A Food and Drug Administration warning to Staar Surgical Co. for failing to keep adequate records and documentation was not what the implantable lens company’s investors were hoping to see.
Shares of Staar plunged 15 percent during the week ended July 2 to close at $13.85, making it one of the biggest losers on the LABJ Stock Index. (See Page 30.) The letter was sent to the company in May but was posted online by the FDA on July 1.
The FDA’s letter pointed out 15 quality control violations the agency discovered during an investigation of the Monrovia company in February and March. Most were related to lapses in documenting the design process of the company’s implantable lenses, but the FDA also pointed out problems with the way Staar handled customer complaints and other record keeping issues. The agency warned the company that there could be severe consequences if these problems aren’t fixed quickly.
“Failure to promptly correct these violations may result in regulatory action being initiated by the FDA without further notice,” said the letter. “These actions include, but are not limited to, seizure, injunction and civil money penalties.”
Staar did not respond to the Business Journal’s request for comment.
Seeing potential dollar signs, several New York law firms quickly announced that they will be investigating the firm on behalf of shareholders who were hurt by the fall in Staar’s stock price after the letter was released.
However, analysts covering the company for Chicago investment bank William Blair & Co. characterized the lapses as “innocent disorganization” that should not affect Staar’s business going forward. The firm maintains an “outperform” rating on the stock.
The company increased its research and development spending by $2 million in the first quarter of this year compared with last year, according to its most recently quarterly earnings in late April. Staar reported a net loss of $1.4 million (-4 cents a share) in the three months ended April 4, compared with net income of $470,000 (1 cent a share) for the same quarter a year earlier. Revenue rose 12 percent to $20.2 million.
