Elite Pharmaceuticals Inc (ELTP)

[WeeZuhl]

Lannett won’t be our distributor

I'm not sure that is true. Maybe a reason we have not yet seen the generic Concerta ANDA filing from Elite is because Lannett **IS** going to be our distributor? Lannett currently distributes generic Concerta through a "perpetual licensing agreement" with Andor pharmaceuticals. It is the only ANDA listed for Andor, which is listed as a foreign LLC. The details of the arrangement are confidential, but here's the flavor:



https://www.streetinsider.com/SEC+Filings/Form+8-K+LANNETT+CO+INC+For%3A+Jul+30/14472937.html

Item 1.01 Entry into a Material Definitive Agreement
On July 30, 2108, Lannett Company, Inc. (the “Company”) entered into a license agreement (the “License Agreement”) with Andor Pharmaceuticals, LLC (“Andor”), pursuant to which Andor granted the Company an exclusive license (the “License”) with respect to all rights and interests of Andor in and to the ANDA Application for Methylphenidate Hydrochloride (the “Products”).
As consideration for the grant of the License, the Company has agreed to pay Andor (a) $1,500,000 in cash, of which $500,000 was paid at closing and $1,000,000 will be paid upon approval by the United States Food and Drug Administration (“FDA”) of an AB rating with respect to the Products (the “AB Rating Approval”), and (b) royalties based upon the net profits realized from the sale of the Products by the Company. The License Agreement, as amended by Amendment No. 1 to License Agreement dated August 2, 2018, by and between the Company and Andor (the “Amendment”), requires the Company to make minimum royalty payments to Andor during the initial four year period following the first commercial sale of the Products by the Company of $16,000,000 (the “Royalty Guaranty”). The amount of the Royalty Guaranty will be reduced by $4,000,000 for each application, if any, by a third party with respect to the Products that both receives regulatory approval from the FDA and is commercially launched after February 2, 2019 and prior to the receipt of the AB Rating Approval.
Each party can terminate the License Agreement for, among other things, the failure of the ANDA Application to be approved by the FDA within specified time periods or the breach by the other party of its obligations under the License Agreement.

The only thing I know about "perpetual licensing agreements" is the undeniable fact that if my computer is working properly for more than 24 hours then Microsoft will immediately and automatically perform a mandatory Windows update that will screw it all to hell by the next morning. Maybe Lannett is tired of Andor's automatic updates, or the pharmaceutical equivalent. Maybe it is just not a good deal for Lannett. Whatever the deal is between Lannett & Andor, it seems to be structured over 4 years from the start of sales, which was some time in mid 2019. Lannett previously dumped Kremers version of generic Concerta because of bioequivalency problems, so they have proven they will make a big move for a better product.


Again, this is pure conjecture. I was hoping to see the Concerta ANDA filed before now. Thinking of possible causes of a delay, one obvious reason would be that Lannett's royalty deal with Andor is in place until mid-2023, three years away. Maybe the reason we haven't seen an application is because there is still plenty of time to get approval and be ready for launch with Lannett in 2023. Just a guess.