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 The leading web portal for pharmacy resources, news, education and careers February 15, 2019
Pharmacy Choice - Pharmaceutical News - ELITE PHARMACEUTICALS INC /NV/ - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - February 15, 2019

Pharmacy News Article

 2/11/19 - ELITE PHARMACEUTICALS INC /NV/ - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THREE AND NINE MONTHS ENDED DECEMBER 31, 2018 (UNAUDITED)

                                COMPARED TO THE

           THREE AND NINE MONTHS ENDED DECEMBER 31, 2017 (UNAUDITED)



The following discussion of our financial condition and results of operations
for the three and nine months ended December 31, 2018 and 2017 should be read in
conjunction with our unaudited condensed consolidated financial statements and
the notes to those statements that are included elsewhere in this report. Our
discussion includes forward-looking statements based upon current expectations
that involve risks and uncertainties, such as our plans, objectives,
expectations and intentions. Actual results and the timing of events could
differ materially from those anticipated in these forward-looking statements as
a result of a number of factors, including those set forth under Item 1A. Risk
Factors appearing in our Annual Report on Form 10-K for the year ended March 31,
2018, as filed on June 14, 2018 with the SEC. We use words such as "anticipate,"
"estimate," "plan," "project," "continuing," "ongoing," "expect," "believe,"
"intend," "may," "will," "should," "could," and similar expressions to identify
forward-looking statements.



Unless expressly indicated or the context requires otherwise, the terms "Elite",
the "Company", "we", "us", and "our" refer to Elite Pharmaceuticals, Inc. and
subsidiary.



Background



We are a specialty pharmaceutical company principally engaged in the development
and manufacture of oral, controlled-release products, using proprietary know-how
and technology, particularly as it relates to abuse resistant products and the
manufacture of generic pharmaceuticals. Our strategy includes improving
off-patent drug products for life cycle management, developing generic versions
of controlled-release drug products with high barriers to entry and the
development of branded and generic products that utilize our proprietary and
patented abuse resistance technologies.



We occupy manufacturing, warehouse, laboratory and office space at 165 Ludlow
Avenue and 135 Ludlow Avenue in Northvale, NJ (the "Northvale Facility"). The
Northvale Facility operates under Current Good Manufacturing Practice ("cGMP")
and is a United States Drug Enforcement Agency ("DEA") registered facility for
research, development and manufacturing.



Strategy



We focus our efforts on the following areas: (i) development of our pain
management products; (ii) manufacturing of a line of generic pharmaceutical
products with approved Abbreviated New Drug Application's ("ANDAs"); (iii)
development of additional generic pharmaceutical products; (iv) development of
the other products in our pipeline including the products with our partners; (v)
commercial exploitation of our products either by license and the collection of
royalties, or through the manufacture of our formulations; and (vi) development
of new products and the expansion of our licensing agreements with other
pharmaceutical companies, including co-development projects, joint ventures
and
other collaborations.



Our focus is on the development of various types of drug products, including
branded drug products which require new drug applications ("NDAs") under Section
505(b)(1) or 505(b)(2) of the Drug Price Competition and Patent Term Restoration
Act of 1984 (the "Drug Price Competition Act") as well as generic drug products
which require ANDAs.



We believe that our business strategy enables us to reduce its risk by having a
diverse product portfolio that includes both branded and generic products in
various therapeutic categories and to build collaborations and establish
licensing agreements with companies with greater resources thereby allowing us
to share costs of development and improve cash-flow.



                                       1





Commercial Products



We own, license or contract manufacture the following products currently being
sold commercially:



                                              Branded
                                              Product       Therapeutic         Launch
                 Product                     Equivalent       Category           Date
Phentermine HCl 37.5mg tablets
("Phentermine 37.5mg")                       Adipex-P       Bariatric        April 2011
Hydromorphone HCl 8mg tablets
("Hydromorphone 8mg")                        Dilaudid          Pain          March 2012
Phendimetrazine Tartrate 35mg tablets
("Phendimetrazine 35mg")                      Bontril       Bariatric      November 2012
Phentermine HCl 15mg and 30mg capsules
("Phentermine 15mg" and "Phentermine
30mg")                                       Adipex-P       Bariatric        April 2013
Naltrexone HCl 50mg tablets
("Naltrexone 50mg")                            Revia           Pain        September 2013
Isradipine 2.5mg and 5mg capsules
("Isradipine 2.5mg" and "Isradipine 5mg")       n/a        Cardiovascular    January 2015
Oxycodone HCl Immediate Release 5mg,
10mg, 15mg, 20mg and 30mg tablets ("OXY
IR 5mg", "Oxy IR 10mg", "Oxy IR 15mg",
"OXY IR 20mg" and "Oxy IR 30mg")            Roxycodone         Pain          March 2016
Trimipramine Maleate Immediate Release
25mg, 50mg and 100mg capsules
("Trimipramine 25mg", "Trimipramine
50mg", "Trimipramine 100mg")                 Surmontil    Antidepressant      May 2017
Brompheniramine/Pseudoephedrine Immediate
Release capsules
(formerly known as Lodrane D  Immediate
Release capsules)                               n/a         OTC Allergy     September 2011
Hydroxyzine HCl 10mg, 25mg and 50mg
tablets
("Hydroxyzine 10mg" and "Hydroxyzine          Atarax,
25mg" and "Hydroxyzine 50mg")                Vistaril     Antihistamine      April 2015
Methadone HCl 5mg and 10mg tablets
("Methadone 5mg" and "Methadone 10mg")       Dolophine         Pain      
 November 2018




