Not surprisingly, given the connection between our technology and more than $100 million of federally funded independent research, 22nd Century's VLN cigarettes have a target nicotine concentration that is exactly in the middle of the nicotine range that the FDA is expected to mandate. Drastically reducing nicotine in cigarettes is the very keystone of the FDA's plan to address nicotine.
The other part of the plan is to ensure that consumers have options for alternative nicotine delivery products. We believe that 22nd Century's technology, which allows us to grow the world's lowest nicotine tobacco, is the best option to achieve the first part of the FDA's plan, minimally or nonaddictive cigarettes.
And while the FDA is tightening the leash on dual and in other e-cigarettes, the FDA also chose to approve IQOS, thus addressing the second part of the FDA's plan to offer alternatives to consumers. FDA Commissioner Gottlieb described these 2 product categories, VLN cigarettes and combustible nicotine delivery products, noncombustible delivery nicotine products as 2 halves of the same strategy.
Not surprisingly, big tobacco is opposed to reducing the nicotine in their cash cow legacy product. In showing up objections to the FDA's plan, these multinational companies have complained that it will, "take too long" or "cost too much" to figure out how to make very low nicotine content cigarettes.
In comments submitted to the FDA on June 13, 2018, REI Services, which is part of Reynolds American 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." Doubling down on their inability to comply with the proposed rule by FDA, REI Services continued pointing out that our company, 22nd Century, holds the commanding position as the technology leader in the field of reduced nicotine tobacco.
Here is an excerpt of the Reynolds American explanation of why their company cannot comply. Commercialization of tobaccos with very low levels of nicotine is made difficult by, "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."
And for the avoidance of doubt, Altria echoes the same statements. On July 16, 2018, Joe Murillo of Altria Client Services 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 variety are already commercially viable, genetically stable plants with acceptable yields and proven nicotine concentrations. 22nd Century's proprietary VLNC cigarettes have important potential public health benefits that have been detailed in dozens of published peer review articles. 22nd Century is more than ready for the FDA to approve our applications for VLN cigarettes. We're also more than ready to enable the FDA's broader plan to mandate that all cigarettes sold in the United States are minimally or nonaddictive. And we are ready to supply any and every country in the world with our VLNC tobacco.
Our current tobacco technology is well protected by multiple overlapping patents, by plant variety protection and by the multiyear physical hurdle of any third-party needing to duplicate our complex assembly of genes and patents, that is 22nd Century's proprietary VLN technology. But it should be noted 22nd Century continues to make important strides with our reduced nicotine tobacco technology. We are already successfully developing the next generation of Very Low Nicotine Content tobacco varieties with superior agronomic and sensory characteristics that will form the foundation of our next generation of VLNC tobacco products that will continue to satisfy the FDA's vision of a future with only minimally or nonaddictive cigarettes on the market.
Considering 22nd Century's achievements as well as big tobaccos' own public admissions, it is clear that the rest of the world is playing a long game of catch-up to 22nd Century's very low nicotine content tobacco technology.
Of course, the FDA is not the only agency looking at reduced nicotine tobacco. The World Health Organization, also known as the WHO, has similarly recommended that all WHO member nations adopt, "a tobacco policy of limiting the sale of cigarettes to brands with a nicotine content that is not sufficient to lead to the development and/or maintenance of addiction." In addition, countries like Canada, New Zealand and the United Kingdom have expressed interest in dramatically reducing the nicotine in cigarettes.
To lead our regulatory efforts on the world stage, 22nd Century recently hired John Pritchard as Vice President of Regulatory Science. Mr. Pritchard was formerly the head of regulatory science for Imperial Brands U.K. He represented 22nd Century last week at the Food and Drug Law Institute conference in Washington, D.C., where acting FDA Commissioner Ned Sharpless indicated that there will be, "no pause" in implementing the FDA's priorities, including its nicotine reduction plan.
Mr. Pritchard will lead and oversee global regulatory and compliance activities for 22nd Century. He will engage with the FDA in support of our PMT and MRTP applications for VLN cigarettes and will work in support of the planned rule by the FDA to revise the nicotine product standard for all cigarettes. Mr. Pritchard will also lead our initiatives with foreign governments that are interested in 22nd Century's proprietary Very Low Nicotine Content tobacco for use in their countries.
