I called GumTech today because I was confused about some of the information that came out of the shareholder's meeting. Stories tend to get mixed up when they are relayed from person to person to person, etc.. This reminds me of when I was in grade school and the teacher told a student something; they whispered it to the person next to them; that student whispered it to the next person, and so on until the last student heard the story. The last student then told the class what he heard, and inevitably, it wasn't even close to what the teacher originally said. This is what happens when something is passed from person to person, and nobody is to blame for getting the story wrong on Yahoo.
Here's what I understood from my conversation with the company:
Dental Gum
GumTech backed away from marketing their own DentaHealth brand because they didn't want to compete with Breath Asure and Ranir. They DID NOT back away from their efforts to form a joint venture with a major oral care provider. In fact, they have accelerated their efforts in this regard and are hopeful that they will announce a major partner in the next 4 to 5 months.
I got the feeling that the oral care company or companies that GumTech is talking to are much larger than Breath Asure and Ranir. This is only my opinion and wasn't confirmed by GumTech. They can't disclose who they are talking to because of nondisclosure agreements. We can speculate who they are talking to, however. Here is a list of the largest oral health care companies and their brand names: Procter & Gamble (Crest), Colgate-Palmolive (Colgate), SmithKline Beecham (Aquafresh), Warner Lambert (Listerine), and Mentadent (Mentadent). I believe that GumTech will announce an agreement to make dental gum for at least one, and maybe two of these companies before the end of the year.
Nicotine gum
The company hopes to announce a joint venture before the end of this year with a large multinational company who will distribute nicotine gum internationally. It is probable that the same partner will distribute nicotine gum domestically after GumTech's ANDA is approved. The partner that they are talking to asked GumTech to hold off talking to other potential partners while they are negotiating. This is what Gary K. meant during his presentation at the shareholder's meeting when he said they were waiting on nicotine gum.
Zicam
Gary was being ultra-conservative when he said that an average of only 3 units of Zicam are in each store. As many of us have posted, Albertsons has been carrying about 10 units per store and Eckerds bought display stands containing 18 units for all their stores. Albertsons said that they will put Zicam in two or three locations in their stores during the cold season, and this explains why their recent order was larger than their initial order in January. A much more realistic estimate is 6 to 10 units per store during the off-season and 15 to 20 units per store during the cold season. Even these estimates are conservative, IMO.
With regard to the stock: I get the distinct feeling that JOSE and HRZG are playing a game with the stock. It is my belief that JOSE is shorting and trying to shake stock loose so HRZG can cover as cheaply as possible for a large customer. Somebody is short a lot of GUMM and it looks to me like they are working with two or three market makers to cover their position. SLKC may be involved as well.
The stock closed down today, but I'm not falling for the weakness. JOSE's offer was 3/8 of a point below the next offer, indicating that there are few sellers of the stock. It remains to be seen whether JOSE can shake the stock down, but he isn't getting any of mine. Given the magnitude of the deals in process (large oral care agreement, nicotine gum, and Zicam), I reiterate that the shorts are in trouble. They might be able to knock the stock down for a few days, but they won't be able to hold it down for long.
Have a nice weekend, everyone.
Dan
PS to Howard: Sincerest thanks for your excellent summary of the discussion at the shareholder's meeting. I'm glad that you went to the meeting. |
