Investors Cashing In On Smokeless Nicotine Debate

Despite warnings from the FDA and others, smokers aren’t the only ones who seem to have a pent up demand for the latest “non-smoking” fad.

If you haven’t yet noticed, new “E-cigarette” products are popping up on websites and on vending carts at local malls across America.

By most accounts, retailers who carry them have trouble keeping them in stock, but it’s not a phenomenon exclusive to the U.S. In China, the U.K. and Australia these E-Cigarettes are off the charts hits that offer users the chance to enjoy a puff without the 4,000 chemicals and toxins found in your typical death stick.

Electronic cigarettes use vapor comprised of propylene glycol, water, glycerin, flavoring, and nicotine to help soothe the urge for a smoke. In a country where 53,000 non-smokers die each year from second hand smoke, these electronic versions of cigarettes seem to be more readily accepted in public- especially given the fact that the devices don’t produce actual smoke. They produce only vapor and users are given the freedom to enjoy their habit in even the most smoker unfriendly surroundings.

Meanwhile, the FDA, big tobacco and pharmaceutical companies all seem to have taken aim at the technology, but smokers say none of them have presented solid scientific evidence that second hand vapor is harmful to bystanders. At least not yet.

Investors and speculators on Wall Street are obviously jonesing for a piece of the E-cigarette action too.

During the last few sessions, shares of Mobile Media Unlimited Holdings Inc. (OTC: MMUH.PK) have shot up from sub-penny level to nearly a nickle. All this after the London based company announced the acquisition of TzuFuma Inc.- a wholesale distributor business of Electronic Cigarettes.

Suddenly, Mobil Media Unlimited Holdings, formerly Veridigm, Inc., a development-stage company which has focused mostly on providing merchant banking type services to small, private and micro cap public companies has become the only profitable and publicly traded E-cigarette play in the market. The company announced that it had acquired TzuFuma on December 17th, but the acquisition became official only hours ago.

Robert Paterson, President of TzuFuma Inc. stated in a telephone interview: “We have ironed out all of the remaining details regarding financing and the integration of the acquisition and I am pleased to announce that no significant material changes were made to the original MOI. The Company and its associates bring a wide talent pool to the table with skill sets we believe will immediately enhance marketing and accelerate our clients into mass distribution here in the United States but more importantly Internationally.”

Several items make this story notable. The first is that the mad scramble for shares is taking place during the winter holidays- one of the most lightly traded periods of the year. And while the rocketing share price is definitely fueled by the fact that the company has an extremely low float (under 25 million shares), it’s telling that speculators who had been looking for a profitable E-cig play have finally found one.

Another company, Ruyan Group (Holdings) Limited trades only on Hong Kong exchange (HKG:0329) and while the company and its subsidiaries are principally engaged in production and sales of a series of health care products, they do produce RUYAN atomizing cigarettes, only not yet profitably.

Same for Smokefree Innotec, Inc. (OTC: SFIO.PK). That company has had no revenue and is still operating in debt, but that didn’t keep shares from running to $.55 last year. It trades today at under $.03.

By comparison, MMUH filings show that year to date, TzuFuma Inc. has generated just under $5,000,000 (Five Million) in gross sales and Paterson seems to feel that figure will increase in the coming year. “We anticipate gross revenues from domestic sales to be in the region of 12-14% of our total gross revenue for fiscal 2010,” says Paterson. “We fully anticipate 2010 to be a bumper year.”

The parent company is now doing its part to make sure they are under full compliance and casting the best image going forward.

Gary Freeman, CEO of MMUH, stated: “Our timely production of unaudited financials for MMUH and our bringing Pink Sheets filings towards full compliance is key to the Company’s future plans. We will publish TzuFuma’s unaudited financial statements for the period of 2nd Qtr-4th Qtr 2009 in early 2010.

Don’t be surprised to see investors cash in profits from this novel approach to the old habit, even as the debate on these devices has intensified in recent months. Front page stories in USA Today and editorials in other major newspapers such as the New York Times and Los Angeles Times have all taken on the subject.

Even California Governor Schwarzenegger recently vetoed a bill that would have denied California citizens the right to purchase electronic cigarettes.

“Unfortunately, many of the arguments we`ve seen recently against electronic cigarettes have been driven by fear of the unknown, insufficient evidence, political agendas, and ignorance about our members` products,” said former U.S. Congressman and Electronic Cigarette Association (ECA) President Matt Salmon. “As in the case of California Governor Schwarzenegger, we’ve found that reasonable people, when willing to honestly and intellectually evaluate the information about electronic cigarettes, find that these products provide smokers a viable alternative to combustible tobacco cigarettes.”

