Lifecore Stock Falls After Gel PulledMar 28, 2003 | AP Shares of Lifecore Biomedical Inc. fell nearly 40 percent in early trading Friday after the company suspended sales of its gynecological surgical gel which accounts for about 10 percent of its sales.
The Chaska-based company said late Thursday that the worldwide distributor of Intergel, Johnson & Johnson, wanted the product pulled while it studied some possible side effects, especially in off-label uses.
Lifecore Chief Executive Jim Bracke wouldn't comment on how long the review process might take, but Piper Jaffray analyst Thomas Gunderson estimated that Intergel could be off of the market for six months to a year.
Shares plunged $2.42 to S3.67 in morning trading on the Nasdaq Stock Market.
Although most of Lifecore's $40 million in annual sales come from dental implants and other dental products, Intergel has drawn the most investor attention because it was projected to be a dominant player in a possible $500 million market.
The company will take $1.3 million in charges in the quarter ending in June for unused manufacturing capacity, Bracke said.
"This is perplexing. I've never run into anything like this," Gunderson said. "The unfortunate part is that (Johnson & Johnson) is not talking or letting a lot of information be released."
Intergel was used to treat two people with punctured bowels who died, but was not specifically tied to the deaths, Bracke said. Other potential side effects of Intergel included pain and inflammation, he said.
Bracke said he was "quite surprised" by Johnson & Johnson's unilateral decision. He said the U.S. Food and Drug Administration was "perfectly comfortable" with the product performance. Lifecore estimated that its worldwide complaint rate on the product to be 0.29 percent of units sold.
However, Bracke said he is confident that Johnson & Johnson was not trying to whipsaw the company for some financial advantage, but simply was assuring that a one-of-a-kind product isn't jeopardized by future regulatory problems.
The FDA approved Intergel for sale in late 2001.
The gel is used to help heal wounds caused by gynecological surgery.