Altria, Anticipating FDA Rule, Is Developing Reduced-Nicotine Cigarettes -- Update

Marlboro maker Altria Group Inc. said it has developed ways of producing reduced-nicotine cigarettes and aspires to become the U.S. market leader in noncombustible tobacco products such as e-cigarettes, ahead of potential federal requirements for tobacco companies to change their products.

The Food and Drug Administration in July said it hopes to mandate a reduction of nicotine in cigarettes to nonaddictive levels and to encourage the development of less harmful products, an announcement that sent shares of Altria and other tobacco companies tumbling.

On Thursday, Altria's Chief Executive Marty Barrington told investors that the Richmond, Va., company for years has been preparing for "a new axis of competition." He noted that Altria supported the 2009 legislation that gave the FDA regulatory authority over tobacco.

"Of course Altria is ready for the introduction of innovative reduced-risk products," he said. "After all, we helped make it possible."

Altria has developed technologies to reduce nicotine in cigarettes should the FDA require it, including tobacco-leaf treatments and tobacco seed varieties with "substantially reduced nicotine levels," said the company's general counsel, Murray Garnick. Altria is producing small amounts of tobacco from those seeds for product development, he said.

Company executives also said Thursday that they plan to seek FDA authorization in 2018 and 2019 to market their Copenhagen snuff and MarkTen e-cigarettes as safer than traditional cigarettes. The company said it would submit health-claim applications for several other products over the next four years.

Through a partnership with Philip Morris International Inc., Altria hopes to sell a heat-not-burn device called IQOS, with accompanying Marlboro-branded tobacco sticks, in the U.S. Altria hopes to market that too as safer than cigarettes, a health claim currently under consideration by the FDA.

The company said it is broadening its portfolio of vaping products, developing new ones in-house, seeking acquisition opportunities and making a minority investment in Avail Vapor LLC, a chain of vape stores and manufacturer of vaping liquids.

Altria executives said the company has been conducting research on nicotine reduction since the 2009 passage of the Tobacco Control Act, which in addition to granting the FDA authority over tobacco opened the possibility that the agency could mandate nicotine reduction in cigarettes.

The executives said Altria has studied whether such a requirement would achieve its intended effect -- prompting smokers to quit or switch to less risky products -- or whether it would backfire, causing people to smoke more cigarettes to compensate. The company didn't disclose its findings.

Research funded by the FDA and National Institutes of Health has shown that when nicotine was nearly eliminated in cigarettes, smokers were more likely to quit or seek their nicotine fix from less harmful alternatives such as e-cigarettes or nicotine gum, compared with smokers who continued using cigarettes with normal nicotine levels.

Nicotine itself doesn't cause cancer but does hook people on cigarettes, which contain other harmful compounds that kill 480,000 people in the U.S. each year.

Mr. Garnick, Altria's general counsel, stressed to investors that it could take years for the FDA to implement a reduced-nicotine rule and that the agency may have to respond to hundreds of thousands of comments as well as legal challenges if the rule "is not grounded in science and evidence." Any required reduction in nicotine would have to be technically feasible for manufacturers, and "sensorily acceptable for consumers," he added.

Write to Jennifer Maloney at jennifer.maloney@wsj.com

(END) Dow Jones Newswires

November 02, 2017 18:37 ET (22:37 GMT)