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Nicotine Free Cigarettes ASH Quoted [02 /14-1]

Excerpts from: Sales Appear Favorable for Cigarettes that Help Smokers Taper Off Nicotine Use

By Paul Bonner The Herald-Sun - Durham, North Carolina February[02 /12/03]

Initial sales appear favorable for the Vector Group's new cigarette that allows smokers to taper off their nicotine intake to almost none, company officials said.

Vector launched Quest cigarettes in seven states late last month -- the latest multi-million dollar gamble by the company to increase its market share and bottom line.

The cigarettes use Vector's patented genetically engineered tobacco for three versions of Quest -- two with low levels of nicotine and one with only a trace level.

By taking the lead in admitting that smoking is addictive and unhealthy, LeBow launched Liggett along a path of acknowledging cigarettes' harm to public health while
still making them.

The result has been innovations intended to reduce smoking's detrimental effects but which are still too new for any conclusive claims.

"We're not positioning this at all as a safer cigarette," LeBow cautioned, nor can the company market Quest as a method for quitting smoking since it hasn't won that
designation from federal regulators.

But the cigarette is "intended to give smokers the ability to get nicotine-free, to get that part of the addiction cycle out of their system," LeBow said.

Quest comes in three versions: Quest 1, with 0.6 milligrams of nicotine per cigarette, 17 percent less than a typical "light" cigarette; Quest 2, with 0.3 milligrams, 58
percent less; and Quest 3, with a negligible amount.

The company is pinning its hopes on Quest all the more after disappointing sales of Omni, a cigarette with low levels of some carcinogens, which it introduced over a
year ago.

The "safer" smoke generated less than $ 2 million in sales in the third quarter of 2002, the most recent financial period the company has reported. The minimal revenue
generated by the product -- plus significant research and development and marketing expenses for Quest -- created an operating loss for Vector Tobacco of $ 20.2
million for the third quarter.

Vector Tobacco's operating loss was $ 65 million during the first three quarters of 2002, nearly negating $ 71 million in operating income from traditional tobacco
business Liggett, which operated in Durham before moving to Mebane in 2000.

LeBow said the company has had a hard time getting the message across on Omni. "What people really want to hear is, 'This will lower your risk of cancer,' " he said.

But LeBow has acknowledged that without extensive studies, Omni can't claim to reduce health risks.

But even if it can't yet be said to break addiction, removing tobacco's addictive chemical builds on previous strategies, such as the nicotine patch.

"Patches do not work," LeBow said. "We think that's because of the habit problem."

An anti-smoking advocate disagrees. The Food and Drug Administration has concluded that nicotine patches or gum are valuable in helping smokers quit, said John Banzhaf, executive director of Action on Smoking and Health in Washington, D.C.

The group has complained to the FDA that Quest should be under the federal agency's regulation because Vector "is making something like a medical claim," Banzhaf said.

"I think it's downright dangerous," Banzhaf said. "A lot of people seem to think it's the nicotine in cigarettes that's dangerous." Also, he said, smokers tend to compensate for low nicotine in some cigarettes by simply smoking more.

"Third, there's no way of knowing by any independent testing whether these things work," he said.

Nonetheless, other tobacco companies will likely "hedge their bets" that Quest will find favor with smokers and develop similar cigarettes, LeBow said. Vector will
market Quest nationwide later this year, and the company has said it plans to spend $ 15 million on the effort.