Reduced-Risk Products Science Update · Reduced-Risk Products Science Update Dr. Ian Jones, PhD JTI VP, Reduced-Risk Products Science © Copyright JT 2018 London – June 5, 2018

Reduced-Risk ProductsScience Update

Dr. Ian Jones, PhDJTI VP, Reduced-Risk Products Science

London – June 5, 2018© Copyright JT 2018 2JT Investor Conference

Forward-Looking Statements

This presentation contains forward-looking statements. These statements appear in a number of places in this document and include statements regarding the intent, belief, or current and future expectations of our management with respect to our business, financial condition and results of operations. In some cases, you can identify forward-looking statements by terms such as “may”, “will”, “should”, “would”, “expect”, “intend”, “project”, “plan”, “aim”, “seek”, “target”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or the negative of these terms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance or achievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known and unknown risks and uncertainties. Forward-looking statements regarding operating results are particularly subject to a variety of assumptions, some or all of which may not be realized.

Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward-looking statement include, without limitation:

(1) increase in awareness of health concerns related to smoking;

(2) regulatory developments; including, without limitation, tax increases and restrictions on sales, marketing, packaging, labeling and use of tobacco products, privately imposed restrictions and governmental investigations;

(3) litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products;

(4) our ability to further diversify our business beyond the traditional tobacco industry;

(5) our ability to successfully expand internationally and make investments outside Japan;

(6) competition and changing consumer preferences;

(7) our ability to manage impacts derived from business diversification or business expansion;

(8) economic, regulatory and political changes, such as nationalization, terrorism, wars and civil unrest, in countries in which we operate;

(9) fluctuations in foreign exchange rates and the costs of raw materials; and

(10) catastrophes, including natural disasters.


This presentation contains images of our products in some slides. Those slides have been included exclusively to illustrate JT Group’s strategy or performance to our investors. They are not to be used for any other purpose.

London – June 5, 2018© Copyright JT 2018

Science is central to our RRP business

4JT Investor Conference

Multi-disciplinary expertise & international collaboration

Fundamental Research

Applied Science

Reduced-Risk Assessment

JTG R&D centersAustria, Germany, Japan, Poland, Sweden, Switzerland and the UK


Broadening spectrum of consumer needs


Consumers are increasingly

interested in experiences and

products that address a

broadening spectrum of

personal and social needsReduced Risk

Potential

Affordability

Social Consideration

Convenience

Satisfaction

$

Focus on Reduced-Risk potential


Combining risk-reduction potential & product acceptance

6

ProductAcceptance

Risk-ReductionPotential X Harm Reduction=

To fulfill the Harm Reduction equation

$

JT Investor Conference


The JT Group approach to assessment of RRP


The emission is our starting point

What comes out of the product

Users’ exposure to emissions & uptake into the body

Biological effects of uptake into the body

Environmental impact simulations

EMISSION1

UPTAKE2

EFFECT3

INDOOR AIR QUALITY4


Tobacco Infused Vapor


How Ploom TECH works

Battery

Liquid Cartridge

Tobacco Capsule

Tobacco Vapor


Cigarettes

TobaccoInfusedVapor

ettes

Heated Tobacco

Charcoal Heated

Co

800 700 600 500 400 300 200 100 0

1) Emission│ The risk cliff concept

Potential risk-reduction in T-Vapor products

TobaccoInfusedVapor

100 0

1

Temperature may be an indicator of risk

HIGHER

LOWER


Reference: Internal JT Group Studies. Note: “TPM” stands for Total Particulate Matter.

