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Expecting another CFO for the 4th time in 3 years?
Bull. Must be complicated enough that the CEO is willing to risk everything as an option and self-market/distributor.
New approvals haven’t been launched. Uncertainty about launching Doxy. No timetable about launching Sabril or even Adderall in Israel. Adderall ER with largest market does squat with Lannett. There’s a significant amount of uncertainty, which is what investors hate. We don’t know what is near term, midterm or long term with this company. Very little is divulged and what is rarely comes to pass.
Must be why Elite’s CEO is not waiting to find out whether Lannett bails on their relationship. Must be such a minor concern as he has mentioned it during the past two conference calls.
IR is the money maker and funny how that one isn’t discontinued. XR isn’t the concern. 6 months is not nearly enough time to find a partner, launch and bring in the same level of revenues we have today. It has taken several YEARS to get where we are. Even worse if we self market/distribute.
Only means Elite has a 6 month runway on their revenue lifeline. Lannett’s Adderall ANDA puts Elite into a corner. Not much wiggle room for error and we tank well below 0.04.
There is no additional value until company grows, pipeline moves forward and gets launched, Lannett situation clears up, etc to garner additional interest. Company needs to get off OTC. New CFO will help navigate that, but TBD on timing of that. May not be as soon as we’d like.
He is the biggest shareholder by far. Whether like it or not, you’re stuck with Nasrat.
4 months after approval and no publicly made progress towards a distribution partner. Hopefully Elite isn’t trying to be that Sales/Marketing partner, but wouldn’t put it past them.
Company will be stretched to get $40M even if they buy Adderall rights. Elite has a ton of regulatory issues to work through with Sabril and Adderall (Israel approval launch). Doxy has to get worked out with SunGen and hasn’t budged since approval. I wouldn’t expect any material incremental revenue from any of these initiatives this fiscal year. Might be an opportunity with Loxapine to bring in a little more starting around calendar year end, but again little impact to this fiscal year.
Sounds like a reason for Lannett to pull the trigger now and go solo.
In other opioid news. Opana ER deceptive marketing nightmare and now filing Ch 11. Will still operate, so will be interesting to watch as debt load gets wiped.
https://www.bizjournals.com/philadelphia/news/2022/08/17/endo-international-bankruptcy.html?utm_source=sy&utm_medium=nsyp&utm_campaign=yh
Nasrat won’t be putting Elite up for sale anytime soon. We are finally consistently CFP and moving pipeline forward. Too much near-term benefit to capture with product & geographic expansion.
It’s just a matter of time before Elite buys those rights from Mikah. Much less transparency on OTC board. No large investment fund ownership to push for change or transparency. When CEO is largest shareholder the waters become murkier.
Continues to buy Elite time to find a new partner (if needed), launch Doxy and Sabril, move trials/submissions forward and strengthen balance sheet. We’ll need a stronger balance sheet if Lannett walks or we’ll encounter some serious pain ahead.
Here is the contract between Elite & Lannett:
https://www.sec.gov/Archives/edgar/data/1053369/000121390019011224/f10k2019ex10-50_elitepharma.htm
Termination: Excluding specific reasons (force majeure, bankruptcy, etc) Lannett can terminate agreement with 6 months notice:
Other Termination Rights. In addition to Article 8.2, (i) either Party may terminate this Agreement pursuant to Articles 14.3 (Assignment without Consent) and 14.5 (Force Majeure), and (ii) LANNETT may terminate this Agreement pursuant to Article 4.4 (Failure to Supply) and Article 9.2(c) (Debarred), and (iii) ELITE may terminate this Agreement pursuant to Article 9.3(c) (Debarred). LANNETT may terminate this Agreement for any reason upon providing ELITE with six (6) months written notice.
I didn’t expect us to this time. Financial results have been consistent, the pipeline moves forward and we have some good things on the horizon, but trials just keep getting delayed. 2 steps forward, 1 step back.
The termination clause in the contract states what is permitted from a timeframe standpoint. Outside of this the injured party would have to be made whole, usually financially or more time.
Lannett is our client and partner for whom we are fulfilling orders. This is the whole purpose of the sales/marketing partnership to rely on their current network and expertise to bring in business. Mutually beneficial.
What cheaper method of production? Unless I am misunderstanding, sounds like you might be mixing up an ADT and Adderall.
I am certain there is a non-compete clause that Elite simply take Lannett’s client. The agreement states that Lannett is the exclusive distributor for Elite’s Adderall products in the US, but Elite is preparing in case they are forced to make a decision between finding another sales/mktg distributor and going alone (please not yet).
What has been one of the consistent themes since Nasrat became CEO: overpromise & underdeliver
That was cleared up last call that trials were being delayed and the 4 wouldn’t happen. No surprise. Does mean any approval in 2023 is extremely unlikely.
Back half news?
Not sure there is any news to report until Q4 cc in Feb. Sabril, Israel Adderall, filings, trials - all still moving forward, but nothing material to report on for while unless Elite acquires Adderall ownership from Mikah, which will lift rev/margins a little immediately.
If Lannett bails, that 50% Mikah acquisition becomes worthless for few years as they try to build out their own sales team from scratch unless they quickly find a new distributor.
Funny thing is Lannett is rocking the IR. ER has barely moved the needle.
Boggles my mind how some questions are selected and not selected by Elite’s IR. How did the question on a different company pass IR’s filtering process? Wow
“OxyContin generated $2.3 billion in net sales in 2010. “By 2018, that number had dropped over half to $820 million and by 2020 had further dropped to $517 million,” Purdue executives said in filings.
Smaller than Adderall market, but we’d be among first generics to enter market. No generic exists yet, but doors are opening and we’ll see how quickly Elite can get their trials done compared to competition.
Q2 expected submission for generic OxyContin (if all goes well). When does it all go well with Elite? Back half of year might be more realistic.
Call up to Q&A is same exact as last call. Just starting Q&A - They are justifying a stock buyback, but not pursuing at this point on OTC.
Why is he repeating building buy vs lease cost again word for word?
I look forward to this music every quarter. Life just isn’t the same without it.
I don’t disagree. Calls out risks, but somewhat hush on investments, pipeline, etc. We do know he has been burned in past from forward looking projections (e.g., SequestOx). He speaks to shareholders with more weight as a lawyer than a CEO.
Possible, but doubt it. Company continues to stabilize. Uncertainty is what drives stock prices significantly lower. We don’t have ton of clarity into filings, studies, etc., but that should all be good news.
Concern for me is going solo without Lannett as a distributor before we are ready and if we funnel too much into R&D…we run into a cash crunch again. Small term loan and line of credit wouldn’t be enough to hold fort up for long as we have just recently started breaking even. Going solo rarely works out for small players. Big risk for our primary source of revenue.
I actually thought it was a typo when first reported that that used prior Q as a placeholder and forgot to remove it.
I’d like to see some new contracts/business won to drive organic growth while we wait for the R&D paint to dry.
The frozen snail still has a heartbeat and is still moving forward ever so slowly.
Yes, check subsequent events. Deal closed on July 1st. Page F-20.
14M? Split excl mfg profits. It would be far smaller when including Mikah’s margin on a quarterly basis.
Guessing she isn’t the only one
Old news.
“Will Tesla be using VELO 3D technology to manufacture all Tesla EV cars in a fraction of the time and increase they're profit margins by another 50%?”
What was profit margin Q1? 0%
What was profit margin Q2? 6%
Good commented response at end of the article regarding longevity and cost per KWH. Who can get 0.07 per KWH? Will be interesting to see the energy costs across geographies.
Perhaps the shareholder failed?