The latest big-name alt-tobacco product has been approved by the Food and Drug Administration (FDA). The IQOS 3, a device that heats but does not burn tobacco, received the green light to be sold within our borders from the regulator. This was announced Monday by Altria (MO 0.20%) the company that exclusively distributes the IQOS line in the U.S. under license from international peer Philip Morris International (PM -0.41%).
Altria wrote in the press release heralding the approval that IQOS 3 is an advancement over IQOS 2.4, its predecessor. The upgrade offers better battery life and faster recharging. In terms of product design, it features a side opening mechanism and a magnetic closure that is ostensibly more secure.
The IQOS line has limited distribution in the U.S.; even getting that far has been a journey for Altria and Philip Morris. The FDA has fairly stringent guidelines for tobacco products, particularly in the way they are marketed to the public. After considerable effort, the two companies finally won authorization in July 2019. IQOS devices finally went on sale in October of that year.
But it's clear that there is a lot riding on the future of alt-tobacco offerings. In the press release, Altria wrote that its "10-year vision is to responsibly lead the transition of adult smokers to a noncombustible future. IQOS is a key part of that future."
Judging by the reaction of the two stocks to the news on Monday, investors would generally agree. Altria's shares rose by 0.8% on the day, in contrast to the dip of the S&P 500 index, while those of Philip Morris advanced by 1.2%.