Matrixx Defends Zicam, but Still Recalls It

Updated from 12:46 p.m. EDT

Matrixx Initiatives(MTXX) will take its Zicam line of nasal cold and allergy treatments off the market, complying with a Food and Drug Administration warning, but the company remains adamant that its products are safe.

On Tuesday, the FDA told consumers to stop using the swabs and sprays, citing reports that the zinc-based products caused a loss of the sense of smell "that may be long lasting or permanent."

Matrixx shares rebounded slightly Wednesday, inching up 35 cents to $6.13 after the previous session's decimation, when they lost almost 70% of their value.

Investors understandably punished the stock; the Zicam nasal products under scrutiny reportedly account for 40% of the company's revenue. For the 12-months that ended March 31, Matrixx had revenue of almost $112 million.

Though the FDA doesn't have legal authority to issue a recall, the agency's letter of warning to Matrixx on Tuesday serves, essentially, a de facto one. Should Matrixx have chosen not to shut down manufacturing of the product in question and remove it from retail stores, the FDA could have siezed company assets, in effect padlocking the doors.

Because Zicam is an herbal remedy, or "supplement," the product did not go through the rigorous approval testing the FDA applies to pharmaceuticals and other medical therapies.

It's been known for years -- perhaps even as long as a decade -- that such side effects have occurred in some people who have used the Zicam nasal remedies. (The FDA warning did not include oral remedies and lozenges, also marketed under the Zicam name.)