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LowLow--Nitrosamine Dissolvable Tobacco ProductsNitrosamine Dissolvable Tobacco Products

Star Scientific, Inc.Star Scientific, Inc.

Part IPart I

Marketing and PerceptionMarketing and Perception

Using science to reduce tobaccoUsing science to reduce tobacco--related harm related harm

at every level of the populationat every level of the population

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Low-Nitrosamine Tobacco ProductsThere is no agreed-upon definition as to what constitutes a “low-nitrosamine” smokeless tobacco product.

Levy et al. (2006) proposed such a product must meet the Gothiatek standard of 5000 parts per billion (ng/g wet weight) of total tobacco-specific nitrosamines.

There is a recommendation made in 2009 by the WHO Study Group on Tobacco Product Regulation that proposed an upperlimit of 2000 PPB (ng/dry gram) of NNN and NNK.

For this presentation, we will use the WHO proposed limit of 2000 PPB NNN + NNK /dry weight as our definition.

LowLow--Nitrosamine Tobacco Products are Nitrosamine Tobacco Products are Not NewNot New

Cigarettes quadrupled nitrosamine content, added volatile carcinogens,doubled per-capita tobacco use and captured over 90% of the tobacco market by 1960, replacing the major 19th century form of tobacco (low-nitrosamine chewing tobacco). 3

Tobacco Use-Cigarettes & Smokeless

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Cigarettes and Lung CancerCigarettes and Lung Cancer

In the US, once the 25-year latency for cancer is taken into account, the correlation between the rise and fall of cigarette smoking and the rise and fall of lung cancer In the US population is nearly perfect. 4

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Cigarette MortalityCigarette Mortality

• Of the 443,000* deaths a year from smoking, about 128,000are cardiovascular, 160,000 are due to cancer and 103,000 due to pulmonary disease.

• This means that even if a smoked product could be made that cut the risk of lung cancer in half, this would only result in areduction of mortality by 80,000/443,000, or 18% after a quarter century (2036 at the earliest).

• Star Scientific believes attempting to reduce surface active respirable particles and combustion gases with current technology cannot materially impact tobacco-related mortality.

* CDC MMWR 2008

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Making CigarettesMaking Cigarettes

• Star Tobacco actually made a successful “low-nitrosamine”cigarette, solved the flavor problems, tested it, and foundthat it lowered the TSNAs in smoke.

• Star took its product to a scientific advisory committee, and was shocked by its recommendation that Star NOT MAKEthe product.

• Upon review of their reasoning, Star chose not to make the new product, and also decided to stop making its profitableline of smoked tobacco products.

Here is why.

Why Star Left the Cigarette BusinessWhy Star Left the Cigarette Business

Pope et al., Circulation, 2009

Cardiovascular risk from smoking is log-linear with respirable particle dose.A meaningful reduction in the relative risk from 2.0 to 1.5 requires a 10-fold reduction in respirable particles. With current technology, no combusted product can lower this risk. 7

R2 = 0.9632

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““LessLess--ToxinToxin””

Tobacco ProductsTobacco Products

There are three classes of tobacco products that were either developed to deliver less toxins to the user or have been shownto contain less toxins than conventional cigarettes and smokeless tobacco:

Low-Nitrosamine Chewing Tobacco

Swedish Snus

Dissolvable Tobacco Products

We are here to talk about Dissolvable Tobacco Products

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Smokeless Tobacco Contains Smokeless Tobacco Contains Specific, Known, Measurable ToxinsSpecific, Known, Measurable Toxins

Following earlier reports on cigarette and smoke toxicity, the 1986 US Surgeon General’s report* listed the major toxins in smokeless tobacco as nicotine (addiction) and carcinogenic contaminants such as tobacco-specific nitrosamines (NNK, NNN), volatile nitrosamines, polycyclic aromatic hydrocarbons and polonium-210.

Since the carcinogen content of smokeless tobacco was as high, or higher, than that of cigarette tobacco, this led to the position (taken at that time) that smokeless tobacco posed potential risks which might outweigh any potential value in reducing cigarette-associated disease.

*USPHS The Health Consequences of Using Smokeless Tobacco 1986

TobaccoTobacco--Specific NitrosaminesSpecific NitrosaminesThe American Cancer Society (ACS) has done 25-30 years of work on TSNAs in tobacco products (Ashley 2010) and has shown that mouthconcentrations of TSNA in tobacco users predict urinary TSNA metabolites and that lower TSNAs in the products results in lower human exposure.

Ashley DL et al. Cancer Epidemiol Biomarkers Prev. 2010 10

R2 = 0.8491

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TSNA ContentTSNA ContentConcern over smokeless tobacco TSNA content is:

Appropriate, Rational and Real.

