To: DanZ who wrote (4990 ) 1/31/2004 5:02:01 PM From: StockDung Respond to of 5582 =DJ : FDA Looks Into Complaints About Zicam By Carol S. Remond A Dow Jones Newswires Column NEW YORK (Dow Jones)--The Food and Drug Administration is looking into complaints that an over-the-counter common-cold medicine manufactured by a unit of Matrixx Initiatives Inc. (MTXX) may be causing some users to lose their sense of smell. The FDA's interest follows at least three lawsuits filed by individuals against Matrixx and Zicam LLC, a wholly-owned subsidiary, by users of Zicam Cold Remedy, a nasal spray designed to deliver a zinc gel into the nasal opening. A spokesman for Matrixx declined to comment on the lawsuits. Matrixx has not disclosed the lawsuits or that the FDA is looking into complaints that users of Zicam Cold Remedy lost their sense of smell, a condition called anosmia. None of the lawsuits specify damages being sought. A spokeswoman for the FDA said the agency "is aware of problems (that) people are reporting" and is investigating the complaints. The FDA spokeswoman would not say how many complaints were received. The spokeswoman said generally any investigation like this would involve contacting the complainants and the company manufacturing the product. Matrixx Chief Financial Officer William Hemelt said that Zicam Cold Remedy, one of 10 Zicam products, accounted for about 60% of Matrixx' revenues last year. Hemelt declined to comment on the lawsuits and said that the company's policy is to disclose lawsuits that "are considered material to the company or outside ordinary course of business." Hemelt also declined to comment on the fact that the FDA is looking into complaints relating to one of the company's products. "Our policy is not to comment on any discussion or communication with any regulatory authorities," Hemelt said. Matrixx' filings with the Securities and Exchange Commission show that Zicam products "are subject to regulation by the FDA, including regulations with respect to labeling of products, approval of ingredients in products, claims made regarding the products, and disclosure of product ingredients." According to some studies, the intake of zinc, either orally or through the nasal passage, may help combat cold symptoms. However, other studies, conducted on animals, have found that high concentration of Zinc injected through the nose may cause anosmia. In information provided to Dow Jones, Matrixx acknowledges that some studies have "attempted to link nasal products containing Zinc to the onset of anosmia." But the company argues that this research is based on products containing zinc sulfate, and not zinc gluconate, the solution contained in Zicam Cold Remedy. Matrixx argues that "zinc gluconate has properties that are significantly different from those of zinc sulfate." Some medical experts seem to disagree with Matrixx' views, however. Robert Henkin of the Taste and Smell Clinic in Washington, D.C., says that there is not much difference between the two zinc compounds. According to Henkin, when it comes to the injection of zinc through the nose, it's not about compound but rather about concentration. "When delivered in a spray, it's possible to have a high enough concentration of zinc to injure the olfactory epithelium," Henkin said. Henkin cautioned that high concentration of zinc injected through the nose is only one of the many reasons why cold sufferers may lose their sense of smell. "It's clear that it could be related, but there could be other things as well, including the viral infection itself." In a presentation to the American Rhinologic Society last September in Orlando, Dr. Bruce Jafek, Dr. Miriam Linschoten and Dr. Bruce Murrow from the Department of Otolaryngology at the University of Colorado School of Medicine, cautioned against the use of zinc spray. "Zinc ions remain toxic to human olfactory epithelium and continued reports of total, probably irreversible, anosmia, can be expected as long as intranasal zinc gluconate gel (Zicam) continues to be used," according to a summary of the presentation included in a program for the conference. Jafek wasn't available for comment. The first suit against Matrixx was filed last October in the U.S. District Court, Western District of Michigan. In that complaint, Dennis Christensen says that he felt an immediate and intense "stinging and/or burning sensation in his nose" after using Zicam Cold Remedy. "Since this one and only use of Zicam Cold Remedy Nasal Spray, plaintiff Dennis Christensen has totally lost his sense of smell," according to the complaint. In its answer filed Jan. 9, Matrixx said it lacked sufficient information to answer the complaint. Matrixx said Zicam is a drug that has met all of the FDA's "requirements to lawfully market an over the counter homeopathic drug in interstate commerce in the U.S." A second lawsuit was filed in the Circuit Court of Etowah County in Alabama on Dec. 18. That suit filed by Janie Sutherland also names Wal-Mart Stores Inc. (WMT) as a defendant. In an answer filed on Jan. 22, Matrixx denied allegations made in the complaint. Wal-Mart also denied the charges. A spokeswoman for Wal-Mart declined to comment about the lawsuit. A third lawsuit was filed last week in the Superior Court of the State of Arizona in Maricopa County. In that suit, three plaintiffs allege that they lost their sense of smell and taste immediately after using Zicam Cold Remedy. Matrixx' CFO Hemelt declined to comment on whether a recent drop in the price of the company's shares was related to the lawsuits. Matrixx' stock reached a 52-week high of $20.89 a share on Jan. 8, a day after the company said it expected total revenues for its fiscal year 2003 to grow 80% compared to 2002. Matrixx said it expected fully diluted earnings per share to be between 33 cents and 38 cents. Matrixx's stock closed at $13.55 a share Friday, down a penny. (Carol S. Remond is one of four "In The Money" columnists who take a sophisticated look at the value of companies and their securities and explore unique trading strategies.) -By Carol S. Remond; Dow Jones Newswires; 201 938 2074; carol.remond@dowjones.com (END) Dow Jones Newswires January 30, 2004 17:01 ET (22:01 GMT)