Shares of The Cooper Companies Inc. (COO) tumbled after the U.S. Food and Drug Administration (FDA) posted a warning letter issued to the company on its website. The letter addresses issues at the company’s Puerto Rico contact lens manufacturing plant. Although FDA issued the letter to COO on Feb 27, it was disclosed by the agency only at the beginning of last week.
Since the revelation of the FDA warning letter, shares of this global medical device company dropped 2.8% to close at $130.15 on the last closing date.
The FDA conducted an inspection of COO’s Caribbean facility – Cooper Vision Caribbean Corporation – from Dec 2013 through Jan 2014. Following the inspection, the federal watchdog has determined that the company’s devices did not conform to the Current Good Manufacturing Practice (CGMP) requirements of the Quality System (QS) regulation.
Most of the concerns raised in the warning letter relate to inadequate internal investigations by COO in the last few years, following the recall of the Avaira Toric contact lenses. The warning letter held that the investigations failed to provide adequate information evaluating the impact of reported problems on the affected device.
Moreover, COO also failed to divulge information on implementation of controls to avoid the distribution of potentially adulterated products while corrective actions are being implemented. The notice also cited violations pertaining to the implementation of Standard Operating Procedure (SOP) and incomplete corrective/prevention action plans.
However, based on feedback from the company, it is understood that COO has already responded to several of the violations mentioned in the letter and much of the remaining outstanding issues are administrative in nature. As such, management decided not to disclose the FDA letter in its Q1 earnings call in early March as it believed that most of the issues had been taken care of.
Furthermore, according to COO, the warning letter is unlikely to affect ongoing plant operations or potential new product approvals by the FDA. In addition, the cautionary notice is not likely to result in any product recall. The company indicated that it should be ready for re-inspection by the FDA within the next two months.
COO currently carries a Zacks Rank #2 (Buy). Some other stocks in the medical/dental supply industry that warrant a look are Milestone Scientific Inc. (MLSS), Steris Corp. (STE) and West Pharmaceutical Services, Inc. (WST). All these stocks retain a Zacks Rank #2 (Buy).
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