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WICKHAM & A88OCIATE$ ATTORNEYS AND COUNSELORS AT LAW SUITE 600 DALE W. WICKHAM 2300 N STREET, N.W. COUNSEL EDWARD O. CRAFT FRANCIS A. LAVELLE' ALVIN J. GESKE DONALD T WILLIAMSON 'ADMITTED ONLY IN ILLINOIS AND MASSACHUSETTS WA $ H 1 N C3 TO N, D. C. 20037 (202) 663-9060 CABLE:WICKLAW M E M O R A N D II M ECONOMIC CONSULTANT GERARD M. BRANNON, PH.D. June 28, 1988 PRIVILEGED & CONFIDENTIAL To: Dale W. Wickham, Esq. From: Paul S. Weisberg, M.D. Re: Substitutes For Cigarettes The Task Wickham and Associates has been asked by Mr. Gene Knorr, Staff V.P. of Philip Morris, Inc. to develop a strategy for the Company through which non-toxic substitutes for cigarettes could be identified, developed and marketed. These substitutes should replace toxic tar droplets as vehicles of nicotine delivery to the lungs with substances which function similarly but are chemically inert when heated, and should replace nicotine with substances which produce similar effects without nicotine's cardiovascular and irritant effects. The strategy would involve funding by the Company of a large research effort by an eminent medical institution or institutions. It would have the anticipated effect of shifting the public image of the Company away from that of a merchant of death toward more socially adaptive roles, and would thereby legitimize the Company's standing from a public policy standpoint. Cigarette Smoking: The Positive Effects Cigarettes enhance certain physiological reactions, and fulfill certain social and psychological needs. These positive attributes should be emulated or preserved in any substitutive product. Cigarettes simultaneously induce a heightened state of energy and attention, while providing a sense of calm and relaxation in the user. They compensate for ungratified oral needs, and supply activity for the hands which binds aggressive energy. They stimulate intestinal peristalsis, and thereby diminish constipation. They appear to aid in the treatment of Parkinson's disease. They serve a communal social function,

' WICKHAM & ASSOCIATES ATTORNEYS AND COUNSELORS AT LAW oppose depression, and (mildly) enhance courage. Most if not all of these effects stem from the actions of nicotine; specifically, they are connected with the modulating effects of the brain's nicotine receptors. Brain Receptors Brain receptors are being studied intensively at numerous academic centers. These receptors are molecule-specific, act at infinitesimally low concentrations of external stimulus; and serve a biological function of adapting the organism to changes in external circumstances. Typically, a continuing external stimulus which is not immediately noxious, and which furthers the overall adaptation of the organism, leads to a long term increase in receptor density associated with "up-regulation", a heightening of reactivity to, or reliance on the stimulus molecule in modulating function. As an example, nicotine increases the density of the nicotine receptors so that certain energy functions come to be preferentially performed using nicotine's high-energy bonds. This state is termed habituation. Similar mechanisms operate for many other substances. In some cases, receptors are so modified in their numbers and perhaps functions, that certain energy reactions can only occur in the presence of the external stimulus: A state of addiction then exists. At a certain level, frequency, or persistence of either added external stimulus or a changed internal environment, the receptors' function is changed, inducing or permitting a disorganization or other threshold-exceeding event, short or long term, that releases or uncouples energy from the organismic system. Examples of this latter event system include cancer, seizures, and sexual orgasm. The nicotine receptor appears either to be multiple, or to have a double action, both a stimulating of brain function through enhancement of high energy (cholinergic) phosphorus bonds, and a calming, relaxing effect similar to that noted with gamma amino butyric acid (GABA), for which there is also a known receptor, or with certain (beta) endorphins, naturally produced compounds often termed "Natural Opiates". Psychic energizers, compounds currently under development which act to offset the cholinergic functional deficiency noted in Alzheimer's Disease, would appear to have much in common with the activating principle in nicotine, while GABA and the beta endorphins would appear to have much in common with nicotine's calming principle. Taken together, these may substitute for the major positive effects of nicotine, without nicotine's adverse cardiovascular and irritant effects. 2

WICKHAM & ASSOCIATES ATTORNEYS AND COUNSELORS AT LAW Cloning is no longer a new technology. Research efforts should be applied to the identification and development of an agricultural product (perhaps a form of cellulose) which is chemically inert when heated to a liquid-gaseous phase, and which could be cloned with energizing and calming compounds that up- regulated identified brain receptors. Product DesiQn The aim of this project would be to develop a product that busies the mouth and hands, as do tobacco products; even looks like a cigarette, but has no chemically reactive vehicles of delivery to the lungs (tar) and entrains the receptors weakly enough to simulate caffeine rather than opiates in its habituation potential. The product would consist of multiple compounds, each up-regulating a brain receptor, producing a mix of energizing and calming similar to that of nicotine. It would be graded at different levels of energizing versus relaxing effects, to the point where in some versions certain features of current frequently abused habituating drugs would be emulated. It would be cloned into an agricultural product inert in its liquid-gaseous phase that would carry the external stimuli to the lungs, and packaged to provide taste and mechanical supports now available through cigarettes. Outputs Cigarette substitutes would be the major outputs from the recommended effort. The study would yield, as well, critical information about the nature of drug abuse, and would hopefully develop understandings that would allow design of non-addictive substitutes for addictive drugs, replacing addiction with low levels of habituation. Another output from this major research might well be a remodeling of states of health and disease on the basis of the interactive balance of brain receptors, leading to the development of cloned replacements for disorganized or degenerating receptor sites, and a consequent restoration of function and opposition to pathological reactions such as cancer or seizures. Caveat It should be understood that major research in a project such as this is costly, that time-tables are difficult to set and maintain, and that outcomes are uncertain and likely to be surprising. 3

WICHHAM & ASSOCIATES ATTORNEYS AND COUNSELORS AT LAW Negotiations Negotiations should begin to identify the institutional setting or settings for the research. The Howard Hughes Foundation, The Robert Johnson Foundation, The Rockefeller Foundation, Duke University and the Scripps Foundation all have access to personnel of requisite skill and sufficient flexibility, scientifically and attitudinally, to work actively and effectively with the Company. Public Relations A Public Relations effort should be developed, which would use this project as a jumping off place to impel reconsideration of the Company's public image. Consultants I would like the help of two leaders in their respective fields in the early planning for this project. The first is Victor Weingarten, who leads his own firm in New York, the most prominent devoted to medically-connected public relations. I have worked with Mr. Weingarten in the past; he is a man of wide range, long experience, and sound judgment. The second is Marc Schuckit, M.D., who is a leading expert on brain receptors. He is Professor of Psychiatry at the University of California at San Diego. He has written extensively on the topic, and is in close touch both with who is doing what where, and with the published and unpublished state of the art in this area. Bibliography upon request. Mr. Lane Porter of Wickham & Associates aided in the reasonably extensive bibliographic research (at the National Library of Medicine) required for preparation of this memorandum. P.S.W. PSW/kyp 4