Kaival Brands Partner Bidi Vapor to Contest FDA Denial of ‘Classic’ Tobacco-Flavored ENDS
- None.
- The FDA issued a marketing denial order for the 'Classic' BIDI Stick PMTA, affecting the distribution of the tobacco-flavored product. This may impact Kaival Brands' revenue from the sale of this specific product.
Insights
The recent announcement by Kaival Brands Innovations Group regarding the FDA's marketing denial order (MDO) for Bidi Vapor's 'Classic' BIDI® Stick PMTA presents a complex situation for investors and stakeholders. The appeal process initiated by Bidi Vapor could lead to a reversal of the MDO, which has precedents in the company's history. However, the uncertainty of litigation outcomes makes it difficult to predict the short-term impact on Kaival Brands' stock performance and revenue.
It is crucial to monitor the FDA's ongoing review of the ten non-tobacco flavored products, as these represent a significant portion of the company's product portfolio. Any future FDA decisions could influence market perception and consumer confidence in the company's ability to navigate regulatory challenges. The diversification efforts mentioned, such as the acquisition of intellectual property from GoFire, Inc., indicate a strategic move to mitigate risk and are likely to be viewed favorably by the market.
The appeal against the FDA's decision, described as 'arbitrary and capricious,' by Bidi Vapor under the Administrative Procedure Act, introduces a legal dimension to the company's business strategy. The outcome of this litigation will not only affect the availability of the 'Classic' BIDI® Stick but could also set a legal precedent for the regulatory treatment of electronic nicotine delivery systems (ENDS). Stakeholders should consider the potential long-term implications of this lawsuit, as it could influence the broader ENDS market and regulatory environment.
Furthermore, the request for a stay of the MDO pending litigation could temporarily allow the continued sale of the 'Classic' flavor, which would support revenue stability for Kaival Brands in the interim. However, the legal process is often protracted and the associated costs and potential for unfavorable outcomes must be factored into any risk assessment.
The financial implications of the FDA's MDO for Kaival Brands hinge on the product's contribution to total revenue and the potential costs associated with the litigation process. Investors should consider the company's past performance in overturning similar FDA decisions and the impact of such outcomes on the stock's volatility. The diversification of Kaival Brands' revenue streams, as seen with the acquisition of GoFire, Inc.'s intellectual property, suggests a proactive approach to managing regulatory risk and could be a positive indicator for long-term financial health.
Additionally, the ongoing sale of the ten non-tobacco flavored products under FDA enforcement discretion provides a buffer against immediate revenue loss. However, the ultimate financial impact will depend on the final FDA determinations for these products and the effectiveness of the company's diversification strategy in reducing dependency on a single product line.
MDO applies only to one Bidi device, ten other flavors still in PMTA process
Kaival Brands remains focused on driving revenue and platform diversification
GRANT-VALKARIA, Fla., Jan. 29, 2024 (GLOBE NEWSWIRE) -- Kaival Brands Innovations Group, Inc. (NASDAQ: KAVL) ("Kaival Brands," the "Company" or "we,” “our” or similar terms), a company focused on incubating and commercializing innovative products into mature and dominant brands, with a current focus on the distribution of electronic nicotine delivery systems (ENDS), which are intended for adults 21 and over, today announced that its licensor and commercial partner, Bidi Vapor LLC (Bidi Vapor), will appeal the U.S. Food and Drug Administration’s (FDA) decision to deny Bidi Vapor’s premarket tobacco product application (PMTA) for Bidi Vapor’s “Classic” tobacco-flavored BIDI® Stick ENDS device. Kaival Brands holds the worldwide license to distribute products made by Bidi Vapor.
On Monday, January 22, 2024, the FDA issued a marketing denial order (MDO) for Bidi Vapor’s “Classic” BIDI® Stick PMTA. Importantly, this decision did not involve the ten PMTAs for Bidi Vapor’s non-tobacco flavored devices which are still under the FDA’s scientific review. Those ten products remain available for sale through Kaival Brands, subject to FDA’s enforcement discretion.
In response to the MDO, on Friday, January 26, 2024, Bidi Vapor filed a petition requesting that the U.S. Court of Appeals for the Eleventh Circuit review the MDO, which Bidi Vapor believes was, among other things, arbitrary and capricious, in violation of the Administrative Procedure Act. Bidi Vapor will also be seeking a stay of the MDO pending the outcome of the litigation.
“Bidi Vapor disagrees with the FDA’s decision and is taking immediate action accordingly,” said Niraj Patel, the Founder & Chief Executive Officer of Bidi Vapor, who is also the Chief Science Officer & Founder of Kaival Brands. “In the meantime, it is important to note that the decision only affects the ‘Classic’ or tobacco-flavored BIDI® Stick. The remaining ten BIDI® Stick flavors are still under FDA scientific review and remain in distribution in the United States through Kaival Brands, subject to the FDA’s enforcement discretion.”
Bidi Vapor has a history of successful outcomes when contesting adverse FDA decisions, having received a favorable Eleventh Circuit ruling in August 2022 that set aside the original MDOs received for its ten non-tobacco flavored products. That ruling put the ten PMTAs back into scientific review and allowed those flavors to remain available for sale pursuant to the FDA’s compliance policy for deemed tobacco products. During this evaluation period, the ten non-tobacco flavored products are still under FDA enforcement discretion.
