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Elite Pharmaceuticals Inc (OTCMKTS:ELTP): An Update On An Undervalued Stock

Elite Pharmaceuticals Inc (OTCMKTS:ELTP): An Update On An Undervalued Stock
Written by
Aaron Smith
Published on
September 9, 2016
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Elite Pharmaceuticals, Inc. (OTCMKTS:ELTP), is a specialty pharmaceutical company that engages in the research, development, manufacture, and licensing of proprietary orally administered controlled-release drug delivery systems and products. It’s widely known that Elite produces some powerful medication. Unfortunately, those drugs have fallen out of favor with regulators, doctors and pharmacies and the stock price has suffered.They manufacture several powerful opiates including, but not limited to, immediate release Roxycodone 5mg, 10mg, 20mg and 30mg tablets which have spawned a bigger prescription pill addiction than the United States has ever known and 8mg tablets of Dilaudid, another highly addictive pain medication. This has caused the stock to decline rapidly as the regulators have cracked down on the distribution of such drugs by doctors and pharmacies. For the most part because intravenous (“IV”) drug users were crushing the pills and injecting them. In fact, even if your doctor were to prescribe either drug for pain, it is virtually impossible to get the prescription filled.The Company's stock tumbled on Monday, July 18th, due to SequestOx, a new drug yet to enter the trial stage that utilizes a proprietary abuse-deterrent technology, ART™, through a multi-particulate capsule which contains an opioid agonist in addition to naltrexone, an opioid antagonist used primarily in the management of alcohol dependence and opioid dependence. This would make two of their primary products, Roxycodone and Dilaudid much safer in the eyes of the regulators in additional to the plethora of other opioids on the market.When SequentOx is taken, the naltrexone is designed to pass through the body unreleased while the opioid agonist releases over time providing therapeutic pain relief for which it is prescribed. However, If the multi-particulate beads are crushed or dissolved, which must be done by IV drug users, the opioid antagonist, naltrexone, is designed to release. The absorption of the naltrexone is intended to block the euphoria by preferentially binding to same receptors in the brain as the opioid agonist and thereby reducing the incentive for abuse or misuse by recreational drug abusers.However, there was a problem. The maximum observed concentration (Cmax) and the time of Cmax (tmax) are both obtained directly from the peak concentration time data. Cmax is defined as the highest observed concentration in a concentration-time profile. Cmax (tmax) is defined as how long it takes for the drug to reach this peak concentration. The problem is that when SequestOx is taken with fatty food, the Cmax of SequestOx is the same as when taken with no food or a light meal but the Cmax (tmax)) is higher which means it takes longer for it to hit its peak concentration.This means a patient could take the drug, expect a certain level of relief, but not get it because of the longer time associated with a higher tmax level. As a result, a patient may take another pill and possibly overdose. The Company was aware of this fact when it submitted the New Drug Application (“NDA”) through trials that demonstrated this effect but it believed that it could resolve the issue with labeling. Specifically, SequestOx contained a note on the packaging stating that this should not be taken with fatty food. However, because the drugs are instant release they are designed for on demand pain relief, the FDA wasn’t happy with this solution. If the drug was designed for chronic pain, this probably wouldn’t be an issue, because a patient should plan to take the drug before eating.If the Company can exhibit to the FDA that there is no difference in Cmax (tmax) when SequestOx is sprinkled on a fatty meal, then the FDA may very well accept that as a resolution and approve the drug with an accompanying label explaining the dosing method. It’s going to the FDA over the coming weeks with this proposal, and if the agency agrees to the resolution, we should see a trial prior to the end of the as quarter.However, as a result of the FDA’s comments, the Company’s share price declined from $0.40 on Tuesday, July 12th to $0.15 on Friday, July 22nd. The stock is down 47.22% since January 26th, underperforming the S&P 500 by 61.76%.On Monday, August 29th, the Company’s shares rose approximately 30%, after the company filed an Abbreviated New Drug Application (ANDA) with the U.S. Food and Drug Administration for a generic version of Percocet, a popular medicine used to treat moderate and severe pain. Percocet, by the way, is dispensed relatively commonly by doctors and easily distributed by pharmacies. Perhaps one of the reasons is that the drug are not water soluble and contain 325mg of Acetaminophen in addition to Oxycodone and, therefore, can not be utilized by IV drug users.The Company is also committed to developing an additional range of opioid abuse-deterrent products including the present offering of Naltrexone HCl 50mg, a drug that reverses the effects of opioids and is used primarily in the management of alcohol dependence and opioid dependence. Furthermore, the complete response letter from the FDA validates the technology and there is a raft of other similar drugs in its pipeline poised for submission. Additionally, the Company expects to file another generic opioid product this year not until the scrutiny of regulators, doctors or pharmacies.As a result of the company’s current path, the development of a range of opioid abuse-deterrent products and the production of generic versions of opioids that the regulators are comfortable with, the doctors are comfortable in prescribing and pharmacies have no difficulty dispensing, we could see the stock rise significantly. 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.

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