
An estimated 47 million Americans light cigarettes each day, and one out of every two long-term smokers will develop lung cancer. According to the British...
Star Scientific, Inc. (NASDAQ:STSI) announced today that as part of its commitment to expand the company's dissolvable smokeless tobacco business, it has enhanced the product development team. Richard Milam, formerly with Brown & Williamson Tobacco Corporation, has joined Star Scientific as Director of Quality Assurance and New Product Development. Mr. Milam was with Brown & Williamson for eight years. During that time he was the senior project manager for the dissolvable hard tobacco invented by Star and manufactured for B&W. In that capacity, Mr. Milam was responsible for all aspects of B&W's dissolvable product development initiative. He received a Bachelor of Science degree in Mechanical Engineering from Auburn University.
The test marketing of smokeless products by the largest US tobacco companies during the past year, together with the 6% average annual growth of the smokeless tobacco category since 2003, make quite clear the increasing economic significance of this market segment. However, the potential impact on public health is even more significant. An estimated 47 million Americans light cigarettes each day, and one out of every two long-term smokers will develop lung cancer. According to the British Royal College of Physicians, smokeless tobacco is between 10 and 1,000 times less hazardous than smoking, depending on the product. Moreover, public health experts funded by a grant from the National Institutes of Health have concluded that smokeless tobacco products with low levels of a group of carcinogens called tobacco-specific nitrosamines (TSNAs) pose at least a 90% reduction in risk compared with smoking. The TSNA levels in Star's patented dissolvable tobacco products, Ariva(R) and Stonewall(R), have the lowest TSNA levels of any tobacco product available, and Star is the only manufacturer of dissolvable smokeless tobacco products. The company believes that adult smokers have the right to fair and accurate information about options they have to reduce their exposure to the toxins in tobacco. Products that reduce this exposure also need to be made broadly available to adult tobacco users.
Star has continued to expand distribution of Ariva(R) and Stonewall(R) dissolvable tobacco. While smokeless tobacco sales have been a minimal part of the company's revenue stream, by the end of the second quarter the company expects to increase its national distribution to include all three of the largest US drug store chains. In addition, the company recently has expanded its sales network by adding more than 40 new distribution centers, which are capable of making the products available to approximately 50,000 retail outlets. Ariva(R) and Stonewall(R) are available with wintergreen flavoring, and a Stonewall(R) Natural flavor was introduced in March. An additional flavor is being developed for both products, and they are expected to be available during third quarter 2007. According to Jonnie R. Williams, the company's CEO, the new dissolvable products flavors will be identified in the marketplace as "Better than Cigarettes(R) - Find Out Why".
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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. Thee risks, uncertainties and contingencies include, without limitation, the challenges inherent in new product development initiatives, particularly in the smokeless tobacco area, 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 any subsequent modification of 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.
See additional discussion under "Factors That May Affect Future Results" in the Company's Form 10-K for the year ended December 31, 2006, as filed with the SEC on March 16, 2007, and other factors detailed from time to time in the Company's other filings with the Securities and Exchange Commission, available at www.sec.gov. 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.
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(R) tobacco curing technology, and in sublicensing that technology to others. Star Scientific has an Executive, Scientific & Regulatory Affairs office in Bethesda, MD, a Corporate and Sales office in Petersburg, VA and manufacturing and tobacco processing facilities in Chase City and Petersburg, VA.