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Again, a supposition based on FUD. However, if paying attention, investors have heard from Nasrat over more than the last CC and he told us in so many words that he anticipated one of two things - LCI would terminate or Elite would. With a quota for IR that belongs to Elite and new capabilities to sell XR that LCI did not do, not only will the workers likely become busier, Elite will likely generate additional revenues and increase the valuation of the business. That is the more likely reality, not the FUD getting tossed around. I really have no idea how it is that investors in a company can believe a CEO that turned the business around would somehow forget trigger points in the business like contracts and partnerships.
In a few months, there will be...WILL BE...a new distribution mechanism announced...and yes, it will be announced.
As to this feeling about Elite's employees...
I’m embarrassed for every employee at that company.
Thanks for the post in reply. Not to put too fine a point on it but manipulation would show up when we have 1+ million shares traded just enough to keep a lid on the price. But, I would remind what I have written before, with the link...
https://www.griproom.com/fun/tag/stock+manipulation
The manipulator’s comment blames management, particularly the CEO for almost everything. Does this sound familiar?
“Worst CEO in history.”
“Fire the CEO and everything gets better.”
“CEO raking in millions while we suffer.”
Well...
Since you are so concerned about stock manipulation
That is correct...
MULTIPLE interviews have ALREADY been conducted.
Nasrat ain't playin' around.
-"We have also interviewed VPs for sales and marketing to be ready to select somebody as soon as we -- if we hear from Lannett."
That is correct...
While interlocking directorates are no longer illegal
C'mon man, giving answers to the test is not allowed!
A dr should be able to do research to find answers to the most difficult questions about a highly complex company like NWBO. One would think!
The outcome of that search for experts to weigh in on NWBO will be of great interest, though not holding my breath...
Is Nasrat doing gig work as a MM? Inquiring minds want to know! Wait, no! That would be a conflict of interest. And before anyone jumps in on the obvious, allow me to remind posters that Mikah is not in conflict with Elite because it is not in competition and that is what matters according to the SEC. Do the research.
As for Mikah and the statements of it having ceased operations...given the need to save the SunGen portion of the Adderall IR/XR from going to a firm that could put Elite in conflict with joint decisions, it appears Nasrat reengaged them in business. Imagine what might happened with the loss of the LCI contract. Such incidents often lead to the collapse of a partnership and/or an argument about who should be partnered with. The idea of creating its own function and focusing on a new distributor would be complicated if not for Mikah. Once again, a business "thing" that should be understood. Kind of like buying the building removed the need for pulling gear out then into another facility, at a notable cost and hit to Elite's profitability; not to mention the need for an FDA re-inspection...which are being delayed due to the pandemic impact and putting manufacturing offline.
Finally, about any thoughts of purchasing the Mikah holdings, as I have posted before, Nasrat would be economically better off with Elite being fairly valued. Buying the Mikah holdings will only happen if it makes economic sense for Elite. Again, because Nasrat's future is not tied to Mikah, it is tied to Elite.
One more thing...there is an over the top argument about how many shares Nasrat has. Over the top because it really fails the business recognition test. One point on that...most...MOST...CEOs are criticized for not holding enough shares and/or for selling shares (no Form 4s = no sale of insider shares). Again, a little research would help with that understanding. Nasrat has NO EXIT plan without Elite being M&A'd. To ensure that can happen, Elite needs more drugs in development and commercialization. When that happens and the revenues approach $100M, it will be done. Just so we are clear, Elite has increased revenues 4X in three years with one main drug...thanks to LCI mostly selling Adderall IR v. XR. To hit $100 M in revenues is 3X from where they are now! Think about it!!!!!!!!!!!!!
When conducting an analysis, it is important to look not only at the known but, upon analysis, the more obviousness of the unknown; which is often the basis for thoughtful analysis and assessment. With that as my grounding...
As to Elite, assessing business success is done when recognizing the CEO, with a company near bankruptcy (likely Chp 7 liquidation), faced with an FDA CRL and the inability to fund the business, is able to turn that around by pivoting to a new product line, attaining 4X revenues over the last three years and, in what is the sine quo non of business success - profitability, then gets a business loan that serves as proof of business concept and makes a strategic asset purchase (the building) that prevents a notable capital outlay, in 12 years. Further, if we consider when the company became profitable, it is sooner than Moderna, Alnylam, and a number of other larger firms. With these irrefutable facts, my evidence lies in the dulcet claims of Sherlock Holmes...
When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth.
