GUMM - Gumm Tech International Inc. Message Board

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Non-Tech : GUMM - Gumm Tech International Inc.

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To: Q. who wrote (112)	4/22/1998 7:34:00 PM
From: Mike M	of 148

John- << The rule of thumb I am familiar with is that biotech companies are valued at their cumulative R&D expenditures.>> That rule of thumb doesn't make any sense in this case, does it John? On the other hand gaging value from sales and earnings does. In the final analysis all drug companies are valued according to sales and earnings...Not how much they paid for R&D...back when, especially when revenue is already materializing. <<The other prospective business activities you describe, assuming that they actually materialize, sound like contract manufacturing. Isn't that a highly competitive, low-margin business, with substantial risk of losing a contract in a given year? >> Remember contract manufacturing of a "drug delivery system" from an FDA approved facility (the only one in its existence according to the company) is not likely to be all that competitive...at least not at first. If any gum company could do the manufacturing the world's 2d largest gum manufacturer would not need GUMM. 30 to 40% of retail doesn't sound like low-margin. Contracts are signed for multiple-years.... Risk does seem to be a part of doing business, as does investing, whether short or long.

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