Elite Pharmaceuticals Inc (OTCMKTS:ELTP) Is Finally Starting To Run

We have been waiting patiently for development stage biotechnology company Elite Pharmaceuticals Inc (OTCMKTS:ELTP) to validate our long-term bull thesis for the last 10-12 months. The company took a hit last year when the FDA rejected its lead development asset and hasn't quite managed to recover since. At the end of April, Elite Pharmaceuticals went for around $0.15 a share. At last close, the company traded for $0.22 per share – a close to 46% appreciation. We are still well off the circa $0.40 a share highs recorded mid last year, but the latest run could be the start of the closing of this gap.A look at the recent press stream reveals nothing of note that might be pushing up the price. There is something, however, and it could hit press as soon as today. If it does, and it does so as positive, $0.40 a share is going to look cheap.Here is what we are looking at.The decline that came last year did so on the back of – as mentioned – the FDA rejecting the company's development asset. It is an abuse-deterrent opioid product called SequestOx, designed as an immediate-release oxycodone for the management of moderate to severe acute pain where the use of an opioid analgesic is appropriate. Opioid abuse in the US is at epidemic levels right now, and companies are scrambling to get an asset to market that can combat said epidemic. Those that do have a potential billion-dollar market waiting for them at regulatory green light. Elite appreciated in value throughout the first half of 2016 in anticipation of it achieving just that. When the FDA published its ruling, however, it pointed to some concerns surrounding the safety of the drug (and specifically, its potential for overdose), and requested more data from Elite that addressed this potential (and more specifically, the negating of it).Many saw this as terminal for the program, but as we highlighted at the time, we didn't think it would be too hard a fix. Sure, it would add some time to the development program, and with this additional time comes and added capital cost (and by proxy, the potential for some dilution), but again as we stated at the time, the program was far from finished.Fast-forward to mid-March this year, and management announced that it had kicked off a study designed to address the FDA's concerns. It is a bioequivalence study, set up to evaluate the relative comparative bioavailability and bioequivalence of a modified formulation of SequestOx to the original formulation, and additionally, to a comparator product under fed conditions. At the time of the announcement, 45 patients had been enrolled (all healthy, and amounting to full enrollment) and the company announced that once the data is in, it intends to put together a resubmission and get it with the FDA before the end of the year.And here is the important part.­The company expects to have data from the trial by – and to quote – mid-May. That suggests to us that we should see data before the end of this week, and with the company running up over the last 24 hours, there's credence to the suggestion that we might see it very near term. What we are looking for, when the data does hit press, is for the numbers to show that the reformulated version of SequestOx has a shorter Tmax under fed conditions. That's the key to the trial's success.If it does, it should be sufficient to alleviate the agency's concern regarding overdose potential, and in turn, would point to a relatively smooth run as shareholders approach decision day on an NDA resubmission for SequestOx and Elite.If the data isn't good, we will probably see a dip, but to a far less degree than the gain we will see if it is strong. Elite has a strong and active generics pipeline with the agency that should support value appreciation from current levels as and when developments come.Keep an eye on the company's homepage as this is where we'll probably see the announcement first.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.