Opinions about business that are ungrounded to research based facts. As business analysts and management know, all that business management can control are the business outcomes and on that end Nasrat has delivered. The share price commonly responds to the business results. As they have been stellar (again, a 4x return over the past three years), what would explain the issues with the share price cannot be tied to management performance at Elite. As any business research shows, the share price should follow the business results. For Elite, they are stellar and getting better. Why is the share price not following positive results as it does according to all business research? As Sherlock Holmes said, “There is nothing more deceptive than an obvious fact.” It is manipulation of the share price on the OTC!
Lots of ungrounded opinions. Facts? How about a couple of facts in contradiction?
Elite has three years of increasing, 4.3X revenue growth and profitability. Since less than 38% of all publicly traded companies are profitable, I would suggest any consideration about Elite being poorly run or a financial sinkhole is factually ungrounded.
Agreed. Focus on what has been done at NWBO. That is, after all, what people are invested in.
bio, I used to teach a case to MBA students about Enron. There is only so much to say without a deep dive (e.g., Nigerian power barge transaction to provide a sleight of hand accounting; bonus-able objectives tied to questionable outcomes). In truth, the problems were focused more than widespread, as you noted with this...
The actual scandal involved very sophisticated and fraudulent transactions that only the top most executives knew were fraudulent. Their accountants and some others at other firms were were instrumental at making those false transactions possible and giving them the appearance of legitimate transactions.
Sorry, why is this funny?
All were transacted Sunday 8/28 lol
Interesting and spot on point about the Elite BOD. I have pointed out to them how we have a 91 year old member! In fact, when looking at their backgrounds, I made some suggestions about new members, including someone to represent the long suffering shareholders. In my recommendation to Nasrat, I specifically excluded myself, as that seemed a conflict of interest. I did, however, recommend WeezHul, given his medical training and that he has spoken in an FDA AdCom on opioids, as memory serves. There are a couple of others - "winechemist" comes to mind, and a couple of others with nom d' plume's that escape me. Just to be clear, I have said this more than a couple of times...no response and, of course, no mention on the calls about the BOD.
I would be pleased if it was mentioned by everyone sending in questions for the November Q call about updating and upgrading the BOD, including a representative from we long-suffering retail investors.
After posting it, I realized...so my bad!
Treasury consultant is an interesting role. Nice. I expect you know about the Altman-Z score? Remember when it was said Elite was going to BK and an Altman-Z was done to show it was not? And Altman-Z is still in use, as you know.
I had absolutely no clear insight on NWBO management when I decided to invest. Frankly, I am not sure of management and absolutely am not a fan of Powers being Chair, CEO, Chief Financial Officer, Chief Accounting Officer, Chief Chef or whatever else she claims as a title. While management matters, it is about the business. Smart people with a bad business rarely yield success.
As for investors, they may be "owners" but they have no clue about the complexity of the decision-making process that is the basis for business outcomes. If decision-making is a psychological construct (it is), then I look for the actions by the company that are born of management decisions and reflected in discernible outcomes. Business development unfolds in certain and predictable ways and, to me, the proverbial ducks are in a row for NWBO and the final linchpin was this...
Northwest Biotherapeutics Announces Approval of Pediatric Investigation Plan (PIP) by MHRA.
Sort of like saying the FDA would never approve any drug submitted by Elite...
Or saying Elite will go bankrupt...
Or that Elite would never be profitable!
Sometimes mistakes are made, misapprehensions of reality occur. Happens with even excellent managers. Remember "New Coke"?
Normally I am not one to weigh in on trivial matters, but this is not trivial. Well done on the valuation. Even if back of envelope, the ability to provide some grounded numbers is excellent. Thank you!
N2K
Many thanks for your considered research perspective...
N2K
I could not agree more completely with this...
Both parties working on each other’s concerns is a really, really good sign for quicker agreement.
This is absolutely spot on...
it's actually much easier in the UK with a single primary payor
LCI's problem is not merely total debt, but the 29% reduction in revenues YOY, including in 7 of 10 product categories, with CNS down 3%. But, hey, that does not even account for their failure in commercializing Elite's XR. Interestingly, last year when their p/s was above $5 (now 50 cents), they told the analysts on multiple Q calls they were going to hit one billion dollars in revenues by 2024-2025. Oops!
As to this...
