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TOBACCO HARM REDUCTION: An Overview of PMI s Scientific Approach & Main Results for the Tobacco Heating System (THS) 2.2, a Candidate Modified Risk Tobacco Product Tunis, Tunisia Dr.

1 TOBACCO HARM REDUCTION: An Overview of PMI s Scientific Approach & Main Results for the Tobacco Heating System (THS) 2.2, a Candidate Modified Risk Tobacco Product Tunis, Tunisia Dr. Nuno Fazenda, on behalf of: Picavet, Patrick; Baker, Gizelle; Haziza, Christelle; Hoeng, Julia; Ivanov, Nikolai; Luedicke, Frank; Maeder, Serge; Peitsch, Manuel; Phillips, Blaine; Poussin, Carine; Vanscheeuwijck, Patrick Philip Morris International November 9th 2018

2 The Scientists Our contact details Gizelle Baker Christelle Haziza Julia Hoeng Nikolai Ivanov Frank Luedicke Serge Maeder Manuel Peitsch Blaine Phillips Patrick Picavet Carine Poussin Patrick Vanscheeuwijck

Creating a New Category: Reduced-Risk Products Reduced-Risk Products ( RRPs ) is the term we use to refer to products that present, are likely to present, or have the potential to present less risk

3 Creating a New Category: Reduced-Risk Products Reduced-Risk Products ( RRPs ) is the term we use to refer to products that present, are likely to present, or have the potential to present less risk of harm to smokers who switch to these products versus continued smoking. Our contact details We have a range of RRPs in various stages of development, scientific assessment, and commercialization. Because our RRPs do not burn tobacco, they produce far lower quantities of harmful and potentially harmful compounds than found in cigarette smoke.

The Objective Is Harm Reduction Smoking is addictive and causes a number of serious diseases Worldwide, it is estimated that more than 1 billion people will continue to smoke in the foreseeable

be offered a range of Reduced-Risk Products to which they can fully switch, should they decide not to quit. * http://www.who.

4 The Objective Is Harm Reduction Smoking is addictive and causes a number of serious diseases Worldwide, it is estimated that more than 1 billion people will continue to smoke in the foreseeable future * Offering smoke-free alternatives to adult smokers is a sensible, complementary addition to existing tobacco control strategies Successful harm reduction requires that current adult smokers be offered a range of Reduced-Risk Products to which they can fully switch, should they decide not to quit. * Figure adapted from Clive Bates presentation to E-Cigarette Summit (19 Nov 2013) Note: Reduced Risk Products ("RRPs") is the term PMI uses to refer to products that present, are likely to present, or have the potential to present less risk of harm to smokers who switch to these products versus continued smoking. 4

toxins and carcinogens in tobacco smoke not the

-NICE Public Health Guidance: Tobacco: Harm

though addictive and not risk-free, is not the

Nicotine is the core of the problem but also the

" -Mitch Zeller, director of US FDA s Center for

5 Nicotine Is Not the Primary Cause of Smoking-Related Diseases It is primarily the toxins and carcinogens in tobacco smoke not the nicotine that cause illness and death. -NICE Public Health Guidance: Tobacco: Harm Reduction Approaches to Smoking (2013) Nicotine, though addictive and not risk-free, is not the primary cause of smoking-related diseases Nicotine is the core of the problem but also the centerpiece of the solution." -Mitch Zeller, director of US FDA s Center for Tobacco Products; Presentation at Food and Drug law Institute Conference (Washington 26 October 2017) 5

6 Disease Risk PMI s Scientific Assessment Approach From Epidemiology Assessment Framework Point of Intervention Post-Market Studies and Surveillance Consumer Perception and Behavior Assessment Clinical Trials Systems Toxicology Assessment Standard Toxicology Assessment Aerosol Chemistry and Physics Time Product Design and Control Principles Source: Smith, M.R., et al., Evaluation of the Tobacco Heating System 2.2. Part 1: Description of the system and the scientific assessment program. Regulatory Toxicology and Pharmacology (2016). 6

7 Assessment Framework: Informed by Epidemiology High-Level Adverse Outcomes Pathway of Cigarette Smoking Toxic Emissions Exposure Molecular Changes Disruption of Biological Mechanism Cell / Tissue Changes Disease Population Harm Analytical Chemistry Biological Networks Toxicology, Systems Biology, and Clinical Studies Models and Clinical Public Health HPHCs* Biomarkers of exposure *Harmful and potentially harmful constituents Proteomics Transcriptomics Genomics Lipidomics Oxidative stress Inflammation Cell adhesion and migration Cytology Cell death Cell proliferation Cell count Gross pathology Histopathology Lipid profile Atherosclerotic plaque formation Lung function

8 PMI s Reduced-Risk Product Portfolio Heated Tobacco Products Products Without Tobacco Note: The RRPs depicted are subject to ongoing development; therefore, the descriptions are illustrative and do not necessarily represent the latest stages of product development.