Note: Phentermine 15mg and Phentermine 30mg are collectively and individually
referred to as "Phentermine Capsules". Isradipine 2.5mg and Isradipine 5mg are
collectively and individually referred to as "Isradipine Capsules". Hydroxyzine
10mg, Hydroxyzine 25mg and Hydroxyzine 50mg are collectively and individually
referred to as "Hydroxyzine". In January 2019, the Company transferred the ANDAs
for Hydroxyzine to Epic Pharma LLC. Oxy IR 5mg, Oxy IR 10mg, Oxy IR 15mg Oxy IR
20mg and Oxy IR 30mg are collectively and individually referred to as "Oxy IR".
Trimipramine 25mg, Trimipramine 50mg, and Trimipramine 100mg are collectively
and individually referred to as "Trimipramine". Methadone 5mg and Methadone 10mg
are collectively and individually referred to as "Methadone".
Brompheniramine/Pseudoephedrine Immediate Release Capsules are referred to
as
"Brom/Pseud Capsules".



Phentermine 37.5mg


The approved ANDA for Phentermine 37.5mg was acquired pursuant to an asset purchase agreement with Epic Pharma LLC ("Epic") dated September 10, 2010 (the "Phentermine Purchase Agreement").




Sales and marketing rights for Phentermine 37.5mg are included in the licensing
agreement between the Company and Precision Dose Inc. ("Precision Dose") dated
September 10, 2010 (the "Precision Dose License Agreement"). Please see the
section below titled "Precision Dose License Agreement" for further details
of
this agreement.



The first shipment of Phentermine 37.5mg was made to Precision Dose's wholly
owned subsidiary, TAGI Pharmaceuticals Inc. ("TAGI"), pursuant to the Precision
Dose License Agreement, with such initial shipment triggering a milestone
payment under this agreement. Phentermine 37.5mg is currently being manufactured
by Elite and distributed by TAGI under the Precision Dose License Agreement.



Hydromorphone 8mg



The approved ANDA for Hydromorphone 8mg was acquired pursuant to an asset
purchase agreement with Mikah Pharma LLC ("Mikah Pharma") dated May 18, 2010
(the "Hydromorphone Purchase Agreement"). Transfer of the manufacturing process
of Hydromorphone 8mg to the Northvale Facility, a prerequisite of the Company's
commercial launch of the product, was approved by the United States Food and
Drug Administration (the "FDA") on January 23, 2012.



Sales and marketing rights for Hydromorphone 8mg are included in the Precision
Dose License Agreement. Please see the section below titled "Precision Dose
License Agreement" for further details of this agreement. The first shipment of
Hydromorphone 8mg was made to TAGI, pursuant to the Precision Dose License
Agreement, in March 2012, with such initial shipment triggering a milestone
payment under this agreement. Hydromorphone 8mg is currently being manufactured
by Elite and distributed by TAGI under the Precision Dose License Agreement.



                                       2





Phendimetrazine Tartrate 35mg



The ANDA for Phendimetrazine 35mg was acquired by Elite as part of the asset
purchase agreement between the Company and Mikah Pharma, dated August 1, 2013
(the "Mikah ANDA Purchase"). Please see "Thirteen Abbreviated New Drug
Applications" below for more information on this agreement. The Northvale
Facility was already an approved manufacturing site for this product as of the
date of the Mikah ANDA Purchase. Prior to the acquisition of this ANDA, Elite
had been manufacturing this product on a contract basis pursuant to a
manufacturing and supply agreement with Mikah Pharma, dated June 1, 2011.



Phendimetrazine 35mg is currently a commercial product being manufactured by
Elite and distributed by Glenmark Pharmaceutical, Inc. USA ("Glenmark"),
pursuant to the Glenmark Strategic Alliance, on a non-exclusive basis, and by
Elite. Please see the section below titled "Strategic Marketing Alliance with
Glenmark Pharmaceuticals, Inc. USA" for further details of this agreement.



On January 2, 2018, the Company announced that it received approval of its ANDA
from the FDA for Phendimetrazine Tartrate Tablets USP, 35mg. This product
approval is from an ANDA that the Company filed approximately six years ago.
This approval resulted in the Company having a second, approved ANDA for this
product. The Company has been selling this product pursuant to the marketing
authorization achieved from the first approved ANDA. The Company is currently
considering strategic options for utilization of this approved ANDA, with such
options including, without limitation, divestiture.



Phentermine 15mg and Phentermine 30mg

Phentermine 15mg capsules and Phentermine 30mg capsules were developed by the Company, with Elite receiving approval of the related ANDA in September 2012.

Sales and marketing rights for Phentermine 15mg and Phentermine 30mg are included in the Precision Dose License Agreement. Please see the section below titled "Precision Dose License Agreement" for further details of this agreement.




The first shipments of Phentermine 15mg and Phentermine 30mg were made to TAGI,
pursuant to the Precision Dose License Agreement, in April 2013, with such
initial shipments triggering a milestone payment under this agreement.
Phentermine 15mg and Phentermine 30mg are currently being manufactured by Elite
and distributed by TAGI under the Precision Dose License Agreement.



Naltrexone 50mg


The approved ANDA for Naltrexone 50mg was acquired by the Company pursuant to an
asset purchase agreement between the Company and Mikah Pharma dated August 27,
2010 (the "Naltrexone Acquisition Agreement") for aggregate consideration of
$200,000.


Sales and marketing rights for Naltrexone 50mg are included in the Precision Dose License Agreement. Please see the section below titled "Precision Dose License Agreement" for further details of this agreement.