Once NH blabbed at the Conference that he had not received notice yet, he was, in my opinion, duty bound to reveal it
That is not what they want to do...but their continuing decline might mean their only way out of onerous debt is Chp 11. Looking at their future drug development and commercialization, getting out of debt would enable them to start anew. With BK they could go private and work to build the business back up, given their 80 year legacy. After which, they could do an IPO in ~ 3 years and accumulate new assets through stock sales. Still BK is often when a new C-suite (or at least CEO) is brought in. So not something Tim Crews wants to really do.
No!
I say we go alone with the IR but get a big pharma for the XR.
Interesting point. First, "materiality" appears a fluid concept the SEC does not focus on. I commend Elite for the PR, as it should have. As for LCI, they likely did not want to PR that they were ending an agreement that brought in revenues, when their revenue decline has been precipitous. Further interesting is that they decided to let Elite know AFTER their annual report and analyst conference that reported the following...
LCI after-hours on Wednesday posted Q4 non-GAAP EPS of -$0.44 compared to -$0.19 a year ago, and net sales of $74.19M versus $106M last year.
I agree...
as it relates to business...
Theres no way to spin this.
How about answers?
1. Going from depending upon a known professional distribution and marketing partner to finding a suitable replacement is an easy transition?
Answer: First, I recall LCI being lambasted as a failure, then as foolish for entering an agreement with Elite, and now they are the bastion of professional distribution? Albeit a firm near being tossed off the NYSE and close to Chap 11. Please! Nevertheless, since it is clear Elite anticipated the termination of the agreement (as the many comments on past CC's would infer), the company has been engaged in a succession process. Easy, no! But easier when an experienced manager like Nasrat anticipates and takes action. Nasrat has been talking about this for the past few Qs and I have been listening. I even posted about it.
2. Building their own in-house distribution and marketing where Elite has had little to no experience is 10x more risky, not to mention the financial burden
Answer: I find the use of an approximation of 10x to be mathematically ungrounded to some data set provided as support. Moreover, building distribution and marketing in a business is not about whether the company has done it, even if so it might not have been done well. The issue for Elite is whether it can be built. However, that is what new companies do, that is what small companies do, that is what bigger companies often re-do. What matters is to source and hire the best talent possible. As for a financial burden, the converse is more likely. A little analysis of Elite's licensing fees provides a rough understanding of what it gets in annually. No way a small group costs what the fees would bring in. Moreover, with their other products brought in-house at some point, Elite would benefit from efficiencies from the learning curve. That translates into greater profit from the same effort.
3. Dont forget no matter who is hired, they are taking direction and orders from the CEO, who is not an expert in this
Answer: This presupposes Nasrat is subdued by the fallacy of micromanagement. What anyone who has hired talent knows is that you hire the right talent and get out of their way. Any manager with experience knows this. As do I, having hired talent and let them do their job. Nasrat did that exact thing when he was a VP at that pretty sizable pharma firm he once worked. In truth, he is likely to hire better talent than what is leftover at the sinking ship, LCI, which has been shrinking its labor force and selling assets. It may also tell investors why XR has not been sold effectively by LCI.
4. Either path has many potholes and adds additional layers of risk for investors.
Answer: Experience in business management tells me that no path is without challenges. As to risks for investors - Seriously? There are always risks! Business is ABOUT managing risks and Nasrat has and well, He managed to move Elite from near BK to profitability, while increasing assets and stopping dilution. The sky is not falling! Funny how various ungrounded risks to Elite and shareholders have fallen to the side only to be revisited again, as if long-term investors were not paying attention the first time.
Really? Perhaps this suggests a need to pay more attention to Nasrat's actions...remember Dexcel?
Outstanding post that effectively encapsulated the facts about Elite's position (pun intended). Always appreciate your professional input.
Well said and anyone with your knowledge likely long recognized that - "It's not a matter of if but when." Elite moving on from LCI was going to happen and you are right about it being better served with a different means of distribution.
As I pointed out in a post, in the last CC Nasrat illuminated that reality, even if we did not seem to acknowledge it. In fact, I expect he had been informed the letter was forthcoming, based on his little Freudian slip...We are going "to be ready to select somebody as soon as we -- if we hear from Lannett."
Just so we are clear about opportunities that come from the end of partnerships...SBUX ended their distribution relationship with Kraft and it was lamented by analysts as the death knell of growth into groceries. As it turned out, not true! (Before any misapprehension of reality, this was anecdotal evidence not a means to an absolute comparison.)
Thanks and as to your question...