Meanwhile, 22nd Century is also making tremendous strides with hemp in Canada's research. In the same way that we control the genetic pathway for nicotine production in tobacco, we see a future where 22nd Century controls the genetic pathway for cannabinoid production in hemp and cannabis. As a part of achieving this future, we recently announced the initiation of a worldwide strategic research and development agreement with KeyGene, a global leader in plant research involving high-value genetic traits and increased crop yields. This exclusive worldwide collaboration is focused on developing hemp and cannabis plants with exceptional cannabinoid profiles for medical and therapeutic use among other applications.
Under the KeyGene agreement, 22nd Century will hold exclusive worldwide rights to all hemp/cannabis plant lines, intellectual property on metabolic traits and research results that are developed through this strategic partnership.
22nd Century's mission in hemp/cannabis is to develop proprietary plant lines for important new medicines and robust agricultural crops in order to improve the health and lives of people around the world.
And while we are not yet entering the marketplace for hemp and cannabis consumer goods in area that remains a legal gray area, we are working to become a source of highly coveted hemp and cannabis genetics, unique plant varieties and high-value extracted cannabinoids.
Combined with 22nd Century's existing hemp and cannabis technology, including our extensive library of hemp and cannabis genetic material, the KeyGene program will bolster 22nd Century's position as a global leader in hemp/cannabis genetics and in the development of proprietary hemp and cannabis super plants.
We are in the enviable position with controlling the industry-leading IP in both hemp/cannabis and tobacco, and indeed never before has our company been so close to achieving our mission to reduce the harm caused by smoking.
With our pending applications at the FDA for our VLN cigarettes coupled with the FDA's ambition to render all cigarettes, minimally or nonaddictive, we stand at the gateway to a dramatically different tobacco landscape. 22nd Century's remarkable tobacco technology is the cornerstone to achieving its vision. Our proprietary VLN cigarettes contain at least 95% less nicotine than any commercial cigarette we have ever attempted, including the 100 leading cigarette brands in the United States.
Research has shown that the trace amounts of nicotine found in our tobacco is below the addictive threshold, whilst officials from around the world have heard loud and clear the conviction expressed by the FDA and are now beginning to develop their own nicotine reduction plans.
22nd Century is ready to launch cigarettes made with our VLN tobacco in the United States and in every nation that wishes to render cigarettes incapable of creating or sustaining addiction. And in so doing, 22nd Century's technology could be responsible for the greatest lifesaving tobacco control initiative ever implemented.
Thank you so much for joining us today and for your continued interest in our extraordinary company. At this time, I'll open the line up to your questions.
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Questions and Answers
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Operator [1]
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(Operator Instructions) Our first question comes from Jim Mcllree.
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James Patrick McIlree, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Industrial and Consumer Technology [2]
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Can you talk a little bit about the hemp strategy? I mean I'm trying to figure out where you're going with this. If you're looking at it from the same kind of standpoint you have with the tobacco IP or if you're looking to become more of a product company or -- and maybe how much you think -- how much capital you might commit to this above and beyond but you've already committed to probably in the next, say, 3 to 5 years.
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [3]
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Well, IP is certainly our priority. That's -- as I just mentioned, we intend to control the genetic pathway in the cannabis and hemp plants much the same way we control that genetic pathway in the tobacco plant, tobacco plant responsible for nicotine production and the hemp/cannabis plant that's halfway responsible for cannabinoid production. We think that that's where our core competencies lie, and frankly, that's where some of the greatest value in the chain can be extracted. So that's our primary focus. I'm not going to say we will never go anywhere else in the chain, whether it be extraction or perhaps even consumer products at some point. But initially, our primary focus will be on the development of proprietary plants and on enhancing our IP portfolio around hemp and cannabis. In terms of spending, we made -- we take a very strategic investment in our strategic partnership with KeyGene. We think that, that will enable us to develop this IP at a fraction of the time that it took us to develop our tobacco IP, but we don't, at this time, envision any substantial investment beyond the levels of the KeyGene investment.
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James Patrick McIlree, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Industrial and Consumer Technology [4]
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All right. Well, I wish you the best and I wish that the FDA will be a little bit more forthcoming with what's going on. I was going to ask you when that's going to happen, but I don't think you're going to give me an answer. So good luck in everything, guys.
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [5]
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Thanks, Jim.
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Operator [6]
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And our next question comes from [Jim Stelton].
