Recall Hits Advanced Medical Shares

Advanced Medical Optics(EYE Quote) slid 13.2% Tuesday morning after a voluntary recall on contact lens solution officials linked to a dangerous eye infection.

The Santa Ana, Calif., company recalled Complete MoisturePlus Multi Purpose Solution at the start of the holiday weekend after the Centers for Disease Control and Prevention found a link between the solution and a rare cornea infection, Acanthamoeba keratitis. The infection is caused by a parasite commonly found in water, soil, sewage systems, cooling towers and HVAC systems, and it can lead to vision loss and even the need for a corneal transplant.

The CDC determined that the risk of developing AK was at least seven times greater for those consumers who used Complete MoisturePlus solution versus those who did not. The affliction typically affects about two out of every one million contact-lens users in the U.S. each year.

Advanced Medical Optics said there is no evidence to suggest that the recall is related to a manufacturing or contamination issue and that it doesn't impact any of the company's other lens-care products. In a conference call Tuesday morning, company CEO James Mazzo said that AK is a result of improper handling and users not following their eye practitioner's advice.

The company's chief financial officer, Randy Meier, said Advanced Medical Optics will have an update for investors early next week regarding the product, which accounted for roughly 10% of the company's consolidated 2006 sales.

Just last week Advanced Medical announced it was exploring a possible purchase of rival Bausch & Lomb(BOL Quote), which only the week before agreed to be purchased for $65 a share, or $3.7 billion, by Warburg Pincus. In disclosing its plans Thursday, Advanced Medical said it would consider offering a superior bid to the Warburg Pincus offer, which Advanced medical said "undervalues" Bausch & Lomb.

Advanced Medical's shares were down $5.24 to $34.95 in recent trading Tuesday, after having opened after the long holiday weekend at $34.37 on a gap down from Friday's close of $40.20.

Shares of Bausch & Lomb were recently sinking $2.57, or 3.7%, to $67.92.