1) Emission│ Dramatically reduced levels of TPM in Ploom TECH

Analysis of smoke & vapor constituents

Reduction in the nine constituents recommended by the WHO for reduction in cigarette smoke

1

3R4FReference cigarette

(control)

Commercially availableHeated Tobacco product

-99%

E-cigarette

London – June 5, 2018© Copyright JT 2018 11

60 adult smokersrandomly selected

Screened Randomized

20 subjects continued to smoke

20 subjects used Ploom TECH

20 subjects smoking abstinent

Existing adultsmokers

The subjects used products ad libitum for 5 days

2) Uptake│ Clinical study design

Biomarkers of exposure

2



60%

20%

40%

80%

0%

100%

Percentage Reduction

Smoking AbstinencePloom TECH Use

1, 3 – Butadiene (MHBMA)

Acrolein (3-HPMA)

Exhaled CO

NNK(NNAL)

2) Uptake│ Reductions similar to smoking abstinence

Reference: D. Yuki et al., 2018. Assessment of the exposure to harmful & potentially harmful constituents in healthy Japanese smokers using a novel tobacco vapor product vs. conventional cigarettes and smoking abstinence. Regul Toxicol Pharmacol. 96, 127-134.

Biomarkers of exposure

-85%-69%

-89%-64%

Conventional cigarettes

2


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

100 100 1,000 10,000 100,000Puffs/L (logarithmic)

[Cell Viability]

Analysis of cell viability

3) Effect│ Less biological impact compared to smoking

Reference: S. Munakata et al., 2017. Comparative effects of cigarette smoke and novel tobacco product vapor on in vitro cellular responses in human bronchial epithelial cells. Society of Toxicology 2017, Baltimore.

Reference cigaretteCommercially availableHeated Tobacco productE-cigarette AE-cigarette BPloom TECH

3

ReferenceCommercHeated ToE-cigarettE-cigarettPloom TE


Analysis of oxidative stress (inflammation)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1,0000 10 100,000100 10,000Puffs/L (logarithmic)

[GSH-GSSG]

3) Effect│ Less biological impact compared to smoking

Reference cigaretteCommercially availableHeated Tobacco productE-cigarette AE-cigarette BPloom TECH

Reference: S. Munakata et al., 2017. Comparative effects of cigarette smoke and novel tobacco product vapor on in vitro cellular responses in human bronchial epithelial cells. Society of Toxicology 2017, Baltimore.

3


In vitro airway model

Control (before exposure)

0 Puffs/L

Smoking(3R4F cigarette)

200 Puffs/L

2,000 Puffs/L

3) Effect│ Observably less effect on tissue model, even at 10 times more puffs

Reference: Internal JT Group Studies.

3

London – June 5, 2018© Copyright JT 2018 16JT Investor ConferenceLondon – June 5, 2018© Copyright JT 2018

Exhaled breath analysis

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

[ug per exhalation]

AmmoniaAcetoneFormaldehydeNicotine

Ploom TECH Use No Product Use

Formaldehyde


4) Indoor Air Quality│ Minimal impact

Reference: H. Ichitsubo and M. Kotaki, 2018. Indoor air quality (IAQ) evaluation of a Novel Tobacco Vapor (NTV) product. Regul Toxicol Pharmacol. 92, 278-294.

4


Simulation of an occupied smoking lounge

0.1

1.0

10.0

100.0

1,000.0

Formaldehyde (ug/m3)

Nicotine (ug/m3)

CO (ppm)

Acetaldehyde (ug/m3)

Ammonia (ug/m3)

Solanesol(ug/m3)

Toluene (ug/m3)

3-Ethenylpyridine(ug/m3)

Glycerol (ug/m3)

PG (ug/m3)

SPM (mg/m3)

TVOC (ug/m3)

Acetone (ug/m3)

[Units] No Product UsePloom TECH UseCigarette Use


4) Indoor Air Quality│ Minimal impact

Reference: H. Ichitsubo and M. Kotaki, 2018. Indoor air quality (IAQ) evaluation of a Novel Tobacco Vapor (NTV) product. Regul Toxicol Pharmacol. 92, 278-294.

4


Positive scientific results to date

18

Summary of Reduced-Risk potential

Our scientific assessments on

Ploom TECH are providing

very encouraging results,

highlighting its strong

Reduced-Risk potential

EMISSION1

UPTAKE2

EFFECT3

INDOOR AIR QUALITY4


London – June 5, 2018© Copyright JT 2018 19

Committed to scientific communication

Follow our progress at JT-Science.com


Documents

Reduced-Risk Products Science Update · Reduced-Risk Products Science Update Dr. Ian Jones, PhD JTI VP, Reduced-Risk Products Science © Copyright JT 2018 London – June 5, 2018