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What about charging shareholders $10M for 13 dud ANDA's, five of which were for phentermine (infamously known as the better half of the dangerous Fen-Phen diet pill)? What about $1.2M for decrepit trimipramine (a strongly anti-cholinergic drug that rightfully resides on the Beer's List of dangerous drugs)? What about the $10,000/month in interest shareholders are paying Nasrat just for trimipramine?
How did the FDA drive him to do those unfair deals with shareholders, with whom he has a fiduciary responsibility? It's time to stop making excuses for the bad behavior of our leaders and hold them accountable for their actions. It's time to expect better from Elite management.
I for one would like to be the first to offer my congratulations for winning this argument with no one. I said from the start that Chesapeake reducing outstanding and authorized shares required two votes from shareholders. I am shocked that it seems so unfamiliar to so many investors that a company can reduce their authorized shares if they choose to. It is commonplace for a company undergoing a reverse split to take the steps necessary to reduce authorized shares at the same time they reduce outstanding. It is so common, in fact, that it barely deserve any discussion at all, unless of course, one is deliberately trying to distract from the relevant, company-specific discussion at hand.
Context does matter. First, the authorized share increase had nothing to do with Series J conversion. There was no need to convert those Preferred shares now or ever. There were interest payments coming due, but Nasrat could have dealt with that with a simple letter, exactly like he did for the alleged ratchet provision. Whatever the stated reasons, the only true reason why Elite had to increase shares immediately is because of LPC III. Without available shares, no LPC III. Without LPC III, no access to capital. That was the only real urgency that required the immediate authorized increase, not Series J conversion.
Second, nobody from Elite ever said that if shares are increased then an RS would not be needed. Nasrat has discussed RS on multiple occasions, saying the company would only do it from a position of strength. It would have been a disaster to do before there was real revenue, but it makes perfect sense if the company is able to steadily increase earnings. What would have been impossible in 2019 becomes very reasonable in 2021.
Finally, when did something being pointless ever stop Nasrat? Remember how excited everyone was when Nasrat declared there would be one ANDA filed every quarter? Those are all gone now, sold off for pennies on the dollar. Pointless. Remember SequestOx, Nasrat spent $50M to develop this and then forfeited the game with 2 minutes left in the 4th quarter. Pointless. I disagree that a reverse split would be pointless, but even if it was, it wouldn't stop Nasrat from doing it.
Investors who believe that ELTP's recent increase in authorized shares will prevent an eventual reverse split are just fooling themselves. It's definitely going to happen. The only questions are when and what ratio. IMO, sooner is better. What would this company look like with $10M in earnings and 100M authorized shares? Those are both reasonable, objective goals that are achievable in the 2021-22 time frame. Or, we can just keep doing what we're doing, which seems kind of pointless.
It's ha ha funny that some investors believe this stock is not going to reverse split in the next few years. It is oh my funny that the same investors do not understand that a company controls their share structure. If they wish to reduce the authorized shares at the same time they reduce outstanding shares in a reverse split, then they are welcome to do it (and many do!). A recent example off the top of my head is Chesapeake Energy, who did this exact thing in April 2020. Shareholders approved both reductions at the same time. There are a multitude of obvious reasons why companies would want to reduce both outstanding and authorized shares. It is a routine process, and no capital letters or superlative punctuation is needed to explain it or understand it.
Challenge to all investors: for every ONE example posted to this board of a public CEO who does non-arm's length deals with his own private company, I will post FIVE examples of companies who reduced both outstanding and authorized shares during a reverse split. Very simple. Good luck.
BTW, I'm ready for it. 15:1 reverse split, leaving ~75M outstanding and ~100M authorized. Stop pretending it might not happen and get it over with already.
Yes, with caveats. It is true that I continue to stay invested in ELTP, but the philosophy is different. I used to believe that this stock would eventually do well based on fundamentals. When all the cards were finally in play, the earnings would go up and the share price would go with it. I still believe that, but I no longer have any faith in the hand we are playing. The Adderalls alone are not going to move this stock with a billion shares outstanding, and there is nothing in the pipeline that will provide any additional revenue for at least several years, maybe longer.