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Unidentified Analyst, [7]
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I've got a couple of questions for you here and some clarifications I'd like you to address. I'm looking at the press release that you put out on April 30, which discussed the third phase process that the FDA had begun on or was involved in, in evaluating the manufacturing facility and so forth there. This came as news to me. In the previous conference call of last quarter, you told us about the role that the Center for Tobacco Products is playing in this entire approval, hopefully, process moving forward. Up until that moment, I and perhaps other investors had never heard of this Center for Tobacco Products. Everything that had ever been brought forth and discussed was done so more or less in terms of Dr. Gottlieb's involvement. And of course, we all know what happened when he announced his resignation. I feel that perhaps had we all been more aware that the clinical tobacco products would indeed be place for all of the action that's happening and Dr. Gottlieb, in and of himself, was not as big of a player in that process moving forward as we had felt he might be, had we known that, maybe, just maybe, we wouldn't have seen the dramatic fall in share price. But anyway, here's the point, here's what I'd like to address. We now know that the Center for Tobacco Products is handling this. We know that there is a 4-phase process that they go through and each phase has its own various components. Please talk to me a little bit about the remaining components in phase 3, and then what will happen when we get to phase 4? In other words, how many more steps are involved in this process until they will be at a point where they will give us a yay or nay and we'll know where we are. Can you talk about that a bit?
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [8]
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Sure. I can give you some broad overview, I guess. Let's start with this, the FDA has 2 broad common departments, 1 is the Center for Drug Evaluation and Research and the other is the Center for Tobacco Products. The Center for Tobacco Products has -- that's where tobacco -- responsibility for tobacco products lies. So that's not a new development. That's been since the Tobacco Control Act. That's precisely the department or the division of the FDA that controls Modified Risk Tobacco Products and PMTs and all of these different things since 2009, our Congress passed the Tobacco Control Act. But let me make this clear, too. Sometimes people get confused with phase 3 studies or phase 4 studies. Phase 3 or phase 4 studies are completely different than the 4-phase PMT review process that we talked about in that April 30 press release. So there are no phase 2, phase 3 trials that are required by the Center for Tobacco Products. Those are primarily what makes it a phase 2 or phase 3 trial is really the size of the study and the statistical significance of the number of patients or participants in the study. So none of those things apply to the MRTP or PMT application. That said, IQOS has just -- it took much longer than any 1 product would, but IQOS has just received a marketing order and can move forward with actually launching the product without any claims, but they can actually launch the product. We had our application accepted for filing in just a few months' time, which was much quicker than IQOS. And that suggests to us that we're on pace, perhaps for a PMT approval as early as this summer. So that's -- I can't guarantee that, but we're optimistic that that's the timetable that we're on. Again, because we are now in the last phase of this 4-phase review process at the Center for Tobacco Products. So -- and now I should also say, Dr. Gottlieb presided over both the Center for Drug Evaluation and Research and the Center for Tobacco Products. Dr. Gottlieb was the commissioner of the entire FDA. Mitch Zeller is the titular head for the Center of Tobacco Products but he reported to Gottlieb. So I'm not sure -- I hope that, that clears up. I think we're on track for, I think, a quicker PMT approval than IQOS had. We're very encouraged that the FDA came and did almost a week-long factory inspection. And I think, frankly, that MRTP will follow in due course once this PMT is approved. Is that helpful?
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Unidentified Analyst, [9]
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Well, I agree completely, but we are going to get approved in light at least of everything that's been written and said and done until today. What I would like to ask is when we -- when you first started all of this with big tobacco companies, you made offers to them to come talk to us. They were pulling up all their defenses as they always do about how long it would take and the impossibility of it, et cetera, and we held out the olive branches here. We're working with you in a number of different ways to see if you get all of the low-nicotine tobacco that you need to continue to market Marlboro and Winston and the list goes on and on, and they never showed up. I wasn't surprised. Or at least I don't think they did, and correct me if I'm wrong. I wasn't really surprised in that until I realized they weren't going to do anything whatsoever that might benefit us. I mean let's face it, they hate us. We put them out of business, eventually at least. And they've previously been, as you all know, supporting the new world where they are vaping. Billions and billions of dollars have been invested there because that's the way that they can continue to addict people to nicotine and not have to worry about any tobacco regulations that may come down the pike. But have any of them actually approached and said, hey, well, we're going to keep Marlboro for example, and here's VLN tobacco, and buy it from you or license it from you or whatever. Have you had any approaches of that or am I right? Have they just said, no way in no hell, we're not going to help you at all.