I remain unsure whether LCI can sell to the customers they obtained to sell Elite's Adderall. If they can't, and Elite has the names of the pharmacies LCI serviced eg. CVS, Rite Aid, Walgreens, why can't Elite have its own representative call the companies to assure them of continued product,
Item 1.02 Termination of a Material Definitive Agreement
On August 23, 2022, Elite Pharmaceuticals Inc. ("Elite”) received notification from Lannett Company, Inc. ("Lannett”) that they are terminating the License, Supply and Distribution Agreement for Mixed Salts for Single Entity Amphetamine Tablets and Mixed Salts for Single Entity Amphetamine Extended-Release Capsules ("Amphetamines Agreement”) effective as of March 31, 2023. All marketing rights will return at that time to Elite and its partner, Mikah Pharma LLC.
In anticipation of the return of the marketing rights, Elite will either develop its own sales, marketing, and distribution system to sell products under an Elite label or choose a replacement sales and marketing partner. Elite will move forward with the most financially attractive alternative.
Good to see you weigh in and I concur. In fact, the numbers could turn in Elite's favor. But, amidst the many concerns that Nasrat sits in his office and counts his shares, this event will show whether he is the business leader Elite needs to guide it forward. I think he is and, as I have said, he has not been waiting for events to unfold before acting. This was obvious if paying attention to the last Q. Here is what he said...
We have done very well to-date with our partner Lannett. And as I stated before, they have approval for their own IR and ER, we have not received an official notice that Lannett wishes to terminate the sales and distribution agreement for these products. However, okay, we cannot take anything for granted. We need to take and/or take in all the necessary management measures to protect Elite, if that happens. By finding and searching for a new sales and marketing partner just in case or by going at it ourselves.
To that end, we are getting licensed in all 50 States each State has its own unique requirements. We have already filled out the applications for all 50 States. And we have already received responses from more than half of them that we are already approved, so we’re approved in half and the other half are pending. We are interviewing three PL for distribution, we do not have warehouses, we do not have distribution systems. This is what Lannett and TAGI and Epic do on our behalf. So we're interviewing third-party logistics for distribution and comparing prices to find the best deal for a small company like us. We have also interviewed VPs for sales and marketing to be ready to select somebody as soon as we -- if we hear from Lannett.
The stakes are too high for us not to be ready, in case if that happens. Having our own sales and marketing force is something that I've always wanted for Elite. I was planning on it once we get few more ANDAs, and maybe four more, to make it financially more feasible. But this may accelerate the process and whatever happens, we'll be ready for it.
Let me repeat the last line for emphasis..."WHATEVER HAPPENS, WE'LL BE READY FOR IT."
That is scenario planning at its best!
Despite the fear induced apoplexy, you are right and that is why Nasrat has been in the process of gaining licensing. This is not a harbinger of bad things, it does not portend LPC-4, they did not get the loan because of this and it is not SOX revisit. While it might be there will be a drop in revenues reported in Q1 2024, they have time to work to fill the gap and the customers that bought Elite's IR/XR will be primed to buy from them. The drugstores want to ensure they continue to receive product and it was Elite that received the DEA approval for the products being distributed...NOT Lannett.
OBTW: An exclusive marketing rights agreement is made between a company and a distributor. The agreement grants the distributor a portion of the profits from the company's sales in exchange for promoting and selling the products. It is an exclusive agreement that gives only one distributor the authority to sell the company's products. With the termination of the agreement, ALL rights are returned to Elite, which means LCI cannot sell to the same customers under the terminated agreement.
LOL, I believe you might have competition :)
Fact free opinions about NWBO are not convincing, but that's just me and my opinion...
A little research found this...
Tax at Exercise
When you exercise warrants to buy the underlying stock, you pay the stated strike price to the issuing company. The difference between the strike price and the price of a share, minus the cost basis, is taxable income. Suppose you exercise warrants with a strike price of $30 per share to buy 100 shares of XY Company and you originally paid $500 for the warrants. Your total investment is thus $3,500. If the market price on the day of exercise is $50, the stock is worth $5,000 and the difference is $1,500. This $1,500 is taxable as ordinary income in the year of exercise. It is not a capital gain because you did not own the shares prior to exercising the warrants.
Capital Gains and Losses
You can sell the shares you acquire by exercising stock warrants immediately. If instead you decide to hold on to the stock, the exercise price becomes your cost basis. Any further gains or losses are capital gains or losses. If you sell the shares one year or less from the date of exercise, you have a short-term capital gain (or loss) that is taxable as ordinary income at the same rate as your other income such as wages or salary. If you hold the shares for more than a year after exercise, it’s a long-term gain or loss. Long-term gains are taxed at a maximum rate of ~ 23 percent.