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.

Biotech / Medical : GUMM - Eliminate the Common Cold -- Ignore unavailable to you. Want to Upgrade?

To: big run who wrote (927)	9/19/1999 10:55:00 PM
From: DanZ	Read Replies (3) \| Respond to of 5582

big_run, You say that Bill has been incredibly resourceful and accurate in his research. This may be true for some stocks that he has brought to your attention, but it is not true for GUMM. I have been going back and forth with Bill for a few months on the Dog Pound, and he has yet to provide even one post that documents reasonable research to justify a short position in GUMM. By his own admission, he only spent three minutes looking at the company's balance sheet. Granted, one can get a feel for a company's financial condition in three minutes, but that isn't enough time to understand a company's products, margins, capacity utilization, future revenue stream, future costs, and future profits, to name a few. Bill has repeatedly ignored a discussion of nicotine gum as if it's not even a potential market for GumTech. The company said at the shareholder's meeting that they are striving to sign a joint venture to manufacture and distribute nicotine gum before the end of this year. Do you realize how big nicotine gum can be to GumTech? I estimate that it will add about $20 million to the company's revenue in the first full year of their joint venture. This should translate to profits of about $1.00 per share, and alone makes the stock worth 20 to 25. If you add in Zicam, which is targeting a $2.3 billion common cold market, GumTech's earnings could approach $3.00 to $4.00 per share in 2001. If the market discounts these earnings over the next 12 to 18 months, the stock could trade to 100 per share. This isn't hype, my friend. I have pro-forma income statements to back up my estimates, and my assumptions are on the conservative side. The wild card in the short term is whether the NEJM publishes the clinical study on Zicam. If they accept the study for publication, the price of GUMM will likely explode from the resulting hype. The stock of Viropharma increased almost four-fold in the week that news of Pleconaril was released. That drug only claims a reduction in the duration of the common cold from 14 to 11 days, and won't be available for at least two years, if ever. Zicam is already on the shelf at stores. In addition, Pleconaril will be a prescription and Zicam is OTC. Finally, the short interest in GUMM is many times higher than that of VPHM when they released their news. If one uses VPHM as a baseline for what could happen to GUMM if the study is accepted, the risk to reward of shorting this stock is about as bad as it gets. In closing, I'd like to say that I think I have an excellent reputation on SI. I don't condone hype and I always speak my honest opinions. I take great pride in maintaining a high degree of integrity, and this is the reason why Bill and I don't get along. Bill may indeed have a good track record. My track record is very good as well, although I am by no means always right. Nobody is infallible when it comes to the stock market, and Bill might not be right about GUMM. Those who know me will attest that I am not hyping GUMM. I'm simply protecting my interests as a shareholder. I don't know if Bill's comments affect the price of GUMM, but given the size of my position, I'm not willing to take the chance and let his lies, misrepresentations, and potentially libelous statements stand without refutation. I hope everyone can understand this. Best of luck to everyone, Dan

To: big run who wrote (927)	9/19/1999 10:57:00 PM
From: Mike M	Respond to of 5582

What I find really, really odd is the fact that management has very little stake in the company. I see shares out of ~7.1 million and the float has ~5.9 million. This leaves management only a 17.5% stake in GUMM. That isn't exactly a hefty vote of confidence in their company. If you follow the company history you will find that a number of the company founders are no longer involved. One died and the family sold out. Others departed at various stages including the former CEO and several directors... There have never been the financial resources for the company to make a significant repurchase of their shares. On the other hand they have resisted private placement solutions that would dilute shareholder value. No doubt Mr Kehoe and Brown Russell have a significant percentage of their net worth in this company....which is good enough for me. So what you have here is a mixed bag. Only 7.1 million shares, a company that doesn't tout, despite Bill's ranting to the contrary, a product that some believe (including me) will revolutionize cold treatment and plenty of skeptics (including you and Bill). Oh, did I mention they make gum. Probably not your kind of company unless it captures the imagination. Good luck.