Investor Ted Karkus waged a nasty proxy battle, brought in his own slate of directors, took over as chief executive and even renamed the company, expunging the name of its founder.
It was all for a tiny Doylestown, Pa., medical-science company called the Quigley Corp., which Karkus renamed ProPhase Labs Inc. (PRPH).
Years of sales declines and losses had long taken their toll before Karkus took charge. A stock that traded for more than $20 a share in the 1990s can barely eke out 85 cents today.
Additionally, the stock now faces delisting from Nasdaq unless the company does something -- like a reverse stock split -- to get its value over $1 a share.
When Karkus' hostile takeover finally succeeded in June 2009, he thought he was getting a promising treatment for something called symptomatic diabetic peripheral neuropathy.
"It wasn't until after I took over control that I found out the pharmaceutical division had essentially no value at all," he said.
Surprise, surprise. Karkus was invested. His friends and associates were invested, too.
"I had to see what was left, and salvage the value of it," Karkus said.
And what was left? Cold-Eeze.
Cold-Eeze is available on stores shelves everywhere. It's a proprietary formula of zinc gluconate glycine advertised as "clinically proven" to shorten the duration of common colds.
When the homeopathic product first came out in the mid-1990s, it was all the rage, making the company something of a one-hit wonder. But like every other homeopathic product, it's difficult to assess whether Cold-Eeze really works.
I've met many people who swear by it, and many others who say it's about as good as a placebo. Karkus says it's why he originally invested in the company -- before becoming disillusioned with its direction and waging a proxy war.
"We have the clinical studies to prove it," he says, "which is why we can say 'clinically proven.'"
Still, it's been a rough go for Cold-Eeze.
Another zinc product, Zicam, generated lawsuits alleging it destroyed consumers' sense of smell. Cold-Eeze came in a lozenge, so it didn't present this problem, but market confusion about zinc products in general became a sales challenge for years.
Additionally, ProPhase's prior management became so focused on an unrelated multilevel marketing company and an ultimately worthless pharmaceutical division that it bungled the marketing of Cold-Eeze, Karkus said.
So can he really turn around Cold-Eeze from here?
Karkus, 52 years old, has an MBA from Columbia University. He worked on Wall Street for 25 years, and then became an investor and management consultant to emerging companies. He boasts of helping turn around ID Biomedical, a Canadian influenza vaccine manufacturer, which was sold to GlaxoSmithKline PLC (GSK) for more than $1.4 billion in 2005.
"We're at the beginning stages of turn-around," says Karkus.
ProPhase posted a $1 million loss on $3.2 million in sales for the quarter ended March 31. But to Karkus' credit, losses are shrinking and sales are expanding.
Since taking over, Karkus has restructured his company's operations. He's hired new advertising, marketing, social-networking and public-relations consultants. He's repackaged the product. He's added new flavors. He's also coming out with an oral spray for people who don't like the lozenges.
He is a believer. He has to be.
"If we don't turn around the brand and grow it again, there is no company," he said.
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at email@example.com or tellittoal.com)