Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Bill Wexler's Dog Pound -- Ignore unavailable to you. Want to Upgrade?

To: Druss who wrote (2715)	8/1/1999 8:51:00 PM
From: out_of_the_loop	Respond to of 10293

Druss: Who is going to make that gum for all those "house brands"? SKB? Regards, Howard

To: Druss who wrote (2715)	8/1/1999 10:13:00 PM
From: DanZ	Read Replies (1) \| Respond to of 10293

Druss, GumTech's new management team changed the company's strategy from marketing their own brand names to formulating and packaging gum products for others. In essence, they are selling their formulating expertise and manufacturing capacity to companies that want to distribute functional chewing gum, but either don't have the expertise or infrastructure to do so on their own. Many companies outsource their production and concentrate on marketing and distribution because it lowers their overhead and labor expense and places some of the development risk on the manufacturer. Consistent with their new strategic plan, I don't expect GumTech to market nicotine gum under their own brand name. They are much more likely to develop it for companies like Novopharm, Heritage, Ranir, or maybe even Watson Pharmaceuticals. I can envision a company like Heritage or Ranir private labeling nicotine gum for sale to Rite Aid and other drug and grocery stores. The most likely manufacturer of that gum is GumTech because they are the only company in the US other than Smith Kline Beecham that has sufficient production capacity to make nicotine gum on a large scale. Once GumTech's ANDA is approved, they will be only one of three companies that can make nicotine gum for sale in the US. The other two are Smith Kline Beecham and Circa Pharmaceuticals, a wholly owned subsidiary of Watson Pharmaceuticals. An ANDA is site specific, meaning that the drug must be manufactured at the facility where the bioequivalency data was collected for submission to the FDA. Once GumTech has an approved ANDA to make nicotine gum, they can make it for any company that wants to distribute it in the US. It isn't trivial to make a good tasting nicotine gum and the FDA's drug GMP's must be followed. This is far from trivial as well, but GumTech already follows the FDA's drug GMP's for all their products because they make Aspirgum, Acutrim Diet gum, and Breath Asure Dental Gum, all of which contain OTC drugs according to the FDA. What other gum manufacturers in the US make OTC drugs and would even attempt to apply for an ANDA to make nicotine gum? My answer: None. The closest company is Circa Pharmaceuticals, but they don't even have sufficient capacity to support their own production of generic nicotine gum and Watson is under fire from the FDA for several GMP violations. Circa's ANDA was approved several months ago and Watson said in a press release that they expected the gum to be on the shelf this summer. Well, where is it? They simply don't have enough capacity to fill the pipeline and no other company has an approved ANDA to make the gum. Watson has a bit of a mess and GumTech recently increased their production capacity so they can make approximately $100 million in gum. I sincerely appreciate your comments and hope that you can see that GumTech has a very good business opportunity in the nicotine gum market. Best of luck, Dan