SEC Company Response from 22nd Century Group, Inc. (XXII) (CIK 0001347858) (XXII) — Jun 6, 2011
22nd Century Group, Inc. (XXII) (CIK 0001347858)
Date: June 6, 2011 · CIK: 0001347858 · Accession: 0001144204-11-034276
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-173420
Letter
UNITED STATES SECURITIES AND 22nd Century Group, Inc. (the “Company”) Registration Statement on Form S-1 (the “Form S-1”) Filed April 11, 2011 File No. 333-173420
Dear Mr. Brown:
The Company received your May 6, 2011 letter (the “May 6 Comment Letter”) containing the comments and questions of the Staff of the SEC regarding the Form S-1. Accompanying this letter is Amendment No. 1 to the Form S-1 (“Amendment No. 1”), which includes revisions in response to the May 6 Comment Letter. In addition, we discuss the Company’s responses to the May 6 Comment Letter below. Further, for your convenience, we have restated each of your comments as set forth in the May 6 Comment Letter immediately preceding each of our responses below.
General
1. Given that there is no guarantee that X-22 or Brand A and Brand B will obtain the necessary approval from the FDA, please revise significantly throughout to clarify this and to provide more balanced disclosure regarding your potential products. Please also revise to clarify that there is no guarantee that you will qualify for "Fast Track" designation. In addition, please clarify throughout that the FDA has yet to release its regulations regarding modified risk cigarettes and that, as of June 2010, all cigarette companies were required to cease the use of the terms "low tar," "light" and "ultra light."
RESPONSE: We have amended the Form S-1 to include more disclosure that there is no guarantee that X-22 or Brand A and Brand B will obtain the necessary approvals from the FDA and to provide more balanced disclosure regarding the Company’s potential products. Please see Prospectus Summary – Our Company – Overview, pages 1, 2 (first and last paragraphs) and 3; Risk Factors, page 14; Business – Overview, pages 34 and 35; and Business- Products, page 38 of Amendment No. 1.
We have amended the Form S-1 to clarify that there is no guarantee X-22 will qualify for “Fast Track” designation. The Company expects to have FDA’s answer about X-22’s Fast Track Status by July 2011. Please see Prospectus Summary – Our Company - Overview, page 3; Business - Overview, page 34; and Business – Government Regulation, pages 50 and 51 of Amendment No. 1.
However, where appropriate, Amendment No. 1 also discloses that, since smoking is the number one cause of preventable death in the U.S., to the Company’s knowledge, every FDA-approved smoking cessation aid since the establishment of the Fast Track program in 1997 (and Nabi Biopharmaceuticals’s nicotine vaccine currently in development) has received “Fast Track” designation while the products were going through the FDA-approval process. Please see Prospectus Summary – Our Company – Overview, page 3; Business – Overview, page 34; Business – Government Regulation, pages 50 and 51 of Amendment No. 1.
We have amended the Form S-1 to clarify that the FDA has yet to release its regulations regarding modified risk cigarettes, and to include where applicable a statement that we believe such regulations will be released over the next year based in part on the timelines contained in the Tobacco Control Act. Please see Prospectus Summary – Our Company – Overview, page 2; Risk Factors, pages 9 and 10; Business – Products, page 34; Business – Sales and Marketing, page 38; Business – Government Regulation, pages 45 and 52 of Amendment No. 1.
We have amended the Form S-1 to clarify that, as of June 2010, all cigarette companies were required to cease the use of the terms “low tar,” “light” and “ultra light.” The following phrase (or a very similar one): “as of June 2010, all cigarette companies were required to cease the use of the terms ‘low tar,’ ‘light’ and ‘ultra light’” appears as follows: Prospectus Summary – Our Company - Overview, pages 2 and 3; Business - Products, pages 34 and 35 (second and last paragraphs); Business – Sales and Marketing, pages 40 and 45; Business – Government Regulation, page 51; and Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview, page 55 of Amendment No. 1.
