Market Overview

What To Make Of The FDA Vote That Rocked Philip Morris

Share:
What To Make Of The FDA Vote That Rocked Philip Morris
Related PM
Analysts Weigh In On The FDA's Position On E-Cigarettes, Menthols
How The FDA May Be Overstepping Bounds With New E-Cigarette Policy
Evaluating Imperial Brands' FY Results (Includes FCF And Dividend Guidance) (Seeking Alpha)

What Happened

Philip Morris International Inc. (NYSE: PM) plummeted 6 percent intraday Thursday after the U.S. Food and Drug Administration’s Tobacco Products Scientific Advisory Committee rejected one of two claims surrounding its modified risk tobacco product.

Why It's Important 

The IQOS — a tobacco heating system — mitigates consumer exposure to harmful chemicals but fails to demonstrate a substantial reduction in user mortality or morbidity, the FDA panel said. 

Altria Group Inc (NYSE: MO) also fell 4 percent on the news, while 22nd Century Group Inc (NYSE: XXII) popped 7.6 percent.

Despite the market’s pessimism, Street analysts defended Philip Morris and its potential to secure authorization for the claims.

Height Securities analyst Stefanie Miller reminded investors that the MRTP case is only the second that the FDA panel has ever considered, and committee recommendations are non-binding.

What's Next

“We still think FDA will ultimately approve the PMTA as soon as next month and MRTP later in the summer for IQOS,” Miller said in a note. 

Piper Jaffray agreed, noting that the regulatory body does not appear to present insurmountable roadblocks.

“While the FDA's TPSAC (scientific committee) meeting has yet to conclude, we consider its strongly favorable vote on one potential modified risk claim to be positive,” analyst Michael Lavery said in a midday note. “... We believe this vote gives the FDA the open door it needs to approve a modified risk claim for IQOS, which we believe it is still likely to do.”

The FDA would need to renew any approval it grants to IQOS, which renders its impending ruling impermanent and is seen to lower the probability of rejection.

Lavery also anticipates a favorable FDA ruling on marketing authorization.

Related Links:

The First US-Listed Marijuana ETF Ignites Today

What Were Once Vices Are Now Dividends: A Sinful New ETF

The IQOS tobacco heating system. Photo courtesy of Philip Morris. 

Latest Ratings for PM

DateFirmActionFromTo
Oct 2018CitigroupMaintainsBuyBuy
Oct 2018BernsteinInitiates Coverage OnOutperform
Sep 2018CitigroupMaintainsBuyBuy

View More Analyst Ratings for PM
View the Latest Analyst Ratings

Posted-In: Height Securities IQOS Michael Lavery Piper JaffrayAnalyst Color News FDA Analyst Ratings Best of Benzinga

 

Related Articles (MO + PM)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
AMTDMorgan StanleyUpgrades65.0
APOMorgan StanleyDowngrades34.0
ARMKBairdUpgrades44.0
CGMorgan StanleyDowngrades23.0
EIXEdward JonesDowngrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Why GW Pharma's Epidiolex Results Could Shape The Future Of Cannabis-Based Therapeutics

Rosenblatt Says Qualcomm RF efforts Could Become Headwind For Skyworks, Qorvo