The FDA Bans Juul Vapes. What Now for Altria’s Investment?

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The Food and Drug Administration has banned all of Juul Labs’ vape products from the U.S. market in a widely anticipated move that had already been discounted in shares of

Altria

Group, the cigarette maker that paid $13 billion in 2018 for a one-third stake in the privately held company.

Altria shares (ticker: MO) were up 1.2% to $42.01 on Thursday afternoon, while the

S&P 500
had fallen 0.2%. They had fallen from a May level of $57, amid concerns about inflation’s effect on cigarette spending, the FDA’s crackdown on nicotine vapes, and a separate plan by the agency to limit nicotine levels in cigarettes.

Under the FDA’s power to regulate nicotine as an addictive drug, marketers of nicotine vape products have had to file applications to keep their products on the market. In its Thursday ruling, the FDA said that Juul’s applications had insufficient toxicology data on its so-called e-liquid pods, which contain the nicotine users consume.

Studies cited by the company, the FDA said, had conflicting data on harmful chemicals leaching from the pods and their genetic toxicity. The agency said it therefore wasn’t able to assess the toxicity risk of Juul’s products.

“We respectfully disagree with the FDA’s findings and decision and continue to believe we have provided sufficient information and data based on high-quality research to address all issues raised by the agency,” said Juul’s regulatory chief Joe Murillo, in a statement.

“In our applications, which we submitted over two years ago, we believe that we appropriately characterized the toxicological profile of JUUL products,” said Murillo, “including comparisons to combustible cigarettes and other vapor products, and believe this data, along with the totality of the evidence, meets the statutory standard of being ‘appropriate for the protection of the public health.’”

Juul said it will seek a stay of the FDA ban, and consider appeals. The company’s products could remain on the market while it does that. Juul’s rival firm Blu continues to sell its vapes as it appeals an FDA ban of its products.

Altria didn’t immediately respond to a request for comment.

Altria has already written down all but $1.7 billion of its original investment in Juul. That remainder amounts to almost 90 cents a share, pretax, but under the terms of the Marlboro maker’s investment in Juul, an FDA ban on Juul frees Altria to market its own vape products, if it wishes.

Corrections & Amplifications: Altria stock has slid from a May level of $57. An earlier version of this article incorrectly said the price was $75.

Write to Bill Alpert at [email protected]