Firm entwined with Va. gov remade into drug developer
The company so entangled with former Virginia governor Bob McDonnell's corruption conviction has renamed and rebranded itself, now categorizing itself as a drug developer rather than a maker of nutrition supplements.
As McDonnell appealed his sentence Tuesday before the 4th U.S. Circuit Court of Appeals in Richmond, Va., the company now called Rock Creek Pharmaceuticals (RCPI) released its first-quarter results.
They showed a $300,000 loss compared to a $9.8 million loss for the same quarter last year, according to a company statement released Tuesday. For the three months ending March 31, the company's net loss per share was 4 cents vs. $1.41 at the same time last year.
At midday, its stock was trading on NASDAQ at $2.25 a share, down 9 cents from $2.36 on opening. Briefly during 2011 and 2012, shares of Star Scientific had topped $100; no stock analysts appear to follow the company now.
Jonnie Williams, founder and chief executive of Star Scientific, gave more than $165,000 in gifts and loans to Virginia's then-governor and his wife in hopes of receiving favorable treatment for two of his company's products. He received immunity in connection with the case, but the federal Food and Drug Administration flagged his company's main products, CigRx for smoking cessation and Anatabloc that claimed anti-inflammatory support for the immune system, for inaccurate marketing.
Williams and the company's then-president, Paul Perito, left their jobs Dec. 27, 2013, but continued as consultants with Star Scientific for another year. Four days after Williams stepped down, the company entered a $15 million agreement with Williams, giving the company a line of credit; that agreement expired April 15.
In March, a lawyer for Williams contacted the company, maintaining that he was contractually entitled to severance pay, but in its 10-Q filing with the Securities and Exchange Commission the company said it did not respond.
Last month, Williams briefly had one of his homes, a 14,700-square-foot gated estate on 28 acres in Manakin-Sabot, Va., for sale at an asking price of $5.5 million. But the real-estate website Zillow now says it is off the market, the second time since Williams' legal troubles began that it was up for sale then removed.
On June 4, Star Scientific changed its name to Rock Creek Pharmaceuticals and moved its corporate offices from the Richmond suburb of Glen Allen, Va., to Sarasota, Fla. In August, Rock Creek announced it was voluntarily suspending Anatabloc and CigRx sales, so it now has no revenue and does not expect to have sales in the foreseeable future, according to its 10-K filing.
"Our strategy is to leverage the underlying science and clinical data accumulated by us in relation to our prior anatabine-based products to advance our pharmaceutical development program," the company said in its 10-Q filing Tuesday.
It can take up to 15 years to develop one new medicine from discovery to availability to patients, according to the Pharmaceutical Research and Manufacturers of America, a trade group better known as PhRMA.
As Star Scientific made changes to its business model, the FDA said in October that the company was now in compliance with its directives and falls under the agency's regulation. It also is scheduled in July to settle two shareholder lawsuits in U.S. District Court in Richmond.
Rock Creek Pharmaceuticals now considers itself a research and development company, specifically targeting inflammatory diseases and nicotine addiction.