Elite Pharmaceuticals Inc (OTCMKTS:ELTP) Looks Like It's Turning Around

Elite Pharmaceuticals Inc (OTCMKTS:ELTP) is making a comeback. The company had a pretty rough start to the month, falling from around $0.12 at the start of August to midmonth lows of $0.09 a piece. During the first half of this week, however, we've seen Elite stage something of a recovery and company is currently trading in and around its start of the month pricing.Management put out first quarter fiscal year 2018 financials on August 9 and there is a chance that some of the headline numbers from this release have contributed to negative sentiment and weighed on share price. Alongside the financials, however, we also got a conference call and the business update that came with this conference call suggests negative sentiment is misguided right now and that the latest bounce could be the start of a longer-term reversal for Elite.Regular readers will likely already be familiar with this one – it is a company that we have come back to on quite a few occasions over the past 12 months. For those new to Elite, it is a biotechnology stock that is forging ahead with a dual operational strategy, with one arm rooted in the development and commercialization of abuse deterrent opioids and another rooted in the sale of generic pharmaceuticals in the US.The lead development product, an abuse deterrent opioid called SequestOx, has the potential to target a multibillion-dollar market if approved. It's had a pretty rocky road to date, however, and near-term approval is looking less and less likely as the months go by. That's a bit disappointing, of course, but for us, it's not a big deal. Unlike many of its peers, Elite's model offers it a degree of diversification, meaning valuation isn't rooted solely in the outcome of a drug development program (in this instance, the SequestOx program).Instead, Elite's inherent valuation is rooted in its development pipeline and a portfolio of generic assets that are all under review right now by the FDA. In total, the company has four generic applications with the agency in the US, something that is highly unusual for an entity of this size and in the space, and as we see feedback from the FDA on each of these applications hit press, there's a good chance that Elite will start to run.Specifically, we are looking at the as yet undisclosed pain management asset application as a key near-term driver, with the SunGen Pharma collaboration asset and the generic Trimipramine, which will be marketed by Dr. Reddy’s Laboratories, outcome as potentially serving to compound any near-term strength brought about by a pain management update slightly longer term.Cash on hand as of June 30, 2017, came in just shy of $10 million, which provides substantial runway (based on current burn, we expect this cash to last through till mid to late 2018 at least) and removes any near-term dilution risk.The key take away here is that this is a company that markets are valuing as a development stage biotechnology play with a stalled lead program. At its current market capitalization, which came in at $86 million at last count, the potential of the generic operations (and specifically, the four applications that are currently with the FDA) is being completely ignored.Once we get any sort of update as to the progress of the just mentioned applications, and especially if we hear news that one of them (most likely the pain management one first) has picked up a green light for commercialization in the US, markets are going to revalue the company and close the gap on the discrepancy that is currently in place. The stock was cheaper a week ago than it is now, but at current prices, it still looks to be available at a considerable discount to core value.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 Mike Mozart via FlickrDisclosure: We have no position in ELTP and have not been compensated for this article.