Cold Reality:A conspiracy? Or is there no cure after all for common cases of the
sniffles?
By Bill Alpert
06/29/1998
Barron's
Page 22
(Copyright (c) 1998, Dow Jones & Company, Inc.)
Corrections & Amplifications
The June 29 "Cold Comfort" article mentioned a Quigley conference call
containing a testimonial from a speaker identified as "with Individual
Investor magazine." That identification -- made by the conference call host
-- was incorrect, according to Individual Investor, which says no employees
were on the Quigley call. (Barron's July 6, 1998)
Quigley 's zinc lozenges were the "first and only product clinically proven"
to stop a cold. Until last week. That's when the Journal of the American
Medical Association reported a study showing the lozenges had no effect on
common colds in almost 250 children and teens. The conclusions were
surprising, coming as they did from the same Cleveland Clinic Foundation
researchers who'd held up a bag of Quigley Cold-Eeze two years ago and said
the product had more than halved the time the average adult spent in a
cold's clutches.
That first study (Barron's, January 13, 1997) made the fortune of the
obscure Nasdaq-traded firm's CEO and founder, Guy J. Quigley . Before the
July '96 appearance of the peer-reviewed report, Quigley had never made a
dime's profit hawking zinc from a converted church in Doylestown,
Pennsylvania.
But with the Cleveland Clinic findings, drugstores couldn't meet demand for
the cold aid that ABC's 20/20 medical correspondent called "the only one
that works." Howard Stern and Rush Limbaugh announced themselves Quigley
suckers. They were in good company. Little Quigley 's sales surged to $70
million in 1997, with earnings of $1.43 a share, and its shares catapulted
from pennies to $23, adjusted for splits.
Quigley 's founder became a rich guy -- with stock, options and warrants
worth over $75 million, not to mention 1997 compensation of $3 million in
hard cash. The Wall Street hoopla unleashed by the '96 report also enriched
the Cleveland Clinic researchers, a pediatrician and an epidemiologist who
received Quigley stock during their analysis of the data from the study.
Beginning in October 1997, however, Quigley shares began to sputter. To
blame, perhaps, were 1997's June- and September-quarter sales that trailed
the March quarter's $22 million blowout. Maybe it was saber-rattling by
Warner-Lambert, which promised a line of Hall's Zinc Defense lozenges for
the winter of 1997-98. Or maybe it was El Nino.
Whatever the cause, Quigley 's stock fell to around $10 a share by this past
April, when the company warned that March '98 sales would come in at only
$7.2 million, versus $22 million a year earlier. Guy Quigley took just pride
in outselling Hall's and dozens of other zinc copycats, but added that a
warm winter and mild cold season had hurt ColdEeze.
Far heavier was last week's blow -- the study of zinc lozenges on 249
schoolchildren with colds. The authors included Dr. Michael L. Macknin, the
pediatrician who published the Cleveland Clinic's first report, and Dr.
Ellen R. Wald, a University of Pittsburgh investigator renowned for her
studies of childhood infections.
Over the winter of '96 and '97, the researchers enrolled children within a
day after the youngsters showed cold symptoms and randomly assigned them to
receive up to six daily doses of either a placebo or Quigley lozenges.
In contrast to the 1996 study, which found a 42% abbreviation of colds in
zinc-treated patients, the new study found no meaningful difference between
zinc and placebo groups, in terms of time spent sniffling and coughing. In
both the zinc and the placebo groups, half the children were free of their
cold symptoms in about nine days.
There were differences in the studies. For one thing, the lozenges in the
children's test contained 10 milligrams of zinc, versus 13.3 in the adult
study and in commercial Cold-Eeze. But considering the smaller size of
children's' bodies, the zinc exposure was about the same.
Seasonal differences in virus strains also might have figured in the
results. And obviously, the age groups in the studies weren't the same.
No single medical study is definitive, and an editorial accompanying the
JAMA report looked forward to others, of children and adolescents. But the
JAMA senior editor who supervised the report, Dr. Phil Fontanarosa, says the
design and analysis of the children's study showed unusual care.
To better ensure that the kids actually took their zinc, for example, school
nurses administered three of each day's doses. "It's almost a directly
observed study," says Fontanarosa. "Normally, you just give a person a pill
bottle and count the pills when they bring it back."
However, in two press releases Quigley called the study "bad science" and
alleged 129 violations of the agreed-upon protocol. Kids swallowed other
kids' lozenges, said the company; children with no cold at all -- or with
strep throat, asthma or flu -- were allowed in the trial. All told, claimed
Quigley , 83 of the 249 participants shouldn't have been considered.
In a conference call with investors, a furious Guy Quigley said the firm's
lawyers had brought his concerns to the AMA Journal at least two months
before publication and the publication told them to "get lost." He said he
couldn't understand why the Cleveland Clinic's independent review board had
approved the study's protocol.
Indeed, he hinted darkly that the article was part of some sort of
conspiracy against his corporation, led by shortsellers and competitors. "We
really have had an awful lot of pressure," Quigley asserted, "from some
exceptionally large pharmaceutical companies that our product seems to be
hurting."
Why would the Cleveland Clinic set out to debunk zinc? With a telephonic
flourish, Quigley disclosed that on September 25, 1996, he had received a
draft proposal from the famous institution seeking a royalty on Cold-Eeze
sales in compensation for the work leading to the original 1996 Annals of
Medicine report that zinc worked. "We refused," said Quigley , "which leads
us to wonder why this threering circus is going on."
Macknin, who the JAMA article said still owns 20,000 Quigley shares, isn't
talking. Dr. John Clough, the Cleveland Clinic Foundation's spokesman, says
he's not sure who initiated royalty discussions. But the clinic never would
have approved such an agreement, he insists.
As for Quigley 's dissatisfaction, Clough says that shortly after the
children's study had begun, the company requested changes to the protocol.
Researchers from the Cleveland Clinic successfully argued for finishing the
study already under way.
Through the rest of the study and even during Quigley representatives'
visits to Cleveland, says Clough, the company made no further complaints --
until the study's results became clear, that is.
"The clinic would have been very happy to see this be a positive trial,"
says the spokesman. "But it's not a question of how you wanted it to come
out; it's how it came out, and that's what got reported."
JAMA never discussed Quigley 's concerns with the firm, says editor Phil
Fontanarosa, because the journal discusses unpublished papers only with
authors and reviewers. But he says Quigley 's pre-publication complaints
were taken "very, very seriously."
Quigley 's criticism prompted added review of the study by experts outside
the Clinic, says Cleveland's Clough. As a result, the report analyzed
separately the set of students who adhered closest to the protocol. Still,
that group showed no association between zinc and cold duration.
A confident Quigley Corp. announced a 500,000-share stock buyback last week,
along with the intention of finding another center to properly study zinc.
And in his conference call, Guy Quigley talked happily of such new
initiatives as sugar-free lozenges and marketing through the popular Yahoo!
Internet site.
A scientific halo certainly doesn't matter to a lot of Quigley fans, who
filled the conference call with zinc testimonials; one came from a fellow
who said he worked for Individual Investor magazine.
Outside shareholders of Quigley impatiently wait to see if the next
common-cold season lifts the shares from their malaise. So do Guy Quigley
and the other officers and consultants who have registered for sale some 5.5
million shares' worth of options and warrants -- most exercisable at $2.50
or less. |
