SCOTTSDALE, Ariz. -- In pioneering the electronic-cigarette category, NJOY helped retailers understand the developing category and secured more than 20 issued patents and 60 nonprovisional patent applications to bring a number of electronic nicotine delivery systems (ENDS) to market.
One of the first independent U.S. manufacturers and distributors of e-cigarette and vaping products, the Scottsdale, Ariz.-based NJOY recently declared bankruptcy, citing an accumulated deficit of $234.4 million and $16 million currently in accounts payable, according to bankruptcy documents.
Filed on Sept. 16, Chapter 11 documents detail a strong history of product innovation, a major misstep in projecting consumer demand and its eventual attempt to avoid bankruptcy by seeking active buyers.
In papers filed with the District of Delaware bankruptcy court, Jeffrey Weiss, the company’s interim president and general counsel, said NJOY emerged as a maker of what could evolve into harm-reduction products, helping deliver nicotine to smokers wanting to stop using traditional cigarettes. It achieved a Phase 1 contract with the National Institute on Drug Abuse (NIDA), Bethesda, Md., to develop a standardized, rechargeable ENDS. The effort was part of an ongoing process to initiate government-funded ENDS studies, potentially proving harm-reduction benefits.
“NIDA has noted that ENDS have the potential to alter dramatically the trajectory of combustion-cigarette-caused death and disease,” the documents said.
The documents described NJOY as one of the first major ENDS companies to offer products across all platforms: disposable and rechargeable “cigalikes,” open-system e-liquids and vaping devices, and closed-system e-liquids.”
In 2011, NJOY introduced NJOY King, a disposable e-cigarette. In 2014, it introduced a rechargeable e-cigarette as well as a vaping platform accessible to retail outlets such as convenience and drug stores.
Eventually its products would sell globally across multiple channels, reaching 21,249 locations, with representation in 23 of the top 25 c-store chains.
One of its key missteps was the introduction in 2013 of its Kings 2.0 product, a second-generation e-cigarette that “was not ultimately accepted by the marketplace.” Its attempts to recover by replacing those products and efforts to launch other lines and an online platform led to mounting debt amid declining sales.
In January of this year, the company hired Barclay’s Capital Inc., London, to explore the potential sale of the company. It contacted 12 parties with two doing substantial due diligence. Ultimately it did not find a buyer.
A request to NJOY officials for additional comment was not returned by press time.
“It’s clear the new regulatory landscape will essentially wipe out most of the U.S. vapor industry unless Congress acts swiftly to modernize the predicate date in the federal law,” said Pamela Gorman, executive director of the Smoke-Free Alternatives Trade Association (SFATA), a Washington, D.C.-based e-cigarette and vaping group. Referring to U.S. Federal Drug Administration (FDA) timetables defining what manufacturers and products go under heavy federal scrutiny, Gorman told CSP Daily News that federal legislation, such as H.R. 2058 or the Bishop-Cole Amendment to the Omnibus Bill would help. “At the very least, [those proposals] allow us to have our products on the shelves and encourage the thousands of small- to medium-sized businesses to hang in there and continue to provide these products to their customers,” she said.