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: caly who wrote (3228)	11/12/2000 6:19:56 PM
From: DanZ	Read Replies (1) \| Respond to of 5582

Calypso, I'm not familiar with the study that you posted, but thanks for posting it. It was interesting. Gum Tech currently makes dental gum for Breath Asure, Ranir, Ecodent, and their own brand (DentaHealth). The Ranir products are sold as private labels to retailers such as CVS, Rite Aid, Eckerd, Genovese, and Meijer to name a few. To the best of my knowledge, the active ingredient in all these gums is Microdent, a patented substance owned by Whitehill Laboratories. Breath Asure Dental Gum contains PXT-20 (TM), which I assume is a trademark name for Microdent in that product. Breath Asure Dental Gum is clinically proven to reduce plaque by 35%, the highest of any dental gum currently on the market. Arm & Hammer Dental gum (made by Church & Dwight) only claims 25% plaque reduction, and the only other competitor that I'm aware of, Aquafresh Dental gum, doesn't make any claim with regard to plaque reduction. Breath Asure dental gum also contains sorbitol and xylitol, two ingredients that are mentioned in the article you posted as helping to reduce plaque. Gum Tech said in a press release last May that they are developing a new dental gum with a large consumer products company. They didn't mention the name of the company, but the most logical choices are Colgate or Procter & Gamble, since these are the only two major toothpaste companies that don't have dental gum on the market yet. Presumably if they are working with P&G, the dental gum would be sold under the Crest brand name, and if they are working with Colgate, it would be sold under the Colgate name. It is possible that they are working on more than one major new gum product since they used the plural (companies) in their press release to describe new business. Here is a quote from the company's May 26 press release: In addition, we are moving forward steadily with a major consumer products company to develop and market oral care gum products and anticipate a significant development with respect to this opportunity before year-end. When realized, these opportunities will result in significant growth in our gum operations. Here is an article that discusses the dental gum market (among other things). happi.com An emerging sector in the oral care industry is the dental gum market. Church & Dwight's Arm & Hammer Dental Care gum is in the market and Colgate and Wrigley are both working on products while SmithKline Beecham and Gillette already sell dental gum in Europe. The dental care gum could eventually become a $100-$200 million business, according to some industry insiders. Others believe that the market could reach $500 million, but some marketers are ambivalent about the sector. Arm & Hammer is going full steam ahead with Dental Care, the baking soda gum. The company expects the category to reach $100-200 million. "Copycats are beginning to pop up as well as competitors from other toothpaste companies," said Mr. Koslow. In my estimation, Gum Tech's break even point for the gum business is $2.5 million to $3 million in quarterly sales. Beyond that, I estimate that their gross margin on gum is 40% to 55% of sales, depending on the volume. IMO, the dental gum contract that they are working on will have high enough volume to push the gross margin to the upper end of the range, and I estimate that their net profit margin will be 10% to 15% of sales. Please note that sales of existing gum products will be accretive to earnings once they exceed their break even point. This should add 3 to 4 cents per share to earnings. Also note that because the company paid off all their debt earlier this year, they will save about 6 cents per share in interest expense from Q4 99. There's no doubt in my mind that the gum business will be profitable once they start shipping the new dental gum, and the company said that it would be signed "very soon". Considering they made that comment in the same press release that they were trying to reduce expectations with regard to the preventative clinical study for Zicam, you have to believe that "very soon" IS very soon. Many people like to talk about Zicam when they speak of this company, but the gum business is worth more than the current stock price IMO. Best regards, Dan