I've shared exactly your concerns about the Zicam gel patent. Nothing in the studies indicate that the positive mechanism for efficacy is in fact the "gel" used to suspend the zinc. I don't think its unreasonable to assume that the application of the zinc directly into the sinuses is the most important distinction, and the suspension liquid is secondary. Nothing in the study design (granted, it's not been released for scrutiny) supports the claim that it's the "gel" that makes it work.
I'd like to see an independent study that compared zinc lozengers, Zicam, and a saline/zinc nasal spray all to a placebo group....lol.
So your point that the patent may not protect Gumm from competitors is quite valid, and represents one of the substantive risks to investors. The second major risk involves actual efficacy. The independent clincal trial information still hasn't been released, other than a press release geared more towards marketing than science.
I remember the cold-eze craze and the "quigleys". The arguement was: (1) cold-eze has been proven to work by independent clinical studies, (2) quigley has a patent on the cold-eze special suspension formula, (3) everyone using it knows it works, (4) cold-eze cures the common cold. Anyone attempting to question any of these claims was shot down, insulted, degraded, and abused. But 2 years later we still can't prove it works, the patent is practically worthless, nobody using it has consistent results, and we know it doesn't cure anything. Yet, back during the hyped-zinc-craze, all of these things were crystal clear and irrefutable.
Back when cold-eze was hot, I bought some and persuaded most of my extended family to do the same. I then monitored effectiveness. Not at all scientific, but the consumer isn't a scientist. I wanted to see if the results were noticable enough for them to consider it to be effective and if they would continue to use it. At first everyone thought it worked. Amazing testimonials - "I took cold-eze at the first sign of a sniffle and I didn't even get the cold!", "my cold was gone in 24 hours", etc, etc. But reality eventually set in. With or without cold-eze, colds are sometimes over in 2 days, sometimes last 3 weeks or more, sometimes start to take hold and don't. After all those testimonials, none of them use the product any more.
I'm doing a similar bit of field research on Zicam, and so far the results are not very convincing:
Message 12792099
Another risk to investors is that the current sales figures could represent a "fad" market. A broker friend of mine is avoiding GUMM precisely because of this. He doesn't believe current or even next quarters sales figures are indicative of future sales. At least at this point, no one in the brokerage community is embracing Zicam as a cold-cure. If they did, we would see bullish broker coverage, and we see no coverage at all.
So far the comparisons to the Quigley fad are striking. Whether or not Zicam sales ccontnue to grow will be based on the consumer's impression. Based on what I've seen with this product so far, I can't imagine the claims of reducing cold duration by 87% holding up under scientific scrutiny. That would be an amazing effect that so far I haven't seen duplicated by my own sample group - not even close.
Now just for the record, I have never shorted GUMM, but I have played it long many times. I sold my shares around 33 after I realized the last press release was another "and we are gonna get it published" bit of spin. They may very well get it published, but the AJIC affair was pure mis-management (they didn't know about the publishing rules?). Speaking of the AJIC publications...it is especailly annoying that fervent longs have poo-poo'ed this serious management error by rationalizing that the publishing of the data really isn't that important. How important that publication was was very nicely spelled out by Davidson, GUMM's CEO:
"We are very pleased that the significance of our initial research has been recognized with publication in AJIC. As the premier publication of infection control professionals, AJIC reaches physicians, nurses, epidemiologists and other health care professionals throughout the world. Publication in AJIC represents an important step in getting Zicam(TM) recognized and accepted by the medical profession as an important weapon in fighting that most common of all plagues -- the common cold," said R. Steven Davidson, Gel Tech's Chief Executive Officer.
AJIC, first published in 1973, is the official scientific publication of the American Association of Professionals in Infection Control and Epidemiology (APIC). In addition to peer-reviewed articles and original research across the field of infection control and epidemiology, including occupational health and disease prevention, AJIC publishes the official guidelines for infection control practices produced by APIC and the CDC (the Centers for Disease Control and Prevention).
Had this publication been achieved and survived peer scrutiny, it is my opinion that GUMM would be trading over $50 right now. I think the brokers would of stepped in with real coverage and targets, and I think the media would of done far more coverage of the study, far beyond the mere regurgitation of the PR that we saw after that light-weight PR. So this is my final risk factor - Gumtech management for goofing the science and blowing a huge opportunity.
None of this is to say that GUMM won't bounce off thee lows and trade a bit higher than here, but to say that GUMM is a sure thing and without substantial risk would be foolish.
SM |