The first shipment of Naltrexone 50mg was made to TAGI, pursuant to the Precision Dose License Agreement, in September 2013, with such initial shipment triggering a milestone payment under this agreement. Naltrexone 50mg is currently being manufactured by Elite and distributed by TAGI under the Precision Dose License Agreement

Isradipine 2.5 mg and Isradipine 5mg

The approved ANDAs for Isradipine 2.5mg and Isradipine 5mg were acquired by Elite as part of the Mikah ANDA Purchase.




Sales and marketing rights for Isradipine 2.5mg and Isradipine 5mg were included
in the Epic Manufacturing and License Agreement until the expiry of this
agreement in October 2018. Please see the section below titled "Manufacturing
and License Agreement with Epic Pharma LLC" for further details of this
agreement.



Sales and marketing rights for Isradipine 2.5mg and Isradipine 5mg are currently
included the Glenmark Strategic Alliance. Please see the section below titled
"Strategic Marketing Alliance with Glenmark Pharmaceuticals, Inc. USA" for
further details of this agreement.



The first shipments of Isradipine 2.5mg and Isradipine 5mg were made in January 2015 to Epic, pursuant to the now expired Epic Manufacturing and License Agreement.

Isradipine 2.5mg and Isradipine 5mg are currently being manufactured by Elite.



                                       3




Oxycodone 5mg, Oxycodone 10mg, Oxycodone 15mg, Oxycodone 20mg and Oxycodone 30mg ("Oxy IR")




We received notification from Epic in October 2015 of the approval by the FDA of
Epic's ANDA for Oxy IR. This product was an Identified IR Product in the Epic
Strategic Alliance Agreement Dated March 18, 2009 (the "Epic Strategic
Alliance"). Oxy IR was developed at the Northvale Facility pursuant to the Epic
Strategic Alliance, in which we are entitled to a Product Fee of 15% of Profits
as defined in the Epic Strategic Alliance. The first commercial sale of Oxy IR
occurred in March 2016, and sales by Epic of this product are ongoing.



Trimipramine 25mg, Trimipramine 50mg, and Trimipramine 100mg

Through Elite Labs, Elite acquired an approved and currently marketed ANDA for
Trimipramine Maleate Capsules ("Trimipramine") 25, 50 and 100 mg, from Mikah
Pharma. Trimipramine is currently manufactured by Elite and marketed by Glenmark
pursuant to the Glenmark Strategic Alliance. Trimipramine is a generic version
of Surmontil, a tricyclic antidepressant. Surmontil and generic Trimipramine
have total US sales of approximately $2 million in 2016 according to IMS Health
Data. The ANDA purchased by Elite is currently the only marketed generic
Trimipramine product.



Methadone 5mg and Methadone 10mg

Methadone 5mg and Methadone 10mg tablets were developed by us, with Elite receiving approval of the related ANDA in August 2018.




Sales and marketing rights for Methadone are included in the Glenmark Strategic
Alliance. Please see the section below titled "Strategic Marketing Alliance with
Glenmark Pharmaceuticals, Inc. USA" for further details of this agreement.

The first shipments of Methadone were made to Glenmark in November 2018. Methadone is currently manufactured by Elite and distributed by Glenmark under the Glenmark Strategic Alliance.

Hydroxyzine 10mg, Hydroxyzine 25mg and Hydroxyzine 50mg

The approved ANDAs for Hydroxyzine 10mg, Hydroxyzine 25mg and Hydroxyzine 50mg were acquired by Elite as part of the Mikah ANDA Purchase.




Sales and marketing rights for Hydroxyzine 10mg, Hydroxyzine 25mg and
Hydroxyzine 50mg were included in the Epic Manufacturing and License Agreement,
which expired in October 2018. The first shipment of Hydroxyzine 10mg,
Hydroxyzine 25mg and Hydroxyzine 50mg were made by Epic, pursuant to the Epic
Manufacturing and License Agreement, in April 2015. In January 2019, Elite
transferred these ANDAs to Epic.



Brompheniramine/Pseudoephedrine Immediate Release Capsules

On September 27, 2011, the Company, along with ECR Pharmaceuticals ("ECR"), launched Brom/Pseud Capsules under the brand name, Lodrane D, an immediate release formulation of brompheniramine maleate and pseudoephedrine HCl, an effective, low-sedating antihistamine combined with a decongestant.

Brom/Pseud Capsules are marketed under the Over-the-Counter Monograph (the "OTC
Monograph") and accordingly, under the Code of Federal Regulations can be
lawfully marketed in the US without prior approval of the FDA. Within the past
few years, the FDA has revised its enforcement policies, significantly limiting
the circumstances under which these unapproved products may be marketed. If the
FDA determines that a company is distributing an unapproved product that
requires approval, the FDA may take enforcement action in a variety of ways,
including, without limitation, product seizures and seeking a judicial
injunction against distribution.



Elite manufactures this product, but there have been several mergers and
successor entities effecting the marketing of this product and transfer of brand
name ownership since this product was originally launched. Marketing of this
product under the Lodrane D was last conducted by Valeant Pharmaceuticals
International Inc. ("Valeant"), but Elite has received no new orders for this
product during the current fiscal year and does not anticipate any further
orders from Valeant for this product.



                                       4




Filed products under FDA review

SequestOx? - Immediate Release Oxycodone with sequestered Naltrexone




SequestOx? is our lead abuse-deterrent candidate for the management of moderate
to severe pain where the use of an opioid analgesic is appropriate. SequestOx?
is an immediate-release Oxycodone Hydrochloride containing sequestered
Naltrexone which incorporates 5mg, 10mg, 15mg, 20mg and 30mg doses of oxycodone
into capsules.