9 Why Heat Tobacco Rather than Burn It? The Tobacco Heating System (THS) (currently commercialized as IQOS in > 40 countries) is designed and has been demonstrated to: Heat tobacco without combustion Preserve elements of the taste, sensory experience, nicotine delivery profile, and ritual characteristics of cigarettes

Elimination of Combustion Is Key Eliminating Combustion is Key Scientific studies have shown that as the temperature of tobacco increases, the levels of harmful chemicals formed increase Torrefaction

10 Elimination of Combustion Is Key Eliminating Combustion is Key Scientific studies have shown that as the temperature of tobacco increases, the levels of harmful chemicals formed increase Torrefaction Source: Baker R. R., 1975, Temperature variation within a cigarette combustion coal during the smoking cycle, High Temp. Sci., 7, Coloration by PMI. Source: McGrath, T.E., Wooten, J.B., Chan W.G. and Hajaligol, M.R., 2007, Formation of polycyclic Aromatic Hydrocarbons from Tobacco: the Link between Low Temperature Residual Solid and PAH Formation, Food and Chemical Toxicology, 45,6,

11 % of Reference Cigarette Reduced Formation of HPHCs by Disease Categories 100% Reference Cigarette 50% 97% 93% 92% 92% 94% THS 2.2 produces an aerosol that contains on average 90-95% lower levels of harmful and potentially harmful chemicals than a reference cigarette 0% No. of toxicants Carcinogens in IARC Group 1 12 Carcinogens (FDA) Cardiovascular toxicants (FDA) Respiratory Toxicants (FDA) Reproductive and Developmental Toxicants (FDA) Note: Health Canada Intense Smoking Regime; comparison on a per-stick basis; excludes nicotine

Reduced Formation of HPHCs by Disease Categories Cigarette smoke Carbon-based nanoparticles Median diameter = 75 nm Amount: 6x10 11 particles

a thermodenuder set at 300ºC to remove the volatile portion/collected material characterized by electron diffusive X-ray.

Investigation of solid particles in the mainstream aerosol of the Tobacco Heating System THS2.

12 Reduced Formation of HPHCs by Disease Categories Cigarette smoke Carbon-based nanoparticles Median diameter = 75 nm Amount: 6x10 11 particles ~= 0.7 mg* Blank (Air) THS aerosol No solid particles Scanning electron microscopy images of the collected smoke/aerosol after passing through a thermodenuder set at 300ºC to remove the volatile portion/collected material characterized by electron diffusive X-ray. * Under the Health Canada Intense Smoking Regime. Pratte et al. Investigation of solid particles in the mainstream aerosol of the Tobacco Heating System THS2.2 and mainstream smoke of a 3R4F reference cigarette. Hum. Exp. Toxicol, 2017; 36: Cohen et al. Estimates and 25-year trends of the global burden of disease attributable to ambient air pollution: an analysis of data from the Global Burden of Diseases Study Lancet 2017;

Reduced Toxicity In Vitro Average reductions in toxicity compared with levels measured for the 3R4F

Measured using Neutral Red Uptake, AMES, and Mouse Lymphoma Assays 100% 75% 3R4F Reference

2 1 50% 25% 90% reduction Under conditions of test, THS aerosol not mutagenic as opposed to smoke

13 Reduced Toxicity In Vitro Average reductions in toxicity compared with levels measured for the 3R4F reference cigarette. Measured using Neutral Red Uptake, AMES, and Mouse Lymphoma Assays 100% 75% 3R4F Reference Cigarette Platform THS % 25% 90% reduction Under conditions of test, THS aerosol not mutagenic as opposed to smoke from reference cigarette 95% reduction 0% Cytotoxicity Bacterial Mutagenicity Mammalian Genotoxicity Air Comparison on a per-nicotine basis Note: These data alone do not represent a claim of reduced exposure or reduced risk. Source: PMI Research and Development

