Bidi Vapor Wins Judicial Stay of FDA’s Marketing Denial Order

U.S. Circuit Court decision allows continued sale of Company’s 11 flavored ENDs as legal fight for review of Bidi Vapor’s PMTA continues

GRANT, Fla., Feb. 3, 2022 /PRNewswire/ — Kaival Brands Innovations Group, Inc. (NASDAQ: KAVL) (“Kaival Brands,” the “Company,” or “we”), is the exclusive global distributor of products manufactured by Bidi Vapor LLC (“Bidi Vapor”), including the BIDI® Stick disposable electronic nicotine delivery system (“ENDS”), which is intended exclusively for adults 21 and over. The Company is pleased to announce that the U.S. Court of Appeals for the Eleventh Circuit has granted a judicial stay of the marketing denial order (“MDO”) previously issued by the U.S. Food and Drug Administration (“FDA”) to Bidi Vapor in September 2021.

The ruling, issued on February 1, 2022, allows Bidi Vapor and Kaival Brands to market and sell all of its BIDI^® Stick ENDS, including its tobacco, menthol and flavored products, while Bidi Vapor continues with its merits lawsuit compelling the FDA to place Bidi Vapor’s Premarket Tobacco Product Application (“PMTA”) for the flavored ENDS back under scientific review.

With the judicial stay decision going in favor of Bidi Vapor, the Company expects many distribution partners to reestablish their previous sales volumes, with potentially new distribution chains added as well.

“We expect this judicial stay will result in a rebounding of BIDI^® Stick sales,” said Niraj Patel, president and CEO of both Kaival Brands and Bidi Vapor. “Many wholesale and retail partners had discontinued or slowed purchases of the BIDI^® Stick, until we heard back from the courts on the likelihood of our merits case succeeding,” Patel said. “This is what our wholesale and retail partners have been waiting for.”

“We believe that Bidi Vapor has developed substantial, robust and reliable scientific evidence through, among other things, surveys, behavioral studies and clinical trials establishing support that the product is appropriate for the protection of the public health,” Patel said. “Following on FDA’s initial administrative stay of the MDO, we believe that this recent judicial stay is a good indication that the Court finds some merit in Bidi Vapor’s arguments and puts Bidi Vapor’s PMTA one step closer to being properly and fully evaluated by FDA.  We are extremely pleased with the Court’s decision on this judicial stay order and continue to expect to be successful on the merits case as well.”

“The Company believes that this decision signals a new milestone in the path toward providing adult smokers 21 and older with a viable alternative to combustible cigarettes. Distributors, wholesalers, retailers and adult consumers are all anxious to see positive outcomes not just for Bidi Vapor, but for the vaping industry as a whole. We believe in science-based regulation of ENDS and hope the courts will require FDA to adhere to the law as it reviews Bidi Vapor’s PMTAs,” Mr. Patel said.

“What gets lost in the public controversy, and the way the FDA has been handling its own marketing-authorization process, are the needs of the adult smoker 21 and older,” Patel said. “The BIDI^® Stick can be a viable and effective option to combustible cigarettes for these adults, and we believe the data Bidi Vapor has provided to the FDA, such as the recently published PK study, demonstrates this. We look forward to the FDA reviewing all of the PMTA submitted science and extensive data that demonstrates BIDI^® Stick as the epitome of compliance and quality.”

Bidi Vapor submitted PMTAs for all 11 flavor varieties (9 flavored ENDS plus Menthol and Tobacco) of its BIDI^® Stick prior to the court-ordered September 9, 2020, PMTA deadline, despite considerable business and logistical challenges due to the COVID-19 pandemic. The detailed applications ran over 285,000 pages and contained significant information supporting the products as appropriate for the protection of the public health – including robust and reliable scientific data supporting that its flavored BIDI^® Sticks provide an added benefit to adult smokers over tobacco-flavored ENDS. Despite submitting scientifically rigorous PMTAs and keeping the FDA informed about its ongoing clinical and behavioral studies, among other things, Bidi Vapor received an MDO for its flavored BIDI^® Sticks, along with nearly all other manufacturers of flavored ENDS, in early September 2021. On September 29, 2021, Bidi Vapor filed a Petition for Review with the U.S. Court of Appeals for the Eleventh Circuit, seeking judicial review of the MDO under the Tobacco Control Act (“TCA”), the Administrative Procedure Act (“APA”), as well as the U.S. Constitution. Accordingly, Bidi Vapor has requested the appellate court to vacate the MDO, and provide such additional relief as may be appropriate, including such relief as necessary to ensure that Bidi Vapor may continue to market the products subject to the MDO to its adult customers. The court-ordered stay issued on February 1, 2022, allows Bidi Vapor to continue to market all of its products in the United States, pending the outcome of the lawsuit.