Type of Smokeless Product TSNA PPB (ng/g)Toombak (ethnic Sudanese product) 2,965,484US Dry Snuff 168,131High-TSNA Asian smokeless products 59,698US Moist Snuff 13,509Snus (historical) 5,458US Chewing Tobacco 2,183Snus (current) 1,200Star Low-TSNA Products 190

Excluding Toombak (a rare ethnic product), there is still a 1000-fold variation in toxin content in products that are currently on the market in the US.

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TSNA ImportanceTSNA ImportanceOver a decade ago John Slade and his co-author(Slade 1998) said it well when they called for the FDA to take action on TSNAs:

“Once the agency has learned more about how tobacco products are made…”

“Once the agency has confidence that the tests it will useto measure the performance of products are reasonable…”

“There are a number of potential opportunities to make tobacco products less dangerous than they presently are…”

among which was;

“SETTING A CEILING FOR YIELDS OF TOBACCO-SPECIFIC NITROSAMINES”

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Tobacco Company ResponsesTobacco Company Responses

The response of the major tobacco companies to concerns about nitrosamines was described thusly in a recent paper by Stepanov et al. (2011):

“The modification of tobacco curing methods and other changes inmanufacturing techniques can substantially reduce TSNAs in tobacco…..

…despite the available knowledge and tools to reduce TSNA content in cigarette tobacco, the levels of TSNA in the tobacco filler…are essentially the same as those reported … 30 years ago.”

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Dissolvable Tobacco ProductsDissolvable Tobacco ProductsIn 1990 Star Scientific developed a new process for curing tobacco that lowered the tobacco-specific nitrosamine levels from parts per million (PPM), to parts per billion (PPB) in the finished product.

Star developed a new form of tobacco product, dissolvable tobacco, which contained less than 0.1% of the nitrosamines of conventional products.

The first product (ARIVA®) was a 240 mg dissolving lozenge containing powdered low-nitrosamine tobacco, flavors and binders. ARIVA had lower nitrosamines than Swedish snus, and did not require the user to spit tobacco juice.

One important goal was to make a product that female smokers would find acceptable.

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Star Was Successful in Lowering Star Was Successful in Lowering Nitrosamines Nitrosamines

Note- Y axis is logarithmic

The new products were not toxin-free, but had markedly lower TSNAs

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Dissolvable Tobacco IS NOT NRTDissolvable Tobacco IS NOT NRT

• NRT Products are pharmaceutical dosage forms of nicotine intended for short-term use to support smoking cessation. They contain pharmaceutical nicotine and excipients in a controlled dosage, are taxed and regulated as drugs, and have proven efficacy in cessation studies.

• Dissolvable Tobacco Products are tobacco products containing powdered tobacco, flavors and excipients intended for use as a tobacco product, are taxed and regulated as tobacco products, and make no therapeutic claims.

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What is in a Dissolvable Product?What is in a Dissolvable Product?STONEWALL® Constituents:Powdered low-TSNA tobaccoDissolvable bindersNon-cariogenic sugars (mannitol, artificial sweetener)pH buffersFlavors (natural and artificial)• 120-mesh (0.125 mm) ground tobacco is small enough not to feel

excessively granular in the mouth.

• “Dissolvable” is scientifically incorrect, as the tobacco product does not form a true solution, but the lozenge does “dissolve” from the perspective of the user, becoming smaller as the product forms a slurry that is swallowed with the saliva.

• Nicotine absorption is trans-mucosal.• There is no “spitting” and there are no cariogenic sugars.

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What is the Source of the Tobacco?What is the Source of the Tobacco?

Tobacco used in ARIVA and STONEWALL is conventional (not genetically altered) Virginia Bright tobacco that is grown, handled, and cured using the StarCured® process, which produces a tobacco feedstock with very low TSNA and aromatic hydrocarbon contents.

Virginia tobacco, grown in Virginia, by Virginia farmers,regulated, sold and taxed as tobacco.

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TSNA Levels in Cured TobaccoTSNA Levels in Cured TobaccoProducing low-TSNA tobacco is an agricultural process and testing each drying box in the barn is essential. (Results – 2009 ZNT Process)

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Manufacturing ProcessManufacturing Process

• Contract the cultivation of a low-nitrosamine tobacco crop with each farmer• Cure by StarCured® process, controlling temperature, humidity, airflow• Keep the cured product cool (40-50°F)• Test cured tobacco box by box for TSNAs & nicotine, reject bad boxes• Grind to 120-mesh, sterilize if manufacture is to be delayed, store cool• Add excipients and granulate• Press lozenges, coat if desired (cosmetic)• Test final lozenges for:

Color, Embossing, Thickness, Weight, Hardness, pH, Nicotine &TSNA content, Moisture, Content Uniformity, Dissolution Special Analyses as desired (e.g. TPSAC-40, BaP, PAH)

Note: CDC method for nicotine quantification is preferred to the Health Canada method becauseflavors and other excipients interfere with the analysis.

