plunged after it said a nonprescription drugs advisory committee commissioned by the
Food and Drug Administration
determined that the active ingredient in the company's Dexatrim brand isn't safe for use as an appetite suppressant.
Shares of Chattem were recently down $2, or 30.2%, to $4.75 in
The committee made the same recommendation for the use of phenylpropanolamine, or PPA, in decongestants, which affects certain formulations of brands including Contac, Dimetapp, Robitussin and Triaminic.
The committee based its findings on a study by Yale University that found an association between PPA use and hemorrhagic stroke. But Chattem argued that only six out of 706 stroke cases enrolled had used appetite suppressants. The committee's recommendation now goes to the FDA for consideration.
The company also said that an independent panel of leading epidemiology experts, commissioned by the Consumer Healthcare Products Association, reviewed the study's results and determined its results were inconclusive because of the small number of reported cases and other intervening factors.
Chattem expected Dexatrim with PPA to contribute about $8 million in earnings before interest, taxes, depreciation and amortization, and 40 cents to 50 cents a share in fiscal 2001 earnings. The company previously projected 2001 sales of $205 million to $220 million, EBITDA of $47 million to $50 million and EPS of $1.00 to $1.20.
Dexatrim's sales in the year ending Nov. 30 will be about $30 million, with about $10 million from Dexatrim Natural, which doesn't contain PPA. The company also announced plans to launch Dexatrim Natural Ephedrine-Free on Jan. 1, together with a new 90-count bottle of both forms of Dexatrim Natural.
The company plans to work with the FDA on the next steps of the PPA study, which it said could include the reformulation or discontinuation of Dexatrim with PPA.