In January 2016, the Company submitted a 505(b)(2) New Drug Application for
SequestOx?, after receiving a waiver of the $2.3 million filing fee from the
FDA. In March 2016, the Company received notification of the FDA's acceptance of
this filing and that such filing has been granted priority review by the FDA
with a target action under the Prescription Drug User Fee Act ("PDUFA") of
July
14, 2016.



On July 15, 2016, the FDA issued a Complete Response Letter, or CRL, regarding
the NDA. The CRL stated that the review cycle for the SequestOx? NDA is complete
and the application is not ready for approval in its present form.



On December 21, 2016, the Company met with the FDA for an end-of-review meeting
to discuss steps that it could take to obtain approval of SequestOx?. Based on
this and the meeting minutes received from the FDA on January 23, 2017, the
Company formulated a plan to address the issues cited by the FDA in the CRL,
with such plan including, without limitation, modifying the SequestOx?
formulation, conducting bioequivalence and bioavailability fed and fasted
studies, comparing the modified formulation to the original formulation.



On July 7, 2017, the Company reported topline results from a pivotal
bioequivalence fed study for or SequestOx?. The mean Tmax (the amount of time
that a drug is present at the maximum concentration in serum) of SequestOx? was
4.6 hours with a range of 0.5 hour to 12 hours and the mean Tmax of the
comparator, Roxicodone, was 3.4 hours with a range of 0.5 hour to 12 hours. A
key objective for the study was to determine if the reformulated SequestOx? had
a similar Tmax to the comparator when taken with a high fat meal. Elite will
pause, not proceed with the rest of the clinical trials, and seek clarity from
FDA before deciding on the next steps for immediate release SequestOx?. The
Company will continue to pursue extended release products with its proprietary
abuse deterrent technology.



On January 30, 2018, the Company reported positive topline results from a pilot
study conducted for SequestOx?. An objective of the study was to assess whether
the reformulated SequestOx could achieve a Tmax comparable to the reference
drug, Roxicodone, when dosed with the standard high fat meal specified by FDA.
As opposed to the earlier formulation, based on these pilot results, the
modified SequestOx? is expected to achieve bioequivalence with a Tmax range
equivalent to the reference product when conducted in a pivotal trial under
fed
conditions.



The Company has provided the pilot data to the FDA, requesting clarification as
to requirements for resubmission of the NDA. The FDA has provided guidance for
repeated bio-equivalence studies in order to bridge the new formulation to the
original SequestOx studies, and also extended our filing fee waiver until
December 2019.



There can be no assurances of the success of any future clinical trials, or if
such trials are successful, there can be no assurances that an intended future
resubmission of the NDA product filing, if made, will be accepted by or receive
marketing approval from the FDA, and accordingly, there can be no assurances
that the Company will earn and receive the additional $7.5 million or future
license fees (see "Licensing, Manufacturing and Development Agreements; Sales
and Distribution Licensing Agreement with Epic Pharma LLC for SequestOx?"
below). If the Company does not receive these payments or fees, it will
materially and adversely affect our financial condition. In addition, even if
marketing authorization is received, there can be no assurances that there will
be future revenues or profits, or that any such future revenues or profits would
be in amounts that provide adequate return on the significant investments made
to secure this marketing authorization.



Acetaminophen and codeine phosphate (generic version of Tylenol with Codeine) 300mg/7.5mg, 300mg/15mg, 300mg/30mg, and 300mg/60mg tablets

On September 18, 2018, the Company filed an ANDA with the FDA for a generic version of Tylenol with Codeine (acetaminophen and codeine phosphate) 300mg/7.5mg, 300mg/15mg, 300mg/30mg and 300mg/60mg tablets. The Company awaits the FDA's response.

Oxycodone Hydrochloride extended release (generic version of Oxycontin)




On September 20, 2017, the Company filed an ANDA with the FDA for generic
version of Oxycontin (extended release Oxycodone Hydrochloride). OxyContin is
approved for the management of pain severe enough to require daily,
around-the-clock, long-term opioid treatment and for which alternative treatment
options are inadequate. OxyContin is formulated such that the tablets provide
physical abuse deterrent properties. IMS reported approximately $2.3 billion in
revenue for OxyContin and its equivalents in 2016. The FDA requested additional
information relating to this filing. The Company's response to the FDA's request
is in progress.



                                       5




Generic version of extended release Central Nervous System stimulant




On May 24, 2018, the Company filed an ANDA with the FDA for a generic version of
an extended release CNS stimulant. The ANDA represents the second filing for a
product co-developed with SunGen under the SunGen Agreement. According to IMS
Health data, the branded product and its equivalents had total U.S. sales of
approximately $1.6 billion for the twelve months ended September 30, 2017. The
Company has not yet received a response from the FDA on this filing.



Under the terms of the SunGen Agreement, the product will be owned jointly by
the Company and SunGen. Elite shall have exclusive rights to market and sell the
product under its own label. Elite will also manufacture and package the product
on a cost-plus basis.


Please see the section below titled "Master Development and License Agreement with SunGen Pharma LLC" for further details on the SunGen Agreement.




There can be no assurances that any of these products will receive marketing
authorization and achieve commercialization within this time period, or at all.
In addition, even if marketing authorization is received, there can be no
assurances that there will be future revenues of profits, or that any such
future revenues or profits would be in amounts that provide adequate return on
the significant investments made to secure these marketing authorizations.

Generic version of an antibiotic product

On January 3, 2019, filed an ANDA with the FDA for a generic version of an antibiotic product.

