Imperial Brands PLC (LSE:IMB) faces a good possibility that a second vape product under its MyBlu brand could be blocked by US authorities, according to analysts at Jefferies.
In April last year, the FTSE 100 tobacco company's Premarket Tobacco Product Application (PMTA) application was denied by the US Food and Drug Administration (FDA).
The FDA has also now issued a denial to IMB's MyBlu menthol pods, another of its so-called reduced-risk products (RRPs).
"While IMB will likely seek a stay, if not granted, wording of the press release would suggest to us enforcement for removal is a good possibility," the analysts said in a note.
While rival British American Tobacco successfully appealed its own PMTA denial, the analysts noted this was based around one main deficiency, while the IMB denial press release says “among other deficiencies”, which suggests there could be several reasons for denial.
"There remains a risk IMB could have no RRP products in the market in the US over the near-term," the Jefferies team said.
While it has a heated product outside the US, it has still not submitted a PMTA, and there is no indication one is coming, they added.
There is a "limited immediate financial impact" of having no RRP in the US, as this only represents 0.5% of sales, but "there's potentially material implications when thinking about continued acceleration of the shift from cigarettes to RRP, and even more so should we see measures such as a cigarette menthol ban or cigarette nicotine reduction, which are supposed to support that shift."