2. Please revise to clarify what you mean by the phrases “super-premium priced cigarette brands,” “specialty cigarette components,” “full flavor cigarette brands,” “reduce smoke exposure,” “biomass products” and “bioconversion.”
RESPONSE: We have amended the Form S-1 to clarify what we mean by these six phrases. For the definition of “super-premium priced cigarette brands,” please see Prospectus Summary – Our Company - Overview on page 3 of Amendment No. 1 under “RED SUN and MAGIC Cigarettes.” For the definitions of “specialty cigarette components,” “full flavor cigarette brands” and “reduce smoke exposure,” see Business – Biomass Products on page 39 of Amendment No. 1 under “BRAND B Cigarettes.” For the definitions of “biomass products” and “bioconversion” see page 52 of Amendment No. 1 under “Biomass Products.”
Registration Statement Cover Page
3. The registration fee appears to have been calculated pursuant to Rule 457(c) of the Securities Act. Please revise footnote 2 to the Calculation of Registration Fee table or advise.
RESPONSE: We have amended the footnote on the cover page to Amendment No. 1 to refer to Rule 457(c).
Our Company, page 1
Overview, page 1
4. Please include in one of your introductory paragraphs your revenues, assets, and losses for the most recent audited period and interim stub. This snapshot will help investors evaluate the disclosure as they read the filing. Also, disclose the fact that your independent auditor's report expresses substantial doubt about your ability to continue as a going concern and that you will not receive any proceeds from this offering.
RESPONSE: We have amended the Form S-1 to include the suggested disclosure. Please see Prospectus Summary – Our Company – Overview, page 1 of Amendment No. 1.
5. Please revise the first paragraph on page one to clarify that you have not attempted to obtain approval or authorization for your products outside of the United States and that there is no guarantee that you will be able to gain approval or authorization for your products outside of the United States.
RESPONSE: We have amended the Form S-1 to include the suggested disclosure regarding X-22. Please see the third paragraph of the Prospectus Summary – Our Company – Overview section of Amendment No. 1, on page 1. Since modified risk tobacco products are not explained until the fourth paragraph on page 2 of Amendment No. 1, we have included the suggested disclosure regarding Brand A and Brand B in the fifth paragraph of page 2 of Amendment No.1. Please note that, in many foreign countries, a product for which a smoking cessation claim is made (e.g., X-22) generally can be sold legally without having to be approved by a regulatory agency – the presence of a smoking cessation claim in many cases does not trigger regulatory approval requirements. In contrast, the FDA considers tobacco/nicotine addiction a disease, with the result that smoking cessation products are regulated since they cure or mitigate the disease of tobacco/nicotine addiction. Therefore, given the regulatory landscape of many foreign countries, it is unlikely that the Company would need to seek regulatory approval or authorization for our products in such countries. The same is generally true in many foreign countries regarding claims for reduced exposure/risk tobacco products (modified risk tobacco products such as Brand A and Brand B).
6. We note your statement on page one that you plan to use a substantial portion of the proceeds of the Private Placement Offering to complete clinical trials for X-22. Please revise to provide quantitative information here regarding the cost of completing these trials, the amount of money raised in the Private Placement Offering. In addition, please either define the term "Private Placement Offering" or include a cross-reference to the definition.
RESPONSE: We have amended the Form S-1 to include the suggested disclosure. The Form S-1 defined “Private Placement Offering” in the Prospectus Summary – Our Company – Overview section (second paragraph under Recent Developments, page 5 of Amendment No. 1), and we have amended the Form S-1 to provide a cross reference to this definition in the second paragraph of page 1 under the Prospectus Summary – Our Company – Overview section of Amendment No. 1.
