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Stockholders sue Goleta-based Sientra after shares slide

By   /   Friday, September 25th, 2015  /   Comments Off on Stockholders sue Goleta-based Sientra after shares slide

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Sientra’s shares nosedived more than 52 percent on Sept. 24 and several law firms around the country announced on Sept. 25 investigations into possible violations of federal securities laws.

On Sept. 23, the Goleta-based breast implant manufacturer sold 3 million new shares in a public offering. The offering raised $66 million for the company before underwriting expenses, commissions and offering expenses. New shares sold for $22 each, though the company closed that day at just $20.58 per share.

Shares plummeted Sept. 24 when the company disclosed that the United Kingdom Medicines and Healthcare Products Regulatory Agency suspended sales of its Silimed products. After the announcement, shares dropped more than 52 percent and closed at $9.70 per share on Sept. 24.

Shares sank as low as $9.53 per share at 11:10 a.m. on Sept. 25 before rebounding slightly to close at $10.09 per share.

Sientra bought the North American subsidiary of Brazilian implant manufacturer Silimed in 2007 for an undisclosed sum. It makes Sientra implants in Brazil. In a press release on Sept. 24, the U.K. agency said a recent inspection found silicone breast, pectoral, calf and other implants were “contaminated with particles.” Inspectors also found that bands and balloons used for gastric bypass surgery and other plastic surgery devices were contaminated.

“There has been no indication at this time that these issues would pose a threat to patient safety,” said John Wilkinson, Medicines and Healthcare Products Regulatory Agency director of devices. “We are urgently investigating this issue and are working closely with our European counterparts to decide whether there is any risk to health. In the meantime, we would recommend that people who have questions about their implants should seek advice from their implanting surgeon or clinic.”

In news releases from several of the law firms filing complaints, they allege that Sientra hid knowledge about the coming suspension of Silimed products in the U.K. until after the follow-on public offering took place and they seek to recover losses by their clients.

Sientra went public on Oct. 29, 2014. The company raised about $77 million after underwriting expenses when it sold 5.75 million shares for $15 each.

While it was a private company, Sientra raised $151 million in venture capital. Founded in 2007, in 2012 it became just the third company to get approval from the U.S. Food and Drug Administration to sell silicone breast implants.

Sientra founder and CEO Hani Zeini sent a letter to plastic surgeons on Sept. 24 and told them in bold lettering that regulators found they pose no threat to patient safety. Silimed’s product status in the U.K. does not appear to have impacted Sientra products’ status in the U.S. yet.

“Our products are FDA-regulated. Sientra’s breast implants and our other products continue to be marketed and available in the United States and there has been no change to the regulatory status of Sientra’s FDA-approved breast implants,” Zeini said in the letter.

“We are confident in the safety of our products, and you can reassure your patients as needed by telling them that there has been no indication that these issues would pose a threat to their safety. In light of this news, we will of course conduct our own review to ensure continued compliance with our own high internal standards.”

Correction: This story originally stated that Sientra purchased Silimed, a Brazilian firm. Sientra purchased Silimed’s North American subsidiary. The Brazilian parent company continues to operate independently.

• Contact Philip [email protected]@pacbiztimes.com.

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