Why is Neogen Stock Trading Lower on Tuesday?

The U.S. Food and Drug Administration (FDA) issued a formal warning letter to Mike Nassif, president and CEO of Neogen Corp (NASDAQ:NEOG), related to Neogen Vet’s HYCOAT (Hyaluronate Sodium Sterile Solution). The letter linked severe microbiological contamination in its HYCOAT hyaluronate sodium sterile solution to widespread horse deaths. According to official regulatory findings, the incident represents the largest number of equine fatalities ever associated with a product quality defect in any sterile FDA-regulated veterinary medical product. • Neogen stock is taking a hit today. What’s weighing on NEOG shares? Fungal Contamination Linked to Animal Fatalities Federal investigators evaluated more than 95 individual clinical cases following severe adverse events reported in horses across multiple states. FDA laboratory testing of HYCOAT lot 5A001 confirmed the presence of viable fungal species. Although marketed as a sterile solution, the contaminated product caused severe health issues, including tissue necrosis, surgical wound dehiscence, systemic sepsis and painful joint infections resulting in euthanasia. Read Also: Zoetis' Acquisition of Neogen Genomics Business Faces Regulatory Scrutiny in Australia Unsanitary Contract Manufacturing Conditions A federal inspection of the contract manufacturing facility revealed widespread insanitary production conditions. Regulators documented inadequate environmental cleaning lacking sporicidal agents, unmonitored cleanroom air quality, absent environmental and personnel sampling and unsterile employee gowning. The cleanroom, constructed inside a warehouse facility, suffered from structural disrepair and lacked differential pressure monitoring as well as essential airflow smoke studies demonstrating proper air movement. Critical Misbranding and Labeling Violations Regulators officially classified HYCOAT as both adulterated and misbranded under the Federal Food, Drug and Cosmetic Act. The product labeling failed to include necessary warnings regarding frequent off-label joint injections and lacked adequate directions for laypersons managing complex medical conditions like surgical wounds or autograft procedures. Furthermore, packaging omitted required statement language restricting product administration strictly to licensed veterinarians. Regulatory Response and Compliance Timeline Following a voluntary recall of HYCOAT lots 4L001, 4L002, and 5A001 on Jan. 28, federal officials emphasized that product distributors retain ultimate legal responsibility for quality oversight. Neogen Vet must submit a comprehensive written response outlining corrective actions within 15 working days to avoid potential legal action or further regulatory enforcement measures. NEOG Price Action: Neogen shares were down 4.85% to $13.06 at the time of publication on Tuesday, according to Benzinga Pro data. Image by MacroEcon via Shutterstock Read Also: 'Beyond Spring and Fall': Apple Prepares Organization Restructure for Accelerating Product Launches