I continue to hold ELTP because we have not yet reached my exit ramp. This stock has a history of making moves for non-fundamental reasons. It will again, multiple times, and I will use those opportunities to make a graceful exit. Not sure what those triggers will be. Outside investor? development plan? abuse-deterrent ADHD? reverse split? rumor and innuendo? The 2014 run had no trigger at all. Who knows what the impetus will be for the next move, but it does not seem like it will be earnings.
I invest on fundamentals, and Nasrat has sold off or cancelled the fundamentals of ELTP. I'll wait for next gimmick, but this time I'll recognize it and act on it.
It's probably a good time for all of us to remind ourselves that ignoring gross behavior doesn't mean it didn't happen (and won't continue to happen).
I never made any argument that Nasrat just gave away the opioid ANDA's to Nostrum and thereby screwed himself. My argument was that selling the extremely valuable ANDA's for pennies on the dollar has the APPEARANCE OF IMPROPRIETY, especially when the CEO has a secretive private company and is also a member a secretive investment group (Epic). There are many ways for Nostrum to secretly return Nasrat's generosity, without any benefit to Elite shareholders. Mikah and Epic are the most obvious vehicles. The APPEARANCE OF IMPROPRIETY is why the boards of publicly-traded companies don't usually allow their CEO to run secretive private companies on the side, not to mention making non-arm's length business deals with that private company. Can anyone find any examples of similar arrangements, where a public CEO does business with his own private company?
Also, if Nasrat's goal is to continue to increase his percentage of ownership, then it is to his benefit to keep the share price low, until he is ready to let it go. Mikah is a tool for Nasrat to enrich himself while he keeps Elite poor. And as for Nasrat owning 26%, I've already addressed that. If he sells the company for 10 cents per share, he'll get $24M just for his pathetic 13 ANDA's. Add millions $$ more for garbage trimipramine. 100X his investment. Cry me a river, poor Nasrat.
Feel free to ignore whatever facts are causing cognitive dissonance, but don't expect the rest of the world to wallow in the same ignorance.
Before using any superlative punctuation, one may wish to familiarize themselves with the FDA's site transfer process. For example, Elite applied for site transfers for dantrolene and loxapine in early 2017. They received approval and launched dantrolene more than *two years later* in 2019. They just recently received the approval for loxapine and have not yet launched it. It is unrealistic to expect Nostrum to commercialize multiple ANDA's within a year of acquiring them (Nov 2019), and it is just plain silly to make ill-conceived conclusions about the ultimate commercial viability of those ANDA's.
Nostrum may have played Nasrat like a fiddle, but the FDA sings to a different tune.
Thanks for the reply, YJ4LIFE. Yesterday was the first day of school, so I'm sorry I couldn't respond to this sooner. I'm like an Uber driver for teenagers. This is the most important question. It really is what it's all about, isn't it? What can we do about these shenanigans that isn't just whizzing into the wind?
Step One: Realize Something Ain't Right. Step Two: Identify the problems. Step Three: Send your concerns in a letter addressed to individual members of the Board and copied to G. Kenneth Smith, VP Legal Affairs. Step Four: Copy & Paste your letter to the SEC as an investor complaint.
Step Five: Stay active. Present fact-based arguments and rebuttals. Consider all evidence-based statements, but recognize unsupported opinions for what they are.
As shareholders, we have been too complacent with our investment. The Board allows Nasrat to run Mikah like he does because nobody has objected. It's time to let them know how we feel about it. Be respectful. Use your own words to describe your concerns. Identify specific transactions that you think are a problem and explain why. Don't forget to CC VP Legal Affairs, and remember to bypass Dianne. She is not here to help shareholders communicate with the Board. She is here to shield the Board from shareholders. Send an individual copy addressed to each Board Member and Ken Smith to Elite HQ in Northvale.
