Proactive Investors - The US Food and Drug Administration (FDA) is rescinding an order that blocked the sale of Juul’s products, including its e-cigarettes.
The FDA in June 2022 banned all of Juul’s products in the US, including the Juul device and four types of flavored Juul pods, on the basis that there was not sufficient evidence the marketing of the products would be appropriate for the protection of public health.
The rescinding of its order is not an authorization or denial of Juul’s marketing application but returns it to a pending and under-review status.
“This action is being taken, in part, as a result of the new case law, as well as the FDA’s review of information provided by the applicant,” the agency said in a statement.
Analysts at Jefferies believe the move means that at least some of Juul’s products will be approved by the FDA.
“While this move does not mean Juul is now approved, simply the products are now back into official review, we think it very likely still implies that we will now see at least some of the Juul products approved,” they wrote in a note to clients.
“We don't think the FDA would be a rescinding an order, especially after the extensive inital review, and then the subsequent review post the administrative stay, to then just deny them again.”
They believe Juul's tobacco product has a “very good” probability of being approved but there are question marks over menthol given the FDA’s recent rejections of menthol, including British American Tobacco PLC (LSE:LON:BATS).
In terms of timing, the analysts see approval coming quickly given the extensive review has already happened.
“Against this backdrop, we would not be surprised if we get an announcement before the end of the year, especially as FDA still intends to be done with all remaining major brand decisions by the end of June,” they wrote.
Should they occur, the approval of Juul’s products should be a positive for investor sentiment on vape and bode well for BAT, which is pending approval of its tobacco vape.
“Today's update on Juul coming during June not only gives us confidence we will get a BAT decision by end of June, but that it will also likely be favorable,” they wrote.