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Business Plan


  • pg 1
									                         Business Plan


      1. THE COMPANY


1. The Company

DTC is a Washington corporation founded to develop and bring to market products
that will substantially reduce the incidence of dental caries throughout the world.

DTC’s core technology includes special chemicals (SC) and vegetable extracts
developed at the laboratory of Dr. Walter Smith at FAMOUS UNIVERSITY. Products
based on these will be integrated with patient education and food-based remedies
to provide the broadest benefit to the most people at the lowest cost. Dr. Smith has
developed the science behind these products with the support of Dental Treatment
Service (DTS).

2. Dental Treatment Service (DTS) Objectives

The objectives of DTS’s scientific program are:

      To foster the development and deployment of technologies that decrease the
       burden of dental disease in society and to apply these technologies for
       treating other mucosal diseases with similar etiology.

      To profitably exploit the results of its R&D program and to reinvest those
       profits in broadening its contributions to public health.

      To build and sustain a reputation for DTS as an innovator in healthcare and
       medicine in selected markets.

3. Dental Caries

Dental Caries, “tooth cavities” to the public, is found in virtually every human
population on earth. It is a slow-onset disease caused primarily by a small group of
bacteria. The predominant species associated with dental caries is Streptococcus
mutans (S. mutans, which is part of the normal flora in the mouth. It is harmless
until it reaches high concentrations in the plaque near the tooth surface and is then
fed carbohydrate or simple sugars. Metabolism of these substrates elicits the
secretion of lactic acid that attacks the mineral component in the tooth’s structure
resulting in dental cavities/caries. Diet, the ecology of the mouth, and the
resistance of the host all influence the development of caries. The disease can be
mitigated in infected individuals by changes in any of these factors.

Caries is a good first choice for DTS’ studies because this slow-onset disease is well
understood and no “cure” has yet been delivered to date. Dental caries is caused
primarily by a common oral bacterium, Streptococcus mutans . When S. mutans
finds conditions that favor it over other oral flora, it will increase it’s numbers
relative to other organisms. When this occurs within dental plaque at the tooth
surface it creates conditions that lead to caries. When the host subsequently
consumes products that contain simple sugars the S. mutans converts them to lactic
acid that erodes the tooth’s surface and subsurface.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                              1
Infants are normally free of infection until their first teeth appear. They are most
often exposed to S. mutans from their mother who carries the organism in her
mouth.. Poor oral hygiene and high sugar diets exacerbate the infection
contributing to tooth damage in children through the teenage years. In the US the
infection often abates in early adulthood as diet and eating habits change. However
the organism remains part of the oral ecosystem and damage from the disease
accumulates slowly into middle age. The costs of caries treatment grows in middle
age due to the increase in restorative surgery, which continues as long as people
have teeth. Thus, ironically, the general improvement in dental care and increase in
longevity has made caries a new disease of the elderly.

Caries does not occur uniformly around the world, nor uniformly across
socioeconomic classes within a population. In the US it is a major cost burden for
the Public Health Service, in part because less affluent people have diets higher in
refined sugars that selectively encourage growth of S. mutans. There are also
segments of the population served by the PHS, such as Native Americans, that resist
preventative dental care for cultural reasons. Paradoxically, in the less developed
nations, caries is found most in the affluent because it is they who can afford to buy
refined sugar products while the poorer people eat more basic foods that contain
less of them.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                             2

     The combined markets for all the DTC anti-caries agents are about $550 million,
     about equally divided between vegetable and chemical active ingredients. About
     half the US population is currently at risk for caries, spread across all ages. These
     data are summarized in Table 1 below.