A recent warning by the Food and Drug Administration (FDA), which proponents of electronic cigarettes insist was based on a flawed, narrow study, have also contributed to the growing debate.

Salmon says the FDA study was extremely narrow in scope and failed to follow established scientific protocols. The Electronic Cigarette Association has called on the FDA to take a more scientific approach and to work with ECA members before making any hasty decision to ban electronic cigarettes altogether.

“We understand that to protect the public, some form of regulation may be necessary, and we welcome that,” said Salmon. At the same time, Salmons and his organization believe a ban would leave smokers without an alternative to combustible cigarettes, whose toxic substances and life-threatening health effects are clearly documented and which the FDA has no intention of banning.

All known e-cigarettes are importe../../../css/_Wall_Street_Journal__the_FDA_considers_them_illegal_because_the_agency_feels_they_are_either___8220_eiab2gk0msm3mk2qwyhg7h.css;unapproved drugs or medical devices.” So far, however, only 50 shipments have been blocked at the border. The agency is considering other enforcement actions against importers of these products and the domestic distributors. But, it is also facing litigation questioning whether the FDA has any jurisdiction at all over e-cigarettes.
The American Cancer Society has also joined the debate against the electronic devices, but as one anonymous supporter of electronic cigarettes points out on a popular website, “In criticizing e-cigarettes, the American Cancer Society has a blatant conflict of interest that it fails to acknowledge: a secretive multimillion dollar exclusive endorsement contract with GlaxoSmithKline (NYSE:GSK) to promote Nicoderm, Nicorette and Commit (which is why the ACS name and logo appear on all of these GSK products sold in the US), which almost certainly contains a non compete clause prohibiting the ACS from endorsing any competitor nicotine or tobacco product.”
Douglas Bettcher, the director of the World Health Organization’s Tobacco Free Initiative, told the Associated Press that “there’s no experience in pharmacology yet of nicotine replacement therapies which actually inhale nicotine in the lungs.” Replacement therapies such as skin patches and gum have undergone thorough clinical testing, Bettcher said. For these reasons, “the WHO does not consider the electronic cigarette to be a legitimate nicotine replacement therapy.”

This debate may continue to get more interesting for everyone involved, especially now that Wall Street appears to be taking sides.

4 responses to “Investors Cashing In On Smokeless Nicotine Debate

  1. As an E-Cigarette user, I can state that the idea of the E-cigarette of a Nicotine Replacement Therapy is not correct. I was not and am not looking to replace nicotine, but rather the elimination of tobacco, 4000+ chemicals, enhancers, MAOI’S, all of which are found in traditional tobacco cigarettes.

    I am glad to see articles out there that are not necessarily promoting the current FDA dogma of ‘quit or die’. The Electronic Cigarette or E-Cig, Personal Vaporizer, etc is an ALTERNATIVE to tobacco products. It is truly in its own classification, or should be anyway. Typical NRT’s (gum, patch, etc) have roughly a 10% success rate after 1 year, while the E-Cig has an 80-85%* success rate for getting users off of traditional tobacco products. Not to mention better health, ease in breathing, reduction of smoking specific medical symptoms, etc.

    This product CAN be used as a nicotine cessation device, if the user wishes. With varying levels of nicotine all the way down to zero nicotine. Keep in mind that nicotine has been demonized by those opposed to tobacco products. Nicotine has not been proven to be a cancerous substance, and BY ITSELF is no more addicting that caffeine, but the enhancers put into tobacco products create a greater addiction. How many people seriously cannot function in the morning until they have their cup of coffee or tea?

    If the FDA wants to keep nicotine out of the hands of minors (one of their latest ploys as witnessed by the Family Tobacco Act, removing flavored cigarettes from the market ‘Doing it for the children’) enforce the current laws about selling tobacco products to minors. Adults enjoy tasty flavors as much as children do, but adults have the financial ability to purchase E-Cigs, whereas children are not going to drop the $40+ for a kit, only to fiddle with E-Juice, etc. They are going to get a pack of smokes from some convenience store clerk either not paying attention or not caring.

    I firmly believe that the FDA, Big Tobacco and Big Pharma are more concerned about the bottom line than they are about people’s health, or the children. With an estimated 85,000,000 smokers in the United States, there is a lot of money to be had in product, taxes, and quitting smoking drugs or medicine. How many of those 85 million will try and quit in the next year, turning to NRT’s for help, and become part of the 90% that are unsuccessful, heading right back to traditional tobacco products? How much money would be lost by the government, Big Tobacco and Big Pharma if those 85 million switched to an alternative that is magnitudes safer than traditional cigarettes?

