Optical Firm’s Stock Dives on Report of FDA Probe
Shares of Azusa-based Optical Radiation Corp. plummeted Tuesday on a published report about a federal criminal inquiry into the firm’s Orcolon eye gel, which allegedly can cause blindness.
The Wall Street Journal, quoting sources it didn’t identify, said Food and Drug Administration investigators were preparing a possible criminal case for the Justice Department to prosecute over the advertising and sale of Orcolon.
Optical Radiation’s stock plunged $4.25 to $24.50 on the NASDAQ market, a loss of 15.5%.
The company said in a statement it has not been informed of any criminal investigation concerning Orcolon. The FDA declined to confirm or deny an investigation.
The gel, used to protect ocular tissue during eye surgery, was approved by FDA regulators a year ago, and was heralded by Optical Radiation as a major breakthrough.
But by May, the Journal reported, doctors had alerted the manufacturer to adverse patient reactions, including a potentially blinding buildup of eye pressure.
However, it wasn’t until October, after 33 patients treated with Orcolon had undergone surgery to save their eyes, that the company withdrew the gel from the market under belated pressure from the FDA, the Journal story said.
Optical Radiation denied wrongdoing and attributed the problem to an undetected contaminant.
The reported probe comes against a background of heightened FDA scrutiny of the medical device industry after years of lax regulatory policies.
Under the guidance of FDA Commissioner David Kessler, appointed in 1990, the agency has intensified enforcement and insisted on more safety tests before high-risk devices are cleared for the market.
Optical Radiation is a leading maker of lenses and other optical products, and had total sales of $146 million last year.
The company stumbled badly last year with another product it had hoped would be a blockbuster: Cinema Digital Sound, a movie theater sound system designed to produce compact disc-quality sound. Though the sound system has been critically acclaimed, theater owners have largely balked at the cost.