Star Scientific to stop making tobacco products

[December 19, 2012]  RICHMOND, Va. (AP) -- Star Scientific Inc. plans to stop making and selling its dissolvable smokeless tobacco products at the end of the year and instead focus on its dietary supplement business, the company said Monday in a filing with the Securities and Exchange Commission.

The Glen Allen, Va.-based company, which used to focus primarily on research of a tobacco curing process that would prevent the formation of carcinogenic toxins in tobacco, said its board voted unanimously to discontinue the Ariva and Stonewall products. It had sold varieties of tobacco lozenges that dissolve in the user's mouth since 2001.

The move, expected to generate annual savings of $1.1 million, was motivated by "continued losses and low sales" and that restrictions that prohibit the company from making statements about the comparative health risks of tobacco products have made it "extremely difficult to effectively market" its dissolvable tobacco products, the company said in the filing.

Instead Star Scientific has shifted its emphasis to the dietary supplements it sells through subsidiary Rock Creek Pharmaceuticals, including its Antabloc product for anti-inflammatory support and the CigRx supplement to reduce the urge to smoke. Last month the company said its CEO and several shareholders were investing $20 million in the firm and its top executive is reducing his salary until the company is profitable.

"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," said the company, which changed its Nasdaq ticker symbol to STSI from CIGX in August.

Dissolvable tobacco is finely milled tobacco pressed into shapes like tablets that slowly dissolve in a user's mouth. They are gaining the attention of tobacco companies looking to offset a decline in cigarette use as smokers face tax hikes, growing health concerns, smoking bans and social stigma.

The company said it plans to look for opportunities to license its dissolvable tobacco technology.

In March a Food and Drug Administration scientific advisory panel said dissolvable tobacco products could reduce health risks compared with smoking cigarettes but also have the potential to increase the overall number of tobacco users. The report studying the products was mandated under the 2009 law giving the FDA authority to regulate the industry

[Associated Press; By MICHAEL FELBERBAUM]

Michael Felberbaum can be reached at http://twitter.com/MLFelberbaum.

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