Star Scientific Files Second Quarter Financial Results; Rock Creek Pharmaceuticals Reports Early Promising Results in Studies As
August 10 2009 - 2:20PM
PR Newswire (US)
PETERSBURG, Va., Aug. 10 /PRNewswire-FirstCall/ -- Star Scientific,
Inc. (NASDAQ:STSI) filed its second-quarter report on Form 10-Q
today with the Securities and Exchange Commission. The company
reported net sales of $.2 million for the second quarter,
significantly higher when compared with net sales of $.05 million
for the same quarter in 2008. Net sales for the first six months of
2009 totaled $.38 million compared with $.2 million for the same
period in 2008. Sales volumes rebounded strongly compared with
lower volumes for first-quarter 2009, which the company believes
was due to the passage of amendments to the Children's Health
Insurance Program bill that are financed by increases in the
federal excise tax on tobacco products. The company reported a
second-quarter net loss of $7.0 million compared with a $6.4
million loss for the same period in 2008. This increase was due
primarily to additional costs associated with the May, 2009 jury
trial of the company's patent infringement lawsuit against RJ
Reynolds Tobacco Company. Total operating costs for second quarter
2009 of $6.4 million increased from $5.8 million for the same
period in 2008. (Logo:
http://www.newscom.com/cgi-bin/prnh/20090317/STARSCIENTIFICLOGO )
The research and development portion of those expenses included $.1
million in product development work to enhance the company's
dissolvable smokeless tobacco products, Ariva and Stonewall . As
part of that effort, the company recently completed successful
focus group testing for several new versions of Ariva , including
additional blends. The company also is in active discussions with
another tobacco company regarding an agreement aimed at expanding
distribution and marketing of Ariva and Stonewall . If an agreement
is achieved, Star anticipates it will be able to achieve both cost
reductions and broadened product distribution for its dissolvable
tobacco products. Second quarter R&D expenses also included
expenditures of $.4 million by the company's Rock Creek
Pharmaceuticals subsidiary. These expenditures related to assessing
the applicability of low-TSNA tobacco and certain MAO agents for
several applications, including in a non-nicotine nutraceutical
product designed to minimize nicotine cravings. Rock Creek now has
completed two preliminary studies to assess the viability and
safety of the active components for a non-nicotine nutraceutical (a
dietary supplement product). Curtis Wright, MD, MPH, Chief Medical
Officer of Rock Creek, stated he is pleased with the preliminary
results of the safety studies now being conducted at two
independent research institutions. "There is increasing evidence in
recent years that the association between nicotine addiction and
MAO reduction in smokers is important. It is one thing to read
research reports and publications but it is quite another to see
primary data showing that tobacco can decrease human MAO B to
levels similar to those seen in strong antidepressants." Rock
Creek's research program is central to its evolving strategies and
to the continued development of products for the treatment of
cigarette addiction, including a non-nicotine nutraceutical that
would be marketed under the brand name CigRx(TM). At the same time
Star continues its efforts to identify a pharmaceutical or
health-related entity that could assist in the distribution and
consumer acceptance of a nutraceutical product such as CigRx(TM).
General and administrative expenses for the second quarter, which
totaled approximately $5.1 million, included $2.7 million of
increased legal expenses for the jury trial referenced above and
the ongoing patent reexamination process before the US Patent and
Trademark Office. Star's counsel filed a motion with the US
District Court on July 7 for Judgment as a Matter of Law or, In the
Alternative, For a New Trial. That motion currently is pending: RJR
must file a response to the motion by August 24. If the District
Court does not grant Star's motion, the company will appeal the
verdict to the US Court of Appeals for the Federal Circuit. As the
company previously announced, Carter G. Phillips, who successfully
represented Star in its 2007 appeal to the Federal Circuit Court,
has been retained to represent Star Scientific in any upcoming
appeal. This press release contains certain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Star Scientific, Inc. and its consolidated
subsidiaries (collectively, the "Company") has tried, whenever
possible, to identify these forward-looking statements using words
such as "anticipates," "believes," "estimates," "expects," "plans,"
"intends" and similar expressions. These statements reflect the
Company's current beliefs and are based upon information currently
available to it. Accordingly, such forward-looking statements
involve known and unknown risks, uncertainties and other factors
which could cause the Company's actual results, performance or
achievements to differ materially from those expressed in, or
implied by, such statements. These risks, uncertainties and
contingencies include, without limitation, the challenges inherent
in new product development initiatives, the uncertainties inherent
in the progress of scientific research, the Company's ability to
raise additional capital in the future necessary to maintain its
business, potential disputes concerning the Company's intellectual
property, risks associated with litigation regarding such
intellectual property, potential delays in obtaining any necessary
government approvals of the Company's low-TSNA tobacco products,
market acceptance of the Company's new smokeless tobacco products,
competition from companies with greater resources than the Company,
the Company's decision not to join the Master Settlement Agreement
("MSA"), the effect of state statutes adopted under the MSA, and
the Company's dependence on key employees and on its strategic
relationships with Brown & Williamson Tobacco Corporation in
light of its combination with RJ Reynolds Tobacco Company, Inc. The
impact of potential litigation, if initiated against or by
individual states that have adopted the MSA, could be materially
adverse to the Company. Although the Company believes the
expectations reflected in such forward-looking statements are based
on reasonable assumptions, it can give no assurance that the
expectations will be attained or that any deviation will not be
material. See additional discussion under "Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended December
31, 2008, as filed with the SEC on March 16, 2009, and other
factors detailed from time to time in the Company's other filings
with the SEC, available at http://www.sec.gov/. All information in
this release is current as of August 10, 2009, and the Company
undertakes no obligation to update or advise upon any such
forward-looking statements to reflect events or circumstances after
the date of this press release or to reflect the occurrence of
unanticipated events. About Star Scientific Star Scientific is a
technology-oriented tobacco company with a toxin reduction mission.
It is engaged in the development of dissolvable smokeless tobacco
products that deliver fewer carcinogenic toxins (principally
tobacco specific nitrosamines, or TSNAs), through the utilization
of the innovative StarCured tobacco curing technology, and in
sublicensing that technology to others. Star Scientific has a
Corporate and Sales Office in Petersburg, VA, an Executive,
Scientific & Regulatory Affairs office in Bethesda, MD, and
manufacturing facilities in Chase City, VA. About Rock Creek
Pharmaceuticals Rock Creek Pharmaceuticals develops pharmaceutical
and related products for treatment of addiction and other
neurological disorders. The company supports third-party academic,
educational and therapeutic advances in both these areas of
research. Rock Creek has scientific and research offices in
Gloucester, MA. See Star's website at:
http://www.starscientific.com/ Contact: Sara Troy Machir Vice
President, Communications & Investor Relations (301) 654-8300
http://www.newscom.com/cgi-bin/prnh/20090317/STARSCIENTIFICLOGO
http://photoarchive.ap.org/ DATASOURCE: Star Scientific, Inc.
CONTACT: Sara Troy Machir, Vice President, Communications &
Investor Relations of Star Scientific, +1-301-654-8300, Web Site:
http://www.starscientific.com/
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