7. Please revise your discussion of the clinical trials for X-22 and your plans to produce and sell modified risk cigarettes by adding the disclosure from the last risk factor on page eight that the net proceeds of the Private Placement Offering will not be sufficient to enable you to complete the FDA approval process for X-22 or the FDA authorization process for your Modified Risk Cigarettes and that you will have to seek additional funding to complete your business plans.
RESPONSE: We have amended the Form S-1 to include the suggested disclosure. Please see the last paragraph of page 2 (Prospectus Summary – Our Company – Overview) of Amendment No. 1.
8. Please provide support for your statement on page one that X-22 is the only smoking cessation product that functions exactly like a regular cigarette and your statement on page three that the modifications you have made to your proprietary tobacco do not affect the leaf constituents important to a cigarette's characteristics, including taste and aroma.
RESPONSE: We have amended the Form S-1 to include the suggested disclosure. In the second paragraph of page 2 (Prospectus Summary – Our Company – Overview) of Amendment No. 1, we have included a cross reference to the amended discussion later in such section, under the heading “Technology Platform and Intellectual Property,” of how we believe our genetic engineering processes result in less nicotine without altering the functionality, taste and aroma of the tobacco – resulting in the X-22 product having what we believe are taste and aroma characteristics within the range of a typical cigarette. Please see page 4 (Technology Platform and Intellectual Property) of Amendment No. 1.
RED SUN and MAGIC Cigarettes, page 2
9. Please provide support to us for your statement that the ban of flavored cigarettes has created a product void in the tobacco channels where you intend to focus your marketing efforts. Alternatively, please revise to state that this is your belief.
RESPONSE: We have amended the Form S-1 to provide more information regarding the 2009 ban by the FDA of flavored cigarettes, which we believe resulted in a product void where we intend to focus our marketing efforts, and the market share of such cigarettes prior to the ban. Please see page 3 of the Prospectus Summary – Our Company – Overview section of Amendment No. 1, under the heading “RED SUN and MAGIC Cigarettes”.
Technology Platform and Intellectual Property, page 3
10. Please balance your disclosure regarding your intellectual property on page three with your disclosure in the last risk factor on page 18 and in the second to the last risk factor on page 19 that you have not performed searches for third-party intellectual property rights that may raise freedom-to-operate issues, that you have not obtained legal opinions regarding the commercialization of your potential products and that there may be existing patents that affect your ability to commercialize your potential products.
RESPONSE: We have amended the Form S-1 to balance the disclosures identified above. Please see the last paragraph of page 4 of Amendment No. 1 (Prospectus Summary – Our Company – Overview) under the heading “Technology Platform and Intellectual Property”; and the first paragraph of the risk factor beginning on page 19 of Amendment No. 1.
Recent Developments, page 3
11. Please revise to clarify the manner in which you sold 5,434,446 Private Placement Offering Securities in the Private Placement Offering and how this relates to the shares being offered. Additionally please reconcile the statement on page three regarding “each Unit consisting of one limited liability company membership interest of 22nd Century and a five-year warrant to purchase one half of one (1/2) limited liability company membership interest” with the statement on page 32 regarding “each such PPO Security consisting of one (1) Unit and a five-year warrant to purchase one-half of one (1/2) Unit.”
RESPONSE: We have amended the Form S-1 to make consistent the phrases referred to in your comment above. The term “PPO Securities” refers to all of the equity securities sold in the private placement offering, and which consist of individual Units sold. “Units” are comprised of one limited liability company membership interest in 22nd Century and a warrant to purchase one-half limited liability security membership interest in 22nd Century. Please see the fourth paragraph of page 33 of Amendment No. 1 under the heading “Background.” With respect to the manner in which the Company sold 5,434,446 Private Placement Offering Securities (PPO Securities) in the Private Placement Offering and how this relates to the shares being offered, 22nd Century Limited, LLC conducted a private placement to raise capital. Immediately after the closing of that Private Placement Offering, 22nd Century Limited, LLC merged with an acquisition company created by 22nd Century Group, Inc. (which was a shell public company at the time). In that merger transaction, 22nd Century Limited, LLC became a wholly-owned subsidiary of 22nd Century Group, Inc. At the closing of the Merger, each limited liability company membership interest of 22nd Century Limited, LLC issued and outstanding immediately prior to the closing of the Merger was exchanged for one (1) share of the 22nd Century Group, Inc’s common stock, and each warrant to purchase limited liability company membership interests of 22nd Century Limited, LLC was exchanged for one warrant of like tenor and term to purchase shares of the 22nd Century Group, Inc’s common stock. The shares being offered under the 22nd Century Group, Inc. registration statement on Form S-1 prospectus are those shares of the 22nd Century Group, Inc that were issued in connection with the Private Placement Offering.