One complainer is a pest, scores of investors sending letters to the board and complaints to the SEC is a real problem. Supposedly, Nasrat is super-afraid of getting sued. Let's find out how true that really is. It is time to expect better from Elite management. Something Ain't Right.
"As a business man", Nasrat's first role is CEO and board member of Elite Pharmaceuticals. He has a fiduciary responsibility to Elite shareholders. There might be ways he could conduct private business in a way that does not conflict with his ethical and legal responsibilities to Elite shareholders, but so far Nasrat has ignored every single remedy available to him. He hides his self-dealing behind the Mikah shield instead of disclosing the details that are most important to Elite shareholders. It is true that every deal between Elite and Mikah has been a sweetheart deal... for Mikah. Elite shareholders get screwed over by Mikah every time.
The playbook is right there in front of you, as previously witnessed with the original 13 ANDA's and trimipramine. Same thing is happening with Adderall.
1. Inflate purchase price >10X, accept promissory note with 10% interest, due in a few years.
2. When total payment is due, accept shares.
Shareholders gave Nasrat a promissory note for $10M for 13 ANDA's worth a few hundred thousand dollars, at best. He collected interest for several years so that shareholders owed him >$13M by the time he converted to Series I Preferred. He gave himself another 79M shares for converting to Series J Preferred. This is how Nasrat turned 13 junk ANDA's into 237M shares of ELTP. Hardly a sweetheart deal for Elite shareholders. How many decent ANDA's could Elite have developed with $13M+??? Instead, we got 5 ANDA's for phentermine and a "deal" with Nasrat's partners at Epic, who took the blame for sitting on these worthless ANDA's for multiple years. Had these ANDA's been commercialized in a timely fashion, Elite shareholders would have realized much sooner how badly they had been snookered by Mikah. Nasrat's Epic partners played an important role in hiding the malfeasance of the original deal for 13 ANDA's.
Need more evidence of sweetheart deals? Look at trimipramine. Mikah paid less than $50K for this crap ANDA, probably much less. As per his usual, he hid the details behind the Mikah shield. He then inflated the price substantially and accepted a promissory note for $1.2M. Now Elite shareholders already owe him $1.6M and will owe $2M by the time Nasrat accepts shares for the total amount.
Enough. Enough of this bullshit. By the time Nasrat agrees to let Elite have these ANDA's, he will inflate the price to $30M+. He will accept a promissory note for the amount with 10% interest for multiple years. He will eventually get $50-$100M in ELTP shares for these two ANDA's that cost him $3M. Meanwhile, Elite shareholders will continue to experience substantial dilution at historically-low share prices. He will continue to fleece Elite shareholders by using Mikah as a secrecy shield. If he's willing to accept a $1.2M promissory note for trimipramine, why not accept a $3M promissory for the Adderalls now? The only reason is because it doesn't suit Nasrat's personal needs and desires. When he places his private company ahead of Elite shareholders, it is a direct violations of his fiduciary responsibilities to Elite.
1. Comparing Elite with Purdue is delusional for any number of reasons. Nobody really believes there is any rational comparison between the business practices of these two companies. Purdue's behavior is not a legal risk for Elite. Elite manufactured and sold generic opioids since 2010 without any legal interference ever.
2. There is zero evidence of any "pressure" building in the stock price, which is a direct result of over 1 billion shares outstanding.
3. "Significant revenue increases" will require additional ANDA approvals. The Concerta application is not imminent and FDA approval before CY2022 is extremely unlikely.
I see no reason why Elite couldn't continue to manufacture trimipramine for Mikah on a cost-plus basis. We would just need to work out the details so it was fair for both companies.
No mention of trimipramine. This deal is obviously not working out for Elite shareholders. I think the best solution would be for Elite to return the trimipramine ANDA to Mikah in exchange for the Adderall IR ANDA. If both Adderall ANDA's cost Mikah $3M together, then the $1.2M that shareholders were charged for trimipramine should easily cover the cost of Adderall IR.