                Table 1: Anti-Caries Market Potential by Age and Treatment

  Summary of            No of         % at risk       % using      % using SC       Potential
   anti-caries        customers                        herbs                        Revenues
 user segments

                      (millions)                                                    $ millions

Children under 6         20,020         37%             13%            6%             34,486
    years old

Children between         42,852         56%             36%            9%            133,740
    6 and 18

    Mothers              58,343         65%             41%            6%            154,909

  Other adults          103,957         65%             37%            5%            242,484

    Elderly              31,702         21%             13%            2%             25,660

   All groups           256,874         56%             33%            5%            591,278

     The expected users are weighted more heavily toward the low-income groups. This
     may be an advantage for the vegetable formulations, which can be delivered as
     lower cost confections, over the more expensive SC treatments. Additionally, the
     appeal of “natural” products has high value in markets made up largely of people
     with discretionary income. These data and conclusions are shown in Appendix A,
     Figure A1, Caries Treatment by Income and Age.

     Because caries is a slow-onset disease, the effects and full benefits of new
     treatments and prophylaxes will be delayed by some years. Much of the current
     dental expense goes for treating cumulative damage that has accumulated over

     e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                                3
many years. We estimate that the health improvements from new products will lag
their introduction and use by 5-10 years. However, once these new habits are
adopted the benefits also accumulate over long periods as shown in Appendix A,
Figure A2.

Five years after acceptance of the new caries prevention products the annual dental
expense per patient is expected to drop by 15%, or $10 Billion/year from of the
current rate of $60 Billion/year. After ten years the US dental expense should be
about half of present levels, representing a savings of $30 Billion per year. These
projected savings are summarized in Appendix A, Figure A3 – A5.

1. At-Risk Populations

The population groups in the United States for whom caries treatments are most
beneficial are:

      Low Socioeconomic Groups often receive services from public health
       agencies who want treatments at a reasonable cost that can be applied to
       large numbers of people economically.

      High Risk Groups from certain segments of the population, such as Native
       Americans, may have greater caries problems for cultural reasons. These
       groups are also reliant to some extent on public health services for dental

      Children up to age 18 have high incidence of caries. They tend to eat
       frequently and like high-sugar foods. Their oral hygiene is often

      Mothers are the primary source of transmission of S. mutans to their
       children. Eliminating S. mutans in the mothers could be a highly desirable
       approach for eliminating the disease.

      The Elderly are experiencing an increase in caries for numerous reasons.
       They have accumulated damage and subsequent restorations that need
       repair or replacement. They may have receding gingiva providing exposed
       dentin that is a haven for the infection. They may also have decreased or
       more viscous saliva production. This is a growing market because only
       recently have people 65 years and older retained their teeth. This group will
       become an major consumer of dental services at the baby-boomers reach 65
       and older.

      High Socioeconomic Group parents want the latest and greatest for their

      In developed countries outside the US the caries distribution is similar to
       our domestic market, modified by their local dietary habits.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                              4
      In less developed countries where refined sugar products are expensive or
       unavailable caries is more often found in high socioeconomic groups that
       can afford sugar.

2. Market Segments

 Children up to 12 years old – Treatment can begin once the child gets teeth.

   a. The characteristics of this segment are:

             They like sweets.
             Certain segments see dentist on regular basis.
             Have a strong immune defense system.
             Often are treated with antibiotics for common diseases.

 Children 12 to 18 – This group has many of the characteristics of the younger
  children, with some additional factors related to personal care and grooming.

   a. Characteristics of this segment:

             Like sweets but interest drops as they age.
             See a dentist regularly.
             They have a strong immune defense system.
             Are less frequently treated with antibiotics.
             Focus more on grooming and cleanliness.
             Less influenced by parents.

 Mothers are often responsible for transmission of the disease to their children
  so they are considered separately from the adults as a whole. In a great many
  cases, permanent elimination of S. mutans from the mother may have a large
  future beneficial effect on the oral health of their children. This would require
  killing of most of the S. mutans followed by repetitive treatment with an S.M.
  inhibitor to curb re-colonization.