Risk Factors, page 7
12. Refer to the third sentence in the introductory paragraph to this section. All material risks should be discussed in this section. If risks are not deemed material then they should not be mentioned. Please revise accordingly.
RESPONSE: The Company believes that all material risks are already discussed in this section and has revised the introductory paragraph of this section to clarify this. Please see page 8 in the Risk Factors section of Amendment No. 1. We have amended the Form S-1 to remove risks that the Company does not consider material.
13. We note your statement in the last paragraph on page 35 that Vector Tobacco had previously marketed Quest cigarettes. Please provide an appropriate risk factor addressing, if true, that at least one of your products was previously marketed unsuccessfully.
RESPONSE: In fact, it is not the case that “at least one of [our] products was previously marketed unsuccessfully.” Vector had to stop marketing QUEST, which contained our proprietary tobacco, as a result of a dispute between Vector and 22nd Century that involved Vector’s ceasing FDA activities related to QUEST. See the Current Report on Form 8-K filed by Vector Group, Inc. (NYSE:VGR) on November 22, 2006. According to a publicly available transcript of a public investor conference call held by Vector Group, Ltd. on November 9, 2007 (approximately 5 years after QUEST was introduced into the market in 2003), distrib
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CORRESP 1 filename1.htm 22nd Century Group, Inc. 8201 Main Street, Suite 6 Williamsville, NY 14221 Tel.: 716-270-1523 June 7, 2011 Mr. John Dana Brown Attorney-Advisor UNITED STATES SECURITIES AND EXCHANGE COMMISSION 100 F Street, N.E. Washington. D.C. 20549 Re: 22nd Century Group, Inc. (the “Company”) Registration Statement on Form S-1 (the “Form S-1”) Filed April 11, 2011 File No. 333-173420 Dear Mr. Brown: The Company received your May 6, 2011 letter (the “May 6 Comment Letter”) containing the comments and questions of the Staff of the SEC regarding the Form S-1. Accompanying this letter is Amendment No. 1 to the Form S-1 (“Amendment No. 1”), which includes revisions in response to the May 6 Comment Letter. In addition, we discuss the Company’s responses to the May 6 Comment Letter below. Further, for your convenience, we have restated each of your comments as set forth in the May 6 Comment Letter immediately preceding each of our responses below. General 1. Given that there is no guarantee that X-22 or Brand A and Brand B will obtain the necessary approval from the FDA, please revise significantly throughout to clarify this and to provide more balanced disclosure regarding your potential products. Please also revise to clarify that there is no guarantee that you will qualify for "Fast Track" designation. In addition, please clarify throughout that the FDA has yet to release its regulations regarding modified risk cigarettes and that, as of June 2010, all cigarette companies were required to cease the use of the terms "low tar," "light" and "ultra light." RESPONSE: We have amended the Form S-1 to include more disclosure that there is no guarantee that X-22 or Brand A and Brand B will obtain the necessary approvals from the FDA and to provide more balanced disclosure regarding the Company’s potential products. Please see Prospectus Summary – Our Company – Overview, pages 1, 2 (first and last paragraphs) and 3; Risk Factors, page 14; Business – Overview, pages 34 and 35; and Business- Products, page 38 of Amendment No. 1. We have amended the Form S-1 to clarify that there is no guarantee X-22 will qualify for “Fast Track” designation. The Company expects to have FDA’s answer about X-22’s Fast Track Status by July 2011. Please see Prospectus Summary – Our Company - Overview, page 3; Business - Overview, page 34; and Business – Government Regulation, pages 50 and 51 of Amendment No. 1. However, where appropriate, Amendment No. 1 also discloses that, since smoking is the number one cause of preventable death in the U.S., to the Company’s knowledge, every FDA-approved smoking cessation aid since the establishment of the Fast Track program in 1997 (and Nabi Biopharmaceuticals’s nicotine vaccine currently in development) has received “Fast Track” designation while the products