Santa Ana’s Advanced Medical Optics Inc. plans to re-enter the contact lens solution market later this year with a new formulation of its Complete solution that was recalled in May.
The company is working with federal regulators on the relaunch of Complete, Chief Executive Jim Mazzo said on a conference call with analysts and investors last week.
Advanced Medical didn’t offer an update on the financial impact of the recall, which analysts believe could reduce 2007 profits by 25% from what was earlier expected.
The company plans to issue a revised sales and profit forecast in a few weeks, once a plan for the relaunch of Complete is ready, said Randy Meier, the company’s chief financial officer who also runs its eye care business.
“We are not in a position to provide guidance at this time,” Mazzo said. “This is largely because we need to do further analysis with respect to what our options are and what the financial impact might be.”
Mazzo also declined to answer a question about whether Advanced Medical still is interested in exploring a bid for rival Bausch & Lomb Inc.
Prior to the recall, Advanced Medical said it was interested in buying Rochester, N.Y.-based Bausch & Lomb and was willing to top a $3.67 billion bid from private equity firm Warburg Pincus LLC that Bausch & Lomb has accepted.
Advanced Medical pulled its Complete MoisturePlus solution after a government probe linked it to a rare infection that can cause blindness.
When Advanced Medical comes back with Complete later this year, the company is likely to drop its “no-rub” designation, according to Mazzo.
No-rub solutions from Advanced Medical and others are used to rinse contact lenses. With other solutions, users rinse the contacts and rub them between their finger and thumb to remove germs and buildup.
While the cause of recent eye infections still is being looked at, “theories include the use of no-rub formulations,” wrote Joanne Wuensch, an analyst with BMO Capital Markets in New York.
“To that end, the next-generation lens solutions will likely not have a no-rub designation,” she said.
Rubbing, or “digital cleaning,” has been a mainstay of contact lens wearing for years, Mazzo said.
Complete was expected to do about $100 million in sales this year. Advanced Medical counts yearly sales of $1 billion, led by eye surgery products.
With Complete off the market, Advanced Medical is looking to more sales of its hydrogen peroxide solutions, which have a track record of killing germs that cause eye infections, said Marc Goodman and Scott Hirsch, analysts with Credit Suisse, in a report.
Hydrogen peroxide solutions make up about $60 million in yearly sales for Advanced Medical.
The Complete recall was a setback but “does not affect our other strong and growing business segments,” Mazzo said, referring to the company’s devices for cataract and laser vision correction surgery.
The recall has delayed Advanced Medical’s plan to enter the dry eye drug market, where it stood to go up against former parent Allergan Inc. of Irvine.
Allergan spun off Advanced Medical nearly five years ago.
A dry eye drug, expected by midyear, now isn’t due before late 2007 or early 2008 as Advanced Medical’s eye care team focuses on the recall and Complete relaunch, Meier said.
The company’s recall efforts, Meier said, include putting together regional “strike teams” and hiring Stericycle Inc. of Lake Forest, Ill., to get Complete off store shelves.
Stericycle worked with Advanced Medical in the company’s November recall of 3 million Complete MoisturePlus bottles after contamination was found at its Hangzhou, China, plant.
“At this point, we believe that every major retailer has received the appropriate instructions and that the product is gone from shelves or in the process of being removed,” Meier said.
Advanced Medical is contacting eye doctors about the recall and advising them on “proper contact lens handling practices,” Meier said.
Advanced Medical has portrayed Complete MoisturePlus as safe in earlier calls, saying any link to infection stems from improper handling of contact lenses by users.
Last week, a lawsuit was filed against Advanced Medical over the recall in what could be a series of suits as lawyers seize upon the issue.
And word came last week that a group of investors including San Francisco hedge fund manager ValueAct Capital Management LLC raised its stake in Advanced Medical to 9.9% from 7.3%, according to a Securities and Exchange Commission filing.
ValueAct is known as an activist investor that urges management for changes aimed at boosting a company’s value.
