Online WSJ puts the spotlight on the QGLY and GUMM patent infringment lawsuit......not sure how this will effect GUMM
Mad2
Overheard:
Online Investors Chew Over
Gum Maker's Latest Product
By CARRIE LEE
THE WALL STREET JOURNAL INTERACTIVE EDITION
Shares of Gum Tech International have been on the rise in recent weeks, after the maker of health-related chewing gum started shipping orders for its new cold remedy, Zicam.
Enthusiasm for the Phoenix company's new cold treatment -- a gel-based substance containing ionic zinc that is applied directly to the nasal cavity -- has even inspired some zealous fans to create an informal Web site (www.gumminvestors.com) devoted to the company.
But online detractors warn that patent-infringement lawsuit filed by Quigley Corp., maker of a similar zinc-based remedy, may derail Gum Tech's recent rally.
Gum Tech's stock hit an all-time high of 19 1/8 on Nov. 2, after trading as low as 12 1/2 in mid-October. Shares have slipped since then. On Friday, they closed at 15 1/4 on the Nasdaq Stock Market.
The surge in price came after the company announced it had started shipping orders for Zicam, which Gum Tech claims can significantly reduce the duration and severity of the common cold. The preparation blocks the ability of rhinoviruses, which cause the common cold, to enter cells lining the nasal passageway, thus preventing the virus from replicating and spreading inside the body.
It was just that claim that caught the eye of Quigley, maker of Cold-Eeze lozenges and bubble gum. Quigley, Doylestown, Pa., alleges that Gum Tech and Gel Tech infringed on Quigley's patent, which covers zinc gluconate applied to the mucus membranes of the throat and mouth. Gum Tech owns a 60% stake in Gel Tech.
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Quigley said it is the sole licensee of a patent titled "Method for Reducing the Duration of the Common Cold." The suit seeks a preliminary and permanent injunction against further infringements, and lost profits and treble damages.
A Quigley spokesperson could not be reached for comment Friday.
Gum Tech says Zicam contains zinc gluconate, but is applied to the nasal area. "We consider the lawsuit to be completely without merit, it's absolutely groundless," says Mr. Russell. "We have had a number of patent attorneys review [Quigley's] patent, we've been assured that there is little if any danger of their being a successful lawsuit infringement brought against us."
Message-board participants are convinced that Gum Tech will emerge victorious from it lawsuit with Quickly, and see the company's stock price return to the highs seen earlier this month.
"Get aboard now! If this little mini correction isn't already over it will be by today," wrote one investor on a Silicon Investor message board earlier this week (www.siliconinvestor.com). "This stock is just beginning its odyssey."
"GUMM is way undervalued," another posted. "This company will exceed anyone's expectations in the long term."
Zicam has done well for the company so far. Gum Tech had approximately $1.1 million in sales for Zicam during the third quarter. On Nov. 18, Gel Tech announced that orders for the new nasal spray totaled more than five times that amount.
Gum Tech reported third-quarter net sales of $2.3 million, up from $1.3 million in the same quarter in 1998. Net losses totaled $795,000, or 11 cents a share, in the third quarter of 1999, from $621,000, or 9 cents a share, in the year-ago period. The company has no formal analyst coverage.
Gum Tech and Gel Tech LLC had been test-marketing Zicam since January. Gel Tech is a joint venture between Gum Tech and BioDelivery Technologies Inc., a privately held biotechnology company in Pheonix.
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