Maker of Zicam to expand in N.J.
Scottsdale firm plans to keep local presence
by Ken Alltucker - Jun. 6, 2011 05:13 PM
The Arizona Republic
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The Scottsdale company that sells Zicam cold-and-flu products has established a new corporate office in New Jersey with plans to expand there.
After the Miami-based private-equity firm H.I.G. Capital closed a $75 million purchase of Matrixx Initiatives in February, the new owners installed a new chief executive officer, Dennis O'Donnell, and established a corporate office in Skillman, N.J.
O'Donnell replaced the company's former CEO, William Hemelt.
O'Donnell, a former Wyeth manager and executive of four other pharmaceutical companies, said Friday that the company plans to maintain an Arizona office as it seeks to grow with new products and brands.
"Ultimately, we will probably continue to have a presence in Arizona," O'Donnell said. "We'll keep an R and D (research and development) team and an accounting team in Arizona."
O'Donnell declined to say how many employees are in New Jersey or how many remain in Scottsdale.
As of last June, Matrixx employed 25 people in Scottsdale and another four sales representatives who lived out of state, company filings show.
Despite a small staff, Matrixx gained national attention through its Zicam cold-and-flu products, sold over the counter at Walmart, Target, grocery stores and chain drugstores.
The company faced lawsuits from hundreds of consumers who alleged that a spray-gel version of zinc-based Zicam caused loss of smell, prompting the Food and Drug Administration in June 2009 to issue a safety-warning letter that led to a product recall. Other Zicam products such as syrups, tablets and liquids were not impacted by the recall, but the spray gel was the company's top-selling product.
Matrixx also made news when it argued a case before the U.S. Supreme Court this year. The high court rejected the company's argument that it did not have to disclose complaints of smell loss to investors because those cases were not statistically significant.
And last week, the inventor of the Zicam cold-and-flu remedy was arrested in Southern California on charges that he illegally marketed an unapproved bird-flu drug.
Charles B. Hensley, who is no longer involved with Matrixx, touted a drug, Vira 38, as a cure for bird flu even though it was not approved by the FDA.
A federal grand jury in Los Angeles indicted Hensley on 12 counts stemming from sales of the unapproved drug to consumers.
Hensley's attorney, Richard Jaffe of Houston, said the products did not harm consumers, adding the dispute is better-suited for regulatory enforcement rather than criminal court. Jaffe said the FDA sent letters to one dozen manufacturers of bird-flu remedies about five years ago, but Hensley was the only person indicted in connection with the investigation.
"I guess he hit the lottery," Jaffe said.
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