Elite shareholders are paying Nasrat $10,000 per month just in interest for the trimipramine deal. He is owed nearly $400k already, just in interest on the promissory note. I highly doubt trimipramine has had $10,000 in sales in any month that we have paid (owed) Nasrat $10,000 in interest. Likewise, I guarantee that Elite shareholders owe Nasrat more in interest than Mikah paid in cash for the ANDA. A lot more. Of course, if I am wrong, Nasrat could easily prove it, but he hid the details behind the Mikah shield. The secrecy serves only him. It is time to expect better from Elite management. A lot better.
LOL please refer to which DRAFT numbers you are referring to, $39M or $62M?
This is not hard. Here's another way to slice the pie. Follow the shares. As previously proven, the outstanding shares as of 6/30/13 was 390M. The outstanding shares as of June 24, 2020 was 840,404,367. Add in the 237,000,000 shares for Nasrat's Series J Preferred and conversion shares, and you are left with 687M shares. This doesn't include any of the tens of millions shares that are owed to Nasrat for salary, bonus, interest, trimipramine, etc.
What value would you like to assign each of these 687M shares? On the low end, the cut off for LPC II was 10 cents. If you assume each of those shares has a value of 10 cents, then those shares represent a minimum burn of $68.7M. But then consider that many of those shares were sold when the share price was much higher, including 30+ cents per share. Add in 7.5M from Epic. Add in the few millions in income for our other drugs. It's very easy to see how Nasrat has blown through $100M during his tenure, and he has only managed to commercialize a half a handful of drugs. Extraordinary failure.
Facts do matter, and my rough estimate numbers once again prove more accurate than any of the attempts to correct them.
It would be helpful if future attempts to incorrectly correct my posts were labeled DRAFT #1, DRAFT #2, PRE-FINAL DRAFT, REVISED PRE-FINAL DRAFT, and FINAL DRAFT. That way, we know which set of numbers to respond to.
Depending on which DRAFT these numbers belong to, this would indicate the methadone, Percocet, Norco, and Tylenol #3 were around $3M each to develop. They were dumped to Nasrat's NJ pharma bro for $300K each (except codeine, which nobody wants). It might be interesting if investors were more concerned with those dreadful numbers instead of incorrectly correcting my numbers.
The 2016 annual report is just one source that proves these numbers are way off. Frankly, 2014-2016 doesn't even pass the common sense test, unless one believes SequestOx cost $5M total. The great thing about facts is that they're provable. Here's a real, live link to real, actual facts. Scroll down to page 12:
LOL The opioids were dumped out the back door less than a year ago. And it's not like this was some old holdover Treppel plan he got stuck with. These applications were all from 2016 and after, not ancient history. The revenue (approximately $50M-$84M) would be recurring every year, including this year, next year, and all future years. It was a bad business decision to sit on them without commercializing, but dumping them permanently for less than Nasrat's hotel costs was a monumental act of negligence that deserves ongoing scrutiny of the motives involved and the long-term damage that was done.
And as for my focus going forward:
Everyone is welcome to join me in expecting better from Elite management.
I say 350 million shares outstanding, and I am corrected with 690 million shares authorized. I say $50M in opioid sales, and I am corrected that it should be $84M. I use $84M, and I am corrected that I didn't give the right context. Nonetheless, it is not unreasonable to say at least $50M was spent on SequestOx development. I previously quoted the 2016 10K:
That's $30M just to get the CRL. How much was spent after the CRL? Costs included multiple reformulations and bioequivalence studies, including a pivotal BE study. $50M for SequestOx alone stands up. If investors want to determine about how many tens of millions of dollars were wasted on developing methadone, Percocet, Norco, codeine, etc., then have at it. I'm sure even if I adopt those numbers I will be chastised about not providing the right context.
Too bad we couldn't implement a stop-loss order to prevent Nasrat from dumping our opioids to his NJ pharma bro. According to N2K, with opioids and Adderall, we could have had over $100M in revenue last year.
Please don't confuse my message with others. I will continue to call attention to the repeated failures in development such as SequestOx and generic opioids, but I have not called for a law suit or resignation. I have called for the Elite board to perform their fiduciary duty to shareholders and hold the CEO accountable for his highly irregular private business activities. If they can't or won't do that, then an SEC investigation would be necessary and appropriate.
