Eye Surgeon Looks to Join Board of Lens Maker

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An investor in implantable lens maker Staar Surgical Co. is eyeing a seat on the Monrovia firm’s board.

Danish eye surgeon and entrepreneur Dr. Joern S. Joergensen took the unusual move of submitting a regulatory filing to the Securities and Exchange Commission disclosing his 2.3 percent stake in the company. Investors normally need to tell the SEC only after they’ve acquired 5 percent or more of a firm.

But the investor’s filing and attached letter might have been meant to grab the company’s attention.

Joergensen, who runs a group of eye clinics in Germany, Denmark and China, identified himself as one of Staar’s largest customers and an authority in corrective vision surgery.

“With the significant issues currently facing the company – sales challenges, market expansion issues, board and management turnover, an ongoing FDA regulatory review, SEC comments relating to such review, and the significant costs associated with ongoing FDA review – shareholders should have a seat at the table,” Joergensen wrote in his letter.

He further explained that his surgical and business experience make him an ideal candidate.

“Unfortunately, the company’s board has only been dismissive of my attempts to raise my candidacy for board membership,” Joergensen continued. “I and other shareholders have concluded that the company and its board are not responsive to its shareholders. … In the absence of a prompt and satisfactory response from the company, we will be forced to take our case directly to all shareholders.”

Staar said in an emailed statement that it values shareholder input and is always willing to hear their perspectives.

“The board’s nominating and governance committee considers candidates for director suggested by our stockholders,” Staar said in its statement, adding that the firm is willing to consider Joergensen’s nomination in the future.

Settlement in Sight?

An end might be near for a legal tussle among CytRx Corp., company shareholders and nine of its directors and officers.

The West L.A. biopharmaceutical firm, which is named as a nominal defendant in a lawsuit against a number of the company’s current and former directors and officers, announced last week that it had reached a settlement that would resolve the claims against all defendants.

Three shareholders alleged the directors and officers, including Chief Executive Steven Kriegsman, gave themselves “spring-loaded” stock options – shares timed to be granted before good news was announced – that would benefit from a jump in share price. The plaintiffs also said the group engaged a stock promotion company to publish misleading articles touting CytRx’s prospects.

The shareholders wanted the individual defendants to compensate the firm for damages they claim it sustained from a waste of corporate assets and to revoke the options in question.

As part of the settlement, which is still pending approval, CytRx will reprice 2 million options granted to directors and officers in December 2013 from $2.39 to $4.66, the price at which they closed about a week later after the favorable news came out. Defendants will not have to admit any liability or wrongdoing.

“We believe that settling this case is in the best interest of all parties and will help avoid further risk to our business,” Kriegsman said in a statement.

The settlement is pending approval by the Delaware Court of Chancery.

Busy Bee

Between a supplemental public offering announced last week and revised guidance issued for the rest of the year, Molina Healthcare Inc. has been busy generating buzz.

The Long Beach managed care provider announced that it would offer 5 million shares of common stock, raising up to $390 million to, among other uses, repay debt and finance acquisitions such as a recently announced expansion into Michigan through the purchase of a Medicaid contract provider that added about 100,000 patients to Molina’s rolls.

Shortly after the news, the firm updated its guidance for the year, raising its net income projection by $15 million to a target of $132 million. It also said the offering would take a toll on adjusted earnings a share, lowering the projection to $2.90 from $4.60.

All this news comes against a backdrop of speculation about mergers among larger players in the health insurance industry amid pressure to cut costs and become more competitive.

Humana Inc. is exploring a possible sale and has held preliminary talks with Aetna Inc. and Cigna Corp., according to the Wall Street Journal. Analysts suggested such a sale could trigger a cascade of consolidation in the managed care industry. But New York-based Leerink Partners analyst Ana Gupte told Bloomberg that consolidation is more likely among the five largest insurers, including Humana, Aetna and Cigna, which each had revenue last year between $30 billion to $60 billion. By comparison, Molina has forecasted revenue of $14.3 billion this year.

Molina representatives declined to comment.

Staff reporter Marni Usheroff can be reached at [email protected] or (323) 549-5225, ext. 229.

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