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [10]
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I'm sorry, I mean I've stated publicly that we have certainly had discussions with big tobacco companies, and we've had ongoing discussions with big tobacco companies. And I really -- I mean for obvious reasons, I can't get much more detailed than that. They're very well aware of us, we're very well aware of them. We see them very frequently, certainly at the Food and Drug Law Institute just a week ago. There's an ongoing dialogue. So let's put it that way. But you're exactly right. The tobacco has cash cows that it obviously wants to protect. But I think what we need to think about is what Commissioner Gottlieb said was it -- there's no single answer here. There are 2 halves of the same strategy. What Gottlieb is focused or what he focused the FDA on, frankly, is getting consumers off of combustible tobacco products. Gottlieb wants to make combustible tobacco products nonaddictive. And in so doing, gives consumers the ability to either migrate to noncombustible products where they can find nicotine if they so desire or where they can simply quit. That's the 2 halves of the same strategies, to make all combustible cigarettes nonaddictive or minimally addictive, but then make, "a landing place" for those consumers who still want their nicotine but from a noncombustible source. So in that way, we're sort of allied with these new, call them, nicotine delivery products, with jewel or with different vaping products. Those products are the place where former smokers can go. And we just simply accelerate that process. And we prevent a whole new generation of smokers from becoming addicted to combustible products. That's how the 2 halves stick together in Commissioner Gottlieb's words. So we're encouraged by those words, big tobacco is very aware of those words. And I think, frankly, that's the pathway going forward, not including the pathway where 22nd Century comes out with a Modified Risk Tobacco Product while the FDA is going through the national rule-making process.
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Unidentified Analyst, [11]
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I understand. And just as you know, I've been a smoker for 55 years. Why I've had no trouble yet, I don't know. I really don't. But I've been hoping and praying that the VLN could get approved so that I could be the first one at the counter to buy a carton so I can get off this stuff myself before it does do me in. So anyway, I'm taking up too much time already. I appreciate your courtesy in hearing me out. Please do keep the notifications of the process as we walk through it with the FDA tobacco center so that we know what phase we're in, how close we're coming and so forth. It's highly informative and helpful, and I think it will keep people focused on the goal. Thank you very much for your time, gentlemen.
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [12]
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We'll do exactly that. Thank you, sir. We appreciate it. Good luck to you.
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Operator [13]
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(Operator Instructions) Our next question comes from David Bishop.
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David Bishop, [14]
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Henry, I got -- I have to commend you on your comprehensive summary that you just gave. In college, that would have gotten me an A in English Comp class. I just have one question for all of you. What is your expected production capacity as far as manufacturing the VLN product? I mean are you guys capable of manufacturing enough product for a nationwide rollout in a couple month period of time?
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [15]
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Well, I think the plan would go a little bit differently. We probably -- I don't think speaking about our modified risk product. If you're talking about when the FDA rule becomes effective, we would be largely licensing the product to all the other tobacco companies. They would be manufacturing their own cigarettes. We could never manufacture all of the cigarettes for all of the different brands in the country. So that will be a licensing opportunity when the FDA rule takes effect. But in the meantime, when we have an authorized modified risk tobacco product, I believe that we can come somewhere near 1% market share with our existing factory. 1% market share would be equivalent to a few dollars. Comparing it to American Spirit, it would be worth somewhere in the order of $4 billion in market cap. And that wouldn't be from day 1. We would likely launch the product in 2 to 3 test markets, much like Altria is doing with IQOS. I believe they're launching in Atlanta and 1 or 2 other markets. We would likely test a couple of markets out West that we've already done some homework on, and fine-tune the launch and fine-tune the distribution network that we've been assembling and roll out frankly on a regional basis. So we will have a little bit of time. On day 1 we don't have to go out there and supply 1% of the U.S. market. But I think we do have the capacity to do that and we'll have plenty of time if and when we are going to exceed 1% capacity, we do have the time to add additional manufacturing capacity. Is that helpful?
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David Bishop, [16]
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That's very helpful. I'd like to congratulate you guys on moving everything forward. I've been a shareholder for about 4 years now and anxiously anticipating what the future holds and congratulations and good luck next quarter. Hopefully, we'll get some action from the FDA.
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Operator [17]
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Our next question comes from Joe Stephens.