Previously posted, multiple times:
Elite shareholders who oppose any one of these goals should familiarize themselves with the Stockholm Syndrome. It is time to expect better from Elite management.
This graph is the perfect summation of Nasrat's failed tenure as CEO. It represents nearly $100M spent in R&D (more than $50M for SequestOx alone), but it shows only 5 drugs commercialized in the entire Nasrat era. Only two are significant revenue-producers, and they are half-owned by Nasrat personally. This graph is like the Warren Buffet quote about patience. Over time, with each appearance on the board, it has taken on a more significant symbolic meaning, about repeated failure, than the post seems to comprehend.
Be careful with this kind of thinking. Just because Nasrat comes out victorious does not mean the shareholders will be winners, too. Just as an example, look at the original deal for 13 ANDA's. Here's the $10 million list:
At most, Nasrat has a few hundred thousand dollars invested in this list. If I am wrong about that, he could prove it, but he hides the details behind Mikah. The secrecy serves only him. He accepted a $10M promissory note, which he eventually converted to Series I Preferred. He converted the Series I into 158,017,321 common shares and then converted again to Series H Preferred. He gave himself 79,008,661 free shares when he converts back to common shares.
So in the end, Nasrat has turned the original 13 ANDA into 237,000,000 shares of ELTP. My break even point is 10 cents. If he sells the company for 10 cents per share, I get zero gain, but Nasrat gets $23.7 million just for the original 13. This does not include his shares accumulated as salary, bonus, interest, and trimipramine deal. At 10 cents per share, Nasrat scores a 100-bagger for 13 garbage ANDA's. Not bad, for Nasrat.
Remember, just because Nasrat and Mikah do well does not mean that Elite shareholders will do well.
This is a moot point, despite the amount of mentions it gets in certain posts. The important question is not debt vs. dilution. The question is what was the ROI? What did we get for our money? We got repeated mismanagement of SequestOx development, left unfinished at 95% complete. We got methadone, Percocet, and Norco sold out from under us. And when we were backed into the corner with little income and no way to sell shares, we got the Chinese communist government as partners.
So I'm not impressed he kept us out of debt. What did we get for the dilution? Instead of a diversified portfolio producing real revenue, we are a one-trick pony, still selling shares to survive. And the saddest part is that Mikah owns half the pony.
We now know how fantastical these projections are. I read here every day how Elite has replaced TEVA in every Walgreen's across the known universe, yet the quarterly revenue for the entire Elite formulary is around $7M per quarter. This includes both Adderall IR and XR. You'd have to multiply the current quarter revenues by 6X to achieve your numbers. I'd be happy to be wrong, but I have realistic expectations. With a billion shares outstanding, there will need to be several multiples of current revenue to move the needle on share price in any meaningful way, and even that will likely be offset by further R&D spending with even more shareholder dilution. It should be obvious by now that the Adderalls alone have not changed and will not change the current trajectory of the company. It should also be obvious that Concerta is a long way off.
Meanwhile, with opioid ANDA's in tact, we could already be sitting at $100M in annual revenue. Ignoring this fact doesn't make it less true or less important. Nasrat is a failed CEO whose destructive decisions have had a major negative effect on this company's future. He doesn't deserve our blind respect. He has properly earned our deep suspicion about his motives and abilities.
Frivolous lawsuits are a cost of doing business. Elite has business insurance for this. They have in-house counsel to help them make decisions so they stay on the legal side. Doctors expect to get sued, yet we still practice medicine. Businesses expect to get sued, yet they still operate. Fear of frivolous lawsuits is a minor consideration in business operations, and it should not cause major shifts in development plans.
I read that post very carefully, and I did not see any answers about why the opioids were never commercialized. Still waiting for that answer, meshcan. Likewise, adding the CNS stimulants instead of switching to them is the most obvious business decision, especially for a company with little income, no access to capital, minimal legal risk, and "going concern" caveats from their auditor.