Approved Products Not Yet Commercialized

Oxycodone Hydrochloride and Acetaminophen, USP CII 5mg/325mg, 7.5mg/325mg and 10mg/325mg tablets

On July 3, 2018, the Company received approval by the FDA of its ANDA filed for
generic Percocet (Oxycodone Hydrochloride and Acetaminophen, USP CII)
5mg/325mg, 7.5mg/325mg and 10mg/325mg tablets. This product is indicated for the
management of pain severe enough to require an opioid analgesic and for which
alternative treatments are inadequate. Based on Quintiles IMS Health data for
the twelve months ending May 31, 2018, the retail sales for the brand and
generic products were approximately $500 million. The Company is evaluating
marketing options for this product.



Hydrocodone bitartrate and acetaminophen tablets USP CII (generic version of Norco)




On November 20, 2018, the FDA approved the Company's ANDA for a generic version
of Norco (hydrocodone bitartrate and acetaminophen tablets, USP CII)
2.5mg/325mg, 5mg/325mg, 7.5mg/325mg and 10mg/325mg tablets. Norco is a
combination medication and is used to help relieve moderate to moderately severe
pain. The combination products of hydrocodone and acetaminophen have total
annual US sales of approximately $700 million, according to IMS Health Data.



Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Amphetamine Sulfate (generic version of Adderall)




On December 10, 2018, the Company received approval from the FDA for a generic
version of Adderall, an immediate-release mixed salt of a single entity
Amphetamine product (Dextroamphetamine Saccharate, Amphetamine Aspartate,
Dextroamphetamine Sulfate, Amphetamine Sulfate) with strengths of 5 mg, 7.5 mg,
10 mg, 12.5 mg, 15 mg, 20 mg, and 30 mg tablets. The product is indicated for
the treatment of Attention Deficit Hyperactivity Disorder (ADHD) and Narcolepsy.
It was co-developed with SunGen and is included in the Master Development and
License Agreement with SunGen Pharma LLC. Please see the section below titled
"Master Development and License Agreement with SunGen Pharma LLC for further
details on this agreement.



In addition to the above, we currently own two different approved ANDAs, all of
which were acquired as part of the Mikah ANDA Purchase. Each approved ANDA
requires manufacturing site transfers as a prerequisite to commencement of
commercial manufacturing and distribution. The products relating to each
approved ANDA were included in the Epic Manufacturing and License Agreement
which expired in October 2018 without such manufacture site transfers to Epic
being achieved. Transfer of commercial manufacturing to the Northvale Facility
is in progress.



                                       6





Asset Acquisition Agreements



Generic Phentermine Capsules



On September 10, 2010, together with our wholly owned subsidiary, Elite
Laboratories, Inc., executed a purchase agreement (the "Phentermine Purchase
Agreement") with Epic for the purpose of acquiring from Epic, an ANDA for a
generic phentermine product (the "Phentermine ANDA"), with such being filed with
the FDA at the time the Phentermine Purchase Agreement was executed. On February
4, 2011, the FDA approved the Phentermine ANDA. The acquisition of the
Phentermine ANDA closed on March 31, 2011 and Elite paid the full acquisition
price of $450,000 from the purchase agreement with Epic Pharma.



This product is being marketed and distributed by Precision Dose and its wholly owned subsidiary, TAGI, pursuant to the Precision Dose License Agreement, a description of which is set forth below.

Generic Hydromorphone HCl Product

On May 18, 2010, we executed an asset purchase agreement with Mikah Pharma (the
"Hydromorphone Purchase Agreement"). Pursuant to the Hydromorphone Purchase
Agreement, the Company acquired from Mikah Pharma an approved ANDA for
Hydromorphone 8 mg for aggregate consideration of $225,000, comprised of an
initial payment of $150,000, which was made on May 18, 2010. A second payment of
$75,000 was due to be paid to Mikah Pharma on June 15, 2010, with the Company
having the option to make this payment in cash or by issuing to Mikah Pharma
937,500 shares of our common stock. We elected and did issue 937,500 shares of
Common Stock during the quarter ended December 31, 2010, in full payment of the
$75,000 due to Mikah Pharma pursuant to the Hydromorphone Purchase Agreement
dated May 18, 2010.


This product is currently being marketed and distributed by Precision Dose and its wholly owned subsidiary, TAGI, pursuant to the Precision Dose License Agreement, a description of which is set forth below.



Generic Naltrexone Product



On August 27, 2010, we executed an asset purchase with Mikah Pharma (the
"Naltrexone Acquisition Agreement"). Pursuant to the Naltrexone Acquisition
Agreement, Elite acquired from Mikah Pharma the ANDA number 75-274 (Naltrexone
Hydrochloride Tablets USP, 50 mg), and all amendments thereto, that have to date
been filed with the FDA seeking authorization and approval to manufacture,
package, ship and sell the products described in this ANDA within the United
States and its territories (including Puerto Rico) for aggregate consideration
of $200,000. In lieu of cash, Mikah Pharma agreed to accept product development
services to be performed by us. This product is being marketed and distributed
by Precision Dose and its wholly owned subsidiary, TAGI, pursuant to the
Precision Dose License Agreement, a description of which is set forth below.



Thirteen Abbreviated New Drug Applications

On August 1, 2013, Elite executed the Mikah ANDA Purchase with Mikah Pharma and
acquired a total of thirteen ANDAs, consisting of twelve ANDAs approved by the
FDA and one ANDA under active review with the FDA, and all amendments thereto
(the "Mikah Thirteen ANDA Acquisition") for aggregate consideration of
$10,000,000, payable pursuant to a secured convertible note due in August 2016.



Each of the products referenced in the twelve approved ANDAs require
manufacturing site approval with the FDA. We believe that the site transfers
qualify for Changes Being Effected in 30 Days ("CBE 30") review, with one
exception, which would allow for the product manufacturing transfer on an
expedited basis. However, we can give no assurances that all will qualify for
CBE 30 review, or on the timing of these transfers of manufacturing site, or on
the approval by the FDA of the transfers of manufacturing site.