   This would be done through a more stringent treatment by the dentist to start
   this improvement spiral. This in turn would be followed by treatment with
   toothpaste or rinses to sustain the resulting healthy plaque. It is believed that
   mothers would be more likely to invest in the dentist’s caries prophylaxis
   because of the extra protection that affords their children.

 Advances in dental care have resulted in the Elderly keeping their teeth longer.
  At the same time many of them experience lower volumes of saliva or more
  viscous saliva. These conditions create an environment more favorable to
  pathogenic bacteria, resulting in increased caries.

       a. Characteristics of this segment:

             Reduced saliva production due to aging.
             Medications that cause “dry mouth” sometimes resulting in the
              ingestion of hard candies to stimulate saliva production.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                               5
             Poor taste and diminished interest in sweets.
             Dietetic restrictions associated with health issues.
             Less robust immune defense system.

 Low Socioeconomic Society needs to be reached with the inexpensive products
  that can be sold over-the-counter either as potions or in common food products.

      a. Characteristics of this segment:

             Limited disposable income.
             Do not see dentists regularly.
             Poor diet usually high in fat and sugar.
             Limited medical attention.

   APPENDIX A, Figure A1, Caries Treatment by Income and Age, describes the size
   of each population segment and estimates the potential use of the most
   promising caries treatments for each.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                        6
3. Product Delivery Vehicles

   These treatments might be delivered in any of a variety of professional or
   consumer products. The best choices for each treatment modality are:

      a. Dental treatments – varnishes, special treatments and rinses, etc.

          Products such as special chemicals will probably be applied in a manner
          that keeps the active agent in the treated area for a prescribed period of
          time in a controlled environment. These will only be applied by dental
          professionals, and will not be formulated as additives to consumer

      b. Oral hygiene products containing vegetable extracts

          These natural materials can be incorporated in a variety of consumer
          products that where duration of exposure is not critical. Because the unit
          cost of the treatment is low they are suitable for repeated use under
          varying and uncontrolled conditions. Some common vehicles that might
          incorporate these treatments are:

             Hard candy – also to stimulate saliva
             Toothpaste
             Mouth wash
             Drinks (e.g., teas, soft drinks)
             Chewing gum
             Sweet foods – sweetened cereals, pastries
             Breath mints

      c. Other foods – prepared foods

          Another possibility is to engineer fruits to deliver the special chemical.
          While these would take many years to develop, this approach has
          tremendous potential because it could:

             treat the S. mutans
             get people to eat more fruit
             eliminate downstream processing costs.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                               7
4. Competitive Products for Caries Control

There are many other products on the market that contribute to a reduction in
caries. They include mechanical devices and chemical treatments that cumulatively
have led to substantial reduction in caries over the last 20 years. The products
most commonly used are described in detail in Appendix B. The entire list includes:

      Toothpaste
      Toothbrushes – including electric and sonic.
      Floss
      Mouthwashes & rinses (OTC)
      Chlorohexidine (Prescription)
      Fluoride treatments


1. Vegetable Extracts

Vegetable treatments look most attractive due to their simplicity, low regulatory
requirements, perceived ease of formulation, worldwide potential use, good margins
and perceived general effectiveness. The first vegetable products could be put on
the market within 2 years. Hurdles to be overcome are proving in-vivo efficacy to
attract distribution and support from the community, development of the right
product forms, scaling up production to satisfy the anticipated demand and
protecting the intellectual property to prevent direct competitors.

The strongest claims were that the product “promotes” or “supports xxxx health”,
and all of those labels contained the disclaimer, in bold type: “This product has not
been evaluated by the FDA. This product is not intended to diagnose, treat,
cure or prevent any disease.” There were few ways, other than package design, to
differentiate brands for any product. Even purity claims were generally absent,
although the store personnel had opinions about some companies.

The market is highly fragmented, with no company having as much as 10% share.
The store gave blocks of shelf space to many brands. Twinlab, Solaray, Solgar,
Natures Plus, Source Naturals, Carlson, Countrylife, Natureslife, NOW and Natures
Way each had about 4 x 6 ft of shelf en bloc. The salespeople claimed that some
brands had better quality control than others, and some ran tests for pesticides.
Unsolicited she mentioned that as a common problem with herbs from China.

