Star Scientific , Inc. Files Second-Quarter Financial Report (Net Sales and Gross Profits Continue to Increase) and Updates Research and Marketing Activities
Published: Aug 10, 2012
GLEN ALLEN, Va., Aug. 9, 2012 /PRNewswire/ -- Star Scientific, Inc. (NASDAQ: STSI) today filed its second-quarter 2012 financial report on Form 10-Q with the Securities and Exchange Commission. The Company reported net sales totaling $1.6 million for the three months ending June 30, 2012, compared with net sales of $0.3 million for the same period in 2011. Net sales for the six months ending June 30, 2012, totaled $2.76 million compared with $0.4 million for the same period in 2011. The 560% increase in net sales for the six months ending June 30, 2012, was largely based on increased sales of Anatabloc®, the Company's dietary supplement that is designed to support the immune system in maintaining healthy levels of inflammation.
Gross profits totaled $0.5 million for the three months ending June 30, 2012, compared with a gross loss of ($0.3) million for the same period in 2011. Gross profits totaled $0.8 million for the six months ending June 30, 2012, compared with a gross loss of ($0.6) million for the same period in 2011, representing an increase of $1.3 million for the first half of 2012.
The Company reported a net loss of ($8.0) million for the second quarter of 2012 compared with a net loss of ($5.0) million for the same period in 2011. The loss for the second quarter included a non-cash charge of $2.3 million related to the issuance of stock options that included grants to several employees and executives, other than the company's two most senior executives, in recognition of the successful launch of Anatabloc®, compared to a non-cash charge of $0.7 million in the same period in 2011. The net loss for the six months ending June 30, 2012, totaled ($13.2) million compared with a net loss of ($11.1) million for the same period in 2011. The increase in net loss was attributable, in part, to increased marketing and advertising costs of approximately $1.3 million related to the expanded distribution and consumer awareness of Anatabloc®, as well as to increased research costs of $1.0 million in connection with clinical(human) trials and pre-clinical(non-human) studies relating to Anatabloc®, and to the development of the Anatabloc® face cream.
The Company also has completed an interim look at the ASAP Thyroid Study that began in April 2012, which examines the effects of nutritional supplementation with an Anatabloc® formulation for Hashimoto's thyroiditis. Paul L. Perito, Chairman, President, and COO of Star Scientific, said, "The ASAP thyroid double-blind, randomized, placebo controlled, twelve week study has reached the point where we were able to take an interim look as allowed by the protocol. I am very grateful that the medical/scientific team, in approximately five months, has established nine separate sites, recruited and enrolled 124 subjects, and secured sufficient summary data whereby the scientific committee determined to continue and complete the study. I am encouraged by the preliminary data and look forward to definitive findings after 120 subjects have all completed the study." Later this summer, the Company plans to report interim results of the CRP/Cardiac Flint Study analyzing the impact of anatabine on C-reactive protein ("CRP") levels. CRP is a molecule produced by the liver in response to an inflammatory signal, and is a marker for inflammation. Mr. Perito further commented, "We are enthusiastic about our many exciting projects, which we believe have significant fiscal potential, including our anticipated launch of the Anatabloc® face cream during the third quarter."
David Dean, Vice President for Sales and Marketing, commented, "We continue to be very pleased with our increased levels of Anatabloc® sales and our ongoing relationship with GNC stores. As of today, Anatabloc® can be purchased in approximately 3,800 GNC stores, which consists of all GNC corporate stores and the majority of GNC franchise stores. Our relationship with GNC has been enhanced by the fact that our Anatabloc® brand ambassador, Fred Couples, has been actively involved in our GNC initiative, while simultaneously winning the Senior Open Championship earlier in July, and being named Champions Tour Player of the Month for July and Captain of the U.S. Team for the 2013 Presidents Cup." A commercial for Anatabloc® featuring Fred Couples recently began airing on the Golf Channel, ESPN, and the Tennis Channel.
As previously announced, on June 26, 2012, the U.S. Patent and Trademark Office issued a patent to the Company for the synthesis of anatabine that facilitates large scale commercial production of high purity anatabine. More recently, the Company was advised that an additional patent will issue August 14, 2012, covering its anatabine and yerba mate composition and uses of the composition for assisting in weight loss and curbing the urge for tobacco.
On May 29, 2012, Star Scientific filed its reply brief in response to the petition for certiorari to the Supreme Court filed by R.J. Reynolds Tobacco Company, Inc. The petition will be considered by the Supreme Court at a conference scheduled for September 24, 2012.
Certain statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions. The statements in this release are based upon the current beliefs and expectations of our company's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including, but not limited to, results of clinical trials, the challenges inherent in new product development initiatives, including the continued development and market acceptance of our nutraceutical and low-TSNA tobacco products, our ability to license and protect our intellectual property, our ability to raise additional capital in the future that is necessary to maintain our business, changes in government policy and/or regulation, including with respect to our nutraceutical and low-TSNA tobacco products, as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our annual report on Form 10-K for the fiscal year ended December 31, 2011. We undertake no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time.
About Star Scientific
Star Scientific, Inc. is a technology-oriented company with a mission to promote maintenance of a healthy metabolism, as well as to reduce the harm associated with the use of tobacco at every level. Over the last several years, through its wholly owned subsidiary, Rock Creek Pharmaceuticals, Star Scientific has been engaged in the manufacturing, sale, and marketing of two nutraceutical dietary supplements, and the development of other nutraceuticals and pharmaceuticals. The company 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, or TSNAs and related low-TSNA dissolvable tobacco products. Rock Creek Pharmaceuticals has scientific and research offices in Gloucester, MA, and a regulatory office in Washington, DC. Star Scientific has a Corporate and Sales Office in Glen Allen, VA; Executive, Scientific & Regulatory Affairs offices in Bethesda, MD, and Washington, DC; and a manufacturing facility in Chase City, VA.
Talhia T. Tuck
Vice President, Communications and Investor Relations
Star Scientific, Inc.
SOURCE Star Scientific, Inc.