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Batch to Batch ConsistencyBatch to Batch Consistency

Typical production run data for ARIVA and STONEWALL batches manufactured in 2008:

ProductNNN

(ng/g)NNK

(ng/g)NAT

(ng/g)NAB

(ng/g)

Total TSNAs(ng/g) pH

Moisture(%)

Nicotine (mg/g)

Ariva 23(22)

24(11)

69(36)

4(5)

121(53)

7.5(0.2)

3.0(0.35)

5.5(0.49)

Stonewall 64(26)

46(14)

208(144)

10(6)

327(160)

7.4(0.3)

3.4(0.65)

8.9(0.58)

Ariva + Stonewall

38(31)

32(16)

120(113)

6(6)

196(145)

7.5(0.2)

3.2(0.52)

6.7(1.8)

Note: Data are presented as mean (SD), and are reported on a dry weight basis.

TSNA Aging Data TSNA Aging Data ––

Milled TobaccoMilled TobaccoNitrosamine content in two typical lots of milled StarCured® II tobacco as tested over time (wet weight):

TSNAs

Date Analyzed NNN(PPB)

NAT(PPB)

NAB(PPB)

NNK(PPB)

Total(PPB)

Lot # T-091021-8803 November 2009 BDL 12 BDL 11 2324 November 2010 28 25 8.2 12 7330 December 2010 17 26 BDL 11 54

Lot # T-091021-11510 November 2009 99 110 3.5 50 260

27 April 2011 77 100 6.5 51 24022

TSNA Aging Data TSNA Aging Data ––

Manufactured ProductManufactured Product

Nitrosamine content in a typical lot of STONEWALL tested under various storage conditions, over time: TSNAs

Date Analyzed NNN(PPB)

NAT(PPB)

NAB(PPB)

NNK(PPB)

Total(PPB)

Baseline - 25 August 2004 57 190 13 32 290

Room Temp (~72°F)12 October 2004 57 200 BDL 34 290

18 February 2005 47 130 BDL 35 210

Incubator (~104°F)12 October 2004 59 200 BDL 36 300

18 February 2005 54 160 BDL 31 250

Refrigerator (~40°F)12 October 2004 57 200 BDL 31 290

18 February 2005 51 130 BDL 32 210

Freezer (~0°F)12 October 2004 54 200 BDL 32 290

18 February 2005 40 120 BDL 34 190 23

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Standard Analytical MethodsStandard Analytical MethodsExternal Testing:• Official Health Canada methods for alkaloids, ammonia, toxic trace

metals, pH, and nitrate

• Labstat International ULC validated methods for TSNAs, PAHs, volatile nitrosamines, carbonyls, nitrite, ethyl carbamate, NDELA, and NSAR

• Becquerel Labs methods for polonium-210, uranium-235, and uranium-238

• AOAC Official Method 966.02 for moisture

• CDC method for nicotine

Internal Testing (Star Facility Laboratory):• TSNAs based on U. of Kentucky methods

• Alkaloids based on CDC method

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Analytical StudiesAnalytical StudiesStepanov et al. (2006) analyzed ARIVA and STONEWALL along with othertobacco products, new and traditional:

Product NNN (PPB) NNK (PPB)Smokeless Products

ARIVA 19 37STONEWALL 56 43Snus (General) 980 180Copenhagen (Long Cut) 3900 1600Skoal (Long Cut) 4500 470

Cigarette TobaccosMarlboro 2900 960Camel 2500 900Winston 2200 580Newport 1100 830

These findings were reiterated and expanded by Hatsukami et al. (2007)

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Manufacturing ConclusionManufacturing Conclusion

Star was successful in making two tobacco products, ARIVA (1.5 mg nicotine) and STONEWALL (4.0 mg nicotine), which have the lowest TSNA content of any SLT products by internal, external, and independent (third-party) analyses.

The products are made by a combination of proprietary and patented processes and produce a finished product that is stable for extended periods and which does not require refrigeration.

The flavors, packaging and nicotine loading will be discussed further in the next presentation, but were selected to minimize health risk, abuse liability, pediatric risk and initiation by non- tobacco users.

Let us now move to marketing and perception.