There is little competitive advantage to be gained from taking common (or even
uncommon) herbs and putting them in a consumer product unless you can make
strong claims of efficacy that others cannot. Claiming that a toothpaste reduces
cavities means little because all of them say that. Saying that we stop the decay
process would, on the other hand, get people’s attention in a different way.

That means to succeed a company must either have a monopoly on the raw material
supply, or patent the particular ingredients. When the raw material is widely
available, as it is in DTC’s case, the commercial viability of vegetable remedies
depends on purifying, identifying and patenting the key active ingredients.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                            8
The steps in creating value for the vegetable products are as follows:

          a.   Establish natural herb sources
          b.   Demonstrate activity in laboratory
          c.   Isolate and identify active components
          d.   File patents
          e.   Formulate into products
          f.   Prove product efficacy
          g.   Complete safety testing

For a product with me-too claims to reduce cavities, the estimated time-to-market
from this point in the development cycle is about 2 years.

If claims are to made for eliminating S. mutans and prevention of caries the
following additional development steps are required.

          h.   Confirm market opportunity
          i.   Set up (pilot) manufacturing
          j.   Establish distribution channels
          k.   Obtain regulatory approval after proof of efficacy
          l.   Market rollout (with partners)

The time-to-market for this product version is about 5 years.

2. Special chemicals (SC)

The best use of special chemical treatments will be for curing established infections.
They will have a longer, more expensive development process and will require
regulatory approval before they can be sold. Initially these treatments will be
administered by dental professionals.

In the long-term SC’s have potential for delivering a caries cure to third world
countries by engineering them into everyday foods such as bananas, apples, rice,
corn, but the technology to do this is still a long way from being practical.

The estimated time-to-market for chemical treatments is:

         If applied by the dentist: – 5 years
         If applied by the patients – 7 years
         If incorporated in foods – greater than 10 years


1. Vegetable Extracts

This opportunity is based on DTS obtaining the rights to research done by Dr. Smith
on discovering natural products with cariostatic activity. Dr. Smith has logically
selected a group of 200 herbs for screening which are known in Rural traditional

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                            9
medicine as having anti-infectious activity. This activity includes both direct attacks
on bacteria and yeasts and indirect stimulation of the immune system to protect
against microbial attack. Some of them have been tested for anti-cancer uses by a
company in San Diego, which is farming the best candidates.

Thanks to Dr. Smith’s test the evaluation of some of these vegetable extracts is well
advanced, and one of them, called SC1, has shown promising anti-caries activity.
Based on this work a company has formulated an experimental toothpaste
containing SC1 and has shown that the anti-bacterial activity was stable for six
months at room temperature.

If we pursue the vegetable approach there are several steps that must be taken to
evolve this science into a business.

        -   identify the active ingredients and determining if they are unique
        -   optimize the formulation
        -   seek patent coverage of anything new
        -   secure sources of raw materials
        -   establish efficacy and determine dosage
        -   obtain the necessary regulatory approval

These are included below in Figure P1 - Vegetable Product Production Flow Chart.


DTC;s initial R&D goals are to find a formulation that is proven to selectively kill the
major cariogenic bacteria. This would allow DTC to claim greater efficacy than
current anti-caries products. This differentiation is important and valuable in the
Company’s competitive business environment.