As of the date of filing of this Quarterly Report on Form 10-Q, the following
products included in the Mikah Purchase Agreement have successfully achieved
manufacturing site transfers:



 ? Phendimetrazine 35mg



? Isradipine 2.5mg and Isradipine 5mg

? Hydroxyzine 10mg, Hydroxyzine 25mg and Hydroxyzine 50mg




                                       7





These products were initially manufactured and marketed pursuant to the Epic
Pharma Manufacturing and License Agreement, which expired in October 2018.
Phendimetrazine and Isradipine are currently being marketed on a semi-exclusive
and exclusive basis, respectively pursuant to the Glenmark Strategic Alliance.
Hydroxyzine was transferred to Epic in January 2019 for aggregate cash
consideration of $450,000.



Trimipramine



In May 2017, through Elite Labs, we acquired from Mikah Pharma an FDA approved
ANDA for Trimipramine for aggregate consideration of $1,200,000. In conjunction
with this acquisition, we also acquired from Mikah Pharma all rights, interests,
and obligations under a supply and distribution agreement with Dr. Reddy's
Laboratories, Inc. relating to the supply, sale and distribution of generic
Trimipramine, and under a manufacturing and supply agreement with Epic Pharma
relating to the manufacture and supply of Trimipramine. The agreement with Dr.
Reddy's Laboratories, Inc. was concluded by mutual consent and Trimipramine is
currently marketed pursuant to the Glenmark Strategic Alliance.



Please see Note 20: Related Party Agreements with Mikah Pharma LLC to the Financial Statements above.

Licensing, Manufacturing and Development Agreements

Sales and Distribution Licensing Agreement with Epic Pharma LLC for SequestOx?




On June 4, 2015, we executed an exclusive License Agreement (the "2015
SequestOx? License Agreement") with Epic, to market and sell in the U.S.,
SequestOx?, an immediate release oxycodone with sequestered naltrexone capsule,
owned by us. Epic will have the exclusive right to market ELI-200 and its
various dosage forms as listed in Schedule A of the Agreement. Epic is
responsible for all regulatory and pharmacovigilance matters related to the
products. Pursuant to the 2015 SequestOx? License Agreement, Epic will pay us
non-refundable payments totaling $15 million, with such amount representing the
cost of an exclusive license to SequestOx?, the cost of developing the product,
the filing of an NDA with the FDA and the receipt of the approval letter for the
NDA from the FDA. As of the date of filing of this annual report on Form
10-K, the Company has received $7.5 million of the $15 million in non-refundable
payments due pursuant to the 2015 SequestOx? License Agreement, with such amount
consisting of $5 million being due and owing on the execution date of the 2015
SequestOx? License Agreement, and $2.5 million being earned as of January 14,
2016, the date of Elite's filing of an NDA with the FDA for the relevant
product. Both of these non-refundable fees (i.e., the $5 million fee and the
$2.5 million fee), have been paid by Epic.



The remaining $7.5 million in non-refundable payments due pursuant to the 2015
SequestOx? License Agreement is due on the FDA's approval of SequestOx? for
commercial sale in the United States of America (please see the paragraph below
for further details). In addition, we will receive a license fee computed as a
percentage (50%) of net sales of the products as defined in the 2015 SequestOx?
License Agreement and is entitled to multi-million-dollar minimum annual license
fees we will manufacture the product for sale by Epic on a cost-plus basis and
both parties agree to execute a separate Manufacturing and Supply Agreement. The
license fee is payable quarterly for the term of the 2015 SequestOx? License
Agreement. The term of the 2015 SequestOx? License Agreement is five years and
may be extended for an additional five years upon mutual agreement of the
parties. Elite can terminate the 2015 SequestOx? License Agreement on 90 days'
written notice in the event that Epic does not pay us certain minimum annual
license fees over the initial five-year term of the 2015 SequestOx? License
Agreement. Either party may terminate this 2015 SequestOx? License Agreement
upon a material breach and failure to cure that breach by the other party within
a specified period.



Please note that on July 15, 2016, the FDA issued a Complete Response Letter, or
CRL, regarding the NDA. The CRL stated that the review cycle for the SequestOx?
NDA is complete and the application is not ready for approval in its present
form. Based on subsequent meetings and communications with the FDA, the Company
believes that there is a clear path forward to address the issues cited in the
CRL. The Company believes that the meeting minutes, received from the FDA on
January 23, 2017, supported a plan to address the issues cited by the FDA in the
CRL by modifying the SequestOx? formulation. Such plan includes, without
limitation, conducting bioequivalence and bioavailability fed and fasted
studies, comparing the modified formulation to the original formulation. the
Company modified the SequestOx? formulation and, on January 30, 2018 reported
positive topline results from a pilot study indicating the likelihood of
achieving the required bioequivalence in a pivotal trial under fed conditions.
The Company is reviewing these results with the FDA and discussing
pharmacokinetic study requirements for a re-submission of the NDA.



The 2015 Epic License Agreement expires on June 4, 2020, and Epic has previously
advised the Company of their desire to extend this agreement. While discussions
are ongoing, they are directly correlated to the regulatory status of
SequestOx?. Furthermore, there can be no assurances that the parties will reach
mutual agreement to extend the term of this agreement and no assurances that the
terms and conditions of the agreement will be similar in all material aspects in
the event that the agreement is extended by mutual consent of the parties.
Non-receipt by the Company of the remaining $7.5 million milestone will have a
material adverse effect on the Company's financial condition.