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Market Strategy and SegmentationMarket Strategy and Segmentation

Immediately after ARIVA’s introduction, citizen petitions were filed with the with FDA seeking to have the product removed from the market with claims that Star was either making an unapproved newdrug to compete with OTC NRT products, or marketing “poison candy”intended to recruit adolescents into tobacco addiction.

Neither charge was true, but as with all such claims, they were based on concerns that might have some factual basis.

Star’s intended customers were smokers in their 40’s and 50’s who were concerned about their health, and it was clear that HOW Star marketed the product and WHERE Star marketed the product were essential parts of its safety profile.

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Star Started with the NicotineStar Started with the Nicotine

ARIVA was loaded at 1.5 mg nicotine at pH 7.5.

STONEWALL was loaded at 4.0 mg nicotine at pH 7.5.

The amount of free nicotine (combination of loading and pH) is the major determinant of how aversive the product is to a non-tolerant user.

Cigarettes deliver the nicotine to the lungs, SLT products deliver it to the oral mucosa. Nicotine delivered to the mouth is aversive and no amount of flavoring will overcome the “nicotine burn” of high oral nicotine levels. There is also a problem, as with NRT and all SLT products, of nicotine-induced nausea, dyspepsia and hiccups.

Where I grew up, nearly every kid learned this when they first experimented with smokeless tobacco.

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Nicotine LoadingNicotine LoadingThe loading of the product was determined by a series of “flavor” testing panels consisting of Star Scientific, flavor company, and Star Tobacco staff.

These were: And they selected as preferable:Cigarette Smokers 1.5 mg nicotineSmokeless Tobacco Users 4.0 mg nicotine

Our consultants recommended that the loading be above 1.0 mg to make the product aversive to non-smokers (kids).

Star loaded ARIVA (the smokers’ product) at 1.5 mg nicotine in flavors preferred by adults.

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FlavorsFlavorsMarket surveys showed adult (40-50 years old) users preferred mint or wintergreen flavors. Past marketing studies done by others showed adolescents and young adults like fruit flavors.

The first generation products were wintergreen only, but after seven years, as we learned adolescents neither knew nor cared about ARIVA we added a few more adult flavors in response to ADULT requests.

2010 ARIVA Flavors(proportion of sales)

WintergreenMintCinnamonJavaCitrus

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PackagePackageThe current package is designed to look like a cigarette pack (plain box, tobacco warnings, no attractive images).

Front Back

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Product SleeveProduct SleeveThe product sleeve will be discussed in the next

presentation, but was designed to be child-resistant.

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Store PlacementStore PlacementThe product is placed with the tobacco products (by law!).

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POS MaterialsPOS Materials

The Point of Sale materials were designed to appeal to smoking adults.

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StoresStores

The product was placed in stores where most adults bought cigarettes (drug stores, tobacco shops and convenience stores).

Some typical store chains that carry Star dissolvable products:

ArivaRite Aid drug stores – 4000 stores Nationwide

StonewallHoliday convenience stores – 500 stores in the Midwest

Ariva and StonewallFood Lion grocery stores – 1200 stores in the SoutheastKum and Go convenience stores – 500 stores in the Midwest Smoker Friendly tobacco shops – in the West

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PromotionPromotion

Promotion was limited to the Point of Sale materials, detailing to store owners/managers/chains, and presentations at tobacco industry and retailer related conferences.

Star endorsed no youth oriented activities and did no sampling.

Star was fortunate in that independent researchers examined its marketing activities, so we have data.

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Survey StudiesSurvey Studies

Caraballo et al. (2006), conducted a series of 16 focus groups in an exploratory study of PREP products on the market in 2002 (Eclipse, Omni, Advance, Accord, ARIVA).

The purpose was to find out how individuals learned of PREPS, if they had tried PREPS, and what their experience had been.

140 individuals who had smoked one or more cigarettes a day in the last month, smoked 100 cigarettes in their lifetime, and who had tried a PREP were recruited.

Most learned of PREPS through advertising, family or friends, tried them to lower risk or through curiosity, and did not like them.

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Survey StudiesSurvey Studies

O’Hegarty et al. (2006) conducted a nested study of PREP marketingin the Caraballo study previously cited.

The authors found that smokers responded to all of the factors that had previously been found to be important in tobacco marketing (color, attractiveness, layout, images, message, health implications).

Their conclusion was that the same elements that govern generaltobacco marketing govern PREP promotion.

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Survey StudiesSurvey Studies

Parascandola et al. (2009) used the Tobacco Use Supplement of the Current Population Survey to study PREP use in 2003.