2. Special chemical Products

Special chemicals (SC) are the most elegant and potentially the best long-term
solution because they stop existing infections. If they are applied in a long-lasting
lacquer coating the may also prevent future infections. The method of delivery can
be modified to match the culture and wealth of the infected community. In
addition, their development path is also better defined than that for vegetables.

  a. There are no topical chemical products produced or marketed today, so there
     are no current products that can exemplify a product such as special chemical
     (SC) treatment for caries. There are only a few chemical products on the
     market today and they are provided as injectibles.
  b. Producing SC on a large scale is a difficult and expensive process. The
     sterilization procedures, equipment, monitoring, etc are very expensive and
     difficult to do on a routine basis. In addition, worldwide capacity for large
     scale production is very limited and at a cost of $200-300 million to build
     such facilities, companies are reluctant to add capacity.
  c. The purification of SC is a standard process regulated by the FDA. Basically it
     consists of passing the cell and media soup through a series of columns
     followed by virus purification procedures.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                              10
  d. Since SC will be expensive to produce and somewhat limited in supply, the
     probable product concept for them is:
          SC would be a product used in special cases of caries infection and
             applied by the dentist. It would be produced and supplied to dentist
             as a frozen concentrate.
          The dentist would use this concentrate to make up dilute solutions for
             treatment. These treatment solutions could be prepared weekly and
             kept refrigerated.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                      11


   To help its research results become products to benefit the society. To do this,
    the university will assist business ventures in a best effort mode.
   In return, the university will seek a return for its support of its research. This can
    take the form of an up front licensing fee (and royalties) from profitable
    licensees or some other arrangements for start-up organizations. Recently the
    university adopted a policy to take an equity position in start up companies in
    exchange for licensing fees.
   The university allows its employees to take part in a start-up as founding
    scientists, board members and consultants. Founders’ shares in the company
    are allowed for university employees if approved by a committee to review
    conflict of interest.




e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                               12

Notes to Tables and Figures

Because caries is a slow-onset disease, the effects of new treatments and
prophylaxes will be delayed by some years. Much of the current dental expense
goes for treating cumulative damage that has accumulated over many years. We
estimate that the health improvements from new products will lag their introduction
and use by 5-10 years. However, once these new habits are adopted the benefits
also accumulate over long periods.


Figure A1: Caries Treatment by Income and Age

   a. In low income groups oral hygiene is worse, so the fraction of people at risk
      in those populations is higher than the average.

   b. Mothers are more aware of the need for dental care because of their concern
      for their children’s health. Therefore mothers will be more frequent users of
      treatments than other adults.

   c. Low income groups will use proportionately more inexpensive OTC products
      to reduce caries than more affluent people.

   d. Higher income groups will be substantially greater buyers of premium
      dentist-applied caries treatments.

   e. Children and the elderly will prefer vegetable candies to toothpaste and
      rinses. Adults will have the opposite preference.

Figures A2- A5: Effect of New Caries Treatments by Patient Age

a. Within 10 years after treatment is widely adopted:

   1. The first populations to see benefits will be the older children who began
      treatment when young. They will require noticeably fewer basic restorations.

   2. The second major reduction in basic restoration costs will be seen in young
      adults who began treatment while in their teens and had accumulated only
      moderate amounts of caries damage that did not progress very much after

   3. Older adults who began treatment as young adults will see reductions in
      basic restoration of old tooth damage. Many fewer will progress to need
      major restorations.

b. Within 20 years after treatment adoption:

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                          13
   4. These anti-caries products will be in routine use.

   5. Diagnostic testing will be reduced for all ages. Treatment will be automatic.

   6. Preventive treatment will be more directed toward periodontal disease, which
      will have lower incidence of occurrence.

   7. There will be large reductions in all restorations, particularly in older children
      and young adults who will not have accumulated any damage once they
      started using the products.

   8. Older adults who have been using the treatments for a long time will have far
      fewer restorations and periodontal disease.

   9. Dental expense in the elderly, who began using the treatments in middle age,
      will be reduced. However this lower expense/patient will be offset by
      increases in longevity and the higher proportion of seniors who retain their

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                             14


For the Dental Treatment Service business plan, toothpaste is both a competitive
product in attacking the cavity problem as well as a potential means for delivery of
natural vegetable products. For these reasons, this study was conducted to better
understand the toothpaste market.

