Carmona's NJOY Position a "Positive" for Entire E-Cig Category

Herzog, Modi express enthusiasm over former Surgeon General's appointment

Melissa Vonder Haar, Freelance Writer

NEW YORK -- Earlier this week, leading electronic cigarette manufacturer NJOY announced that former Surgeon General Dr. Richard Carmona had been appointed to the company's board of directors. Not surprisingly, tobacco industry analysts have expressed enthusiasm over what this move means for both NJOY and the growing e-cigarette segment as a whole.

"This announcement gives us further conviction on the potential ultimate opportunity for e-cigs and that consumption of e-cigarettes could one day surpass consumption of traditional cigarettes," Wells Fargo senior analyst Bonnie Herzog wrote in a research note.

Carmona's 2006 report on the negative side effects of secondhand smoke was a key basis for enacting several smoking bans. In his new role with NJOY, Carmona will provide counsel on public health and regulatory issues, as well as head up NJOY's harm reduction research.

"Given Dr. Carmona's work surrounding the potential dangers of secondhand smoke as outlined in his landmark 2006 Surgeon General's Report on the health effects of exposure to environmental tobacco smoke, we think his appointment to NJOY's board further validates the potential that e-cigarettes could have to reduce harm with the understanding that more research will likely need to be completed," Herzog wrote.

She predicted that Carmona's history with harm reduction could ultimately benefit not just NJOY, but all e-cigarette companies--especially Lorillard's blu eCigs, which Herzog expects could generate up to $200 million in revenue by the end of the year.

"Overall, we view this announcement as very positive for NJOY, one of the leading private e-cigarette companies, as well as the entire fast growing e-cigarette category," wrote Herzog.

Herzog wasn't alone in such sentiments--UBS analyst Nik Modi released an equally enthusiastic response to the NJOY news in a note titled "A Positive Step for the E-Cig Category."

Modi cited Canadian law professor and tobacco expert David Sweanor, who said, "When Dr. Carmona comes on board, it's very hard for anti-tobacco people to simply oppose e-cigs since a leader of their community is not only supporting e-cigarettes, but has joined the board of the largest e-cig company."

"We agree with David Sweanor's comments," Modi wrote, noting that it was still unclear whether NJOY or blu is the largest e-cig player in the United States. "We view NJOY's announcement as a step forward in increasing the legitimacy of the e-cigarette category as a viable alternative to cigarettes."