14 Disease Risk From Risk Assessment Framework to In Vivo Study Design Animal Model: ApoE -/- Mouse Concomitant Analysis of CVD and COPD Endpoints 8 months duration (approximately 40% of lifetime) Concomitant analysis of CVD and COPD endpoints Comprehensive analysis of molecular changes and mechanistic impact Exposure dose corresponds to ~30 cigarettes per day in human comparison Assessment Framework Group Exposure From Epidemiology Point of Intervention Cigarette Cessation 3R4F 3R4F Cessation Air Switching 3R4F THS Candidate MRTP THS Note: The descriptions in the chart are for illustrative purposes only Time Reference: Air Start Air Month 2 Month 8 Phillips et al. (2015) An 8-Month Systems Toxicology Inhalation/Cessation Study in ApoE-/- Mice to Investigate Cardiovascular and Respiratory Exposure Effects of a Candidate Modified Risk Tobacco Product, THS 2.2, Compared with Conventional Cigarettes. Toxicological Sciences, in press

15 Mechanism Disruption (% ± SEM) Mechanism Disruption (% ± SEM) Mechanism Disruption (% ± SEM) Mechanism Disruption (% ± SEM) Reduced Effects on Disease Mechanisms Cell Stress Cell Fate & Apoptosis Cell Proliferation Tissue Repair & Angiogenesis Cigarette THS Switch Cessation THS Cigarette THS Switch Cessation THS

16 Mean ± SEM Mean ± SEM Mean ± SEM Atherosclerotic Plaque in the Aortic Arch Data from µct at Month 7 Disease Endpoint for CVD Atherosclerotic Plaque in the Aortic Arch Data from µct at Month 7 Plaque surface area (mm 2 ) Aorta mean occlusion (%) Plaque volume (mm 3 ) Fresh Air Cigarette Smoke THS Switch Cessation THS Phillips, B., et al. (2015). "An 8-month systems toxicology inhalation/cessation study in Apoe / mice to investigate cardiovascular and respiratory exposure effects of a candidate modified risk tobacco product, THS 2.2, compared with conventional cigarettes." Toxicological Sciences 149(2):

17 NNK (ng/stick) Total NNAL (pg/mg creat) [95% CI] T o t a l N N A L ( p g / m g c r e a t 9 5 % C I ) Carbon monoxide (mg/stick) COHb (%) [95% CI] COHb (%) Changes in Exposure to HPHCsin Healthy Human Subjects Reduced Exposure in Healthy Human Subjects Levels of HPHCs Are Drastically Reduced in THS Aerosol Exposure Is Significantly Reduced After Switching to THS %* 0.48 Leads to Cigarette THS Smoking Abstinence Time 40 (days) Time (Days) (days) Carbon CO COHb Monoxide (%) NNK i S C %* Leads to , * On equivalent nicotine basis T i m e ( D a y s )

a l H E M A H M P M A C O H b B [ a ] P 4 - A B P C E M A N N N 2 - N A S - P M A M H B M A 1 - N A 1 0 0 8 0 N N A L Switching to THS achieves almost 95% of the reduction achieved by

18 Percent of Cigarette Exposure [95% CI] P e r c e n t o f C i g a r e t t e E x p o s u r e Percent of Cigarette Exposure [95% CI] P e r c e n t o f C i g a r e t t e E x p o s u r e Reduced Exposure Similar to Smoking Abstinence Reduced Exposure in Healthy Human Subjects THS Smoking Abstinence Cigarettes o - t o l 1 - O H P 3 - H P M A T o t a l H E M A H M P M A C O H b B [ a ] P 4 - A B P C E M A N N N 2 - N A S - P M A M H B M A 1 - N A N N A L Switching to THS achieves almost 95% of the reduction achieved by smoking abstinence Cigarettes o - t o l 1 - O H P 3 - H P M A T o t a l H E M A H M P M A C O H b B [ a ] P 4 - A B P C E M A N N N 2 - N A S - P M A M H B M A 1 - N A N N A L

Clinical Assessment Results to Date High-Level Adverse Outcomes Pathway of Cigarette Smoking Toxic Emissions Exposure Molecular Changes Disruption of Biological Mechanism Cell / Tissue Changes