These are simple, straightforward questions that anyone is welcome to answer. Yes, dear investor, we know you are glad that Nasrat wasted millions of dollars and tens of millions of ELTP shares developing these drugs and then sold them off to his buddies for pennies on the dollar. We know you are happy to have $30M revenue instead of $100M revenue, but why? Make it make sense for us, from a rational business perspective. We're waiting.
I didn't say authorized, I said outstanding. For the quarter ending 6/30/13, there were 395,787,000 shares outstanding. So I will correct my statement. When Nasrat took over in 2013, the share price was 7 cents and there were 396M shares outstanding. Now there are over a billion shares outstanding, and the share price is 6 cents.
I agree that in time our generic opioids would have generated well over $50M every year. I think $84M would have been very achievable. Recurring. Yearly.
This is the part I don't get. I don't think pivot is the correct term. A pivot suggests a minor change in direction. A pivot would be adding CNS stimulants to the pipeline while continuing to pursue the current development projects. A pivot would mean developing CNS stimulants with revenue from opioid sales instead of dumping the opioids and using sketchy Chinese government money. A pivot does not require us to abandon everything we have done up to that point. What Elite did from 2013-2020 was more like ping pong than a pivot. Back and forth and back and forth and ultimately going nowhere.
What's past is prologue. We would be fools not to learn from what we have seen with our own eyes. The previous deals for 13 ANDA’s and trimipramine allow us to formulate an expectation about the future deal for the Adderall ANDA's. We never had a chance to render an opinion on the 13 ANDA’s, trimipramine, or the opioid ANDA’s, but we do have an opportunity to have a say in the upcoming Adderall deals. By God, I’m going to have my say. I’m going to say it on this board, and I’m going to say it to the Elite board. I’m going to say it to the SEC. I recognize that when I’m done, chances are good nothing will have changed. I might not have all the answers, but I’m no chump. Shame on us if we choose to bury our heads in the sand instead of opening our eyes to what is unfolding right in front of us. The odds are against the common shareholders, but we are not powerless. We can affect the future of the company, if we choose to.
Whatever investment decisions I make, it would not deter me from laying waste to the counter-factual, Nasrat-worshipping drivel that I see here constantly. I consider it a public service. I'm providing specific facts and asking specific questions, and the lack of answers is quite revealing to those with the ability to make an objective analysis. The very few investors who attempt to reply are forced to rely on delusional fantasies about the destruction that would befall the company in the unlikely event they were able to finalize their own development plans. It's bizarre thinking. By every measure, the CEO has been a miserable failure.
The fact that I could still do well for myself with this speculative investment does not cause me to be delusional about the ongoing failures of Nasrat Hakim as CEO. The well-demonstrated, unrefuted record of failure speaks for itself. And if Elite investors open their eyes just a little, it is easy to see how the shenanigans with Mikah are highly irregular for the CEO of a public company. It is just as easy to see specific examples of how Mikah has been used to hide critical details from Elite investors. Who does it serve for Nasrat to have a secretive private business on the side?
Pure fantasy. How would selling $50M/year in generic opioids cause Elite to go bankrupt? Generic opioids are a mainstay of modern medical treatment, and so far, not a single poster has been able to cite any responsible manufacturer of generic opioids who suffered any negative legal consequences. So I ask again, how exactly would the company have gone bankrupt?
Here are some additional data to make it easier!
When Nasrat took over, share price was 7 cents and 350M shares outstanding. Seven years later, there are over a billion shares outstanding and share price is 6 cents.
Do you see the difference, it is very simple. This amazes me too!
If he gets our thanks for leading us to this record-breaking revenue, what do we get for all the dilution we suffered? And what does our great CEO get for leading us AWAY from double the revenue we would have had with our opioid ANDA's? And how much is a "thanks" worth in dollars? Is it more or less than the millions of dollars that Mikah will receive directly in Adderall profit splits? Is it more or less than $1M compensation he receives every year? Is it more or less than the $1.2M we paid for trimipramine?