Release Date: July 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Elite Pharmaceuticals Inc (ELTP, Financial) reported a significant increase in total revenues, reaching $56.6 million, a 65% increase from the previous year.
- The company achieved a 192% increase in operating income, rising from $3.7 million to $10.8 million.
- Successful commercial launch of the Elite label product line, transforming the business model and increasing profit margins.
- Approval of methotrexate and acquisition of three approved ANDAs, which are expected to contribute to future revenues.
- Strong balance sheet with working capital doubling from $14 million to $28 million and net equity increasing from $29 million to $58 million.
Negative Points
- Despite the revenue growth, Elite Pharmaceuticals Inc (ELTP) experienced an operating cash burn of $3.3 million, compared to a positive cash flow of $3.3 million the previous year.
- The company will not qualify as an accelerated filer due to not meeting certain revenue criteria.
- The transition to in-house marketing and distribution required a large investment in working capital and infrastructure, impacting cash flow.
- Stock-based liabilities and derivative expenses, which fluctuate with stock price, continue to affect financial statements.
- The company has a high number of shares outstanding, which has been a point of concern among shareholders.
Q & A Highlights
Q: Is AI utilized in your business now and do you see it helping in a significant way going forward?
A: Nasrat Hakim, CEO: AI is currently used on a small scale in our operations, particularly in formulation development and clinical trials. While our machines have some AI components, they are not as sophisticated as they could be. We look forward to incorporating more advanced AI technologies in the future to optimize various aspects of our business, from formulation to sales and marketing.
Q: Why does Elite need so many shares outstanding?
A: Nasrat Hakim, CEO: The large number of shares is a result of historical financial strategies to keep the company afloat, including strategic alliances and selling shares instead of borrowing money. This approach helped avoid bankruptcy and maintain company operations. While a reverse split could address the number of shares, it is not planned unless required for a NASDAQ listing.
Q: Is the partnership with TAGI still beneficial now that Elite is marketing products under the Elite label?
A: Nasrat Hakim, CEO: Yes, the partnership with TAGI remains beneficial. TAGI has a niche in the bariatrics market and has been a reliable partner for over 13 years. The contract has about a year and a half remaining, and we will reassess the partnership at that time.
Q: Are you considering using SequestOx technology to develop an Adderall NDA or other drugs?
A: Nasrat Hakim, CEO: Our patents and know-how, including SequestOx technology, add significant value to the company. While we are currently focused on our own profitable products, these technologies could entice potential buyers or be utilized in the future.
Q: Why did Elite buy back the products from Nostrum?
A: Nasrat Hakim, CEO: We sold the products to Nostrum five years ago when we needed funds. Now that we are financially stronger, we repurchased three out of the five products for the same price. This effectively gave us an interest-free loan and allowed us to reclaim valuable assets without diluting shares at a low stock price.
Q: Why didn't Elite buy back Hydromorphone from Nostrum?
A: Nasrat Hakim, CEO: Hydromorphone required significant formulation changes and effort to produce the 4mg and 2mg doses. Given our focus on more impactful products, we decided not to repurchase Hydromorphone.
Q: Does Elite plan to produce the products recently acquired?
A: Nasrat Hakim, CEO: Yes, we acquired these products with the intention of producing them. Our new facility expansion will support the manufacturing of these products, freeing up space in our existing facility.
Q: What are the future revenue projections for Elite Pharmaceuticals?
A: Nasrat Hakim, CEO: We project a minimum of $70 million in revenues for the fiscal year ending March 2025, skipping the $60 million mark due to our current run rate and strong market demand for our products.
Q: How has the transition to direct sales impacted Elite's financials?
A: Carter Ward, CFO: The transition to direct sales with the Elite label has significantly increased revenues and profit margins. This shift required substantial investment in working capital and infrastructure but has proven to be a successful strategy, as demonstrated by our financial results.
Q: What are the implications of the recent ANDA approvals and acquisitions?
A: Carter Ward, CFO: The approval of methotrexate and the acquisition of three ANDAs provide a strong pipeline for future growth. These products are expected to contribute to our revenues and enhance our market position.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
