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Let's talk Nasrat's "Strategy" for a minute. Play

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Mazeppa   Monday, 10/30/17 01:49:46 PM
Re: jour_trader post# 275574
Post # of 281976 
Let's talk Nasrat's "Strategy" for a minute. Play by play.

At first, very sound IMO. The idea--to forward an ADF with properties that would stop all/most forms of abuse, by mixing indistinguishable beads of an agonist and antagonist together, and in doing so, eliminated the effect of crushing, snorting, shooting, and common ways of circumventing abuser methods, such as microwave, detergent and the like. Was a plug-and-play solution, so would be huge if approved. That was the real play. Allegedly, the FDA, pre-Califf, was ok with the long T-max w/fatty meals but turns out Califf wasn't. Unexpected CRL on a priority review results, so now, new strategy needed. It should be noted, importantly, Nasrat was fully taken by surprise, thought it was a given, so had no "Plan B"--thus winged the new "strategy" from there.

The first part, to reformulate SOx, was fine/reasonable. What would be expected...address the T-max with a new polymer that broke down faster in lipids and shorten the time. Came up with multiple formulations, got FDA blessing for attempting, though evidently premature--but the strategy of re-formulation was a natural extension, and if it worked, would have been great.

The second part, however, was "reactive" in nature...not well thought out or planned with a great deal of forethought. The idea of committing to "One ANDA a quarter." This promise turned out to be quite expensive, and said "strategy" did not even include a marketing plan, but rather, done under the rationale of "all we need to do is capture x% of each given market"...without plans of how such would be accomplished--just make it and market share will follow.

From ELTP's website, they state one of their core competencies lies in drug production in a GMP facility environment. The FACT, however, is while getting out the ANDA's, the whole time, their manufacturing facility was under warning, and ANDA's not even able to be even assessed. (A bigger shame indicates that it was not even up to snuff if SOx was approved)...but the point is, by adhering to the ad-hoc strategy put together after the CRL, they have spent millions of dollars of the R&D for such ANDA's along with what appears to be a 3m application fee for each. Concurrently, something happened to essentially end their significant methadone sales/revenue..."what/why" was not made clear, but was a major source of revenue upon which such R&D used to formulate and submit the ANDA's. So with the ongoing cash outflow, the only recourse to keep the "strategy" of one ANDA per quarter resulted was and is to engage in significant dilution.

And as the sp drops, more dilution was/is needed to obtain the same revenue for operations to continue and fund this "strategy." Even with two or three ANDA's filed, Nasrat was relentless, despite ongoing dilution, and despite the limitation that none of the ANDA's were even able to be assessed by the FDA. The brakes should have been put on until warning letter cleared, but he just continued with the reactive strategy, instead of adapting to the reality of the warning letter hold-up. Again, just like SOx, his confidence that all would be cleared up was a "given" in his mind. He's also now working on (as has been for years) on an "undisclosed" potential "blockbuster" of a generic...again with shareholders in the dark, and money down the drain. SOx, meanwhile, remains in limbo for an unknown period.

Yes, he cut a deal with SunGen, but we have yet to hear one development over all this time, and it's not even opioid-related. CNS and allergy drugs...what do we know about that? Pura was supposed to a good deal/strategy, but after years, nothing. Wining and dining...maybe he got a free meal out of it, but the shareholders not scraps from the table.

Both "strategies" failed. He went forward too soon or without enough testing with the polymer reformulation. Worse, he kept forwarding his reactive commitment to one ANDA a quarter, at significant expense, while concurrently, losing the methadone sales, and having no way to even get such ANDA's assessed for approval. His confidence belies an underlying narcissism in his own abilities, as nothing has ever gone through. So the upcoming CC? IMO, more "hope" the warning letter would be resolved "soon." No big jump in revenues, and more dilution.

The only thing his "strategy" now boils down to is growing ELTP into a big generic company from a small one. Once the "warning letter" is cleared up (eh..."soon")...we then will have to await ANDA approval for an unknown period, and then pursue product placement and sales in an unknown manner, without an idea of what the earnings from such endeavors will be (nor projections of market share). The real reason behind this "home-run" play, the SOx/ADF solution, is for now all but dead in the water, and even optimistically, still years away. Nasrat needs to stop the spending now until the warning letter cleared, and some ANDA's approved.

The nature and focus of the company have changed. His post-CRL "strategy" was ad-hoc, and not even viable now given the end of the methadone sales revenue and inability to get ANDA's assessed. Relentless in keeping his commitment to one ANDA per quarter under these conditions (methadone revenues gone) display continued hubris and adherence to an ill-conceived/incomplete "strategy" that the company can no longer afford. I'm personally amazed he didn't even give Health Canada a shot given our patents there and different (easier) approval system there with SOx. Stupid allocation of money that was wasted instead on an ANDA applications, that costs more than applying there and pushing for labeling if they had T-max concerns.

***This is no longer the same play that attracted people to invest in the first place.*** Seen it before...a huge ego pharma CEO with no cognizant view of where to go, what to do, and reluctance to downsize and adapt as necessary--but no lack of hyperbole. No, Nasrat is not some stellar CEO by any means...just a QC guy with background from a big company masquerading as a CEO, but no idea of what he is doing managing a company, and no reluctance to keep bad news undisclosed from shareholders.

So, I strongly disagree. I see no "steps in the right direction." Now it's load up under .08, and play the OTC lotto? Lol. Feel like a genius for having sold half my position upon the CRL bounce, but a dummy for holding beyond the BE formulation failure. Now, it's just quicksand.


"Beware of missing chances; otherwise it may be altogether too late some day" -- Franz Liszt
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