                                       8




Manufacturing and License Agreement with Epic Pharma LLC

On October 2, 2013, we executed the Epic Pharma Manufacturing and License Agreement (the "Epic Manufacturing and License Agreement"), which expired on October 2, 2018.




Pursuant to this now expired agreement, the Company granted Epic certain rights
to manufacture, market and sell in the United States and Puerto Rico the twelve
approved ANDAs acquired by us pursuant to the Mikah Thirteen ANDA Acquisition.
Of the twelve approved ANDAs, Epic had exclusive rights to market six products
as listed in Schedule A of the Epic Manufacturing and License Agreement, and
non-exclusive rights to market six products as listed in Schedule D of the Epic
Manufacturing and License Agreement. Epic manufactured those products for which
manufacturing site transfer was achieved and Epic was responsible for all
regulatory and pharmacovigilance matters related to the products. The Company
received a license fee and milestone payments, as provided for in this
agreement. Upon expiration of this agreement, Epic ceased having rights to
manufacture and market any of the products included therein. The Company has
already successfully transferred manufacturing of Isradipine to the Northvale
Facility and is in the process of transferring manufacturing of several of the
other products included in this agreement to the Northvale Facility. The Company
is also evaluating strategic options, in addition to manufacturing site transfer
for several of the products, with such options including, without limitation,
divestiture.



During the life of the Epic Manufacturing and License Agreement, the Company
received license fees and milestone payments. The license fee was computed as a
percentage of gross profit, as defined in the agreement, which was earned by
Epic as a result of sales of the product. The milestones, which totaled $1.8
million were based upon Epic's signing and transfer of manufacturing to their
manufacturing facilities. Please note that this agreement expired prior to
successful transfer of manufacturing site for all products relating to the
milestones, Elite received an aggregate of $1.0 million out of the total $1.8
million in milestones provided for in the agreement.



Trimipramine Acquisition


On May 16, 2017, we executed an asset purchase agreement with Mikah Pharma, and
acquired from Mikah Pharma (the "Trimipramine Acquisition") an FDA approved ANDA
for Trimipramine for aggregate consideration of $1,200,000, payable pursuant to
a senior secured note due on December 31, 2020 (the "Trimipramine Note"). Mikah
Pharma is owned by Nasrat Hakim, the Chairman of the Board of Directors,
President and Chief Executive Officer (CEO) of the Company.



The Trimipramine Note bears interest at the rate of 10% per annum, payable
quarterly. All principal and unpaid interest is due and payable on December 31,
2020. Pursuant to a security agreement, repayment of the Trimipramine Note is
secured by the ANDA acquired in the Acquisition.



Trimipramine Distribution Agreement with Dr. Reddy's Laboratories, Inc. and Manufacturing Agreement with Epic




On May 17, 2017, in conjunction with the Trimipramine Acquisition, the Company
executed an assignment agreement with Mikah Pharma, pursuant to which the
Company acquired all rights, interests, and obligations under a supply and
distribution agreement (the "Reddy's Trimipramine Distribution Agreement") with
Dr. Reddy's Laboratories, Inc. ("Dr. Reddy's") originally entered into by Mikah
Pharma on May 7, 2017 and relating to the supply, sale and distribution of
generic Trimipramine Maleate Capsules 25mg, 50mg and 100mg.



On May 22, 2017, the Company executed an assignment agreement with Mikah Pharma,
pursuant to which the Company acquired all rights, interests and obligations
under a manufacturing and supply agreement with Epic originally entered into by
Mikah in 2011 and amended on June 30, 2015 and relating to the manufacture and
supply of Trimipramine (the "Epic Trimipramine Manufacturing Agreement").



Under the Epic Trimipramine Manufacturing Agreement, Epic manufactured Trimipramine under license from the Company pursuant to the FDA approved and currently marketed Abbreviated New Drug Application that was acquired in conjunction with the Company's entry into these agreements.

Under the Reddy's Trimipramine Distribution Agreement, the Company supplied
Trimipramine on an exclusive basis to Dr. Reddy's and Dr. Reddy's was
responsible for all marketing and distribution of Trimipramine in the United
States, its territories, possessions, and commonwealth. The Trimipramine was
manufactured by Epic and transferred to Dr. Reddy's at cost, without markup.



The Reddy's Trimipramine Distribution Agreement was concluded by mutual consent in August 2018.

Elite successfully transferred manufacturing of Trimipramine to the Northvale Facility in September 2018, resulting in the irrelevance of the Epic Manufacturing Agreement.



                                       9




Methadone Manufacturing and Supply Agreement




On June 23, 2011 and as amended on September 24, 2012, January 19, 2015, July
20, 2015 and as extended on August 9, 2016, we entered into an agreement to
manufacture and supply Methadone 10mg to ThePharmaNetwork LLC (the "Methadone
Manufacturing and Supply Agreement"). ThePharmaNetwork LLC was subsequently
acquired by Alkem Laboratories Ltd ("Alkem") and now goes by the name Ascend
Laboratories LLC ("Ascend") and is a wholly owned subsidiary of Alkem.



Ascend is the owner of the approved ANDA for Methadone 10mg, and the Northvale
Facility is an approved manufacturing site for this ANDA. The Methadone
Manufacturing and Supply Agreement provides for the manufacturing and packaging
by the Company of Ascend's methadone hydrochloride 10mg tablets.



The initial shipment of Methadone 10mg pursuant to the Methadone Manufacturing and Supply Agreement occurred in January 2012.




On August 26, 2016, the Methadone Manufacturing and Supply Agreement was amended
and extended through December 31, 2017 and expired. We made our final shipments
of Methadone to Ascend during the quarter ended June 30, 2018.



