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February 28th, 2014:

Chemical evaluation of electronic cigarettes

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NJOY, E-Cigarette Maker, Receives Funding Valuing It at $1 Billion

This week, the electronic cigarette maker NJOY received a $70 million capital injection from a group of investors including Brookside Capital and Morgan Stanley Investment Management, in the latest vote of confidence for a fast-growing industry.

The company, based in Scottsdale, Ariz., boasts several entrepreneurial investors including Sean Parker, the co-founder of the now-defunct Napster, and Peter Thiel, one of the founders of PayPal.

We believe that only an independent company can have as its corporate mission the extraordinary technological and important objective to make cigarettes obsolete,” said Craig Weiss, chief executive of NJOY. Mr. Weiss, who is a patent lawyer and former hedge fund manager, compared the initiative and its ambition to putting a man on the moon. His brother Mark, also a lawyer, founded NJOY in 2006 after a trip to China inspired him to enter the electronic cigarette market. During his trip, he visited a trade show where e-cigs, so large they looked like cigars, were being showcased. “It seemed to him that this was the future of smoking,” said Mr. Weiss, who took over as president of NJOY in 2010.

But as e-cigarettes become more popular, major tobacco companies are taking note. Lorillard, the maker of cigarette brands like Newport and Kent, acquired Blu eCigs for $135 million in 2012, and RJ Reynolds, Japan Tobacco International and British American Tobacco have also scooped up stakes in emerging e-cigarette companies.

The presence of such big tobacco firms has caused some critics to question whether e-cigarettes are just a new way to get people hooked on nicotine, an addiction that could lead them to turn to tobacco cigarettes.

To counter that impression, NJOY points to its unusual team of executives that include veterans of the old tobacco industry, as well as scientists and well-respected doctors to help with this image. It recently added former Surgeon General Dr. Richard H. Carmona, who served in the George W. Bush administration, to its board