Health Effects PK / PD Studies 4 single-use studies Reduced Exposure Studies 4 up to 3-month studies Exposure Response Study 6 + 6-month study Nicotine absorption similar to CC 15 biomarkers of

19 Clinical Assessment Results to Date High-Level Adverse Outcomes Pathway of Cigarette Smoking Toxic Emissions Exposure Molecular Changes Disruption of Biological Mechanism Cell / Tissue Changes Disease Population Harm Analytical Chemistry Biological Networks Toxicology, Systems Biology, and Clinical Studies Models and Clinical Public Health Reduced Emissions Reduced Exposure Reduced Adverse Health Effects PK / PD Studies 4 single-use studies Reduced Exposure Studies 4 up to 3-month studies Exposure Response Study month study Nicotine absorption similar to CC 15 biomarkers of exposure significantly reduced vs. cigarettes Directional shift of CREs toward cessation Statistically significant changes in CREs linked to smoking-related disease All co-primary CREs shifting in the same direction as they would upon smoking cessation

20 Primary Objective and Co-Primary Endpoints Smoking Cessation Epidemiologic link to smoking-related disease? Affected by smoking status Reversible upon smoking cessation Co-Primary Endpoints Representative of Pathomechanisms Lipid Metabolism Clotting Endothelial Function CO Acute Effect Inflammation Oxidative Stress HDL-C 11-DTX-B2 sicam-1 COHb WBC 8-epi-PGF 2α Assess the changes across a set of the 8 co-primary clinical risk endpoints in smokers who switch from smoking cigarettes to using THS as compared to those continuing to smoke cigarettes for 6 months Lung Function FEV 1 Genotoxicity Total NNAL

21 Study Population Main Eligibility Criteria Healthy subjects, minimum 30 years of age 10 years of smoking history with at least 10 cigarettes/day for the last year Subjects did not intend to quit smoking Clinically relevant disorders that would jeopardize the participants safety Female, pregnant or breastfeeding Subjects using medication with an impact on co-primary endpoints Green Frame: Inclusion Criteria Red Frame: Exclusion Criteria

22 Run-in period Randomization Study Design and Disposition Exposure Response Study ZRHR-ERS-09-US (Clinical trials.gov: NCT ) ZRHR-ERS-09-EXT (Clinical trials.gov: NCT ) Adult healthy smokers not willing to quit 15 sites in U.S. Baseline visit 3-month visit 6-month visit 12-month visit

23 Changes in Clinical Risk Endpoints Endpoint Change From CC-use Observed Change LS Mean Difference / Relative Reduction Halparin Ruger Adjusted CI 1-sided p-value (0.0156) THS directional change vs SA (literature) HDL-C Difference 3.09 mg/dl 1.10, 5.09 <0.001* significant WBC Count Difference GI/L , * significant sicam-1 % Reduction 2.86 % , DTX-B2 % Reduction 4.74 % -7.50, epi-PGF 2α % Reduction 6.80 % , COHb % Reduction 32.2 % 24.5, 39.0 <0.001* significant FEV 1 %pred Difference 1.28 % pred 0.145, * significant Total NNAL % Reduction 43.5 % 33.7, 51.9 <0.001* significant * denotes significant p-value at the % level, following test multiplicity adjustment using the Hailperin-Rüger approach All CREs shifted in the same direction as the smoking cessation effect observed in the literature 5 out of 8 clinical risk endpoints were statistically significant compared with continued smoking

24 Conclusion of the Exposure Response Study All clinical risk endpoints shifted in the same direction as the smoking cessation effect described in the literature 5 out of 8 endpoints showed statistically significant and favorable changes after switching to THS despite the fact that up to 30% cigarette use was allowed in the primary analysis population Full switching is the best option for current adult smokers continuing to use tobacco products

25 Independent Verification of PMI s Science Govt. Bodies Federal Institute for Risk Assessment (BfR) (Germany, 2018) in line with our results: The herein confirmed reductions of relevant toxicants by about 80-99% are substantial Food and Drug Administration Briefing Document (U.S. FDA, 2018) in line with our results: The independent testing performed by STL [FDA s Southeast Tobacco Laboratory] confirmed the lower levels of selected [harmful and potentially harmful compounds] HPHCs in the aerosol from the HeatSticks compared to mainstream cigarette smoke. Public Health England (U.K., 2018) in line with our results: Compared with cigarette smoke, heated tobacco products are likely to expose users and bystanders to lower levels of particulate matter and harmful and potentially harmful compounds. The extent of the reduction found varies between studies. National Institute for Public Health and the Environment (RIVM) (Netherlands, 2018) in line with our results: The use of heatsticks with the IQOS is harmful to health, but probably less harmful than smoking tobacco cigarettes.

