Elite Pharmaceuticals, Inc. (OTCMKTS:ELTP) Awakens on Financing News
Elite Pharmaceuticals, Inc. (OTCMKTS:ELTP) acts truly concerned about its future, and luckily, in the past days offered up important corporate updates. At the same time, the stock price still seeks direction. On Monday, the ticker ended with a net gain of a modest 16% to $0.37 as buying volumes of $1.62 million offset a couple of days of selling. But ELTP remains a ticker moved by the moods of pharmaceutical stocks- the need for constant good news and future expectations, without which the stock price often enters a period of depressed trading.
The spike on Monday was triggered by news of new financing. ELTP announced it secured financing with Lincoln Park Capital Fund, LLC. The sum of $40 million in total would be secured through a period of share placements, taking up to 36 months. There are certain restrictions around the agreement, such as the limit of buying up only 500,000 worth of shares on any day. The sum of the purchase in a business day should not exceed $760,000. Also, Lincoln Park cannot become the beneficial owner of more than 9.9% of the ELTP common stock.
While these precautions are good, ELTP will still have to offer at least a glimpse of the potential of its drug technologies. Although ELTP is in the potentially lucrative anti-opioid business, it is unknown when its treatments would be marketed and accepted.
Without the latest round of funding, ELTP stacks up as a mid-range pharmaceutical firm, with the usual setbacks due to long research:
- cash: $1 million
- current assets: $3.9 million
- total assets: $18.2 million
- current liabilities: $12.5 million
- total liabilities: $23.2 million
- revenues: $1.6 million
- net loss: $1 million
While the company may be promising, the stock price movement is worrying- after testing the patience of investors, ELTP exploded at the beginning of the new year, peaking at $0.90, only to wipe out more than 55% of its value.
Investors’ forums show some worries that Lincoln Park could start offloading the shares rather soon after taking hold, with only small probability that it would hold onto the position. There are even doubts whether the move of LPC could be called investing, or is an operation with more short-term gains in mind.
ELTP has chosen a field in which even the big contenders have stumbled. The big promises for anti-addiction treatments helped hype up Titan Pharmaceuticals, Inc. (OTCBB:TTNP), only to have it gap downward by 75% on a day of bad news. TTNP repeated that pattern of crashing suddenly, and is now depressed at $0.63.
Marina Biotech, Inc. (OTCMKTS:MRNA) also rose on bright expectations, to peak at $1.80. Unfortunately, investors were impatient and the gains were shed, bringing the ticker down to $0.86.
If you like pharmaceutical companies for their supposed stability, keep in mind that without a steady inflow of news, the price gains remain extremely insecure. Beware quickly triggered trends following a period of subdued prices.