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: Hank who wrote (2645)	10/17/2000 11:44:04 PM
From: Sir Auric Goldfinger	Read Replies (1) \| Respond to of 5582

Especially journals that don't count.

To: Hank who wrote (2645)	10/18/2000 12:00:51 AM
From: DanZ	Read Replies (2) \| Respond to of 5582

I disagree that the journal article won't contribute to sales. Gum Tech can send reprints of the article to doctors, pharmacists, buyers, and consumers. Increased awareness to each group should lead to higher brand recognition and sales. Gum Tech can also now claim in their advertising that Zicam is clinically proven to reduce the duration of the common cold by 71%. In fact, they have already started doing this. Regarding your "financial analysis" of Gum Tech, you fail to recognize the reason that they lost money in their gum operations for the last few years. I have discussed this many times before and I'm not going to get into the detail again. The bottom line is that the gum business will be profitable soon after the joint venture with Swedish Match becomes operational. The company also said in a press release and their annual report that they are working with a large consumer products company for a new dental gum. The only two large consumer products companies that don't yet have a dental gum are Colgate and P&G (Crest). The profits from either of these partners should also put the gum business in the black. Money can be made on functional chewing gum. In fact, Gum Tech was profitable before they went public. The only reason that they have lost money recently is because they expanded their capacity before they had enough volume to cover their fixed costs. Sometimes companies have to make an investment before they can win business that will ultimately make them profitable. That is the case here, and it is the reason that your argument about past losses is irrelevant. Gum Tech doesn't have to dominate the cough and cold category to make money on Zicam. Their gross profit margin has varied between 66% and 76%, with a direct correlation to volume. Based on a 70% gross margin, $3 million in advertising expenses, $1 million in operating expenses, and $250k in R&D, they would need about $6 million in quarterly sales to break even. Every 1 million in sales above that break even point would contribute about 5 cents per share in profit to Gum Tech. This takes into account the fact that they own 60% of Gel Tech. The profit on revenue of $15 million would be about 45 cents per share and that only represents about 2 million units. I think that Gum Tech can achieve sales of this magnitude on their own this cold season, but since their stated goal is to partner with larger companies, I believe that they will seek a partner for Gel Tech. In addition to helping Gum Tech market Zicam domestically, I believe that their partner will take Zicam through the FDA OTC drug process since it will enable them to sell Zicam internationally much quicker. The partner would also enable them to increase their market share much quicker, and this would add to their profitability. And again since you can't read, I don't work for Gum Tech, nor have I ever received any compensation from them in any form. If you follow my posts on SI, you would notice that I don't discuss GUMM any more than any other stock that I'm holding. In fact, I generally don't mention GUMM unless news comes out, or you or some other bozo makes ridiculous statements that I feel compelled to respond to. Now if you will kindly go back into hiding on this thread, I will too.