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FDA Dims Staar's Hope of Offering Lens First

The agency's action will delay the firm's launch of implantable contacts. Its stock plummets 38%.

September 30, 2004|Denise Gellene | Times Staff Writer

Staar Surgical Co. said Wednesday that the launch of its newest vision product, an implantable contact lens, would be delayed because Food and Drug Administration inspectors found numerous problems at the company's Monrovia factory. Staar's shares plunged 38% on the news.

Staar said in a regulatory filing that the FDA cited 36 deficiencies in manufacturing, quality control and complaint-handling procedures. The company said it couldn't predict when the matter would be resolved.

A Staar spokeswoman said the company had no comment beyond its Securities and Exchange Commission filing.

Because of its problems, Staar has fallen behind in a race to launch the first implantable contact lens to correct severe nearsightedness.

Staar's lens received an endorsement from an FDA advisory panel last October, but the agency told the company that it couldn't sell the lens until it fixed the problems at its factory. Staar had hoped to bring the lens to market in the fourth quarter.

It now appears that Advanced Medical Optics Inc., a vision care company based in Santa Ana, will be the first with such a lens, also known as a phakic lens. The company's product received FDA approval Monday and could reach the market in a matter of weeks, spokesman Steve Chesterman said.

Analysts said 2 million to 5 million people in the United States were candidates for the new products, representing a big sales opportunity for both companies.

Kate Sharadin, an analyst with Pacific Growth Equities who follows Staar, said the company's lens could have sales of several hundred million dollars a year. Staar posted sales of $50.4 million in 2003.

"It is a very significant product for the company," Sharadin said.

The market for phakic lenses, however, is expected to grow slowly, and Sharadin said Staar probably wouldn't be hurt by a delay of a few months in launching its product.

Staar's regulatory problems go back to December 2003, when the FDA sent the company a warning letter citing quality problems dealing with an existing product, a man-made replacement lens for patients with cataract surgery.

The FDA also told the company that it had failed to report to the agency "serious injuries" caused by the replacement lenses. The agency said some patients had complained about impaired vision.

The FDA reinspected Staar in July.

Staar said in its SEC filing that it had corrected some of the problems cited in the FDA's most recent inspection report, and that it planned to address some of the other shortcomings noted by the agency.

Staar said if the FDA was not satisfied with its actions, the agency could possibly conduct another inspection, seize the company's products or suspend its operations.

However, Sharadin said she considered such harsh medicine to be unlikely.

The FDA doesn't comment on regulatory actions involving specific companies.

Staar's shares fell $1.93 to $3.10 on Nasdaq, while Advanced Medical Optics rose 84 cents to $38.77 on the New York Stock Exchange.

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