to actively commercialize our significant intellectual property portfolio. Our revenues increased from less than $530,000 in 2014 to more than $8.5 million in 2015. Indeed, our revenues in 2015 exceeded prior financial projections and were the highest in our Company’s history.

That said, we are not yet profitable and we did not expand the sales of our commercial products as quickly or as broadly as we would have liked. We are disappointed that logistical issues prevented us from rolling out MAGIC Very Low Nicotine cigarettes in Europe beyond Spain. Nevertheless, all things considered, these are merely “bumps in the road” and 22nd Century closed 2015 with a very strong foundation for continued success and growth.

As discussed in earnings calls over the last year, 22nd Century’s enormous potential – in the near term and the long term – rests with our technology that gives us the potential to disrupt at least two major industries. With ownership or exclusive control of more than 200 issued patents and more than 50 pending patent applications around the world, 22nd Century has a virtual monopoly on the genes in the tobacco plant responsible for nicotine production.

Ours is the only company in the world capable of growing tobacco with 95% less nicotine than conventional plants… and, at the other end of the spectrum, no other company can grow cigarette tobacco with nicotine content as high as our proprietary plants. These technologies – and the incredibly important independent clinical trials being conducted with cigarettes made from our proprietary tobaccos – are what make 22nd Century extraordinary. And these are the things management intends to build on, in the near term, to increase shareholder value.

To date, there have been numerous independent, scientific clinical studies (Phase II and Phase III) using 22nd Century’s proprietary Very Low Nicotine cigarettes. New clinical trials using 22nd Century’s SPECTRUM® research cigarettes are already underway. Most notably, a Phase III study featuring 1,250 participants compares two different approaches to help smokers lose their addiction to nicotine: (A) an immediate reduction in nicotine content in cigarettes to non-addictive levels by using 22nd Century’s proprietary Very Low Nicotine tobacco in such cigarettes, or (B) a gradual reduction in nicotine content in cigarettes to non-addictive levels by using 22nd Century’sSPECTRUM® research cigarettes. No matter which protocol ultimately prevails, each utilizes 22nd Century’s proprietary products, so 22nd Century will be the “winner” either way.

Based on the results of these and other independent clinical trials, we believe 22nd Century will be the first company in the world to achieve a Modified Risk Tobacco Product designation for a combustible cigarette.


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