Bidi Vapor remains committed to regulatory compliance and the premarket review process and is forging ahead with its planned studies to support its PMTAs. Bidi Vapor’s behavioral studies show that the majority of BIDI^® Stick consumers are older smokers who were either able to transition completely away from smoking or were able to significantly reduce the number of daily cigarettes smoked. This corresponds with Bidi Vapor’s completed clinical pharmacokinetic (PK) study, which demonstrates that the BIDI^® Sticks deliver nicotine to adult consumers comparable to their usual cigarette brand and also elicited similar subjective effects. In short, the behavioral studies and PK study demonstrate that the BIDI^® Sticks may be a satisfying alternative to cigarettes among current smokers and may support their transitioning away from cigarette smoking.

Mr. Patel, the Company’s President and Chief Executive Officer, owns and controls Bidi Vapor.  As a result, Bidi Vapor and the Company are considered under common control and Bidi Vapor is considered a related party

ABOUT BIDI VAPOR

Based in Melbourne, Florida, Bidi Vapor maintains a commitment to responsible marketing, supporting age-verification standards and sustainability through its BIDI^® Cares recycling program. Bidi Vapor’s premiere device, the BIDI^® Stick, is a premium product made with medical-grade components, a UL-certified battery, and technology designed to deliver a consistent vaping experience for adult smokers 21 and over. Bidi Vapor is also adamant about strict compliance with all federal, state and local guidelines and regulations. At Bidi Vapor, innovation is key to our mission, with the BIDI^® Stick promoting environmental sustainability, while providing a unique vaping experience to adult smokers.

ABOUT KAIVAL BRANDS

Based in Grant, Florida, Kaival Brands Innovations Group is a company focused on growing and incubating innovative and profitable products into mature and dominant brands in their respective markets. Our vision is to develop internally, acquire, own, or exclusively distribute these innovative products and grow each into dominant market-share brands with superior quality and recognizable innovation. Kaival Brands is the exclusive global distributor of all products manufactured by Bidi Vapor.

Learn more about Kaival Brands Innovations Group, Inc., at www.ir.kaivalbrands.com.

Forward-Looking Statements

This press release includes statements that constitute “forward-looking statements” within the meaning of federal securities laws, which are statements other than historical facts that frequently use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “position,” “should,” “strategy,” “target,” “will,” and similar words. All forward-looking statements speak only as of the date of this press release. Although we believe that the plans, intentions, and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions, or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied, or forecasted in such statements. Our business may be influenced by many factors that are difficult to predict, involve uncertainties that may materially affect results, and are often beyond our control. Factors that could cause or contribute to such differences include, but are not limited to, the timing and results of Bidi Vapor’s appeal of the FDA’s PMTA determinations; the scope of future FDA enforcement of regulations in the ENDS industry; the FDA’s approach to the regulation of synthetic nicotine and its impact on our business; the successful implementation of the expansion of the Company’s distribution of the Bidi^® Stick in international markets, the duration and scope of the COVID-19 pandemic and impact on the demand for the products we distribute; the actions governments, businesses, and individuals take in response to the pandemic, including mandatory business closures and restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps that we could take to reduce operating costs; our inability to generate and sustain profitable sales growth; circumstances or developments that may make us unable to implement or realize anticipated benefits, or that may increase the costs, of our current and planned business initiatives; changes in government regulation or laws that affect our business; significant changes in our relationships with our distributors or sub-distributors; and those factors detailed by us in our public filings with the Securities and Exchange Commission. All forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. Except as required under the federal securities laws and the Securities and Exchange Commission’s rules and regulations, we do not have any intention or obligation to update any forward-looking statements publicly, whether as a result of new information, future events, or otherwise.