Health company at center of McDonnell corruption trial undergoes overhaul

The Washington Post’s Rosalind Helderman and Matt Zapotosky break down the trial of former Virginia governor Robert McDonnell and his wife Maureen. (Lee Powell/The Washington Post)

The federal corruption trial of former Virginia Gov. Robert McDonnell (R) and his wife Maureen thrust Star Scientific, a small health supplement company located just outside Richmond, into the spotlight when its chief executive was accused of giving the couple lavish gifts in exchange for favors.

Now the company founded by businessman Jonnie R. Williams Sr. is virtually unrecognizable. Long before a jury last week handed down guilty verdicts for McDonnell and his wife on public corruption charges, Star Scientific had changed its name, location, executive leadership, board of directors and strategy.

Attempts by executives of the rechristened Rock Creek Pharmaceuticals to recast the company as one rooted in scientific discovery have been hindered by criticisms of its former leader and lawsuits over the health benefits of its products.

Williams turned over the reins of Star Scientific, a firm he founded in 1990 as Star Tobacco, last November after it was revealed he had provided the McDonnell family with trips, gifts and money valued at more than $150,000.

What followed were months of aggressive and widespread changes under newly named chief executive Michael Mullan, an Alzheimer’s researcher who had worked with Star Scientific while head of a Florida research lab called the Roskamp Institute.

All but one member of Star Scientific’s board was removed and a new crop of directors was elected to shepherd the company. Christopher C. Chapman Jr., a medical doctor and business consultant who has served on the board since 2005, was appointed president.

The company’s transformation continued in June when it officially relocated its headquarters to Sarasota, Fla. and became Rock Creek Pharmaceuticals, a name once used by its subsidiary.

Mullan and the company’s new leaders also ushered in a still-fledgling plan to move Rock Creek Pharmaceuticals away from supplements, whose health benefits drew skepticism from the Food and Drug Administration, to drugs that are scientifically vetted and green-lit by federal regulators.

But fallout from regulatory criticism and involvement in the McDonnell case continues to roil the company.

Rock Creek Pharmaceuticals pulled Anatabloc, the dietary supplement at the center of the McDonnell trial, off store shelves in August after the FDA raised concerns that the health benefits of anatabine, the product’s main ingredient, were being falsely marketed and that the supplement was not approved for sale in the U.S.

The move dealt a major blow to the company’s finances. A 2013 annual report filed with the Securities and Exchange Commission states Anatabloc provided nearly all of the company’s revenue and the firm still operated at a net loss each of the past five years.

Executives at Rock Creek Pharmaceuticals declined to comment through a spokesman.

Additionally, separate class action lawsuits brought against the company by shareholders and customers, both claiming the company misrepresented the health benefits of its products, are pending in federal court, records show.

Rock Creek has said in regulatory filings it plans to use the science behind the supplements and its other ongoing research to development treatments for osteoarthritis, ulcerative colitis and smoking cessation, among other medical issues. But bringing a new drug to market is a long and expensive proposition for any biotechnology company.

“We anticipate that our future revenue will be highly dependent on the successful development and commercialization of one or more new pharmaceutical products,” the company said in SEC filings.

“We currently do not have any pharmaceutical product candidates in advance development stage, and there can be no assurance we will ever develop a product candidate that will generate revenue.”

To help pay for drug development, Rock Creek tentatively agreed to a $15 million loan from Williams, its embattled former chief executive, after he stepped down. A spokesman said the company ultimately arranged other financing worth $15.1 million from unnamed investors.

Steven Overly is a national reporter covering federal technology and energy policy with a focus on Capitol Hill. He previously covered the business of technology, biotechnology and venture capital.

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