Elite Pharmaceuticals Inc (OTCMKTS:ELTP) Collapses After FDA Decision
The shareholders of Elite Pharmaceuticals Inc (OTCMKTS:ELTP) were looking forward to the July 14 date to learn the decision of the FDA about the company’s abuse-deterrent opioid candidate, SequestOx. Instead of the expected positive outcome, however, on July 15 the company received a complete response letter in which the FDA stated that the New Drug Application for SequestOx was not ready for approval in its present form.
Following this outcome the stock of the company got hammered when the market reopened after the weekend. ELTP opened yesterday’s trading session with a massive gap down of around 8 cents from its Friday’s closing price. In the first minutes of the session the ticker sank even lower dropping to an intraday low, and a new 52-week low, of $0.151 per share.
The management team decided to not let its stock suffer a free fall towards the bottom of the chart and early in the morning they held a conference call. The call provided further clarity on the situation and it definitely alleviated some of the concerns that investors had. Following the conference ELTP‘s stock began to slowly retrace it steps up the chart and it managed to finish the day at $0.231, above its opening price. Unfortunately, at this price the stock still incurred a devastating loss of over 25%.
ELTP‘s plans for the future haven’t changed and the company will attempt to file at least one new application for its drug candidates with the FDA during each quarter between Q3 this year and the end of 2017. The state of Elite’s financials has also never been stronger – the annual report for the fiscal year ended March 31, 2016, contained the following numbers:
• $11.5 million cash
• $16.7 million total current assets
• $4.65 million total current liabilities
• $12.5 million total revenues
• $683 thousand net loss
Ignoring the risks, as the stock’s disastrous crash proved yesterday, may be extremely dangerous, though. We have been warning you that in order to raise funds for its operations ELTP has been selling sizable amounts of shares under its purchase agreement with Lincoln Park Capital Fund, LLC. Just a couple of days ago the registration statement covering the resale of 63 million shares by Lincoln Park became effective. In addition, between March 31 and June 7, a total of 9.3 million shares were issued as an exercise of warrants at an average price of $0.065 per share.
Use caution when approaching the stock of the company and set appropriate time horizons for your trades.