The writing was on the wall at Sientra. On Nov. 12, the company’s top executives took the fall.
The embattled Goleta-based breast implant manufacturer cleaned house Thursday afternoon. Sientra founder and CEO Hani Zeini stepped down as CEO and he will be replaced by industry veteran Jeffrey Nugent. Nicholas Simon also resigned as chairman and Joel Smith resigned as general counsel, chief compliance officer and corporate secretary.
Sientra will now hope Nugent — a former CEO of Biolase, Precision Dermatology, Revlon and Neutrogena — can lead the company to a brighter future.
“I am honored to take on the role of CEO during this important time for our company. While we must address the challenges facing the company, Sientra remains a great business. We have a strong brand value proposition, a base of loyal surgeons and unique and differentiated products,” Nugent said. “Our immediate priority is to resolve the outstanding regulatory questions, maximize our existing inventory and ensure a stable manufacturing process moving forward. I am committed to developing and executing a comprehensive plan to drive shareholder value and provide our surgeons and patients with Sientra’s high-quality breast implants as soon as possible. I look forward to working with Hani and the rest of the leadership team to position Sientra for future success.”
Troubles for the company started on Sept. 23 when Sientra held a follow-on public offering and priced shares for $22 each. Nearly simultaneously, the British Medicines and Healthcare Products Regulatory Agency announced that it suspended sales of implants made by Sientra’s Brazilian contract manufacturer, Silimed.
Shareholders could only watch helplessly as shares plummeted 52 percent from $20.58 on Sept. 23 to $9.70 the next day. Since then shares have continued to sink faster than the Titanic, only occasionally coming up for short periods during recent weeks. Shares closed Nov. 12 down 5 cents at $3.88 per share.
During inspections of Silimed’s factory before Sept. 23, European regulators found breast, calf, pectoral and other implants contaminated by particles of silica and cotton. Zeini, the Food and Drug Administration and European regulators said the particles did not pose a threat to patient safety, but said implants made by Silimed should remain off the market until further testing was completed.
Sientra voluntarily pulled its products from the market on Oct. 9 and said it was continuing to work with the FDA to resolve the matter.
On Oct. 22, the story turned bizarre. A fire broke out in the larger of two buildings at Silimed’s factory in Rio de Janeiro. The blaze engulfed the building and amateur video at the scene showed thick black clouds billowing from the building.
After news broke of the sales suspension in Europe on Sept. 23, Zeini tried to be proactive.
“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 a letter to plastic surgeons on Sept. 24.
Zeini issued another letter to plastic surgeons when Sientra pulled its breast implants from the market on Oct. 9 that again reassured plastic surgeons and patients that the products were safe.
“Out of an abundance of caution, we are voluntarily recommending that you temporarily discontinue implanting all Sientra devices manufactured by Silimed,” Zeini said in that letter. “No reports of adverse events and no risks to patient health have been identified in connection with implanting these Silimed manufactured products.”
Zeini said on Oct. 28 that production of Sientra breast implants could resume at a different building on the same site, but it would require extensive renovations to a much smaller building.
In a conference call with analysts and investors though on Oct. 28, he ducked several questions from analysts about the company’s financial standing, and was standoffish at times.
“I can always count on you to keep asking the same questions but as I indicated on this call, we’re not going to give guidance, we’re not going to discuss long term guidance, future guidance, and 2016 guidance, as we have done in the past. When the appropriate time arrives, we’re fully transparent and we’ll do so accordingly,” Zeini said on the call.
It turns out that time will be on Monday. Sientra announced for the first time on Thursday its third quarter earnings call would happen at 1:30 p.m. Monday, but will be without Zeini.
It’s still unclear today if Zeini, Simon and Smith were forced out unwillingly by the board, or if they voluntarily resigned their posts. Simon and Zeini will continue to serve on the board of directors. Zeini will also serve as a consultant for the company.
A news release thanked the company’s founder for starting the company.
“We are grateful for Hani’s vision and unwavering dedication to Sientra since its founding,” Simon said in a news release. “Hani’s commitment to Sientra has been, and will continue to be, a key driver of Sientra’s success. We look forward to his continued guidance and support as a member of the board and believe Hani will ensure a smooth transition through his role as a consultant.”
• Contact Philip Joens at [email protected].