Probably not the best way to do this, just off the top of my head: -

DECLARE @code NVARCHAR(255);

SET @code = '12333345566689';

WITH CTE(N) AS (SELECT 1 FROM (VALUES(1),(1),(1),(1),(1),(1),(1),(1),(1),(1))a(N)),

CTE2(N) AS (SELECT 1 FROM CTE x CROSS JOIN CTE y),

CTE3(N) AS (SELECT 1 FROM CTE2 x CROSS JOIN CTE2 y),

CTE4(N) AS (SELECT 1 FROM CTE3 x CROSS JOIN CTE3 y),

CTE5(N) AS (SELECT 1 FROM CTE4 x CROSS JOIN CTE4 y),

CTE6(N) AS (SELECT TOP (LEN(@code)) 1 FROM CTE5 x CROSS JOIN CTE5 y),

TALLY(N) AS (SELECT ROW_NUMBER() OVER(ORDER BY (SELECT NULL)) FROM CTE6)

SELECT @code = REPLACE(REPLACE(REPLACE(LTRIM(RTRIM(@code)),SUBSTRING(@code,N,1)+SUBSTRING(@code,N,1),SUBSTRING(@code,N,1)+CHAR(7)),CHAR(7)+SUBSTRING(@code,N,1),''),CHAR(7),'')

FROM TALLY;

SELECT @code;

Returns "12345689"

Based on REPLACE Multiple Spaces with One[/url] and The "Numbers" or "Tally" Table: What it is and how it replaces a loop[/url].