The worldwide toothpaste market is about $5 billion in retail sales. The United
States market in 1999 was $1.7 billion and is expected to grow to $2 billion by
2003. The 1999 figure of $ 1.7 billion is up 4% from 1998 figures.

The top 5 brands of toothpaste in terms of market share for 1999 in dollar sales are
as follows:

BRAND                 COMPANY               SALES (millions)      PERCENT (%)
Colgate               Colgate-Palmolive     $475                   28
Crest                 Proctor & Gamble       444                   26
Aquafresh             SmithKline             181                   11
Metadent              Cheesebrough-         136                      8
Arm & Hammer          Church & Dwight         71                    4
Other                                        393                   23
Total                                       1,700                 100

Colgate and Crest saw sales growth from 1998 of 5.3% and 8.7% respectively. I
could not find figures for other toothpaste brands.

The toothpaste market has seen a shift over the last 10 years from standard
toothpaste products to premium products that provide tartar control, whitening,
gels, desensitizing, antibacterial and all natural ingredients. This has segmented the
market and provided the consumer an array of products for specific needs. This has
been good for toothpaste sales and, as shown above, sales are on the rise. As a
further example of this growth, the largest segment of this premium category, the
whitening segment, has seen sales growth since 1996 of 159%. Projections are that
toothpaste sales will continue to increase as producers introduce more and more
specialty products. Therefore, research and development in the toothpaste
business is very aggressive. New, active components for these specialty
products are in demand. As an example, competitors are looking for materials
that will compete with Colgates new “Total” containing triclosan. This could be
a good opportunity for vegetable based antibacterials particularly for the all
natural segment.

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                           15
Toothpaste is composed of several ingredients, each of which provides a functional
important component to the finished product in its effort to fight cavities and
periodontal disease. Below are the various functional component categories with
examples of the chemicals used.
      Abrasives are added to toothpaste to remove debris, plaque and bacteria
      from the tooth surface. Polishing agents are added to polish the tooth
      surface and improve appearance. Often these are the same component.
      Materials used in toothpaste for these purposes include calcium carbonate,
      sodium bicarbonate (baking soda), dicalcium phosphate, sodium
      metaphosphate hydrated aluminum, silica, and sodium pyrophosphate.
      Natural toothpaste use baking soda or sea salt. Many of these compounds
      including baking soda have the added feature of neutralizing acids that are
      produced by cavity forming bacteria.

      These are components added to toothpaste to kill oral bacteria and to reduce
      the formation of cavities. The leading substance added to toothpaste to do
      this is fluoride. It is the most effective material as an antibacterial and cavity
      preventor. It functions topically by inhibiting the growth and acid formation
      of the bacteria. It functions systemically by becoming part of the tooth
      enamel making it more resistant to demineralization. It is a proven substance
      for cavity prevention and is used widely in most toothpastes. It is added as
      sodium fluoride, stannous fluoride and sodium monofluorophosphate.

      Other compounds that fall into this category include sodium dehydroacetate,
      zinc citrate, sodium lauryl sarcosinate, Neem, tea tree oil, xylitol, chlorine
      dioxide, myrrh resin, mastic gum, thymol, eugenol, eucalyptal, Echinacea,
      goldenseal and other natural plant extracts. A recent antibacterial added to
      toothpaste is triclosan, a broad antibacterial found in soaps. Triclosan is
      found in a new toothpaste introduced by Colgate called “Total”.

      Humectants are materials added to toothpaste to keep it moist. They include
      compounds like propylene glycol, glycerin, and sorbitol.

      These are added to improve the flavor of toothpaste. There are many such
      substances added to toothpaste for this purpose. A few examples are
      saccharin, sorbitol, peppermint, spearmint, wintergreen, cherry, cinnamon,
      fennel, ginger, anise, as well as various natural extracts and oils.

