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Biotech / Medical : GUMM - Eliminate the Common Cold
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To: Helios who wrote (2402)3/25/2000 12:03:00 PM
From: DanZ  Read Replies (2) of 5582
 
Helios,

The registration of securities was related to the exercise of expiring stock options. The stock price went up and people were holding in the money expiring options. Of course they were going to exercise them; however, there aren't that many more unexercised options outstanding.

The dividend was related to the Citadel financing that was issued in June 1999. Gum Tech borrowed $6 million: $4 million in Subordinated Notes, and $2 million in preferred stock. Gum Tech made regular payments on the debt until last quarter when they paid back the remaining balance in full. The dividend that you see was for the preferred shares but it will be zero going forward.

I believe that some people are too focused on Zicam, because this company has a lot more going for it than just that one product. I think that this focus has hurt the stock price in the short term, and that the stock will rally when people realize that production of nicotine gum will begin in only three to six months. I believe that the company is also very close to announcing a joint venture for a new dental gum (major toothpaste brand).

First quarter sales of Zicam will probably be lower than people expected a few months ago because the company wasn't able to set up international distribution agreements in the first quarter. This has surely hurt the stock price in the last month, but it is a short term problem because the international sales have only been delayed. At this point, I believe the expectations that prevailed a few months ago have come out of the stock and that expectations are so low that the stock is near a bottom. I also think that there is a good chance that a large company will buy BioDelivery Technologies' stake in Gel Tech. If this occurs, I believe that it would be positive for the stock. IMO, the current stock price gives zero value to either Gum Tech's stake in Gel Tech (Zicam) or their gum business. Even if the first quarter's sales come in where I think they will, it is of no importance in the long term.

Regards,

Dan
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