were going through the FDA-approval process. Please see Prospectus Summary – Our Company – Overview, page 3; Business – Overview, page 34; Business – Government Regulation, pages 50 and 51 of Amendment No. 1. We have amended the Form S-1 to clarify that the FDA has yet to release its regulations regarding modified risk cigarettes, and to include where applicable a statement that we believe such regulations will be released over the next year based in part on the timelines contained in the Tobacco Control Act. Please see Prospectus Summary – Our Company – Overview, page 2; Risk Factors, pages 9 and 10; Business – Products, page 34; Business – Sales and Marketing, page 38; Business – Government Regulation, pages 45 and 52 of Amendment No. 1. We have amended the Form S-1 to clarify that, as of June 2010, all cigarette companies were required to cease the use of the terms “low tar,” “light” and “ultra light.” The following phrase (or a very similar one): “as of June 2010, all cigarette companies were required to cease the use of the terms ‘low tar,’ ‘light’ and ‘ultra light’” appears as follows: Prospectus Summary – Our Company - Overview, pages 2 and 3; Business - Products, pages 34 and 35 (second and last paragraphs); Business – Sales and Marketing, pages 40 and 45; Business – Government Regulation, page 51; and Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview, page 55 of Amendment No. 1. 2. Please revise to clarify what you mean by the phrases “super-premium priced cigarette brands,” “specialty cigarette components,” “full flavor cigarette brands,” “reduce smoke exposure,” “biomass products” and “bioconversion.” RESPONSE: We have amended the Form S-1 to clarify what we mean by these six phrases. For the definition of “super-premium priced cigarette brands,” please see Prospectus Summary – Our Company - Overview on page 3 of Amendment No. 1 under “RED SUN and MAGIC Cigarettes.” For the definitions of “specialty cigarette components,” “full flavor cigarette brands” and “reduce smoke exposure,” see Business – Biomass Products on page 39 of Amendment No. 1 under “BRAND B Cigarettes.” For the definitions of “biomass products” and “bioconversion” see page 52 of Amendment No. 1 under “Biomass Products.” 2 Registration Statement Cover Page 3. The registration fee appears to have been calculated pursuant to Rule 457(c) of the Securities Act. Please revise footnote 2 to the Calculation of Registration Fee table or advise. RESPONSE: We have amended the footnote on the cover page to Amendment No. 1 to refer to Rule 457(c). Our Company, page 1 Overview, page 1 4. Please include in one of your introductory paragraphs your revenues, assets, and losses for the most recent audited period and interim stub. This snapshot will help investors evaluate the disclosure as they read the filing. Also, disclose the fact that your independent auditor's report expresses substantial doubt about your ability to continue as a going concern and that you will not receive any proceeds from this offering. RESPONSE: We have amended the Form S-1 to include the suggested disclosure. Please see Prospectus Summary – Our Company – Overview, page 1 of Amendment No. 1. 5. Please revise the first paragraph on page one to clarify that you have not attempted to obtain approval or authorization for your products outside of the United States and that there is no guarantee that you will be able to gain approval or authorization for your products outside of the United States. RESPONSE: We have amended the Form S-1 to include the suggested disclosure regarding X-22. Please see the third paragraph of the Prospectus Summary – Our Company – Overview section of Amendment No. 1, on page 1. Since modified risk tobacco products are not explained until the fourth paragraph on page 2 of Amendment No. 1, we have included the suggested disclosure regarding Brand A and Brand B in the fifth paragraph of page 2 of Amendment No.1. Please note that, in many foreign countries, a product for which a smoking cessation claim is made (e.g., X-22) generally can be sold legally without having to be approved by a regulatory agency – the presence of a smoking cessation claim in many cases does not trigger regulatory approval requirements. In contrast, the FDA considers tobacco/nicotine addiction a disease, with the result that smoking cessation products are regulated since they cure or mitigate the disease of tobacco/nicotine addiction. Therefore, given the regulatory landscape of many foreign countries, it is unlikely that the Company would need to seek regulatory approval or authorization for our products in such countries. The same is generally true in many foreign countries regarding claims for reduced exposure/risk tobacco products (modified risk tobacco products such as Brand A and Brand B). 