Star Scientific Exiting Tobacco Business

Will discontinue manufacturing, distribution, sale of Ariva, Stonewall dissolvable products

GLEN ALLEN, Va. -- Star Scientific Inc. said in a filing with the U.S. Securities & Exchange Commission (SEC) that its board of directors has voted unanimously to discontinue the manufacturing, distribution and sale of our company's dissolvable smokeless tobacco products, Ariva and Stonewall Hard Snuff, as of Dec. 31, 2012.

"With this change, our company will no longer be manufacturing or selling any tobacco products, the filing said. "The board was motivated to take this action in light of the continued losses and low sales for our dissolvable tobacco products over the last several years. It was also motivated by the fact that restrictions under the Family Smoking Prevention & Tobacco Control Act."

The company said that the Tobacco Control Act "prohibit[s] our company from making any statements about the comparative safety of various types of tobacco products have made it extremely difficult to effectively market our dissolvable tobacco products, notwithstanding that they represent a less hazardous alternative to cigarettes and to traditional smokeless tobacco products."

It also said, "The board's action was further influenced by the fact that continuing to manufacture dissolvable tobacco products has had a negative impact on our ability to interest leading scientific and medical research centers in undertaking clinical research" related to its dietary supplements and cosmetic products.

However, Star said, "Following the discontinuance of our dissolvable tobacco business, our company will continue to look for licensing opportunities related to our dissolvable tobacco products and technology, including that relating to our Ariva BDL and Stonewall BDL modified risk tobacco products and the patented StarCured tobacco curing process used in connection with the manufacturing of our low TSNA dissolvable tobacco products."

The company said that it anticipates annual savings of approximately $1.1 million from the discontinuance of the dissolvable tobacco business. It anticipated that the total cost in connection with the discontinuance of the dissolvable tobacco business will be approximately $2.8 million in the fourth quarter.

Glen Allen, Va.-based Star Scientific is a technology company with a mission to promote maintenance of a healthy metabolism, as well as to reduce the harm associated with the use of tobacco. Through its wholly owned subsidiary, Rock Creek Pharmaceuticals, Star Scientific has been engaged in the manufacturing, sale and marketing of nutraceutical dietary supplements and the development of other nutraceuticals and pharmaceuticals. It also has continued to pursue the development, implementation and licensing of the technology behind its proprietary StarCured tobacco curing process, which substantially prevents the formation of carcinogenic toxins present in tobacco and tobacco smoke, primarily the tobacco-specific nitrosamines (TSNAs) and related low-TSNA dissolvable tobacco products.

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