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Unidentified Analyst, [18]
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I have a couple questions for you that -- the first is can you talk about reduced harm and while I understand nicotine is certainly extremely addictive, most of the time when I think about harm from cigarettes, you think of cancer and cancer -- essentially it's not the nicotine that's the carcinogen, but it's the tar and the other substances. So when we talk about reduced harm and we have already the approval of IQOS, that definitely shows that you can have a nonheated or smokeless tobacco product, a noncombustible tobacco product that delivers nicotine. That most likely is going to reduce the harm from the tar and the carcinogens. How does your product compare when it comes to tar of the carcinogens?
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [19]
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Yes, that's an excellent question and a very important question. Our product does not, and let me be very clearly, it does not reduce tar carcinogens and we are not seeking anything from the FDA to say otherwise. What we are seeking from the FDA is a very simple claim. The right to make the claim that our cigarettes have 95% less nicotine, period. That's all we're asking. It's reduced exposure. So there are sort of 2 different branches to the modified risk program, one is exactly what you've outlined is a modified risk branch, I guess. The other is a modified or reduced exposure. And so what we are looking for, a reduced exposure marketing authorization where we can expose consumers to less nicotine to hopefully a minimally or nonaddictive amount of nicotine. And the idea is when you expose consumers to only a minimally or nonaddictive amount of nicotine, than the smoker can smoke as much as he or she sees fit. Without being addicted to the product, the smoker can smoke fewer cigarettes, the smoker might make more quit attempts. But in general, by smoking less or perhaps by quitting, that smoker will lessen their exposure to tar and to smoke and to the cancer causing agents in cigarettes by simply smoking less or quitting altogether. So that's our claim. Our modified risk claim is actually a reduced exposure claim, a reduced exposure to nicotine and only nicotine. Does that make sense?
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Unidentified Analyst, [20]
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Thank you for clarifying that. And to follow up, if a cigarette, let's say, talk about IQOS, again the same company has their own combustible products, if you look at let's say the Marlboro Ones it looks to be 0.01 milligrams of nicotine in the Marlboro Plus One, 0.1 milligrams of nicotine per cigarette. The question is, of course, how much tobacco is in each cigarette? Consumers don't look at nicotine per gram of tobacco. They look at nicotine per cigarette. So I'm very curious with VLN, what is the nicotine content per cigarette?
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [21]
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Okay. I'm not exactly sure what you're looking at with Marlboro, but let's also make this very clear because you're making some very excellent points. The old way that nicotine exposure was measured was nicotine yield as measured by a smoking machine. And the FDA said, I don't know 10 years ago, that that's really not a valid way to measure nicotine exposure because smokers alter their smoking behavior when given a light product or an ultralight product or a low tar product. They takes more puffs per cigarette, they inhale more or less deeply. They alter their breath behavior and basically defeat the filter and the ventilation holes in order to get the nicotine that they are seeking. So nicotine yields are not looked at as an accurate measure of nicotine that consumers are actually inhaling into their bodies. But we've measured our nicotine exposure by cigarette, by content in the tobacco and by yield, okay? So it's important to say by each of those metrics, we've measured the nicotine tobacco content, the yield and the nicotine per cigarette. in all 3 cases, we're at least 95% less than each and every one of the 100 top-selling brands in the United States. So I can say that definitively. Any way you want to look at it, we're 95% less. The most accurate way to look at it, scientists believe is by nicotine content.
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Unidentified Analyst, [22]
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In this case then what would be your nicotine content per VLN cigarette?
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [23]
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The range that we target is exactly the range that we believe the FDA will mandate which is between 0.3 and 0.7 milligrams per gram nicotine per gram of tobacco.
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Unidentified Analyst, [24]
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So that's between 0.3 and 0.7? So if I took a Marlboro...
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [25]
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The target is 0.5. That's the ideal.
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Unidentified Analyst, [26]
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If I took a Marlboro Plus One and cut the filter off and just weighed the tobacco, I'm going to get 0.62 maybe 0.65 grams. And they're advertising that as 0.1 milligrams of nicotine. If I do the math, that means their tobacco is coming in at 0.16 milligrams per gram?