6. We note your statement on page one that you plan to use a substantial portion of the proceeds of the Private Placement Offering to complete clinical trials for X-22. Please revise to provide quantitative information here regarding the cost of completing these trials, the amount of money raised in the Private Placement Offering. In addition, please either define the term "Private Placement Offering" or include a cross-reference to the definition. RESPONSE: We have amended the Form S-1 to include the suggested disclosure. The Form S-1 defined “Private Placement Offering” in the Prospectus Summary – Our Company – Overview section (second paragraph under Recent Developments, page 5 of Amendment No. 1), and we have amended the Form S-1 to provide a cross reference to this definition in the second paragraph of page 1 under the Prospectus Summary – Our Company – Overview section of Amendment No. 1. 3 7. Please revise your discussion of the clinical trials for X-22 and your plans to produce and sell modified risk cigarettes by adding the disclosure from the last risk factor on page eight that the net proceeds of the Private Placement Offering will not be sufficient to enable you to complete the FDA approval process for X-22 or the FDA authorization process for your Modified Risk Cigarettes and that you will have to seek additional funding to complete your business plans. RESPONSE: We have amended the Form S-1 to include the suggested disclosure. Please see the last paragraph of page 2 (Prospectus Summary – Our Company – Overview) of Amendment No. 1. 8. Please provide support for your statement on page one that X-22 is the only smoking cessation product that functions exactly like a regular cigarette and your statement on page three that the modifications you have made to your proprietary tobacco do not affect the leaf constituents important to a cigarette's characteristics, including taste and aroma. RESPONSE: We have amended the Form S-1 to include the suggested disclosure. In the second paragraph of page 2 (Prospectus Summary – Our Company – Overview) of Amendment No. 1, we have included a cross reference to the amended discussion later in such section, under the heading “Technology Platform and Intellectual Property,” of how we believe our genetic engineering processes result in less nicotine without altering the functionality, taste and aroma of the tobacco – resulting in the X-22 product having what we believe are taste and aroma characteristics within the range of a typical cigarette. Please see page 4 (Technology Platform and Intellectual Property) of Amendment No. 1. RED SUN and MAGIC Cigarettes, page 2 9. Please provide support to us for your statement that the ban of flavored cigarettes has created a product void in the tobacco channels where you intend to focus your marketing efforts. Alternatively, please revise to state that this is your belief. RESPONSE: We have amended the Form S-1 to provide more information regarding the 2009 ban by the FDA of flavored cigarettes, which we believe resulted in a product void where we intend to focus our marketing efforts, and the market share of such cigarettes prior to the ban. Please see page 3 of the Prospectus Summary – Our Company – Overview section of Amendment No. 1, under the heading “RED SUN and MAGIC Cigarettes”. Technology Platform and Intellectual Property, page 3 10. Please balance your disclosure regarding your intellectual property on page three with your disclosure in the last risk factor on page 18 and in the second to the last risk factor on page 19 that you have not performed searches for third-party intellectual property rights that may raise freedom-to-operate issues, that you have not obtained legal opinions regarding the commercialization of your potential products and that there may be existing patents that affect your ability to commercialize your potential products. RESPONSE: We have amended the Form S-1 to balance the disclosures identified above. Please see the last paragraph of page 4 of Amendment No. 1 (Prospectus Summary – Our Company – Overview) under the heading “Technology Platform and Intellectual Property”; and the first paragraph of the risk factor beginning on page 19 of Amendment No. 1. 