Medical Device Daily, and Holland Johnson, MDD Associate
Troubled ophthalmic manufacturer Staar Surgical (Monrovia, California) on Friday reported that its board has launched the process of exploring "strategic and financial alternatives" – phrases typically used by firms pursuing negative end games. The company said it has retained Morgan Stanley to assist in the review.
Earlier in the week the company reported in a Securities and Exchange Commission filing that it is still attempting to deal with a warning letter from the FDA, issued a year ago (Medical Device Daily, Jan. 9, 2004) and that it could see further agency action against it.
Larry Haimovitch, president of Haimovitch Medical Technology Consultants (Mill Valley, California), who follows the ophthalmology sector for MDD, noted that the company has had problems with the agency "for some time," and he described its current status as in "regulatory purgatory."
He noted that Staar has good products, including its phakic intraocular lens (IOL), the first such product to receive recommendation for FDA approval from an agency panel, but that any final approval is delayed somewhat indefinitely.
Last year's warning from the agency cited "flaws" in operations at the company's manufacturing plant in Monrovia. Those flaws are related to manufacture of the company's surgically implanted IOL.
The letter said Staar had not thoroughly investigated adverse reactions related to its IOL products, as well as injuries or malfunctions attributed to its cartridges and injectors associated with the lens. The letter thus put on hold the company's request for expedited handling of its premarket approval application for the implantable lens.
In late January, Staar met with the FDA to inform it concerning its corrective actions in response to inspection of the Monrovia facility (MDD, Jan. 22, 2004), reported as part of other details in the SEC filing. Staar said that during the meeting, the FDA gave no indication of the status of its review of the company's response or the nature of any future communications.
Meanwhile, on Jan. 14, the FDA approved a company supplement allowing 18 investigational sites to enroll more patients in its trial of its IOL while the request for approval is pending. But until the FDA is satisfied with the company's response, it is unlikely to grant approval, Staar said.
Further potential FDA actions looming for the company – and acknowledged in its SEC filing – include another inspection, seizure of products or injunction of the Monrovia facility to compel compliance.
Haimovitch called the inability of the company to get its IOL product through the approval process "a shame."
While he didn't foresee bankruptcy for Staar, he said that the company "may go the way of an acquisition, ultimately" because it has been "prevented from turning the corner" financially.
He cited current rumors that Bausch & Lomb (Rochester, New York) is a likely acquirer, but added: "Staar really could fit nicely with a couple of companies."
Haimovitch said that the company is going to have to raise more money this year and is facing stiff competition from such heavyweight ophthalmology contenders as B&L, Alcon (Fort Worth, Texas) and Advanced Medical Optics (AMO; Santa Ana, California).
While noting that its board is considering a variety of alternatives, Staar also provided the obligatory wording that there is "no assurance that any transaction or transactions will occur or, if undertaken, the terms or timing."
And it said that any FDA actions "could have a material adverse effect on ... established lines of business, results of operations and liquidity."
Staar said late Friday that it will hold a conference call on Wednesday to discuss its full-year financial results.
Staar manufactures minimally invasive ophthalmic products, including the Visian IOL, as well as products designed to improve patient outcomes for cataracts and glaucoma. The Visian ICL has received CE marking, is approved for sale in 37 countries and has been implanted in more than 35,000 eyes worldwide, Staar said.