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.

Strategies & Market Trends : The GUMMMy Bear Squad touting Gum Tech (NASDAQ: GUMM) -- Ignore unavailable to you. Want to Upgrade?

To: Mad2 who wrote (76)	12/29/1999 7:52:00 AM
From: DanZ	Read Replies (2) \| Respond to of 207

Mad2, I have avoided posting on this thread since you started it but your last post struck a nerve. You have consistently been wrong about Gum Tech for nearly a year yet you posted a ridiculous price target again without any supporting justification. Here are some questions to consider when valuing Gum Tech. How much do you think the company will earn in the fourth quarter of 1999? How much do you think they will earn in the first quarter of 2000? How much is international distribution of Zicam worth? How much is the recently announced joint venture with Swedish Match worth? How much is the dental gum agreement that Gum Tech is negotiating with a large toothpaste company worth? If you answer those questions truthfully and reasonably, I don't think you will conclude that the stock will trade to single digits in 3 to 4 months. Of course GUMM moved up on expectations, and those expectations are being met. Every company without a proven track record doesn't fail as you have wrongly implied. Gum Tech is establishing a very credible track record and proving its critics wrong. Carl: Regarding your issues... 1. The product doesn't work The initial study conducted by Gel Tech concluded that Zicam reduces the duration of the common cold by 85%. While it was an internal study, it was conducted in a double blind placebo controlled fashion. The American Journal of Infection Control accepted the study for publication and later withdrew it due to pre-release of data. The editor of AJIC said that the study followed a acceptable method and that they didn't take issue with the data or conclusions. Considering the number of calls that Gum Tech and Gel Tech have received from consumers, and feedback that the company is getting from buyers and pharmacists, there is no doubt in my mind that Zicam works. My personal experiences with Zicam validate this as well. 2. While the product works, people won't buy it because squirting gel up your nose is disgusting. Few people have complained that Zicam is disgusting to use. The gel absorbs quickly and has no lingering feeling. 3. While the product works, it won't sell because GUMM is too financially weak to promote and distribute the product. This was more of a concern before they distributed Zicam to nearly every drug store, grocery store, and mass retailer in the US. Zicam is now sold in nearly 50,000 stores. Gum Tech's critics, including Mad2 if memory serves me correctly, asserted that they wouldn't be able to achieve this. Well, the company proved them wrong. Regarding promotion, Zicam is selling very well without much promotion. They received a lot of free promotion when USA Today printed a front page story on Zicam after AJIC accepted the study for publication. Gel Tech's PR and advertising firms, Edelman and Kovel/Fuller, have effectively promoted Zicam despite what the critics said about Gum Tech's financial position. The company has plenty of cash right now due to the exercise of options, financing from Citadel, and cash flow from operations. While the fourth quarter financial statements won't be out for about a month, I came to this conclusion based upon a pro-forma analysis. 4. While the product works, there is nothing novel about it, and it will be easily copied by much larger competitors who will crush GUMM. Competition is a concern for any company but Gel Tech's patent should afford them some protection against copycats. The market for OTC cold products in the US alone was about $2.5 billion last year. I don't have a worldwide estimate, but it is obviously much higher than this. Even if competition eventually hits the market, I think that Zicam will get a good share of the market. If they only get 3% of the domestic market, they will have sales of $75 million. If you add in international distribution, which they are currently negotiating, there's no doubt in my mind that they will sell a minimum of $100 million in Zicam in 2000. This represents a very small penetration of the world market but it will have a very big effect on Gum Tech's top and bottom line growth. Gum Tech has left open an option to partner with a drug or consumer products company to jointly promote and distribute Zicam, but they haven't had any need to exercise this option. They are more likely, IMO, to form a joint venture to distribute Zicam internationally than in the US. Best regards, Dan

To: Mad2 who wrote (76)	12/29/1999 10:57:00 AM
From: Carl R.	Read Replies (1) \| Respond to of 207

Mad2, I agree that the product is "a bit funky", and sounds disgusting to use. In actual practice they have done a good job devising a system of delivery, which is probably why they have a significantly larger demand than the nearly identical product you cite in your intro to this thread. Using the product is "a bit funky", but not nearly as funky as one might imagine, and certainly much more pleasant than the actual cold itself, and actually much more pleasant than the "drugged up" feeling that one gets from standard cold medicine. There is no question that a pill or liquid would be easier to sell. There is also no question that a large advertising budget combined with prime positioning in stores (at the checkout, or end-of-aisle displays) would significantly improve sales. On the other hand, the fact remains that people don't like colds, and as a general rule they don't like being "drugged up". Many people are open to trying new solutions to the cold problem, especially if they work. Isn't it possible that word-of-mouth could create significant demand for an "unusual" product that actually works. Remember the old saying, Build a better mousetrap and the world will beat a path to your door? Does it still apply in a world that is saturated with advertising? Obviously if the product doesn't work, it will fail. Based on my personal experience sucking on Zinc, I see every reason to believe that the product should work. If it does work, what do you think the chance of success is? My personal opinion is that if the product works, once they have created an initial demand and established a market presence they will have the opportunity to sell to one of the large drug companies. Only if they decline that offer and try to capture the whole market for themselves will they fail. Thanks for the courteous replies, Carl