Star Scientific, Inc. (NASDAQ: STSI) issued the following statement made by Paul L. Perito, Chairman, President and Chief Operating Officer of Star Scientific, Inc.:
We learned late Friday that a lawsuit, seeking to invalidate one of the patents to which Star is the exclusive licensee, was filed in Federal Court in Richmond, Virginia by Philip Morris. The patent at issue describes a process for substantially preventing the formation of tobacco specific nitrosamines (TSNAs) in tobacco, regarded by researchers worldwide as one of the most powerful cancer-causing agents in tobacco and tobacco smoke. We believe that this lawsuit is defective and without merit. The company will respond formally when it has had the opportunity to fully review the complaint. However, the US Patent & Trademark Office issued the patent that Philip Morris is challenging after completing its usual review of the patent application.
It has been well known for decades that TSNAs are powerful cancer-causing agents. Public health advocates including Dr. Greg Connolly, who heads the Massachusetts Tobacco Control Program, have stated repeatedly that TSNAs in tobacco should be reduced to the lowest levels technologically possible, and that companies have a responsibility to do so. However, until Star focused on methods to reduce or eliminate these toxins, there appeared to be little concern expressed by Philip Morris regarding the TSNA levels in tobacco. Perhaps Philip Morris would like to share with the public the average TSNA levels for its Marlboro cigarette brand during those years when Star was investing significant resources to develop its patented technology.
This appears to be business as usual for Big Tobacco. However, Brown & Williamson, on the other hand, the third largest tobacco company in the US and second largest affiliate of British American Tobacco, has entered into a comprehensive licensing agreement with us for the same technology, as has another Virginia tobacco manufacturer. We find it ironic that, against this backdrop, Philip Morris has chosen to challenge this patent. In May 2001 we initiated patent infringement litigation in Federal District Court in Maryland on the same patent against RJ Reynolds. That litigation is in active discovery, and we continue to pursue the lawsuit vigorously.
Star Scientific has been a catalyst for positive change in the tobacco industry, particularly through its pioneering efforts to reduce tobacco toxins like TSNAs. In 1998, Star processed the first harvest of 700,000 pounds of very low-TSNA flue-cured tobacco, and at that time, it was the only very low-TSNA tobacco available in the United States. Just three growing seasons later, in 2001, over 85% of all flue-cured tobacco in the United States was cured in a manner to reduce TSNAs. Star also has partnered from the beginning with flue-cured tobacco growers in Virginia and in other flue-cured states, who had been unfairly portrayed as purveyors of harm to the public health, to achieve these significant changes. In 1999 we established a contractual cultivation and curing program, the StarCured(TM) program, through which participating growers were provided specially designed curing barns at no cost to them. These growers also receive a per-pound premium on the StarCured(TM) tobacco they sell to the company. Moreover, Star Scientific's two co-founders, Jonnie R. Williams and Francis E. O'Donnell, Jr., MD, offered 1000 shares of stock in the company to every StarCured(TM) grower family so that they could share in whatever success the company experiences in the future. It is curious that Philip Morris has only recently chosen to express concern for the financial interests of tobacco growers.
We are understandably proud of what we have been able to achieve to date, and we believe that these efforts will continue to stimulate inexorable progress in the tobacco industry.
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. These 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 the capital necessary to grow 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 proposed 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") and its decision to challenge the constitutionality of the MSA, the effect of state statutes adopted under the MSA and any subsequent modification of the MSA, the Company's dependence on key employees and on its strategic relationships with Brown & Williamson Tobacco Corporation. 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 Annual Report on Form 10-K for the year ended December 31, 2001, 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.
About Star Scientific
Star Scientific is a technology-oriented tobacco company with a toxin reduction mission. It is engaged in the development of tobacco products that deliver fewer carcinogenic toxins (principally tobacco specific nitrosamines, or TSNAs), through the utilization of the innovative StarCured(TM) tobacco curing technology, and in sublicensing that technology to others. Star Scientific has a Corporate and Sales Office in Chester, VA, an Executive, Scientific & Regulatory Affairs office in Bethesda, MD, and manufacturing and processing facilities in Petersburg and Chase City, VA.