Elite Pharmaceuticals Inc (ELTP)

[RizZo]

Elite Pharmaceuticals, Inc. (ELTP) CEO Nasrat Hakim on Q1 2021 Results - Earnings Call Transcript
Aug. 17, 2020 4:45 PM ET




Chairman and CEO and President, Mr. Nasrat Hakim would like to give an update and his comments.




So let's look at the industry and see what's going on in the industry, generic industry, we're not talking about the brand Pfizer's and others, we are talking about the generic industry. Looking at the generic industry for the past five years and naming just about any company you can think of, starting with the largest company in the world, Teva Pharmaceutical, which acquired Actavis and Watson the other two largest companies in the world was $65 five years ago, today it's $12.

They have a negative P/E ratio and there they have no earnings per share, actually they do lose $0.07, $0.08 per share. The company's market cap is about $12 billion to $13 billion and they owe about $26 billion. This is a little bit like a person who owns a house that's worth $100,000 and they have a mortgage on it for $200,000, $300,000. The best company of all these -- almost dozen I'm going to go through is Dr. Reddy. Dr. Reddy was $65 five years ago and they are about $60 today, not a lot loss over five years and most of it's really gained within last year and they have a P/E ratio, actually they have earnings per share of 40.

At Sandoz, they dissolve their generic decision, they were at one time the biggest and they became the second biggest and they dissolved the generic business. Mylan, $54 five years ago, $16 today, they also have the P/E ratio, [indiscernible] bankrupt, Amneal they purchased impacts and $350 million worth of product from Watson and they were $45 to go -- they are $4 today and they operate at the loss negative P/E ratio. Valeant $250 down to $17 operating at a negative P/E ratio. Paragon 200 down to $50, Endo Pharmaceutical $80, that's 80 down to 3 bucks. Lannett, I think the whole of Lannett, they are doing an outstanding job for us, they were $50 five years ago, they are $6 today, again negative earnings.

Akorn $20 five years ago, $0.12 today. Insys pharmaceutical $30 five years ago, $0.04 today. The consolidation in the pharmaceutical industry and the time we have gone through have been very rough. You know, everybody wants to hear that our stock is going through the roof and making money and that is the best news for me that I could ever share with you and with my family. But the sector as a sector has been suffering and little Elite not only not go bankrupt, we survived, we have our lights on, we pay our employees, we comply with FDA requirements, DEA requirements, offshore requirements, as I said we meet payroll and we're thriving.

We have shifted to becoming profitable, we still fund companies to make deals with such as SunGen and others in order for us to survive and now we've reached profitability and the outlook looks really positive considering that ER is in its infancy with respect to the product life cycle, hopefully we will max out maybe in two to three years and start to see where it's going to settle then, but as of now everything looks good for us. So, are we more soft in the generic industry? I would say no. Are we worse off if we diluted the company than borrowing -- if we are borrowing money from a lender that comes after us, no, we would not exist today if we did that.

With all of that, we're a small company and we're on the OTC. Obviously our stock gets manipulated. We have low volumes, when you have 500,000 shares changing hands at $0.06 a share or $0.07 a share, that's $30,000, $35,000 anybody with fair brand can manipulate the heck out of the company. That's why I keep talking about creating fundamentals and getting the heck of the Bulletin Board and the OTC and moving on to the place where we have institutional investors coming in.

As I mentioned and so this quarter, we've had five quarters in a row where we have done very well and yet the stock did not move. That pressure is building up and I do believe sooner or later we are going to take off.

Let me say in conclusion that we are in the best financial shape ever and we are doing better than most in the industry. We've stabilized the company, we have solid manufacturing facility with excellent GMP compliance and history and financial sources through our profitability and Lincoln Park Capital, we have an avenue to buy products, work with partners or go at by ourselves for R&D.

We are profitable and targeting sustained profitability. We have $75 million in federal tax credit, meaning that the first $75 million that we earn we don't pay taxes on. We have very little debt. If you look at our debt-to-market cap, we're running at about 7%, if you look at Teva, they're running at 200%. Our profitability and Lincoln Park deal are critical factors and our investing in R&D. The list I just went through is our vehicle to NASDAQ, makes us very appealing for somebody to buy us out or for us to merge with another company's sales and marketing or of the sort and continue. The news has been fantastic in spite of the stock has not moved in the past, I have -- I have no remedy for that, I don't have the magic wand for me to get the stock up, all I have is our hard work, continuing to get the best deal for Elite, to ensure that we will get to where we're going.

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