Elite Pharmaceuticals Inc (ELTP)

[no2koolaid]

Amidst the discussion about what a pharma company will not pay for Elite there is much to learn from the world of M&A.

Allergan completed an agreement to acquire nano-cap Tobira Therapeutics for $28.35 p/s in upfront cash, a whopping six-fold premium to the September 19, 2016 close of $4.74 p/s. And, imagine this, Tobira had no approved products and only $1,053 (that is correct, one thousand fifty three dollars) for a licensing fee. And, here is the interesting part – Allergan still has no revenues generated from that acquisition.

How about Gilead’s purchase of Kite in August 2017 for $11 Billion, while Kite had $22 Million in revenues for 2017 and their cash burn was $330 Million. Ah, that means they were losing money.

In January 2018, Celgene bought Juno for $9 Billion after Juno had failed in a P-3 putting the company 2 years behind its development of its lead drug JCAR17. Oh, it has no approved drugs or revenues beyond the fees previously paid by Celgene. And, they were burning through cash like there was no tomorrow trying to get through necessary R&D.

I suppose I could continue but why bother? I do not have to explain it to an Elite investor.