4 Recent Developments, page 3 11. Please revise to clarify the manner in which you sold 5,434,446 Private Placement Offering Securities in the Private Placement Offering and how this relates to the shares being offered. Additionally please reconcile the statement on page three regarding “each Unit consisting of one limited liability company membership interest of 22nd Century and a five-year warrant to purchase one half of one (1/2) limited liability company membership interest” with the statement on page 32 regarding “each such PPO Security consisting of one (1) Unit and a five-year warrant to purchase one-half of one (1/2) Unit.” RESPONSE: We have amended the Form S-1 to make consistent the phrases referred to in your comment above. The term “PPO Securities” refers to all of the equity securities sold in the private placement offering, and which consist of individual Units sold. “Units” are comprised of one limited liability company membership interest in 22nd Century and a warrant to purchase one-half limited liability security membership interest in 22nd Century. Please see the fourth paragraph of page 33 of Amendment No. 1 under the heading “Background.” With respect to the manner in which the Company sold 5,434,446 Private Placement Offering Securities (PPO Securities) in the Private Placement Offering and how this relates to the shares being offered, 22nd Century Limited, LLC conducted a private placement to raise capital. Immediately after the closing of that Private Placement Offering, 22nd Century Limited, LLC merged with an acquisition company created by 22nd Century Group, Inc. (which was a shell public company at the time). In that merger transaction, 22nd Century Limited, LLC became a wholly-owned subsidiary of 22nd Century Group, Inc. At the closing of the Merger, each limited liability company membership interest of 22nd Century Limited, LLC issued and outstanding immediately prior to the closing of the Merger was exchanged for one (1) share of the 22nd Century Group, Inc’s common stock, and each warrant to purchase limited liability company membership interests of 22nd Century Limited, LLC was exchanged for one warrant of like tenor and term to purchase shares of the 22nd Century Group, Inc’s common stock. The shares being offered under the 22nd Century Group, Inc. registration statement on Form S-1 prospectus are those shares of the 22nd Century Group, Inc that were issued in connection with the Private Placement Offering. Risk Factors, page 7 12. Refer to the third sentence in the introductory paragraph to this section. All material risks should be discussed in this section. If risks are not deemed material then they should not be mentioned. Please revise accordingly. RESPONSE: The Company believes that all material risks are already discussed in this section and has revised the introductory paragraph of this section to clarify this. Please see page 8 in the Risk Factors section of Amendment No. 1. We have amended the Form S-1 to remove risks that the Company does not consider material. 5 13. We note your statement in the last paragraph on page 35 that Vector Tobacco had previously marketed Quest cigarettes. Please provide an appropriate risk factor addressing, if true, that at least one of your products was previously marketed unsuccessfully. RESPONSE: In fact, it is not the case that “at least one of [our] products was previously marketed unsuccessfully.” Vector had to stop marketing QUEST, which contained our proprietary tobacco, as a result of a dispute between Vector and 22nd Century that involved Vector’s ceasing FDA activities related to QUEST. See the Current Report on Form 8-K filed by Vector Group, Inc. (NYSE:VGR) on November 22, 2006. According to a publicly available transcript of a public investor conference call held by Vector Group, Ltd. on November 9, 2007 (approximately 5 years after QUEST was introduced into the market in 2003), distrib