    Lastly, you will hear the argument that the E-Juice has the same product as antifreeze, which is correct…in a sense. It has the same liquid that is used in ‘non-toxic’ antifreeze, and is used by Vets to help save animals that have been poisoned by traditional antifreeze, not to mention used by hospitals to aid in the cleaning of the air of airborne bacteria. You know what else is in anti-freeze? WATER!

    If the FDA wants to ban E-Cigarettes, stop using terrorist (not the bomber type, but to create terror type) tactics, half truths and inconsistent/incomplete data. If the FDA really cared about the populace they would fast track any possible reduced harm TRP (Tobacco Replacement Product), they would welcome the E-Cig with open arms. Ask any ‘Vaper’ (since it is not smoke but vapor), they will tell you how much better they feel, and how they finally feel free from the grip that Big Tobacco had on them.

  2. Kudos for a well informed article.

    8 Months ago, I smoked my last cigarette after picking up an electronic cigarette. That’s right, I SMOKED my last cigarette. I truly enjoy vaping and yes, I will admit that a lot of it probably has to do with being addicted to nicotine. So what? Nicotine is not the harmful part of smoking - the smoke is! I find it almost inconcievable that anti-smoking activists are rallying against the first truly effective aid to help people stay away from the cancer stick. In addition, their outlook is creating an atmosphere where I can only vape in smoking areas, forcing a non-SMOKER to inhale second hand smoke. Brilliant.

    To hear the director of WHO make an ill-informed statement like “there’s no experience in pharmacology yet of nicotine replacement therapies which actually inhale nicotine in the lungs” only adds to my sense of wonder. My doctor prescribed the Nicotrol INHALER for me in the past. Is that not nicotine inhaled into the lungs? Along with propylene glycol, by the way, all with the blessing of the FDA. The only difference is that a big pharmaceutical company made $100 off me and the doctor probably had his greens fees paid. Like many others, I think that is what this controversy is really about.

  3. I got my first e-cigarette 3 months ago and have not smoked a cigarette since the day I got it. Within 2 weeks my smoker’s cough that I have had for the last 5 years is gone. I feel more energetic and my home, car and clothing no longer stink like a burning cigarette. I know from the way I feel that my lung capacity has improved as well as my general lung health. I now have control over my Nicotine intake level and have cut my nicotine level more than half the level I was using when I started using my e-cigarette 3 months ago. I am no longer ingesting thousands of chemicals that are prevalent in cigarettes. I am no longer infecting others with second hand smoke. I am no longer endangering my loved ones with a home fire. I am tired of big business having control over our government agencies in the name of profit over the masses health. I will continue to use my e-cigarette as a cessation device as it is the only thing that has worked for me. I have tried wellbutrin and nicotine gum in the past with horrible results. I have read studies on chantix and will not even think of trying it due to the huge health risks involved with this drug.
    I’m disgusted that the FDA is so corrupt and would bow before big tobacco and side with profit over American’s health.

  4. I have been using an ECigarette for almost a year. I have never felt better in my life. I have smoked for 18 years, half my life, and I think this is the best product since sliced bread. This BS about going to the doctor is a joke. They give you chantex (sp?) and this product is known to cause people to commit suicide. They give people patches and gum… both have been found to escalate the growth of skin/mouth cancers. We live in a free country, yet we are not given a choice. Its common sense… 12 ingredients CANNOT be nearly as bad as 4000-5000 ingredients. Yes, there may be some inherent risk of using an eCigarette, but are the risks as great as straight smoking? If you are going to ban eCigarettes, wouldn’t it make sense to ban cigarettes too… since they are PROVEN to be more harmful?

    You people need to start using your brains and actually think for yourself instead of letting people (government) tell you what to do. eCigarettes have been around for almost 7 years now… and now that the FDA has put pressure on the subject, other countries are starting to fear them.

    As far as them working? You have to know how to USE them first. You don’t inhale them as you do a regular cigarette… therefore anyone not instructed to use them properly is not going to get enough nicotine to get rid of the cravings… therefore they are said not to work/deliver enough nicotine.

    Just another line of BS spewed by the rectum we call the government.

    If you wanna read some real info, or watch some videos about ecigarettes… goto http://www.ecigmods.com

    Thanks.
    Craig

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