Elite Pharmaceuticals Inc (OTCMKTS:ELTP) Caves In After Filing Quarterly

It has been a good long run but it has come to its unavoidable end. In yesterday’s session Elite Pharmaceuticals Inc (OTCMKTS:ELTP) dropped over 19% on its biggest daily volume for the past 52 weeks. This happened to be the first trading session after ELTP put up its due quarterly report.

It’s a little hard to tell whether investors were displeased with the quarterly report or ELTP simply finally toppled over due to its unsustainable chart climb, which pushed the stock from $0.21 per share in late October to $0.42 just a day ago.

Here is the brief summary of ELTP‘s balance sheet as of September 2015:

• $9.0 million in cash
• $4.5 million in current liabilities
• $2.6 million in quarterly revenues
• $1.9 million in quarterly net loss

The company put up a press release, highlighting a 115% increase of quarterly revenues year-over-year. However, it’s also true that revenues are down QoQ, due to the lack of product development licensing in the last quarter. The company’s loss from operations in this quarter on a YoY basis is exactly the same as it was in 2014 – $4.0 million. ELTP‘s bottom line varies wildly every quarter, due to significant figures recorded as “change of fair value of derivatives”.

Another highlight of the report is that ELTP significantly ramped up research and development in its last reported quarter, almost doubling the money spent on R&D in the previous quarter. The company confirmed that it expects to file a NDA with the FDA by the end of calendar 2015, with a response from the Administration anticipated in the first weeks of 2016.

There is nothing particularly alarming about ELTP‘s performance in its last reported quarter and the slip is likely due to either disproportionate investor expectations or simply a technical hiccup, as the stock was massively overbought prior to the slide. ELTP is now back in normal trading ranges.