Matrixx Initiatives plans to introduce more products delivered via the swab platform used in one of the Zicam nasal products that FDA advised the firm to recall in 2009.

Matrixx President Bill Hemelt said the swab platform could present opportunities "in a whole variety of areas beyond cold and flu" products the firm already markets in oral- and nasal-delivery forms, including an allergy relief nasal swab.

"We have 10 years of patent protection on that particular device and we know consumers love it. We want to find other ways of applying that," Hemelt said during a March 17 presentation at the Roth Capital Partners OC Growth Stock Conference.

While saying the firm would innovate and launch products to promote growth, Hemelt emphasized that re-launching the recalled Zicam gel swab would help the firm's growth outlook.

The Scottsdale, Ariz.-based homeopathic product manufacturer withdrew its two zinc-containing intranasal cold remedies - a nasal gel and a gel swab - after FDA sent a warning letter to the firm in June 2009 concerning adverse event reports that showed a potential link to anosmia, the loss of the sense of smell. The agency also warned consumers of the risk potential (¹ Also see "Zicam Case Shows FDA Takes Defining Adverse Events Seriously" - Pink Sheet, 22 June, 2009.).

The products made up 40 percent of the firm's annual sales, with the swab outselling the gel two to one.

FDA advised Matrixx that the products would no longer be subject to a homeopathic monograph, stating that the products are unapproved new drugs because they are not generally recognized as safe and effective and label claims refer to reducing cold symptoms.

The firm would need to submit and gain approval of a new drug application before returning the products to market.

While the agency twice has denied Matrixx's request to withdraw the warning letter, the firm has filed a Freedom of Information Act request to obtain the agency's records relating to the recall (² Also see "Odds Are Stacked Against Matrixx In Bid To Rescind Zicam Warning Letter" - Pink Sheet, 15 March, 2010.).

Hemelt reiterated the firm's acknowledgement that the NDA process would be difficult, but he added that Matrixx has not ruled out the option.

"It is certainly something we will consider and evaluate," he added.

"It would be time-consuming, but clearly that swab device - if I could get that back - I would pay a lot of money to get it back."

Cold Remedy Plus Line Hits Shelves In Fall

While considering an NDA and looking at extending use of its swab platform, Matrixx recently announced a Zicam line extension, Cold Remedy Plus oral products, according to the firm's Web site.

A spokeswoman said the products, which will hit store shelves in September or October 2010, are "the next generation of cold remedy products that continue to reduce the duration of a cold when taken at the first sign and helps relieve some symptoms associated with a cold," she said in an e-mail.

Innovation Or Brand Promise?

Gene Grabowski, senior VP and head of the crisis and litigation practice at Levick Strategic Communications, said Matrixx's planned move to more swab products "makes sense."

Grabowski noted the swab product's popularity, and added that Matrixx should continue trying to return the recalled intranasal swab to the market.

"It is smart to be aggressive in developing new swab products given that was a leading product," he said.

However, Karen Kreamer of K2 Brand Management Consulting said the delivery system is less important than the product's benefit. She said the firm should focus less on the delivery system and more on the benefit of the product.

Kreamer explained that brand recovery is not easy and noted Toyota's ongoing recall crisis, pointing out the Zicam recall is minor in comparison.

"With safety issues resolved, Zicam can look forward to regaining brand strength by following a basic rule of brand management - be true to your core brand promise," Kreamer said in an e-mail.

Zicam's core promise is cold prevention, she noted.

"They can credibly expand this brand promise to 'prevention' by focusing on helping consumers reduce the severity of colds and allergies. This is what makes the Zicam brand unique from its competitors," Kreamer said.

She said while innovation and product launches are good goals, the products must deliver the core promise "to help consumers prevent, or limit the duration, of colds and seasonal allergies."

Matrixx Optimistic About 2011 Growth

Hemelt pointed out Matrixx has not lost retail shelf space or retailers' support due to the recall. He said the firm's market research showed consumer awareness of FDA's warning dissipated relatively soon after the Zicam recall and did not seem to impact the opinions of those who were already using Zicam products.

Matrixx expects to grow the Zicam brand 5 percent to 10 percent in its fiscal 2011, which begins in April 2010.

Matrixx "will continue to come up with new products," in terms of the "cold remedy group, and we will focus even more attention on the allergy-sinus group," Hemelt said.

Hemelt said the firm will continue to focus on its commitment to its retail customers. He said Matrixx will prioritize increasing the amount of SKUs and placement, as well as adding promotions and secondary placement.

Hemelt also said the firm successfully moved users from its recalled intranasal products to its oral remedies.

He explained that oral cold remedy consumer consumption increased 10 percent in the 52 weeks that ended Feb. 21, but an obstacle for growing the Zicam brand is store-brand products, Matrixx's "greatest competitor."

But "innovation helps offset store brand encroachment," according to his presentation.

Other goals for 2011 include increasing operating margins, having a positive cash flow, and completing legal activities, which have increased due to a rise in lawsuits following FDA's action, Hemelt said.

- Katie Stevenson ( ³ k.stevenson@elsevier.com )

Zicam Swab Platform Takes Center Stage In Matrixx Growth Plans

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