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [27]
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You know what, I don't have a chart so I don't want to start giving you exact numbers in front of me. I just was looking at a chart a couple of hours ago with literally the 100 brands all marked down there. But whatever they're talking about right now is likely yield, is I think what you're talking about. I don't think that very many folks are publishing anything about content. But if you want to get into this more deeply, you can certainly e-mail us and we'll share with you a chart of all the numbers. As a matter of fact, they're all included in our MRTP application and our PMT application. So we'll be happy to share that data with you. It's all publicly available or will be.
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Operator [28]
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The next question comes from [Marian Gray].
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Unidentified Analyst, [29]
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I want to make $10, so I'm just going to say show me the money and I'll tell you later what that means. How close are we to other countries going VLN? Because I know about a year ago or less, Canada was looking for VLN cigarettes.
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [30]
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Well, we haven't publicly announced any strategic partnership with another country, but I have disclosed publicly that we've talked to about half a dozen countries. And I mentioned earlier in my prepared remarks that John Pritchard is going to be sort of instrumental in talking with some of the folks in the regulatory and the public health world about doing exactly that, about bringing very low nicotine cigarettes to international markets. Mike, Zercher, our head of business development, is talking with major tobacco companies in international markets. But John Pritchard will be working with public health officials and regulatory experts in these international markets. I guess I'll just say we're certainly talking to folks in North America, in Europe and in Asia, frankly. But I can't really make any announcement yet. We don't have something to announce.
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Unidentified Analyst, [31]
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Have we sent VLN cigarettes to Canada?
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [32]
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We've sent VLN cigarettes to dozens of countries. So that's all I can say.
We'll take one last call because it's approaching the 5:00 hour.
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Operator [33]
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We'll take the question from Ivan (inaudible).
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Unidentified Shareholder, [34]
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Henry, could you please tell me, I'm a longtime shareholder and I'll be honest with you. I've been listening to these conference calls for years. It seems to me like you're saying the same old stuff here, and I'm learning nothing new on this conference call. Can you speak a little bit about what you're doing with the University of Virginia and Anandia as far as research? Are we going to renew some of these contracts? And if not, what are we doing? When are we going to start making revenue off some of these research partners that we are partnering with?
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [35]
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That's an excellent question. I'm going to let Tom address some of our strategic partnerships with research institutions. But let me just say broadly, 22nd Century, I understand what you're saying and I sympathize with you. 22nd Century, though we are growing our revenues each year, and that's important to demonstrate that we're capable of doing that, we're capable of running a factory and we're capable of growing our contract manufacturing business, that's not how we're going to build substantial shareholder value here. That's generally -- what that's doing is it's growing a little part of our business, it's enabling us to have a factory, to support the 50-plus people who work there so that when we do supply research cigarettes to the government or when we do need a factory inspection from the FDA for a modified risk product that we have that factory up and ready and available at a moment's notice. So that's why we're selling whatever we're selling, $25 million worth of product a year simply to pay the overhead there and to keep the lights on. What you're going to see, I believe, is you're going to see one day a regulatory approval or you're going to see a licensing announcement and you're going -- that's going to be an on/off switch. We're not going to get there incrementally. It's not going to be in 1 year we did $25 million, the next year we did $45 million and then the share price went up 10% and then it went up 15% and then it went up 20%. It's not going to be like that. We're going to achieve success. You've been a shareholder for several years, well then obviously you realize our first application that we submitted for our modified risk tobacco product was a strong one. But we invested, I don't know, $2 million I guess in that application because that's the resources that our company had.
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Unidentified Shareholder, [36]
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If that's the case, why did you waste the time in submitting it? The whole thing is you submitted that application, and at the very end of the year, if I'm not mistaken, it was December 2 or December 31st, you let your shareholders know that you're giving no choice. You waited 1 whole year without any word throughout the process like you're doing this year. This is what I'm upset about. I've heard you, Henry, since the first...
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [37]
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Sir, let me correct you, sir. We didn't wait a year to let you know. The FDA waited a year to respond to us. So let's just be very, very clear about that. The FDA responded literally 350 days after we submitted our application. We had an initial meeting early on which we reported. Let me finish. Not on the first application, sir. On the first application, we had a preliminary -- sir, I'm not going to argue with you. I'm telling you the facts. The facts are we submitted the application, we had some early discussion with the FDA and we didn't hear anything from the FDA for the better part of the year, okay? This second application.
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Unidentified Shareholder, [38]
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What happened to this application?
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Henry Sicignano, 22nd Century Group, Inc. - President, CEO & Director [