Investor Class Action Launched Over Zicam Side Effects

Scottsdale, AZFor investors in Matrixx, something allegedly stinks—and it has everything to do with Zicam smell loss and other Zicam side effects. Beyond the Zicam loss of smell that lay at the root of the June recall of the cold remedy, shareholders in Matrixx Initiatives Inc. are alleging misrepresentation at the investor level.

According to the Associated Press (AP), the US Food and Drug Administration (FDA) issued a health alert earlier this summer with regard to the zinc contained in Zicam potentially impacting an individual's sense of smell either temporarily, or permanently.

Matrixx, the manufacturer of Zicam, initiated a voluntary recall of the product June 24th.

Now, a Matrixx investor has filed a proposed securities class action lawsuit against the manufacturer on behalf of investors who purchased stock in Matrixx between December 22, 2007 and June 15th of this year.

According to a press release issued by Shareholders Foundation, the plaintiff cites the manufacturer for failure to disclose material adverse facts pertaining to the company's operational well-being and future prospects. In so doing, the complaint alleges, Matrixx violated federal laws governing securities.

According to the complaint, the FDA issued a health alert June 13th with regard to certain Zicam products.

Three days later, according to the plaintiff, Matrixx revealed that it had received a warning letter from the FDA asserting that Matrixx was in violation of regulations by failing to file a new drug application for Zicam Cold Remedy Nasal Gel and Zicam Cold Remedy Gel Swabs. The FDA also asserted that the aforementioned products were misbranded under FDA regulations by failing to adequately warn of risks. The FDA also took issue with some of the company's marketing practices.

The FDA warning letter said Matrixx appeared to have more than 800 adverse reaction reports. The FDA directed the company to submit all reports to the FDA and to "indicate which of these reports have been previously submitted…"

Various class action and personal injury lawsuits have been filed and the company told AP that it expects more.

In tandem with these troubles Matrixx stock value has tumbled from a 52-week high of $19.74 per share, to $6.05 per share at the close of trading July 6th. AP reports the stock has traded as low as $4.39 and as high as $21.50 in 2007.

The proposed securities lawsuit was filed in US District Court for the District of Arizona. Matrixx, meanwhile, stands behind its product.