Elite Pharmaceuticals Inc (OTCMKTS:ELTP) Just Reported Earnings; Here's Our Take

Elite Pharmaceuticals Inc (OTCMKTS:ELTP) just reported earnings for the third quarter of fiscal 2017, and the company has held pretty flat on the news. There's a conference call set to take place at the start of next week, and the call will serve up an opportunity to delve into the details a little further than the text release allows. Ahead of the call, however, and given that markets don't seem to have responded to the release as yet, let's take a look at the numbers and what we think they mean for Elite (and in turn, its shareholders) moving forward.First up, a quick introduction.This one is a development stage biotechnology company with a bit of a twist. Readers that have been with us for a while will know that we've long been fans of Elite, even when the company has taken a hit (as it has done on a number of occasions over the previous twelve months). We say it's got a twist to it because it's not your standard development stage entity; one with a lead asset, a follow up pipeline and a seemingly never ending need to raise capital. No, this one's got two sides to its operations – one that resembles the just mentioned exploratory pipeline structure, and another that is a revenue generating generic drug manufacturing arm.This two pronged structure is important, as it means the company can fund a large portion of its own development costs with the generic business. That removes the potential for dilution on a shareholder's exposure (at least, that is, removes much of the risk) while still offering the potential upside of a moonshot lead asset candidate. In other words, this is a biotechnology company with all the reward of a development stage entity targeting a big indication, but only a fraction of the risk.So that's why we like it, but what did the latest numbers show?Well, they reflect our bias.Consolidated revenues for the third quarter of Fiscal 2017 were $2.3 million, a 6% increase on a year-on-year basis. The vast majority of these revenues, and the growth, derives from the company's generic product sales (a growing roster of eight approved and commercially available assets in the portfolio right now). Development costs, which were primarily attributable to the company's ongoing development of its lead abuse deterrent asset – SequestOx – came in at $1.5 million, meaning the company is generating around $800K more in revenues than it is spending on development. That's not something that can often be said for a company at this end of the market, in this space. There's an operational cost, of course, and COR translated to a net loss of $1.6 million.So the numbers look good – what are we looking from the call?We expect some degree of update surrounding SequestOx, but as we've noted in the past, we aren’t resting too much of our near term bias on said update. We expect the drug to pick up approval and the labeling it's after, and that as a medium to long term prospect, it's a dead set value driver.What we're really looking for is an update on the generic submission strategy, and some confirmation of time frames for said strategy's catalysts. The company expects to submit a generic application every quarter this year for a new asset, and these submissions are going to dominate the news stream for the next twelve months. Each one that picks up regulatory approval will ease the risk of dilution a little bit more, and as this risk dilutes, so does the attractiveness of the company from a potential shareholder's perspective.We'll sit in on the call and bring an update as to our bias and the time frames that underpin as and when necessary.We will be updating our subscribers as soon as we know more. For the latest updates on ELTP, sign up below!Disclosure: We have no position in ELTP and have not been compensated for this article.