NEW YORK (CNNfn) - Prompted by warnings from public health officials, the makers of two of the nation's most popular dietary drugs said Monday the products will be pulled.
American Home Products Corp. and Interneuron Pharmaceuticals Inc. said they are recalling dexfenfluramine (better known by its brand name "Redux") and fenfluramine (Pondimin), which is half of the popular drug cocktail known as "fen-phen." The other portion, phentermine, is not affected by the recall.
Redux and Pondimin each have accounted for about $100 million in sales so far this year.
The recall was urged by the Food and Drug Administration following new findings that the substances were linked to irregular heart conditions.
"There are many unanswered questions prompted by these findings," said John R. Stafford, chairman and chief executive of American Home.
Withdrawal of Redux from the market will cost American Home an estimated $200 million to $300 million, or 20 to 30 cents a share, the Madison, N.J.-based company said. The lost sales will result in a reduction in earnings of 2 cents in both the third and fourth quarters and 10 cents in the next fiscal year.
Interneuron Pharmaceuticals, which holds the patent on Redux, said it expects to record charges of $8 million to $12 million in the current fiscal year, which ends in September. The Lexington, Mass.-based biotechnology firm said it derives "a significant portion" of its revenue from Redux royalty payments.
Analysts downplayed the impact of the recall. "In my view, it's not real bad news because the real bad news has already been reflected in the stock," said Jami Rubin, a pharmaceuticals analyst at Schroder & Co.
Nonetheless, shares of both companies took a pounding in the financial markets. American Home's stock (AHP) closed down 3-11/16 at 73-1/4 on the New York Stock Exchange. On the Nasdaq, Interneuron shares (IPIC) slid 1-11/16 to 16-7/8.
Concern about the life-threatening side effects of the drug combination was sparked in July after researchers at the Mayo Clinic of Rochester, Minn., reported 24 cases of rare heart valve diseases in women who used the drugs.
At least one death has been recorded as a result of the side effects. A 29-year-old woman died of a heart attack in August after repeated usage of the drug combination.
American Home's Wyeth-Ayerst Laboratories subsidiary, which markets Redux for Interneuron, said last month it would re-labeled the drugs to warn users of its harmful side effects. Earlier this month, Florida became the first state to individually ban their usage.
Subsequently, the FDA said it has received 66 additional reports of heart valve disease associated with fen-phen. Meanwhile, American Home has sent notices to about 450,000 physicians and pharmacists nationwide.
As well as the lost sales, American Home also said it faces a number of legal actions -- some of which have filed for class action status.
"At this time, it is not possible to determine the extent of claims which may be made with respect to these products. Additional charges may be recorded," the company said.
In light of the recall, the American Medical Association is advocating that those patients who have used the drugs to remain in contact with their physicians.
"It's still early and they are going to have to stay in touch with their physicians. The studies are on-going. It's possible that some of this is reversible. We'll just have to wait and see," said Dr. Ted Lewers, a Maryland physician who is secretary treasurer of the American Medical Association.
-- Robert Liu