TI JanFeb2016 • TPI Q1

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20 TOBACCO INTERNATIONAL JANUARY/FEBRUARY 2016 approximately 95 percent less nicotine than found in ordinary tobacco—is only possible through 22nd Century's p r o p r i e t a r y t o b a c c o v a r i e t i e s , " Sicignano said. "The company's Very Low Nicotine tobacco was deregulated by the FDA in 2002, which allowed for its agricultural production. At that time, 22nd Century's technology was licensed to Vector Tobacco, meaning only Vector could have contracted with farmers to grow our Very Low Nicotine tobacco. The Vector license was discontinued in 2008 and the industry has changed dramatically since the early 2000's. For example, in 2009, the FDA gained the authority to regulate nicotine levels in commercial cigarettes. What's more, until recently, there was no provision for Modified Risk Tobacco Products (MRTP) like 22nd Century's BRAND A. Indeed, 22nd Century submitted an MRTP application to the FDA in December 2015 to request a Reduced Exposure Marketing Order, which is approval to disclose Brand A's Very Low Nicotine content and to sell it commercially. "In 2010, the company worked c o l l a b o r a t i v e l y w i t h t h e N a t i o n a l Institute on Drug Abuse (NIDA), which is part of the National Institutes of Health (NIH), to design variable nicotine research cigarettes—eight different nicotine levels, from very low to high, encompassing 22 brand styles with different tar yields in both regular and menthol. To date, 22nd Century has supplied over 22M SPECTRUM research cigarettes to the US federal government. " O f p a r t i c u l a r i n t e r e s t i n t h e last decade has been the mounting evidence identifying Very Low Nicotine tobacco cigarettes as an effective smoking cessation aid," Sicignano said. "For example, in October, 2015 The New England Journal of Medicine published a special article describing a m i l e s t o n e s t u d y t h a t u s e d t h e company's proprietary SPECTRUM research cigarettes [N Engl J Med 2015; 373:1340-1349]. The authors concluded that data from the study suggests– a s c o m p a r e d w i t h c i g a r e t t e s o f conventional nicotine content–22nd Century's proprietary low nicotine SPECTRUM cigarettes were 'associated with reductions in smoking, nicotine exposure and nicotine dependence, TURN OF THE XXII CENTURY XXII CENTURY GROUP HIGHLIGHTS LEADERSHIP • Accelerated licensing and manufacturing under new CEO • Revenue from company-manufactured MSA cigarettes, government research cigarettes and filtered cigars of $8.5M for 2015, up from $528,991 in 2014 • Developing groundwork for future revenue streams in cannabis and tobacco biomass niches KEY INVESTMENTS • Purchase of NASCO Products, LLC (2014), made XXII the first signatory to the US Tobacco Master Settlement Agreement (MSA) in six years • 2014 purchase of facility for the manufacture of XXII products • Exclusive manufacturer (2015) of Smoker Friendly private label, distributed through national chain of 800-plus cigarette stores PATENTS • XXII holds more than 200 issued patents, with more than 50 patent applications pending worldwide • Licensing deal with British American Tobacco; also seeking additional licensing opportunities • In the valuable US cessation market, XXII owns 16 issued patents and eight patent applications • In China, the world's largest cigarette market, XXII owns six issued patents and three patent applications PRODUCT LAUNCHES (2015) • Launched high-nicotine content RED SUN cigarettes at over 500 domestic US retail stores including Smoker Friendly • MAGIC cigarettes launched in Spain, where 900 retail stores have placed orders for its cigarettes • XXII plans to expand distribution for MAGIC cigarettes across Europe and in other international markets, including Asia. X-22 PRESCRIPTION SMOKING CESSATION AID • Pursuing joint venture to fund a Phase III clinical trial for X-22, XXII's groundbreaking prescription smoking cessation aid that tastes, smells and smokes like a cigarette–but contains 95 percent less nicotine than commercial "light" cigarettes. • Independent clinical trials have demonstrated the efficacy of XXII's Very Low Nicotine cigarettes in helping smokers to quit. In the US alone, 22M people try to quit smoking annually.

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