Tiny biotech firm offers Big Tobacco model to curb its nicotine habit

LONDON: Investors are betting on a little-known biotech company to supply Big Tobacco with low-nicotine cigarettes, but so far its technology is unproven.

Shares in New York-based 22nd Century Group have soared 80 per cent to a three-year high since late last month, when the US Food and Drug Administration proposed cutting the nicotine levels in cigarettes so they aren’t so addictive.

Investors’ hopes are pinned on 22nd Century’s technology becoming widespread, although none of the big tobacco makers has bought it yet.

The plant biotechnology company says it has more than 200 patents that give it the ability to increase or decrease the level of nicotine in tobacco plants, as well as the level of cannabinoids in cannabis plants.

“We genetically modify the tobacco. We’ve been working on this for 20 years,” Henry Sicignano, chief executive of 22nd Century, told Reuters.

Sicignano, who helped to develop Natural American Spirit cigarettes before the brand was bought by RJ Reynolds in 2002, said the aim was to reduce the harm caused by smoking.

By making cigarettes less addictive, people would smoke when they want to rather than when they need to, and would probably smoke less.

That is the logic behind the FDA announcement suggesting regulating nicotine and encouraging smokers to switch to alternatives seen as less harmful, such as ecigarettes.

Sicignano said 22nd Century can make cigarettes with 95 to 97 per cent less nicotine than conventional cigarettes, which have about 10 mg of nicotine each. It is the only company with tobacco that can be below the threshold of what health regulators say they believe to be non-addictive, he added.

A top-10 shareholder of 22nd Century said major cigarette firms would have to turn to it if the FDA’s proposal becomes reality.

“If Big Tobacco doesn’t want their market to go to zero overnight, they’re going to have to work with someone who has a lownicotine tobacco leaf,” he said.

While the long-term market for low-nicotine cigarettes is highly uncertain, given that they are designed to be easier to quit, he said it would take years for all smokers to quit. “For a tiny company there’s a huge opportunity.”

22nd Century has roughly 80 employees and annual revenue of about US$16 million, a portion of which is from regulators such as the FDA using its tobacco to run clinical trials.

So far it has got orders for over 24 million cigarettes for this purpose, with at least 25 such trials underway.

It sells some low-nicotine cigarettes in Spain and does contract manufacturing of regular cigarettes “to keep the lights on”.

British American Tobacco, the world’s biggest international tobacco company, has been assessing the opportunity for tobacco with altered levels of nicotine.

It has a four- year research agreement with 22nd Century worth up to US$14 million that gives it the right to enter into an exclusive worldwide licensing agreement with the company.

Sicignano said he expected BAT to enter into a commercial agreement, and noted that any such deal would not prevent 22nd Century from selling its own products – finished cigarettes or tobacco leaves – to rivals such as Altria, Japan Tobacco International or Imperial Brands. — Reuters