26 Overall Conclusion Tobacco Harm Reduction is about offering smoke-free alternatives to adult smokers who would otherwise continue smoking. It is a sensible, complementary addition to existing tobacco control strategies (prevention and cessation). Heated tobacco products, THS 2.2 in particular, are addictive and not risk-free. However, the totality of the scientific evidence demonstrates that switching completely to THS 2.2 presents less risk of harm than continuing to smoke. To date, a growing number of number of independent studies corroborate PMI findings.

27 We Are Open & Transparent About Our Science You are welcome to visit our R&D center in Neuchâtel (Switzerland) to meet and discuss our study results with our scientists.

28 Our contact details Thank you for your attention

29 Our contact details Back-up slides

30 Atherosclerotic Plaque in the Aortic Arch Data from µct at month 7 Phillips, B., et al. (2015). "An 8-month systems toxicology inhalation/cessation study in Apoe / mice to investigate cardiovascular and respiratory exposure effects of a candidate modified risk tobacco product, THS 2.2, compared with conventional cigarettes." Toxicological Sciences 149(2):

COHb -43,5% Total NNAL -16,2% Total 1-OHP

9,29-25,0% -42,9% 3-HPMA MHBMA 0 Baseline

31 NEQ (mg/g creat) ±95% CI Reduction in Exposure and Exposure to Nicotine -32,2% COHb -43,5% Total NNAL -16,2% Total 1-OHP THS-use CC-use -28,4% 3-HMPMA 10-27,3% 3-OH-B[a]P 8-48,6% -40,8% CEMA Total NNN ,1 9,2 9,89 8,85 8,63 9,29-25,0% -42,9% 3-HPMA MHBMA 0 Baseline Month 3 Month 6-70,0-60,0-50,0-40,0-30,0-20,0-10,0 0,0

32 Global Disease Risk Associated with PM 2.5 Cohen et al. Estimates and 25-year trends of the global burden of disease attributable to ambient air pollution: an analysis of data from the Global Burden of Diseases Study Lancet 2017; SD-654

33 Statistical Analysis Success criteria: To establish that the risk profile of THS is modified compared to cigarettes 1 All co-primary endpoints shift in the direction of cessation Primary analysis: predominant users of THS > 70% Establish modification of risk Smokers Health Profile Study-wise =0.05 Test-wise = out of 8 clinical risk endpoints are statistically significant (Hailperin-Rüger Approach) Majority of the smoking cessation effect is preserved If modification of risk is established 5/8 significant clinical risk endpoints* Results of the study can be verified with the effects measured for smoking cessation *By using a 1-sided test with the Hailperin-Rüger adjusted α level for multiple testing (1.5625%).

34 Main Analysis Population THS-Use Randomized Product Use 70% THS use* Distribution of Randomized Subjects by Product Use Categories CC Arm (%) 95,9% 4,1% CC-Use Randomized Product Use 1% THS use* THS 2.2 Arm (%) 59,2 5,8% 0% 20% 40% 60% 80% 100% THS Use Dual Use CC Use Other use * Calculated over the study and on at least 50% of the Study Days

35 Product Use Time Period Product THS Use Mean / Day (Min, Max) CC Use Mean / Day (Min, Max) Baseline Cigarettes 18.5 (10.0, 65.0) 19.5 (10.0, 90.0) Postrandomization THS 16.5 (3.2, 63.0) < 0.01 (0.0, 0.44) Cigarettes 1.95 (0.0, 14.0) 16.8 (3.0, 43.7) Overall tobacco 18.5 (3.2, 63.5) 16.9 (3.1, 43.7)

CARDIOVASCULAR EFFECTS OF THE TOBACCO HEATING SYSTEM (THS) 2.2 COMPARED WITH CONTINUED SMOKING

CARDIOVASCULAR EFFECTS OF THE TOBACCO HEATING SYSTEM (THS) 2.2 COMPARED WITH CONTINUED SMOKING Athens, Greece Dr. Patrick Picavet, M.D., on behalf of: Baker, Gizelle; Haziza, Christelle; Hoeng, Julia;