Caution: Don't Misinterpret the Elite Pharmaceuticals Inc (OTCMKTS:ELTP) Data

As our regular readers will likely be more than aware, Elite Pharmaceuticals Inc (OTCMKTS:ELTP) is one that we have followed quite closely over the last 12 months. The company is a young biotech that is trying to bring an abuse-deterrent opioid asset to market but, to date, hasn't had much luck to that aim. A number of setbacks (which we will look at in a little more detail shortly) have caused the asset's development pipeline to drag on and, over time, shareholder sentiment (and in turn, the company's market capitalization) has weakened.Of all of the developments Elite had on its calendar, one stood above all of the rest as being a real potential value driver. That development just hit press and – subsequent to its release – the company has taken a more than 42% hit. This decline suggests that the news wasn't great and, to put it bluntly, it wasn't.With that said, however, it wasn't as bad as markets seem to have interpreted it as being, meaning there may be an opportunity to pick up shares cheaply at current rates (and subsequent to latest interpretation-driven decline) ahead of a recovery going forward.For those new to this one, the drug in question is called SequestOX and it is an immediate release opioid asset designed to include abuse-deterrent properties. The drug was pushed back (by way of a Complete Response Letter (CRL)) during late 2016 based on the FDA's concerns over the potential for overdose when taken in and around mealtime (specifically, when taken with fatty foods).In response to the CRL, Elite set about conducting a bioequivalence study to compare what's called the Tmax of the drug to a standard of care therapy called Roxicodone. As per the latest release, the mean Tmax of SequestOx was 4.6 hours with a range of 0.5 hours to 12 hours and the mean Tmax of Roxicodone was 3.4 hours with a range of 0.5 hours to 12 hours.For those not familiar with these terms, Tmax refers to the amount of time taken for a drug to reach what is called Cmax, which is the peak serum concentration of the active compound. In other words, Tmax refers to how long it takes for the drug to reach its highest concentration in the blood. The longer the time taken (the higher the Tmax) the higher the potential for overdose based on the idea that the patient will take one dose, wait a while, think that the initial dose is not working because it is taking so long to reach peak concentration and then take a second dose as a result. The second dose will push dosing into overdose levels and therein lies the danger.Theoretically, that is.So, with SequestOx taking a little over an hour longer than Roxicodone to reach peak serum concentration, there is theoretically an increased potential for overdose between one and the other.What this does mean is that it's an added risk factor. What it doesn't mean is that SequestOX is too dangerous to pick up an approval in its target indication. Markets seem to be assuming that the latter of these implications is correct as opposed to the former and therein (for us) lies the opportunity.Sure, a comparable Tmax would be great, or a shorter Tmax even better. However, these are complex drugs (with the abuse deterrence side of the equation accounting for a large portion of the complexity, which of course, the comparator doesn't have) and that it has a slightly longer Tmax (somewhere in the region of 25%) isn’t overly surprising.It's also not damning for the program. A fatty food risk is something labeling can easily resolve and something that labeling has easily resolved on hundreds of other drugs that are readily available in the US today.Elite management has said that it is putting some other trials on hold while it gains feedback from the FDA as to the next steps in light of the latest results. When we eventually see this feedback, we expect it's not to be as harsh as many are expecting and, in turn, for this company to recover on its announcement.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on ELTP, sign up below!Image courtesy of Be.Futureproof via FlickrDisclosure: We have no position in ELTP and have not been compensated for this article.