“Director Zeller continues to believe the FDA has a huge opportunity to develop a ‘comprehensive nicotine regulatory policy’ taking into account the continuum of risk,” says Wells Fargo spokesperson.

Wells Fargo Securities LLC recently attended and participated in the National Association of Tobacco Outlet (NATO) Show in Las Vegas where Mitch Zeller, director of the FDA’s Center for Tobacco Products, presented on a panel.

“Overall, Director Zeller’s tone and comments were consistent with those made at previous conferences and we believe the agency remains committed to working with the industry,” said Bonnie Herzog, managing director, beverage, tobacco and convenience research for Wells Fargo.

She noted the following key takeaways:

(1) FDA’s biggest opportunity remains a comprehensive nicotine regulatory policy; (2) FDA’s final rule on e-cigs (cigarettes)/vapor regulation is a huge undertaking, but armed with more science will incorporate a continuum of risk;

(3) FDA is very focused on reducing tobacco and nicotine use by kids with a goal of demoralizing the products; and

(4) Potential menthol regulation is not expected any time soon—IF ever—in Wells Fargo’s view.

“We remain bullish on vapor long term, but near term we’ve become more cautious given increased uncertainty,” Herzog said. “Director Zeller continues to believe the FDA has a huge opportunity to develop a ‘comprehensive nicotine regulatory policy’ taking into account the continuum of risk as it relates to nicotine delivery products—with combustible cigarettes on one end of the spectrum and nicotine replacement therapy (NRT) on the other end. This to us is key and we remain optimistic that Director Zeller still seems to be fully embracing the continuum of risk concept and views nicotine separately from the delivery, which suggests that e-cigs/vapor could ultimately be favorably regulated. Having said that, Director Zeller stressed the debate surrounding nicotine is very complicated, but important, and noted the FDA has started a discussion about a Total Nicotine Framework. Further, Director Zeller stressed the importance of better science given the rapidly evolving industry and to help the agency determine who is using these products and how they are being used. Furthermore, we are also optimistic that a continuum of risk policy could have positive implications on future modified risk claims by non-combustible nicotine delivery products (e-cigs, smokeless, etc.) despite the FDA’s recent denial of Swedish Match’s modified risk application.”