U.S. regulators missed a Sep. 9 deadline to approve or deny the marketing of e-cigarettes by big tobacco companies. The Food and Drug Administration already has rejected the marketing applications of some 130 small firms that sell e-cigs in such flavors as Apple Crumble and Cinnamon Toast, but the agency said on Thursday that it needs more time to review the remaining applications.
The remaining applications probably include the ones that investors care most about, such as those from Juul Labs—the private firm that’s 35%-owned by Altria Group (ticker: MO)—and the Vuse products from the Reynolds American unit of British American Tobacco (BTI), as well as the blu products from Imperial Brands (IMBBY).The companies’ stocks pretty much tracked the broader market Thursday, although shares of British American and Imperial Brands have lagged badly since the year began.
Last year, a federal judge gave tobacco companies until Sep. 9, 2020, to submit applications for FDA approval of their e-cigs. The agency was given a year to review them. Thursday’s FDA announcement said the agency had acted on 93% of the millions of products submitted for review.
“We’ve made significant progress,” said the agency’s press release. “However there is more work to be done to complete our remaining reviews.”
“We continue to work expeditiously on the remaining applications that were submitted by the court’s Sep. 9, 2020, deadline, many of which are in the final stages of review,” the agency said. An update on the subject by Mitch Zeller, the director of the FDA’s Center for Tobacco Products, also appeared Thursday.
The FDA’s deadline miss was generally criticized by anti-tobacco groups like the Campaign for Tobacco-Free Kids and the American Thoracic Society.
To receive a marketing authorization, an e-cig maker must persuade the FDA that permitting sale of its products would be “appropriate for the protection of the public health.” The agency can weigh the product’s appeal to youngsters, against its potential to help adults quit smoking. In the last two weeks, the FDA denied authorization to over 100 marketers of flavored e-cigs deemed too attractive to young people.
Morgan Stanley analyst Pam Kaufman wrote in an August note that she expects favorable decisions for most of the industry’s big e-cig players, including Altria, BAT and Imperial Brands. Swedish Match (SWMAF) also awaits decisions on its flavored cigars.
A Sep. 3 note by J.P. Morgan’s Celine Pannuti also predicted that the decisions would have limited impact on the big names. A denial for all of Juul’s products is unlikely, she wrote, but any denials would certainly be a positive for rivals like BAT. She wouldn’t be surprised to see denials for the flavored products of Juul or BAT, but expects the rest of their products to receive authorizations.
Write to Bill Alpert at email@example.com