Elite Pharmaceuticals Inc (ELTP)

[no2koolaid]

While there remain a number of questions investors hope to hear the answers to with the upcoming Q1 2021 CC, I find it important to make sure the discussion is on level ground…So, let’s start with this…

When Nasrat took over, share price was 7 cents and 350M shares outstanding. Seven years later, there are over a billion shares outstanding and share price is 6 cents.

Were there 350 million shares authorized at the time of Nasrat being named CEO? Actually…NO!!! As per the Q for period ending December 31, 2012, Elite’s authorized shares were 690 million.
https://s3.amazonaws.com/sec.irpass.cc/2258/0001144204-13-009129.pdf

However...Nasrat was named CEO August 7, 2013. https://www.pmlive.com/pharma_appointments/elite_pharma_names_actavis_vp_as_ceo_495188

Since I am on the board, I may as well offer a bit more…as to this…

How would selling $50M/year in generic opioids cause Elite to go bankrupt? Generic opioids are a mainstay of modern medical treatment, and so far, not a single poster has been able to cite any responsible manufacturer of generic opioids who suffered any negative legal consequences. So I ask again, how exactly would the company have gone bankrupt?

While the numbers being thrown around for the cost of development are speculative, it would be informative if we can look at the alleged $50 Million market opportunity of the pain meds and the actual mathematical percentage that a prorated share of the market at peak would allow:

Percocet: 16 competitors with equal prorated market share of 6.25%/500 = 31.250 M
Norco: 11 competitors with equal prorated market share of 0.91% / 447 = 40.680 M
Ty w/code: 8 competitors with equal prorated market share of 12.5% / 45 = 5.630 M
Methadone: 10 competitors with equal prorated market share of = 10.0% / 30 = 3.00 M
Hydromorphone: 8 competitors with equal prorated market share of = 12.5% / 30 = 3.750 M

In aggregate, the prorated market share for an owner of the drugs at peak would be more than $50M, it would be = $84.310 M.

OBTW: The $1.2 Million Elite got for the sale of the drugs to Nostrum was put to good business use, since the p/s was being manipulated to keep it under the dime needed to sell shares to LPC and fund development.

But it is more complicated than the simple math suggests...

Beyond that the "$50M" argument fails to account for time to peak revenues, it also fails to account for the need of a partner to commercialize the drugs. Whether Elite was unable to find a partner at a reasonable price, or at all, would affect certain strategic decisions; which might well have influenced Elite's pivot to the CNS generics. Further, what might have influenced that pivot was, in no small part, because of a comparative look at the market opportunity with generic Adderall IR and XR.

According to the much discussed IQVIA numbers…generic Adderall IR and XR are thought to have a combined market of $1.8-2.0 Billion. So, with a similar prorated market share capture for Elite, that would be roughly $160 - $180M a year at peak, or roughly double the pain meds above. To even the untrained business eye, the math suggests that Elite’s pivot was financially correct, as it will have turned the pivot into profit.

As my maternal grandmother would say..."If "ifs" and "buts" were candy and nuts, oh what a party we'd have!" Complaints are about the past. Strategy is about the future. Time to look in that direction and pose questions based on a forward thinking view.