Sientra settles public offering lawsuits for $10.9 million
Goleta-based breast implant manufacturer Sientra announced a $10.9 million settlement Oct. 28 in two lawsuits that shareholders filed over the timing of the second public offering the company held in September 2015.
Sientra announced in a news release that the company will pay $10.9 million to six parties in cases in federal court in Los Angeles and state court in San Mateo County. Of that, Sientra will pay just $1.6 million while the company’s Directors and Officers Liability Insurance policy will pay the other $9.3 million.
On Sept. 23, 2015, the British Medicines and Healthcare Products Regulatory Agency suspended sales of Sientra’s contract manufacturer Silimed in Europe. Regulators in Australia and other parts of the world quickly followed suit and suspended sales of Silimed products.
European regulators said Silimed’s factory in Rio de Janeiro was contaminated by microscopic particles of silica and cotton. Though the suspension by European regulators did not affect Sientra’s approval in the U.S., Sientra voluntarily pulled its products from plastic surgeons’ offices on Oct. 9.
Ultimately, regulators found particles just 20 nanometers in size. Surgeons told the Business Times that such extremely small particles would not threaten patients.
Sales of Sientra implants resumed March 1, using inventory previously made by Silimed, which was unable to manufacture implants because an Oct. 22, 2015 fire burned down its factory.
On Aug. 9, the company announced Wisconsin-based Berkshire Hathaway subsidiary Vesta will begin manufacturing its silicone breast implants in 2017. The company is also working to find a backup manufacturer.
In the news release, the company did not announce why it settled the cases. The settlement is also still subject to court approval. A written settlement agreement is expected to be submitted to both courts by Nov. 30.
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