Elite Pharmaceuticals, Inc. (OTCBB:ELTP)’s Conference Call Results In A Severe Crash

For nearly two weeks the stock of Elite Pharmaceuticals, Inc. (OTCBB:ELTP) enjoyed a rather positive upwards trend. Starting from below 30 cents on November 7 it almost closed at $0.33 on November 18. Last Friday the company filed its quarterly report for the period ending September 30 and it helped them keep the positive momentum going. And indeed, for a pharmaceutical pennystock company the report contained some quite encouraging results:

• $7.6 million cash
• $11.7 million total current assets
• $3.8 million total current liabilities
• $1.2 million total revenues
• $4.6 million total operating expenses

Thanks to a significant change in the fair value of warrant derivatives and preferred share derivatives ELTP reported a net income of $21 million for the quarter. They were able to resolve the default on their bonds by retiring the Series B NJEDA bonds and by catching up with the payments under the Series A bonds. In April Elite entered into another purchase agreement with Lincoln Park Capital Fund, LLC. according to which the company can sell up to $40 million worth of common stock to Lincoln.

Yesterday at 11 a.m. ELTP held a conference call to discuss their operations but instead of boosting investors’ confidence it had the exact opposite effect. During the hours before the conference call the stock was managing to keep its price gains but soon after the start of the call it plunged for the bottom. It continued sliding lower and lower for the rest of the session and closed at $0.27 for a loss of 18%.

It seems that investors were not happy to learn that so far ELTP has not been able to find a suitable partner for their abuse resistant opioid drug ELI-200. Furthermore the approval of the drug by the FDA could be delayed if the agency demands more clinical trials to be conducted. It didn’t help that the previously announced meeting with the FDA that was supposed to take place in October actually happened just a couple of days ago on November 17.

Still, the company announced a couple of positive developments that could help their stock reclaim some of yesterday’s losses. ELTP is planning to launch a new generic drug by the end of the year with a possible second one by the end of March, 2015 and this could lead to even better revenue results.

In the short term though the volatility of their stock shouldn’t be underestimated. Even after yesterday’s drop the company still commands a market cap of over $155 million which can be viewed as overly-inflated. That is why any trades involving the stock should be attempted only after doing your own due diligence.