The U.S. Food and Drug Administration has sent a formal warning letter to Mike Nassif, president and CEO of Neogen Corp (NEOG), and the subject is about as grim as regulatory correspondence gets: Neogen Vet's HYCOAT, a hyaluronate sodium sterile solution that was supposed to help horses and instead, according to the agency, killed a lot of them.

The letter links severe microbiological contamination in the product to widespread horse deaths. According to official regulatory findings, this incident represents the largest number of equine fatalities ever associated with a product quality defect in any sterile FDA-regulated veterinary medical product. That is a record nobody wants.

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.

Here's the ugly part. The product was marketed as sterile. Instead, the contaminated solution caused tissue necrosis, surgical wound dehiscence, systemic sepsis and painful joint infections that ultimately resulted in euthanasia. Horses that were supposed to be recovering from procedures ended up being put down.

Unsanitary Contract Manufacturing Conditions

A federal inspection of the contract manufacturing facility turned up widespread insanitary production conditions. Regulators documented inadequate environmental cleaning that lacked sporicidal agents, unmonitored cleanroom air quality, absent environmental and personnel sampling, and unsterile employee gowning.

The cleanroom itself, constructed inside a warehouse facility, suffered from structural disrepair. It also lacked differential pressure monitoring and essential airflow smoke studies that would demonstrate proper air movement. In other words, the setup for making a supposedly sterile injectable product was missing many of the things that make a cleanroom a cleanroom.

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. It also lacked adequate directions for laypersons managing complex medical conditions like surgical wounds or autograft procedures. And the 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. That's a polite way of saying the buck stops with Neogen, not just the contract manufacturer.

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 market data.