Staar is interesting speculation at the current level of $10-12. They are one of the leaders in interocular lenses (IOLs). These have been around for about 50 years, initially as a plexiglas replacement lens for the natural lens in the eye, when someone gets cataracts. There are over an estimated 4 million IOLs implanted annually worldwide. STAAR invented a soft foldable IOL made of silicon about 12 years ago. The founder licensed the technology to everyone and STAAR has an estimated 17% of the foldable market.
The current management has developed a number of new products that should help them take market share in the IOL market including the only IOL that corrects for astigmatism (Toric lens) that is just beginning to ramp up sales and is expected to receive FDA approval for higher reimbursement as an innovative new technology. A new collamer material is also expected to be approved over the next few months that will be the best IOL material on the market. Both the Toric IOL and the new collamer material put STAAR in the strongest position to take market share since the foldable IOL was first introduced. These products also increase the attractiveness of STAAR as a takeover.
One of the most exciting new products STAAR has developed promises to be a better treatment for glaucoma than anything on the market. This is the Aquaflow wick which is a tiny collagen wick that is implanted at the corner of the eye, slowly dissolves, and leaves a natural channel to relieve eye pressure potentially indefinitely. This could be a $150 million dollar product and is on schedule for fast track FDA approval by the end of 2000.
STAAR also has an implantable contact lens (ICL) which is just finishing clinical trials but probably won't be on the market for at least 2 more years. The ICL competes with laser procedures. At first investors thought this would be a huge market but the conventional wisdom now is that these ICLs will be used more for severe vision correction, which lasers are unable address since there is only so much of the cornea that can be cut. But, those with severe vision correction needs will be highly motivated to get an ICL since they can go from being legally blind to having 20/20 vision in a 4-minute procedure. The market for ICLs, even if all they ever get is only the severe vision correction patients, will still be a sizable market for STAAR.
The controversy over the company has been management has not taken advantage of their opportunities. My view is that STAAR has outstanding technology that has been developed by current management but they will need some real marketing muscle to take full advantage of it. The eye care market has several large companies with marketing muscle that could really benefit from STAAR's technology. I believe it is just a matter of time before STAAR is bought out. A $15 offer was rejected last fall. I believe someone like an Allergan, Alcon, Pharmacia/Upjohn, or Johnson & Johnson are the most logical candidates to buy STAAR which I believe will be in the $20-$30 range within 12 months.
Oppenhiemer recommended STAAR with a 30 page report a few months back. I don't think they would have spent the time writing the report on a relatively small company like STAAR unless there was investment banking involved.
And, yes there has been a number of insider buys recently. I also heard that Bloomberg which has more current insider updates has buys from other board members as well. |
