Elite Pharmaceuticals Inc (ELTP)

[no2koolaid]

Imagine my surprise when my 833 word post was called a 5,000 word essay! Frankly, that is not within a rounding error so I will chalk it up to poetic license. However, much to my dismay, there was also this…

Just for starters, it's his salary that is paid in shares, not bonus.

Well, a quick check of my post makes it clear I never said how Nasrat’s salary was paid. But let’s not quibble and lose the point…When being compensated with shares, Nasrat receives the shares based on the strike price of the shares at the time of the payment and this is determined by the market, not by the company and certainly not by the recipient. So, I fail to see what the fuss is about. We can track the share price over time and it would not take a statistician to make clear that Nasrat’s shares are as underwater as anyone who bought them at the same time.

As to the involvement of Mikah over time, I can understand the concerns. If it appears that Mikah came out better in transactions with Elite and this is so irksome, why not submit it as a question for the next CC? But it would be wise to formulate the question effectively and, in so doing, avoid leaping to conclusions absent evidence. What I mean is this…

It is well-established that Mikah recently outbid Elite, in direct competition for a vital asset, while interceding in a strategic partnership.

Ah, NO! Let’s go back the CC for the 2020 Annual Report for clarity…

https://seekingalpha.com/article/4356443-elite-pharmaceuticals-inc-eltp-ceo-nasrat-hakim-on-q4-2020-results-earnings-call-transcript

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. 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 ANDAs by stepping in. It is my hope that eventually Elite will end up with these two products.

What the above makes clear is that there was no competition between Elite and Mikah to purchase SunGen’s solid dose portfolio because there could be no competition, as it would be in violation of SEC rules and put Nasrat in the legal jeopardy. It is only by NOT competing with Elite that Nasrat can avoid SEC sanctions as owner of Mikah while CEO of Elite. As the discussion from the Annual CC makes clear, there was no conflict.

Always glad to clear up the confusion.

P.S. That was 568 words!