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Non-Tech : GUMM - Gumm Tech International Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (110)	4/22/1998 12:44:00 AM
From: Mike M	Read Replies (2) \| Respond to of 148

John- Thanks for your comments...Goes to show you there have to be buyers and sellers to make a market. I will try to respond to your comments... Where did I say that I was willing to pay $34 M in market cap for .2m in R&D? I merely said the company wants folks to view it as a research company which develops product and manufactures same...I have no illusions where the profit margin will come from.... Biotech companies aren't priced according to research cost but according to prospective sales. Did you pay any attention to the recent agreement with Schering Plough? Two products - Aspergum and Chooz to be manufactured by GUMM....If you look at Schering's numbers, you will see they did about $20M/year for Aspergum and $7M for Chooz...at 35% (Gumm's approx % revenue), that figures about 9 1/2 M revenue or nearly $2M gross profit....I understand Herbalife commitment is larger and the Nabisco prospects dwarf both of these companies. When (my assumption) Nabisco gears up to market product they will spend more advertisement $s than Gumm will likely see in manufacture....but, I doubt GUMM will complain...Kern talked to $2 or $3 per share this year....Obviously he was way too optimistic with regard to where the company would be when...but given the sheer volume Nabisco would bring to the table, those kind of earnings are not as implausible as the skeptics want to think. Do you know why they raised $4M last year...They had to increase manufacturing capacity, not for existing orders, but to satisfy client concerns for ability to service volume of orders...hqs relocation, 8 coating machines, another blister machine...etc. Co also opted to spend heavily to market cigarrest to satisfy channels....(I think that decision served more to educate the company than to edify) I don't need help reading the Statement of Cash Flow...You are correct in a pure assumption that they can't sustain another year like last year....When I said they did not sustain a cash burn in the write off - that is exactly what I meant...Cash burn was not relevant to the write off...How last year relates to your prediction that the company will burn another $3.5M this year is where I take issue. Should they need cash, and I don't think they feel they do right now, they will likely obtain convertible debt...I understood they turned down such an offer recently...At some point equity financing will possibly be proffered... I appreciate your comments and take absolutely no umbrage at your challenge to mine...I am not threatened in the slightest, on the contrary appreciate intelligent dissent...My evaluation of the company is on what I think is happening, not what it did last year...Time will tell if I am all wet or not.... I still say that I think this company is under accumulation and I would not hold my breath for the stock to trade at 5/8...Just my opinion....There are about 760,000 shorts who disagree with me. Mike