Findings were that PREP use was low (2-3%), and more commonamong: daily smokers, 25-35 year old smokers, nicotine dependent smokers, smokers who had made multiple quit attempts and in stateswhere PREPS were actively marketed.

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Store PlacementStore PlacementStar’s marketing program was studied by Slater et al. (2008) in a study looking at PREPS in general, and ARIVA and Omni in particular.

ARIVA was marketed:

Primarily in drug stores 47%In urban and suburban stores 87%In the Northeast and South 81%To stores with white customers 60% And stores with black customers 44%Via in-store advertising 1.5%

In very few of the stores sampled 2.5%

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What Happened after LaunchWhat Happened after LaunchThe dissolvable products have found their niche after a decade of marketing, and dissolvable tobacco is a minor SLT product.

Table 1: US Smokeless Tobacco Retail Sales Volume (Metric Tons) 2004 – 2009

2004 2005 2006 2007 2008 2009

Total Smokeless Tobacco 48,922 48,270 50,916 50,262 52,264 50,657

US Moist Snuff 31,535 32,503 35,173 35,913 38,509 37,994

Chewing Tobacco 17,232 15,630 15,567 14,135 13,428 12,287

Swedish-Style Snus 14 9 53 86 191 245

Dry Snuff 132 119 114 117 119 114

Dissolvables 8 9 9 10 17 17

Source: Euromonitor International. Smokeless tobacco in the US. August 2010 Market Report.

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Who Buys ARIVA and STONEWALL?Who Buys ARIVA and STONEWALL?Star conducted a follow-up telephone survey of ARIVA and STONEWALL buyers as part of its marketing program.

Demographics (N = 159)Percent Percent

Male 84 EmploymentFemale 18 Full time 63

Part Time 11Age Unemployed 5

Under 18 0 Retired 1518-29 19 College Student 229-39 1640-49 25 Household Income50+ 40 Under 25,000 18

25,000-59,000 5460,000-99,000 26100,000 + 9

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Who Buys ARIVA and STONEWALL?Who Buys ARIVA and STONEWALL?Tobacco Use

Percent PercentYears smoked Effect on smoking

< 5 years 20 A lot less 165-10 years 13 A little less 54Over 10 years 67 About the same 27

A little more 0Amount smoked A lot more 3

< ½ pack 27½ to 1 pack 32 Effect on Dipping (SLT use) 1-2 packs 35 A lot less 38Over 2 packs 3 A little less 33

About the same 27A little more 0A lot more 0

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Who Buys ARIVA and STONEWALL?Who Buys ARIVA and STONEWALL?How, Where, and Why Used

Percent PercentUse per day Why Used

2 or less/day 23 No smoking area 303-5 a day 40 Switch to it 236 or more a day 36 Try to cut down 16

Try to quit 19Where used (all checked responses) Dual use 11

At Work 72At Home 70 How Learned of Product Restaurant/Bar 47 Friend 35Around Children 45 Store Display 39In the Car 62 Advertising 16Other 6 Internet/Other 10

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Adolescents and Young AdultsAdolescents and Young Adults

Star’s efforts in making the product “look” like a package of cigarettes(no attractive graphics), adult-oriented promotional materials and placement, avoiding linking the point of sale materials to any youth-oriented activities, placing a “keep away from children and adolescents” warning on the package and refusing to discuss the product with non-tobacco users were fully successful.

In ten years of marketing, despite placement of a contact number on the package for product concerns, we have received no reports of uptake or abuse by children and adolescents.

We will discuss this further in Presentation 2.

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Other CompaniesOther Companies

Major tobacco firms have test marketed various dissolvable products, and their market experience has been similar to Star’s experience.

Most PREPS that were introduced are now off the market despite strong efforts at marketing by some firms.

Star’s dissolvable tobacco products appeal to middle-aged smokers with long smoking histories who have tried to quit multiple times and failed.

Despite concerns similar to the concerns over OTC NRT products, there has not been any significant adolescent or young adult uptake or use.

Star’s products have not been profitable for the company to date.

We make them because it is the right thing to do.

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Conclusion Conclusion --

Part IPart I

Star started from the premise, shared by experts in the field*, that low-nitrosamine oral tobacco products could be made that posed much less risk to the user than smoking cigarettes.

Star developed ARIVA and STONEWALL to make low-nitrosamine oraltobacco products available on the US market.

Star designed the product to appeal to adult smokers who were concernedabout their health.

Star took care to avoid any product design or marketing that would attract non-smokers or young adults.

In our next discussion we will describe the pharmacokinetic and subjective testing that supports the contention that we have been successful in our efforts.

*Levy et al. 2004; Royal College of Physicians 2007