Medical device maker Staar Surgical Co. hasn’t seen such a good week in a long time.
The Monrovia company saw its share price spike twice last week, spurred by separate government approvals from the United States and the European Union for eye surgery devices that it plans to start selling within weeks.
Starr shares were trading at $1.05 on June 8 but shot up to $1.71 after the company announced the next morning that it had received European approval for a device that simplifies and makes cataracts surgery safer.
Then on June 11, the company announced that the U.S. Food and Drug Administration gave Staar clearance to market a device that makes it easier to insert implantable contact lenses. That jolted the shares from $1.49 to $3.44.
Over the past year, Staar’s stock has traded as low as 79 cents to as much as $5.98, but analysts said that last week’s developments will boost the company.
“They haven’t been in a better place in years,” said Jon Hickman, an analyst with Santa Monica-based MDB Capital Group LLC, which predicts sales to grow 15 percent next year to $90.5 million.
The company’s core product is the implantable contact lens, which is increasingly being viewed as a viable option to correct vision given rising concern over reported side effects from the most popular form of laser eye surgery called Lasik.
Hickman also credits much of Staar’s recent success to Chief Executive Barry Caldwell, who since taking the helm in late 2007 has managed to cut operational costs and push the company toward higher sales worldwide $79 million in 2008 compared with $59 million in 2007.
Blurry past
Founded in 1982, Staar makes products used in the treatment of cataracts, and to correct vision problems such as nearsightedness; farsightedness; and astigmatism, a birth condition in which the cornea is not symmetrical.
Staar made its name in the early 1990s by developing the first foldable replacement lens for patients with cataracts, a condition in which the eye’s natural lens becomes cloudy. The lens allowed doctors to use a far smaller eye incision than possible with traditional rigid lens replacements.
In 1996, the company began selling overseas the Visian ICL, the first implantable lens that is foldable and minimally invasive for the correction of adult nearsightedness. It requires an incision about half the size of an older, competing lens and unlike Lasik surgery in which a slice of the lens is cut away by a laser the procedure is reversible because the natural lens is left in. Reported side effects are fewer, too.
But it took nearly 10 more years for the FDA to approve the product in the United States in part due to problems at the company’s manufacturing plant in Monrovia.
In general, company investors historically have been frustrated by Staar, which has faced patent problems leading to lawsuits, shake-ups in management, production delays and posted more than $40 million in losses over the past three years.
The company reported a loss of $1.66 million in the first quarter, but that was just a fraction of the $8.72 million loss in the same quarter a year ago. Revenue was up 2 percent to $18.3 million.
Hickman said Starr is being weighed down now by patent litigation it lost that will cost the company $4.9 million, a big sum given its past losses. Company executives also are holding their breath on a variety of pending product approvals in the U.S. and overseas.
Despite those problems, Caldwell has said that he plans to turn Staar profitable in 2009 by lowering operating expenses and increasing sales, provided the product approvals come through.
“Instead of going out and raising more money, which we have done for several years, we are trying to change that culture to one where we have got to live on what we have,” Caldwell told Reuters in December. “Our plan for the next year is to make money every quarter in 2009.”
A bright spot for the company has been the Japanese market, where sales rose in 2008 to $13.5 million from $423,000 in 2007. Those numbers could get even better if the company obtains Japanese regulatory approval for its Visian ICL product, expected sometime this year.
In addition, the company is hoping the FDA will eventually approve the Visian TICL, an implantable lens for patients who are both nearsighted and have an astigmatism. The product already sells internationally.
Meanwhile, the company is prepping to start shipping products just approved last week.
First shipments to the European Union of the KS-X Preloaded Hydrophobic Acrylic Injector the device that is designed to more easily implant lenses in the eyes of cataract patients will start rolling out this month. In July, Staar will start shipping its Epiphany Injector System for implantable contact lens patients in the United States. Both surgical devices allow surgeons to insert the lenses without handling them.
Hickman suggested the company also should consider bolstering its military business. Staar’s products have been used to treat some soldiers sent to Iraq or Afghanistan. He said the military is more likely to pick up the cost of ICL surgery, which runs from $1,500 to $3,000 per eye compared with $499 and $2,500 per eye for Lasik.
“It may not be the bulk of their business, but it couldn’t hurt to seek it out,” Hickman said. “They’ve had strong sales on military bases. They’re poised to see a brighter year ahead.”