“While we are disappointed with the FDA’s decision, we are in close contact with Bidi Vapor and laser focused on selling the Bidi Vapor products that we are permitted to,” said Barry M. Hopkins, Executive Chairman of Kaival Brands. “Like Bidi Vapor, we are fully committed to the legal and responsible use of our products. Moreover, we are committed to increasing Kaival Brands’ revenues by strengthening our existing business and also diversifying our product portfolio, as evidenced by the intellectual property we acquired in May 2023 from GoFire, Inc. We look forward to providing progress updates on our initiatives over the course of 2024.”
ABOUT KAIVAL BRANDS
Based in Grant-Valkaria, Florida, Kaival Brands is a company focused on incubating and commercializing innovative products into mature and dominant brands, with a current focus on the distribution of electronic nicotine delivery systems (ENDS) also known as “e-cigarettes” for use by customers 21 years and older. Our business plan is to seek to diversify into distributing other nicotine and non-nicotine delivery system products (including those related to hemp-derived cannabidiol (known as CBD) products). Kaival Brands and Philip Morris Products S.A. (via sublicense from Kaival Brands) are the exclusive global distributors of all products manufactured by Bidi Vapor LLC. Based in Melbourne, Florida, Bidi Vapor maintains a commitment to responsible, adult-focused marketing, supporting age-verification standards and sustainability through its BIDI® Cares recycling program. Bidi Vapor's premier device, the BIDI® Stick, which is distributed exclusively by Kaival Brands, is a premium product made with high-quality components, a UL-certified battery and technology designed to deliver a consistent vaping experience for adult smokers 21 and over. Nirajkumar Patel, the Company’s Chief Science and Regulatory Officer and director, owns and controls Bidi Vapor. As a result, Bidi Vapor is considered a related party of the Company.
Learn more about Kaival Brands at https://ir.kaivalbrands.com/overview/default.aspx.
ABOUT KAIVAL LABS
Based in Grant-Valkaria, Florida, Kaival Labs is a wholly-owned subsidiary of Kaival Brands focused on developing new branded and white-label products and services in the vaporizer and inhalation technology sectors. Kaival Labs’ current patent portfolio consists of 12 existing and 46 pending with novel technologies across extrusion dose control, product preservation, tracking and tracing usage, multiple modalities and child safety. The patents and patent applications cover territories including the United States, Australia, Canada, China, the European Patent Organisation, Israel, Japan, Mexico, New Zealand and South Korea. The portfolio also includes a fully-functional proprietary mobile device software application that is used in conjunction with certain patents in the portfolio.
Learn more about Kaival Labs at https://kaivallabs.com.
Cautionary Note Regarding Forward-Looking Statements
This press release and the statements of the Company’s management and partners included herein and related to the subject matter herein includes statements that constitute “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended), which are statements other than historical facts. You can identify forward-looking statements by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “position,” “should,” “strategy,” “target,” “will,” and similar words. All forward-looking statements speak only as of the date of this press release. Although we believe that the plans, intentions, and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions, or expectations will be achieved. Therefore, actual outcomes and results could materially and adversely differ from what is expressed, implied, or forecasted in such statements. Our business may be influenced by many factors that are difficult to predict, involve uncertainties that may materially affect results, and are often beyond our control. Factors that could cause or contribute to such differences include, but are not limited to: (i) actions taken by Bidi Vapor in response to the FDA’s MDO on its Classic Bidi Stick as described herein, (ii) future actions by the FDA relating to the PMTAs for Bidi Vapor’s 10 other flavors that could adversely impact our business and prospects, including the outcome of FDA’s scientific review of Bidi Vapor’s pending PMTAs, (iii) the results of international marketing and sales efforts by Philip Morris International, the Company’s international distribution partner, (iv) how quickly domestic and international markets adopt our products, (v) the scope of future FDA enforcement of regulations in the ENDS industry, (vi) the FDA’s approach to the regulation of synthetic nicotine and its impact on our business, (vii) potential federal and state flavor bans and other restrictions on ENDS products, (viii) general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth, (ix) the effects of steps that we are taking to raise capital, reduce operating costs and diversity our product offerings, (x) our inability to generate and sustain profitable sales growth, including sales growth in U.S. and international markets, (xi) circumstances or developments that may make us unable to implement or realize anticipated benefits, or that may increase the costs, of our current and planned business initiatives, (xii) significant changes in our relationships with our distributors or sub-distributors and (xiii) other factors detailed by us in our public filings with the Securities and Exchange Commission, including the disclosures under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2022, filed with the Securities and Exchange Commission on January 27, 2023 and accessible at www.sec.gov. All forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. Except as required under the federal securities laws and the Securities and Exchange Commission’s rules and regulations, we do not have any intention or obligation to update any forward-looking statements publicly, whether as a result of new information, future events, or otherwise.
All Press Inquiries and Kaival Brands Investor Relations:
Stephen Sheriff, Chief Operating Officer and Investor Relations Officer
Ir.kaivalbrands.com
investors@kaivalbrands.com
FAQ
What is the current focus of Kaival Brands Innovations Group, Inc. (KAVL)?
What was the FDA's decision regarding Bidi Vapor's 'Classic' BIDI Stick PMTA?
What action is Bidi Vapor taking in response to the FDA's decision?
What is the status of the remaining ten BIDI Stick flavors?
What intellectual property did Kaival Brands acquire in May 2023?
What is Kaival Brands' strategy for revenue growth?
What was the outcome of Bidi Vapor's contesting of adverse FDA decisions in August 2022?
Who is the Founder & Chief Executive Officer of Bidi Vapor and the Chief Science Officer & Founder of Kaival Brands?
Who is the Executive Chairman of Kaival Brands?
