New FDA report criticizes STAAR Surgical plant.

November 1, 2004

Monrovia, CA-STAAR Surgical Co. has hired a new vice president of quality, regulatory, and clinical affairs to work with the FDA, which has outlined 36 points about the condition of STAAR Surgical's manufacturing facility in a continuing investigation of the company.

Monrovia, CA-STAAR Surgical Co. has hired a new vice president of quality, regulatory, and clinical affairs to work with the FDA, which has outlined 36 points about the condition of STAAR Surgical's manufacturing facility in a continuing investigation of the company.

James Farnworth, who most recently was director of regulatory affairs and quality assurance for Volcano Therapeutics Inc., has a degree in design engineering. To ensure continuity, Farnworth will continue to work with Quintiles, a large, North Carolina-based pharmaceutical-services organization that has acted as the company's liaison with the FDA.

The most recent FDA report, delivered to STAAR Surgical on Sept. 23, follows two warning letters the FDA issued to the company in December 2003 and April 2004.

The company immediately revealed the general nature of the FDA's observations in a report filed with the federal Securities and Exchange Commission. The points "represent deviations from the FDA's regulatory requirements" and make it unlikely that the FDA would grant approval to market the company's Implantable Contact Lens (ICL) until these issues are resolved.

The company had hoped to launch the ICL in the United States during the fourth quarter of this year. During the company's July 28 meeting with FDA officials, STAAR Surgical had provided evidence that corrective action had been taken on some points, which the FDA "verified," according to the filing. STAAR Surgical also provided evidence of corrective action on other points, which the FDA had not yet verified. On some points, the company promised to take corrective action, and gave no response on certain other points.

Sheryl Seapy, a spokeswoman for STAAR Surgical, said the company would not have any further comment. In response to the revelation of the FDA's "483" report, the company's stock prices dropped from a day's high of $5.28 a share to a low of $2.88 the next day. Prices are recovering somewhat, with shares running about $3.85 in mid-October.

The company received its first warning letter Dec. 22, followed by a second April 26, related to "events that occurred from 1997 to 2001 concerning procedures of the company," said STAAR Surgical in a July 29 news release. It said then that the FDA was satisfied with the company's plan for response to those issues.

In related news, a Connecticut law firm has filed a lawsuit seeking class action status on behalf of all those who purchased STAAR Surgical stock between April 3, 2003, and Jan. 6, 2004. The lawsuit, filed in the U.S. District Court for the District of New Mexico, alleges that the company and its officers had issued materially false statements about the "the existence of serious injuries and/or malfunctions attributable to STAAR Surgical's implantable lenses which were likely to cause or contribute to serious injuries."

Seapy declined to comment on the lawsuit.