In addition to our two heated tobacco product platforms, we are also developing two product platforms that contain nicotine but not tobacco. Instead of heating tobacco to release tobacco flavors and nicotine, both of these platforms use nicotine that is extracted from tobacco leaves. These tobacco-free products produce a nicotine-containing vapor in distinctly different ways. One platform heats an e-liquid containing nicotine and flavors with an electric heater to generate an e-vapor. The other platform produces a vapor from a chemical reaction between nicotine and a weak organic acid.
In 2014, we acquired Nicocigs, a leading e-cigarette company in the U.K., which produces a variety of products (Nicocig and Vivid) that includes disposables, rechargeables, and tank systems.
In addition, under an agreement announced in 2013, Altria Group, Inc. has made available its e-cigarette products exclusively to PMI for commercialization outside the U.S., which we currently sell under the brand name Solaris in Israel and Spain.
We are now well advanced in the development of our next generation e-vapor product platform that we call MESH. MESH heating technology is the core of this product platform, and is a completely new approach to e-vapor generation.
MESH heating technology uses a metallic mesh with tiny holes to heat a pre-filled, pre-sealed e-liquid cartridge that contains nicotine and flavors. The consumer activates the MESH heating process by pressing on a button. As the MESH heater is in contact with the e-liquid in the cartridge, it heats the e-liquid to generate a nicotine-containing vapor. Each pre-filled and pre-sealed cartridge contains its own MESH heater.
Unlike typical e-cigarette cartridges, MESH cartridges are manufactured, assembled, pre-filled, and pre-sealed in a fully automated process in our European production facilities. MESH also features puff-activated heating and a low-liquid level detection system that ensures the consistency and quality of the vapor generated and inhaled. These improvements address the current concerns of adult vapers in relation to quality, safety, consistency, and origin.
We launched a city test of our new vaporization technology under the brand name MESH, along with four new unique e-liquid flavor offers, in the U.K. in November 2016.
We are also developing products based on technology that we acquired in 2011 from Professor Jed Rose of Duke University and his co-inventors. Professor Rose is one of the world’s leading experts on nicotine and smoking. These products replicate the feel and ritual of smoking without tobacco and without burning. One of these products under development is called STEEM.
Unlike an e-cigarette, this product generates a nicotine-containing vapor in the form of a nicotine salt. When a consumer draws on the mouth piece, a chemical reaction between nicotine (a weak base) and a weak organic acid takes place to produce a vapor containing nicotine salt.
We expect to conduct a city test of STEEM in 2017.
Our new portfolio features a range of nicotine-containing products without the smoke.
Heating tobacco to release flavors and nicotine while eliminating combustion.