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

To: DanZ who wrote (3845)	4/15/2001 11:13:08 PM
From: Mark Marcellus	Read Replies (1) \| Respond to of 5582

The facts stand for themselves and everyone can make up their own minds on GUMM, but just to correct the places you misinterpreted what I said: It is highly unlikely that Wrigley shorted GUMM the day of the announcement. I never said that Wrigley shorted GUMM, I said they might have hedged. I haven't done the math, but they could quite likely have hedged for less than the amount of the breakup fee that GUMM would have to pay if the deal falls through. I also never said that it happened the day of the announcement. If it did happen it quite likely happened over a period of days which not so coincidentally occurred during GUMM's swoon into the 6's and 7's. BTW, if it did play out that way, then the hedging activity would have had the happy (from Wrigley's point of view) side effect of making their purchase price lower. Specifically, they said that Wrigley will evaluate three Gum Tech products and that Gum Tech will receive royalties in the amount of 5% for three years if Wrigley markets them. You say this isn't a risk to shorts, but I beg to differ I didn't say it doesn't present a risk to shorts, I said that based on information in the proxy the risk to shorts was reduced as compared to the information that was available before. First, the revenue from the product which has the most potential (since it actually appears to exist and may have P&G marketing behind it) is capped at a relatively modest $1.25 Million. GUMM loses more than that in a quarter, even in the pro forma. Second, the balance of the royalties are for only 3 more products and for a limited time frame. When the deal was announced, there was speculation about unending royalty streams flowing from Wrigley to GUMM. The proxy sharply circumscribes those scenarios, and therefore I would guess that this part of the proxy was pleasurable reading for those who are short. BTW, I was hoping for some clarification as to why the proxy gave two different numbers for how many products will be developed pursuant to the royalty agreement. I'm assuming the final number is three, and that the original number of six (in place at the time the appraisal was done) was reduced. I find that curious. Perhaps I can be forgiven for assuming that the appraised value of these three eliminated royalty agreements was negligible, as I would think that otherwise the appraisal would have had to be redone. Makes me wonder how much the first three are worth, but time will tell. You opine that there's nothing in the proxy that should concern shorts. I opine that there's nothing in the proxy that should concern longs. I never said the first. I said there's nothing new to concern shorts. I also disagree with the second. For example, the potential damage from Wrigley sales of their holdings after the laughably brief 6 month lockup period comes to mind. But once again, time will tell.