      Subatances in this category provide stability, smoothness and consistency to
      toothpaste. They are sodium hydroxide, cellulose gums, hydrated silica,
      carrageenan, and gum tragacanth.

      Desensitizers are substances added to toothpaste to make the teeth less
      sensitive to conditions such as hot, cold, acid, base, etc. Common

e17ad1d6-6bca-4c5c-b878-5a72091f3755.doc                                             16
       compounds used in toothpaste for this purpose include potassium nitrate,
       sodium citrate, and strontium.

      Binders help hold the toothpaste formulation together. Some examples are
      sodium alginate, bentonite, and carrageenan.

      These are added to toothpaste for foaming and cleaning. A common
      substance used for this is sodium lauryl sulfate (SLS). Natural toothpastes
      replace SLS with xylitol.

      Lubricants help toothpaste flow smoothly from the tube and over the teeth.
      Glycerin is the most widely used compound for this purpose.

   10. COLOR
       Artificial colors are used to color most toothpastes. Titanium dioxide is
       added to make the paste opaque and white. Natural colors are used in
       natural toothpastes and include annatto as well as fruit and vegetable

       Preservatives are added to toothpaste to provide extended shelf life to the
       product. Common preservatives include p-hydroxybenzoate, methyl paraben,
       citric acid, and natural extracts.

The newest product in this category is Colgates “Total” containing the antibacterial
triclosan. This is a broad spectrum antibacterial that has been used in antibacterial
soaps. To use this in their toothpaste, Colgate had to conduct several trials and get
FDA approval. Triclosan is a somewhat controversial compound in that many
experts warn that its use will only promote strains of microbes that will develop
resistance to this antibiotic. Market analysts project that competitors will be
introducing similar toothpastes with antibacterial additives.

Gel toothpaste are not new, but were one of the first products to separate
themselves from the standard products. Gel toothpastes are offered by all of the
major toothpaste producers and are generally promoted as a breath freshenesr. The
Aquafresh brand is one that exemplifies this. Mixtures of gels and white toothpaste
are also available in unique tubes to deliver both to your toothbrush.

Whitening toothpaste is another premium category that has seen excellent sales
growth over the last 6 years. All major toothpaste producers provide whitening
formulations in there produce lines. Whitening is promoted through the action of
baking soda as an abrasive stain remover coupled with hydrogen peroxide. These
products only remove stains from the surface of the teeth and do not penetrate the

Toothpastes are offered that desensitize your teeth to hot, cold, acid, base, etc. A
line of such products is offered by Block Drug Company, Inc. under the brand name

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“Sensodyne.” The desensitizing is done through the use of nitrate compounds in the
toothpaste formulation. Combinations of desensitizing and whitening or gel
formulations are available.

“Enamelon” is a toothpaste introduced in 1998 by a startup company called
Enamelon, Inc. This product addresses the issue of repairing cavities through
remineralization. The company offers a toothpaste that contains fluoride and
proprietary formulations of calcium and phosphate ions such that the saliva
concentration of these ions is enhanced to promote repair through remineralization
of decay sites. Some of this technology was developed within the company and
some was licensed from the American Dental Association Health Foundation. The
product and the company are doing very well. They are in the process of offering
other toothpaste and dental care products.

A new product from Arm & Hammer addresses “nighttime breath”. This toothpaste
contains zinc citrate that is to inhibit the growth of oral microbe overnight thus
preventing “nighttime breath”.

All natural toothpastes are another premium category that is growing well. There
are numerous products on the market from a variety of marketers including Toms
of Maine as well as foreign producers. These products usually contain fluoride,
baking soda, peroxide and various natural extracts. Vegetable extracts are
promoted heavily by this market segment. A product called “Enamel Saver”
markets a sodium lauryl sulfate free toothpaste that contains xylitol in its place.
One natural toothpaste offers a product containing aloe vera that is suppose to
promote healing of gum and mouth sores.

