Elite Pharmaceuticals Inc (ELTP)

[WeeZuhl]

N2KA, why focus on 4 products?

Nasrat said:

We don’t have to mind or to execute all of them, so when we decide which are the cream of the top, the top two, three or four and focus on these, keeping in mind how much they’re going to cost..

So I said:

4th Approval 2017.
NASDAQ 2017/2018.
Buyout 2018.

So you said:

I have to disagree with your assessment on a buy out in 2018. My response to such a date is - WHY BOTHER? If Elite were to arrive at that year and they have hit the Nasdaq, filed and had approved multiple ADFs, increased the number of generics and their sales (however, small), and even reduced R&D costs associated with fewer trials, I would seriously argue they would have a firm capable of achieving the heights suggested by those using the seemingly wildly enthusiastic comparisons to Pharmacyclics and Jazz. Realistically, when there is the potential for their tech platform that would enable multiple filings, the math becomes compelling for continuing on their current path

I think the possibility of building a better Purdue must be intriguing to NH. Believe me, I’ve done the math, and it intrigues me, too.
2.5% dividend yield on $5.00 stock = approx. $1000/month for every 100,000 shares held. At my share count, the quarterly dividend checks alone would allow me to lead an entirely fruitless existence filled with vulgar debauchery and overpriced automobiles. And I will attest, Sir, that I am up to said challenge.

However, recognizing that NH is usually measured in what he says on CC’s, what does he mean when he says he wants to find the 4 top products and focus on them? (Yes, yes, I get that many feel that he over-promises and under-delivers on timelines, but I think he is learning to be less specific about things that are not fully in his control.) What is his meaning in saying he will focus on four products? If I was building up a family of abuse-deterrent opioids, why stop at four? I would have eight more in trials by the time of the 4th approval.

The law of diminishing returns… initially, each new product will substantially increase market cap at a level beyond what is generated in revenue (“growth stock”), but at some point, adding more products only marginally increases market cap, based on increasing revenues. All the while, your market share is at risk to the next disruptive technology innovation (specifically, an ADF that prevents oral abuse). King of the Hill one day, bum the next.

As I’ve said before, NH has his buyout price already, and when he reaches that price, we are done here. I believe his statement indicates that he thinks four products are what it will take to get him there.