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Monday, Jun 5, 2023

Staar Surgical Starts Year with New CEO

Mason retires; industry vet Frinzi tapped

When Caren Mason in 2014 joined Staar Surgical Co. as a member of its board of directors, the ophthalmological-focused medical device company faced several large problems.

It had received a “warning letter” from the Food and Drug Administration regarding violations at its Monrovia manufacturing facility in Los Angeles County.

The company (NASDAQ: STAA) also didn’t achieve its goals for revenue, gross margin, profitability or manufacturing consolidation, resulting in no bonuses for its top executives in 2014, according to its annual report.

Since the board named Mason as chief executive in 2015, the company’s seen a major turnaround in fortunes.

Staar’s sales have jumped four-fold to an estimated $285 million in 2022. Its market cap has climbed from around $500 million to $2.3 billion as of last week.

“Caren did an outstanding job,” said Jim Mazzo, a longtime CEO in Orange County’s ophthalmology industry. “She repositioned Staar and created a global entity with outstanding results.”

Mason on Dec. 19 announced she would retire as CEO and a board member, effective Dec. 31, to be replaced by Tom Frinzi, an industry veteran who is also chairman of Staar’s board.

Frinzi said he accepted the CEO position because he’s been on the board for two and a half years, including the past six months as its chairman, a position he will be keeping.

“I liked what I saw from the board’s perspective,” Frinzi told the Business Journal last week. “I’m very bullish on what Staar will become.”

Mason has agreed to serve in an advisory role until the end of 2023.

The market was taken aback by the unexpected change, as its shares fell 9.5% on the day of the announcement.

“Timing [was] a surprise, but succession should be smooth,” Mizuho Americas analyst Anthony Petrone wrote in a note to investors. Frinzi, who counts a long history in Orange County’s medtech sector, “is a veteran of the ophthalmology and refractive surgical industries, having worked in a variety of industry roles over 30+ years.”

Long Pedigree

Staar Surgical, which was formed in 1982, unveiled in 1991 the world’s first foldable intraocular lens, or IOL, for cataract surgery.

By 2014, when the company was experiencing its problems, it recruited Mason to the board.

Mason has a long pedigree at medical device companies like Eastman Kodak Health Imaging, General Electric Healthcare and Bayer AG. From 2010 to 2012, she was CEO at Verinata Health Inc., a provider of non-invasive prenatal genetic sequencing tests that was acquired by Illumina for $350 million.

When Mason became Staar’s CEO, one of her biggest moves was to expand the company’s sales to China, which accounted for $107.3 million in sales, almost half of the company’s $230 million in 2021. By 2018, she had resolved the issues surrounding the FDA’s warning letter.

Another change was moving its headquarters from Monrovia to Lake Forest in 2019, because Orange County “is more important than Los Angeles” for recruiting ophthalmologists, she told the Business Journal in 2019.

From 2016 until 2021, Staar Surgical stock registered an 841% return, topping the 305% of the Nasdaq and a 226% return for its peer group, according to its 2021 annual report.

“Under Caren’s leadership, Staar has achieved numerous significant milestones including accelerating average revenue growth above 25% over the past several years,” Aimee Weisner, chair of the board’s Nominating and Governance Committee, and a 2014 Business Journal General Counsel Award winner while at Edwards Lifesciences, said in a statement about Mason’s retirement.

Recent Challenges

Mason is stepping aside at a difficult moment for the company, which has seen its stock fall in recent months as sales haven’t hit expectations because of delayed revenue in China due to COVID-19 restrictions, a slowdown in the European economy, a stronger U.S. dollar and lower-than-expected takeoff of its business in the U.S.

In early 2022, the company’s valuation topped $4 billion.

Mason owns 782,161 shares, or 1.2% of the company, currently valued at around $37.5 million, according to its latest proxy in April, which said she was 68 years old at the time.

“Serving as CEO of Staar Surgical has been the highlight of my career,” Mason said in the statement. “I look forward to watching Staar’s continued success and have great confidence in Tom and the amazing Staar leadership team.”

J&J Vet

Frinzi, who was appointed to Staar’s board in 2020, has served as worldwide president for Johnson & Johnson’s vision business, which included cataract and laser refractive surgery, and has its base in Irvine.

He was named to that position in 2017, at the conclusion of Johnson & Johnson’s acquisition of locally-based Abbott Medical Optics (AMO).

He was also CEO of WaveTec Vision, a developer of surgical systems for eye surgery, and has held senior positions at Bausch & Lomb Surgical, Refractec and Chiron Vision. He’s currently executive chairman at ViaLase Inc., an Aliso Viejo-based glaucoma-focused medtech startup.

“Tom is an industry veteran with many success stories,” Mazzo, the former head of AMO, said. “Tom is well-known in our space and has a keen sense for developing talent.”

Nowadays, Staar’s key product is implantable collamer lens, or ICL for short, a product line that treats a wide range of refractive errors such as myopia (nearsightedness), hyperopia (farsightedness), and astigmatism.

A problem that’s hindered the company has been an inability to crack the U.S. market, which represented only $10 million of its 2021 sales.

The company is hoping its U.S. sales will improve as the FDA last March approved its EVO Visian ICL lens, its newest family of lenses that treat myopia. It aimed this year to train 600 U.S. surgeons on how to use the product.

There are tremendous growth opportunities” in the U.S. with EVO Visian, Frinzi told the Business Journal.

“Staar’s U.S. business has the opportunity to grow like the rest of the world.”

The company currently has three facilities in Orange County, including a manufacturing facility in Aliso Viejo, a research office in Tustin, and its headquarters in Lake Forest.

“We have quite a presence in Orange County,” he said. “We expect that to continue to grow. We’re bullish on Orange County.”

The company recently opened a new 1,500-square-foot EVO ICL Experience Center in Lake Forest, equipped with a surgical simulation room and with the potential to stream live surgeries performed at other locations to the surgical simulation room.

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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