Star Scientific falls as it cautions on funding
NEW YORK (AP) — Shares of Star Scientific fell to the lowest point in more than a year Monday as the company cautioned that it may need to seek out additional funding to sustain its operations early next year.
THE SPARK: Star Scientific Inc. said in a filing with the Securities and Exchange Commission that it expects to have funding to sustain operations into the first quarter 2013. The company said that it may need to seek out more funds depending on its sales, market conditions and its stock price. Star Scientific added that there is no guarantee that it will be able to secure additional funding at commercially reasonable terms.
The statement comes less than a month after it was disclosed that Star Scientific would receive a $5 million payout in a patent dispute settlement with Reynolds American Inc., the country's second-largest tobacco company. Company shares tumbled because investors expected a much bigger payout.
THE BACKGROUND: In August Star Scientific Inc. changed its Nasdaq ticker symbol from CIGX to STSI. The Glen Allen, Va. company used to focus primarily on research of a tobacco curing process that would prevent the formation of carcinogenic toxins in tobacco smoke. It also worked on the development of "smokeless" tobacco products. Star Scientific has shifted its focus more toward the dietary supplements it sells through its subsidiary Rock Creek Pharmaceuticals, including its Antabloc product for anti-inflammatory support.
SHARE ACTION: Star Scientific's stock dropped 69 cents, or 27 percent, to $1.87 in afternoon trading. Earlier in the session the shares fell to $1.80, their lowest level since August 2011.