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: rli123 who wrote (3916)	8/8/2001 8:27:49 PM
From: DanZ	Read Replies (2) \| Respond to of 5582

rli, Sorry, I don't spend much time on the Internet any more and just read your messages. You are right. Gum Tech will earn a 5% royalty on Crest Dental Gum up to a maximum of $1.2 million. It is obvious that they will collect that much given the projections from P&G and Wrigley, which are in line with what I had estimated several months ago. The only thing that I was wrong about is the length of time it took P&G to move forward. Perhaps they didn't want to do it alone and wanted a large company like Wrigley to help them out. If this deal had been announced before Gum Tech elected to sell the contract to Wrigley, I think that the stock would have reacted more to the upside. Many people seem to be missing that the sale to Wrigley allowed Gum Tech to collect several years worth of profits from Crest Dental Gum today. In essence, Wrigley and Gum Tech discounted the expected profit from Crest Dental Gum forward when they came to an agreement on the $25 million sales price. I'm sure that CSFB was involved in this as Gum Tech's investment banker. The equipment had a book value of only about $5 million, so obviously most of the sale was for the P&G contract. Wrigley is evaluating three other Gum Tech gum products, and should they decide to take one or more of them to market, Gum Tech would receive 5% royalties for three years with no cap. It is a big unknown how much this will be worth, but I think with the stock at 8, all the risk is on the shorts because I don't think the stock has any value in it for these products. There's no cap on the royalty, so I think this is a big risk to the shorts.