As the world, or at least the U.S., knows by now, the FDA warned consumers earlier this week that Zicam nasal sprays and swabs may cause permanent loss of smell and taste.

And consumers spoke out. A lot.

But what about Matrixx Initiatives (MTXX), the company that makes Zicam? After the warning letter from the FDA, the company voluntarily recalled all their nasal Zicam products. MTXX stock ended up taking a massive hit and plummeted more than 70% after the warning and recall.

On Wednesday, however, MTXX CFO, COO and Acting President Bell Hemelt went on CNBC and lashed out at the FDA, calling the action “unprecedented.”

The next day, MTXX had a conference call for analysts, investors and media (which you can listen to right here). Initially, the company said they would not be answering questions, but then OK’ed questions in advance:

“Media are welcome to participate in this call. Questions will not be taken during the call…If you submit questions in advance to the contact below, the company will do its best to address those questions during the call.”

And during the call, Hemelt emphasized:

“We are hopeful that if we can tell our story to the FDA that perhaps we can get them to change their mind. And that would be the ideal situation. And we are certainly hoping for that outcome, but we are moving ahead as if that may not happen.”

And what about the FDA? Siobhan DeLancey, a spokesperson for the FDA was pretty strict and clear about the concerns:

“They are to stop marketing the products. They have to provide us with a plan for inventory that’s already out there. If they want to continue marketing this product, they need to bring us a new drug application with studies and data to prove safety and efficacy. All recalls are voluntary by the company. Generally, we tell the company we have a concern and they usually work with us and do a voluntary recall.”

But analyst Scott Henry from Roth Capital Partners made everyone’s thoughts manifest:

“In my 12 years covering this industry, I’ve yet to see such an arbitrary decision at the FDA. I see very little wiggle room…’MTXX needs to go back to square one, do a full-blown study and go through the formal drug approval process.’”

Hemelt admits that the company’s $40M in cash would not go very far to conduct a study of the magnitude (herpes indication?) needed to get a full-blown NDA approval…

MTXX sounds like they’re fuming:

“The company believes the FDA action is unwarranted and is in the process of determining its response, which may include removing these products from the marketplace. These products constituted approximately 40 percent of the company’s net sales in 2009.”

These guys must be PO’ed, big time, and claim the recall itself could cost upwards of $10M. But guess what? We found an interesting Zicam website from 2004 that we’ll share with you…stay tuned!

Anonymous Tip? Comments? Contact us: hr AT iguanabio DOT com

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