Elite Pharmaceuticals Inc (OTCMKTS:ELTP) is a micro-cap stock that just suffered a major price break related to its initial topline results for its abuse deterrent drug test. As noted in its July 7 release, this was a pivotal bioequivalence fed study for SequestOx. The stock dropped nearly 50% on the results, logging its lowest closing levels since 2012. We want to take a closer look at the situation and see if this represents an opportunity or more rocky times ahead for the stock.
According to the release, the mean Tmax of SequestOxTM was 4.6 hr with a range of 0.5 hr to 12 hr and the mean Tmax of the comparator, Roxicodone, was 3.4 hr with a range of 0.5 hr to 12 hr. A key objective of the study was to determine if the reformulated SequestOx had a similar Tmax to the comparator when taken with a high-fat meal. Elite will pause, not proceed with the rest of the clinical trials, and seek clarity from FDA before deciding on the next steps for immediate release SequestOx. Elite will continue to pursue extended release products with its proprietary abuse deterrent technology.
Elite Pharmaceuticals Inc (OTCMKTS:ELTP) bills itself as a specialty pharmaceutical company, engages in the research, development, manufacture, and licensing of proprietary orally administered controlled-release drug delivery systems and products. The company operates in two segments, ANDA’s for Generic Products and NDA’s for Branded Products.
It owns, licenses, and contract manufactures various generic and oral dose pharmaceuticals products, such as Phentermine HCl 15mg, 30mg, and 37.5mg tablets and capsules for the treatment of bariatrics under Adipex-P brand name; Lodrane D immediate release capsules for OTC allergy treatment; Methadone HCl 10mg tablets for pains under the Dolophine brand name; and Hydromorphone HCl 8mg tablets for pains under the Dilaudid brand name.
Elite Pharmaceuticals, Inc. was founded in 1984 and is headquartered in Northvale, New Jersey.
According to company materials, ELTP is “a specialty pharmaceutical company which is developing a pipeline of proprietary pharmacological abuse-deterrent opioid products as well as niche generic products. Elite specializes in oral sustained and controlled release drug products which have high barriers to entry. Elite owns generic and OTC products which have been licensed to TAGI Pharma, Epic Pharma and Valeant Pharmaceuticals International. Elite currently has eight commercial products being sold, additional approved products pending manufacturing site transfer and the NDA for SequestOx, for which it just received the CRL from the FDA. Elite’s lead pipeline products include abuse-deterrent opioids which utilize the Company’s patented proprietary technology and a once-daily opioid. These products include sustained release oral formulations of opioids for the treatment of chronic pain. These formulations are intended to address two major limitations of existing oral opioids: the provision of consistent relief of baseline pain levels and deterrence of potential opioid abuse. Elite also provides contract manufacturing for Ascend Laboratories (a subsidiary of Alkem Laboratories Ltd.). Elite operates a GMP and DEA registered facility for research, development, and manufacturing located in Northvale, NJ.”
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The key element in the press release that likely really drove the pain for shareholders was the company’s note that it would pause rather than proceed with the rest of the clinical trials, and seek clarity from FDA before deciding on the next steps for immediate release SequestOx. That signals to the market that the data was troubling enough to cut off the process from here for the time being.
That said, the company also noted that it will be pushing back in the same direction over the next 6-12 months. Given that we would assume all the weak hands have been kicked off this bus for now, support from here may be relatively stable. And if the company’s next press release is a positive turn on the situation, we could see some upside from this point. That’s a big “if”, but it’s worth at least considering.
Traders will note just under -30% eroded out of share values just during the past week. That said, market participants may want to pay attention to this stock. ELTP is a stock who’s past is littered with sudden rips. Moreover, the company has seen interest climb, with an increase in recent trading volume of nearly 260% over what the stock has registered over the longer term.
Currently trading at a market capitalization of $101.7M, ELTP has a significant war chest ($10.6M) of cash on the books, which compares with about $487K in total current liabilities. ELTP is pulling in trailing 12-month revenues of $9.6M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -74%. You can bet we will update this one again as new information comes into view. For continuing coverage on shares of $ELTP stock, as well as our other breakout stock picks, sign up for our free newsletter today and get our next hot stock pick!
Disclosure: we hold no position in $ELTP, either long or short, and we have not been compensated for this article.