The Takeaway:

We have been writing since mid-July that we saw signs that Food and Drug Administration (FDA) Commissioner Scott Gottlieb was poised to take some sort of action against JUUL and potentially other e-cigarette manufacturers as the issues of youth use shifted from a back-burner concern to something of high-priority for the agency. Gottlieb is officially labeling the e-cigarette youth use an "epidemic" and continues to believe in a causal relationship between certain flavors of e-cigarettes and their attractiveness to minors. Despite the lack of sufficient evidence to support this assertion, Gottlieb is positioning the FDA to take action sooner rather than later against "youth appealing" flavors. At risk are the manufacturers of JUUL (JUUL Labs), Vuse (BTI), Blu (IMBBY), MarkTenXL (MO), and Logic (JAPAY), which all have 60 days to submit a plan to the FDA on what each company will do to "address the widespread youth access and use of their products." We think there is a 65% chance that regulators will force the removal of a material number of these companies' e-cigarette products from the U.S. market before the end of CY 2018, pending additional regulatory approvals that will likely take years to complete. How many products remains unclear at this time, but these are certainly substantial headwinds forming against these companies' e-cigarette products.