Matrixx Begins FDA Response Process (MTXX)
Matrixx Initiatives, Inc. (Nasdaq: MTXX) has confirmed the receipt of the FDA Warning Letter today, and it is also making at least a first response to the issues. The FDA asserted that the Company is in violation of its regulations by failing to file a new drug application for its Zicam Cold Remedy Nasal Gel and Zicam Cold Remedy Gel Swabs and that those products are misbranded under their regulations for failing to adequately warn of risks. The FDA referred to numerous complaints it has received of anosmia associated with the use of these products.
In response, Matrixx believes these products are safe and do not cause anosmia. Its position is supported by the cumulative science that has been confirmed by a multi-disciplinary panel of scientists. Matrixx said that it believes the FDA action is unwarranted and the company is in the process of determining its response, which may include removing these products from the marketplace.
We had noted that the company gave a category of 71% of annual sales, but it further clarified this by stating that these products in that category actually constituted approximately 40% of net sales in 2009.
If there is one thing you can count on, it is that that this is probably the first of several back-and-forth volleys between the company and the FDA. It would be more than rare for this to be just a one-day event.
Meanwhile, shares lost more than half of their value before the stock was halted.
Jon C. Ogg
June 16, 2009
