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

To: Mark Marcellus who wrote (3423)	12/7/2000 11:22:11 AM
From: DanZ	Read Replies (1) \| Respond to of 5582

Mark, The shorts who frequent this thread try to make Gum Tech look like the worst company on Earth. Perhaps my comments appear to be slanted too far to the positive side because I am always put on the defensive from reckless and malicious comments from short sellers that have no motive other than to profit from their short position. I take exception to one thing that you said. Companies that aren't EXPECTED to make money in the future tend to have lower P/S and P/B ratios than companies that are expected to make money in the future. I don't think it has much to do with what occurred in the past. The growth rate of sales also has a lot to do with how much investors are normally willing to pay for a stock. Gum Tech's one year growth in sales is 194%, and their TTM sales have grown about 110% over the comparable period. Why don't you compare those growth rates to the companies in your list and see how GUMM stacks up? Many of the products that Herbalife, Natures Bounty, Twinlab, etc, sell are commodities (vitamins and herbal products for the most part). They compete primarily on cost and to a lesser extent on brand name recognition, or by trying to differentiate their products by adding something extra. With few exceptions, Vitamin C is Vitamin C no matter who you buy it from. While some may argue that Zicam is a commodity, I would disagree because it is clinically proven to reduce the duration of the symptoms of the common cold by 75%, far greater than any other product on the market. In addition, several retailers have said that Zicam is unique, not only because it reduces the duration of the symptoms of the cold, but because of its delivery system, non-drowsy formula, and fact that it doesn't simply mask the symptoms; it reduces the duration and severity of them. Given the low level of competition in the dental gum and nicotine gum markets, I wouldn't exactly call those products commodities either. I would agree with you that Gum Tech would be overvalued if it were trading at 22 times trailing sales; however, I think 10 to 15 times sales is a fair price given their growth rate and earnings potential. That would put the stock between 20 and 30, which is way below where it is currently trading. Regards, Dan