Elite Pharmaceuticals Inc (ELTP)

[RizZo]

Nasrat Hakim

Thank you, Carter. What a difference a year makes. An increase in revenue from $7.6 million to $18 million is a solid step in the right direction, becoming profitable enough to support an R&D pipeline would get us to the right destination. That is where we want to be. An essential part of growth is to also hold on to what you have. We are working with our partner Lannett to protect our current shares of the market and ensure that we grow it. Lannett is in charge of sales and marketing and they have done a very good job with the market shares for the IR in spite of the fact that it's a saturated market with 11 players. We trust they'll do the same thing with amphetamine ER. From our side, Elite is protecting and improving the business by ensuring that our GMP facility has the right capacity, equipment, material and personnel to support Lannett and our other sales and marketing partners.

We secured enough API quota from the DEA to support Lannett's sales projections through the end of this year. That is fantastic news. We struggled with that in the first quarter and a little bit in the second and finally the DEA came around and gave us enough quota to support the sales and marketing projections through the end of the year. In March, Elite was inspected by the FDA again for Pharmacovigilance and REMS. After eight day inspection the FDA issued a minor observation on a Form 483. The observation was for our website not having a link to REMS for [Indiscernible]. We explained to the FDA that the product is not and has never been marketed or commercialized. Further the link on the website to the REMS was corrected three days before. They issued the observation that did not help. We still got a minor observation but the FDA was kind enough to annotate that it was corrected before they left.

Regardless, this is a great outcome and outstanding news. That makes five inspections, four of which we got zero observations and one that we got this Mickey Mouse observation for. Elite has also successfully pivoted away from opioids during the opioid crisis and the negative environment and lawsuits that came with it and we are extremely lucky that we have never been a part of that. Elite is executing on its growth plan, getting product approvals and launching new products. And our sales and marketing partners Glenmark, TAGI and Lannett are all performing well.

Regarding amphetamine ER capsules, the product was approved last December. We successfully launched it by March. Lannett, our sales and marketing partner has done a very good job with this product and we expect this product to continue to grow and contribute to our profit and revenues. Amphetamine ER is also marketed by Lannett and they have done an excellent job considering that this product has 11 players, most of which are very big pharma companies. They obtained enough shares for us to enjoy the revenues that Carter just cited a few minutes ago.

Loxapine, the transfer of Loxapine capsules and several of you had questions about that. Our facility was approved last quarter and we have a sales and marketing partner identified. The delay has been from the API supplier. As soon as we launched this product, we will let you know. We were hoping to launch it two three months ago, but as I said the API supplier had an issue and we are working with our partner and the API supplier to resolve that. This is a product that has an IMS data of $5 million. And there are four ANDAs approved including ours. Loxapine is on the FDA's product shortage list. The antibiotic tablets ANDA, this product was developed and filed with our partner SunGen. As per the agreement the ANDA will be in SunGen's name. We received a complete response letter with a minor designation. The work on the minor amendment was completed by Elite a while back. SunGen has not filed the response with FDA. They plan to do so sometime in September or October.

I will discuss that further in a couple of minutes. On the development pipeline, Elite is working on the central nervous system product discussed previously. We continue to work on other differentiating genetics for our future growth, and we will update you on those development projects upon achieving key milestones. Covid-19 has impacted our business like they impacted everybody else in the industry. We created an employee protection plan where those who are what we call non-essential, non-essential means that they can perform their job from home, working from home. Lab personnel went on two shifts in order to create more space between personnel. And we require them to wear masks and clean the place regularly. Manufacturing, we have rules on having no more than two operators in the room with frequent air changes and gowning and masks in order to secure their safety. This is a serious issue that's affecting everybody in the industry. So far the impact has been minimal on us, but it's always in the back of my mind in case if we have resurgence or we have a second wave in the fall. That could be a serious issue not only to Elite and here but also to our API suppliers and others in the pharmaceutical industry.

We held a special shareholder meeting last week for the proposals for additional authorized shares passed by a large majority. The election results are provided in our June 24 filing on the shareholder meeting. Thank you all for voting and thanks for all those who voted for or against.

I will take a minute and address the SunGen products that I just cited. We have several products with SunGen. The two antibiotics, central nervous system and also amphetamine ER and IR. The SunGen is a good company and they have a solid R&D group. Today's landscape has had financial impact on SunGen and I have discussed that in previous meetings. We know what's happening in China. Long before Covid-19, the turf war, the issues that were having with the Chinese, the devaluing of the currency, people unable to get money out of the country. SunGen depends on financing from China. They have spent a lot of money on R&D with very little money coming in, as many stopped or slowed down and coming in they needed to rediscover themselves or come up with an exit strategy. That impacted us on the antibiotic drug that I just mentioned. And also on the central nervous system drug.

In addition, we were very concerned about amphetamine IR and ER who are they can divest to and what's going to happen. Their CEO and I entered into negotiations to acquire SunGen at least the R&D solid doses line. SunGen have also an injectable division. We reached an agreement and decided to approach our boards with it. The offer was 100% in stock, the CEO accepted it. He saw it as a very good thing for the company. He thought that they'll be an upside when they get our stocks is then that it's going to go up with all these new products we'll be getting. But their board rejected it because they do not understand the -- stock and restrictions that comes with it. In the meantime, SunGen was also negotiating with other Chinese firms to acquire them. We had the first shot at it and the board did not accept a 100% stock offer.

They offered Elite to buy amphetamine IR and ER but insisted also on 100% in cash. I called the Board meeting. Mr. Ward informed us that we cannot afford to spend that kind of money on new products. We do not have it and we cannot raise it. After Elite rejected the offer that's how Mika ended up with the enders by stepping in. It is my hope that eventually Elite will end up with these two products. Okay. A question from the stockholders as why there was no 8-K and the answer is simple; this transaction was between two privately held companies after Elite was given the right of first refusal and rejected the offer. Further, there is no impact on Elite. The impact on Elite really for this transaction is zero. All Mika is step into SunGen's shoes, that's it. That had no impact on Elite whatsoever. As a matter of fact there are positive impacts on Elite that I will not go through in here today. That did not require an 8-K but we did publish this event as a part of our 10-K. We included it in detail in our 10-K.

There were several questions about this subject and I hope I covered them all. So I'll move on to others and I'll circle back to this. The questions really were coming in after just few minutes ago from Dianne because of the delay in the SEC. Yesterday they had some technical issues and they could not get the 10-K out so every question Dianne gave me up till the last second, I have try to add it to my presentation, group it with others or addressed separately. The first question is please explain the following timeline and Carter just went through that. The accelerated filing and the status on all of this. There is no need for me to repeat all of that.

Can you provide guidance for Q1, 2021 which is this quarter? Please provide some type of forecast for the next few quarters as we haven't had much information in the last five months.

I will share with you what I know and that is the quarter ending today we will hit the $7 million in revenues and that quarter would not have any profit splits from the ER, is that right, Carter? We don't see any profit splits this quarter.

Carter Ward

No. There should be some.

Nasrat Hakim

Yes, very minimal because of the launch, okay. So the quarter will end today. We will hit the $7 million. The last quarter was almost $5 million.

Carter Ward

Just under $5 million.

Okay. I expect the same funds for next quarter, but as I just told you we are going through a pandemic. I cannot make you promises that I cannot keep. And we don't run sales or marketing therefore I can't give you projections. All I can do is when Lannett gives me a solid projection for what they want us to make for three months, I would have a good sense what am I going to make during these months. But beyond that the schedule keeps changing, okay.

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