A unique product is offered by a company named Body Electric of Colville, WA. Their
product is called “Pristine”. This is a tooth cleaning oil made from cold-pressed
essential oils of mint and almonds which are known for their antibacterial
properties. It does not contain any fluoride, abrasives, foaming agents, sweeteners,
emulsifiers or preservatives.

There are many toothpastes offered on the market, but most fit within these
categories. The flow of such products is expected to continue as consumers
become more educated on dental disease.

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Sales of mouthwash in 1999 were $677million. This was up from 1998 by 3.8%. The
top 5 leading brands were:

                 BRAND             SALES (millions)
                 Listerine         $293
                 Private Label      133
                 Scope              111
                 Plax                38
                 Act                 19
                 Other               83
                 Total              677

The mouthwash market has been growing but not a t the rate of that of
toothbrushes and toothpaste.

Mouthwashes contain fewer functional components than toothpaste, but they do
have some important key ingredients.

All mouthwashes contain some form of antiseptic or antibacterial. Over the counter
products usually contain alcohol, cetylpridinium chloride or methyl salicylate as an
antiseptic. They may also contain sodium fluoride. Prescription mouthwash contains
the antibacterial chlorohexidine.

Additional functional components in mouthwash are flavorings and colors. Common
flavorings include sweetness as saccharin, mint, spearmint, peppermint, thymol,
eucalyptol and vegetable extracts.

Mouthwash products generally fall into one of three categories based on the market
they are addressing. These three categories or market needs are breath freshening,
teeth whitening and dental hygiene.

In the category of breath freshening, mouthwash is marketed to people seeking a
treatment for bad breath. Listerine and Scope are examples of products that
address this market. These products contain antiseptics to kill bad breath forming
bacteria and a heavy dose of flavoring to temporarily cover bad breath. Research
has shown that mouthwashes have an immediate effect on bad breath but long term
they are not effective in eliminating the problem.

The mouthwash whitening market is relatively new. Products in this category are
“SuperSmile” mouthwash and products made by Polident. These products contain
antiseptics and flavorings but also contain baking soda and peroxide to enhance
teeth whitening. Their effectiveness is unproven.

Mouthwashes that attempt to improve dental hygiene are of greatest interest to DTS
and its business plan. There are several products on the market that claim to
remove plaque, kill oral bacteria, reduce gingivitis and improve overall oral health.

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PLAX is a mouthwash that is designed for used before brushing to loosen plaque for
easier removal on brushing. No information could be found on its special active
ingredients. Listerine and other major marketers of mouthwash make a tartar
control product that is suppose to reduce the formation of tooth tartar when used
regularly. Several natural mouthwashes are sold that contain an array of natural
substances such as vitamin C, vitamin E, Aloe vera, witch hazel, tea tree oil (oil form
the tree Melaleuca alternitolia) and numerous vegetable extracts. These are claimed
to kill bacteria, improve healing, reduce cavities and reduce gum disease. As an
example, natural products such as these are available for companies like Toms of

A few unique antibacterial products are “ANTI-OXIDANT” and “ClosysII”.
ANTIOXIDANT is a mouthwash marketed as an immune system supplement to boost
the immune system to prevent gum disease. It contains vitamin C&E, coenzyme Q,
alpha lipoic acid, grape seed extract, selenium, Aloe vera, and a proprietary delivery
system. Its effectiveness is unproven. Closys II is a mouthwash that contains
chlorine dioxide as an antibacterial. Product claims are that chlorine dioxide is more
effective than other antibacterials.

To complete the review of mouthwash products, there are several products
marketed that are alcohol free and/or saccharin free. There are also mouthwashes
that are two phases to get the desired effect.

In general, OTC mouthwashes have been shown to have little effect on controlling
plaque and oral bacteria and they are no substitute for brushing. The one positive in
mouthwash is fluoride. A mouthwash that contains fluoride has been shown to be
effective in enhancing the protective effects of fluoride in toothpaste.

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