Precision Dose License Agreement

On September 10, 2010, we executed a License Agreement with Precision Dose (the
"Precision Dose License Agreement") to market and distribute Phentermine 37.5mg,
Phentermine 15mg, Phentermine 30mg, Hydromorphone 8mg, Naltrexone 50mg, and
certain additional products that require approval from the FDA, through its
wholly-owned subsidiary, TAGI, in the United States, Puerto Rico and Canada.
Phentermine 37.5mg was launched in April 2011. Hydromorphone 8mg was launched in
March 2012. Phentermine 15mg and Phentermine 30mg were launched in April 2013.
Naltrexone 50mg was launched in September 2013. Precision Dose will have the
exclusive right to market these products in the United States and Puerto Rico
and a non-exclusive right to market the products in Canada. Pursuant to the
Precision Dose License Agreement, Elite will receive a license fee and milestone
payments. The license fee will be computed as a percentage of the gross profit,
as defined in the Precision Dose License Agreement, earned by Precision Dose as
a result of sales of the products. The license fee is payable monthly for the
term of the Precision Dose License Agreement. The milestone payments will be
paid in six installments. The first installment was paid upon execution of the
Precision Dose License Agreement. The remaining installments are to be paid upon
FDA approval and initial shipment of the products to Precision Dose. The term of
the Precision Dose License Agreement is 15 years and may be extended for 3
successive terms, each of 5 years.



Master Development and License Agreement with SunGen Pharma LLC




On August 24, 2016, as amended we entered into an agreement with SunGen Pharma
LLC ("SunGen") (the "SunGen Agreement") to undertake and engage in the research,
development, sales and marketing of eight generic pharmaceutical products. Two
of the products are classified as CNS stimulants (the "CNS Products"), two of
the products are classified as beta blockers and the remaining four products
consist of antidepressants, antibiotics and antispasmodics.



Under the terms of the SunGen Agreement, Elite and SunGen will share in the
responsibilities and costs in the development of these products and will share
substantially in the profits from sales. Upon approval, the know-how and
intellectual property rights to the products will be owned jointly by Elite and
SunGen. Three of the eight products will be jointly owned, three products will
be owned by SunGen, with Elite having exclusive marketing rights and the
remaining two products will be owned by Elite, with SunGen having exclusive
marketing rights. Elite will manufacture and package all eight products on
a
cost-plus basis.



On May 24, 2018, the Company filed an ANDA with the FDA for a generic version of
an extended release CNS stimulant. The ANDA represents the second filing for a
product co-developed with SunGen under the SunGen Agreement. According to IMS
Health data, the branded product and its equivalents had total U.S. sales of
approximately $1.6 billion for the twelve months ended September 30, 2017. The
Company has not yet received a response from the FDA on this filing.



On December 10, 2018, the Company received approval from the FDA for a generic
version of Adderall, an immediate-release mixed salt of a single entity
amphetamine product (Dextroamphetamine Saccharate, Amphetamine Aspartate,
Dextroamphetamine Sulfate, Amphetamine Sulfate) with strengths of 5mg, 7.5mg,
10mg, 12.5mg, 15mg, 20mg and 30mg tablets. The product is a central nervous
system stimulant and is indicated for the treatment of Attention Deficit
Hyperactivity Disorder ("ADHD") and Narcolepsy. According to QVIA (formerly
QuintilesIMS Health) data, the branded product and its equivalents had total
U.S. sales of $365 million for the twelve months ending September 30, 2018. This
product is jointly owned by the Company and SunGen, pursuant to the SunGen
Agreement.



                                       10





On January 3, 2019, the Company filed an ANDA for a generic version of an
antibiotic. This is the third ANDA that Elite has co-developed and filed
pursuant to the SunGen Agreement. According to QVIA (formerly QuintilesIMS
Heath) data, the branded product for this antibiotic and its equivalents had
total annual U.S. sales of approximately $94 million for the twelve months
ended
September 30, 2018.



 There can be no assurances that any of these products will receive marketing
authorization and achieve commercialization within this time period, or at all.
In addition, even if marketing authorization is received, there can be no
assurances that there will be future revenues of profits, or that any such
future revenues or profits would be in amounts that provide adequate return on
the significant investments made to secure these marketing authorizations.

Strategic Marketing Alliance with Glenmark Pharmaceuticals, Inc. USA




On May 29, 2018, we entered into a license, manufacturing and supply agreement
with Glenmark Pharmaceuticals Inc. USA ("Glenmark") to market the two Elite
generic products described below in the United States with the option to add
products in the future (the "Glenmark Alliance").



Pursuant to the Glenmark Alliance, Glenmark will purchase the products from
Elite and then sell and distribute them. In addition to the purchase prices for
the products, Elite will receive license fees well in excess of 50% of gross
profits. Gross profits are defined as net sales less the price paid to Elite for
the products, distribution fees (less than 10%) and shipping costs. Glenmark
will have semi-exclusive marketing rights to the ANDA approved generic product,
phendimetrazine 35mg tablets, and exclusive marketing rights to Methadone 5mg
and 10mg, products that were approved by the FDA on August 3, 2018.
Collectively, the brand products and their generic equivalents had total annual
sales of approximately $33.6 million in 2017, according to Quintiles IMS Health
data. The Agreement has an initial term of three years and automatically renews
for one-year periods absent prior written notice of non-renewal. In addition to
customary termination provisions, the Agreement permits Glenmark to terminate
with regard to a product on at least three months' prior written notice if it
determines to stop marketing and selling such product, and it permits Elite to
terminate with regard to a product if at any time after the first twelvemonths
from the first commercial sale, the average license fee paid by Glenmark for
such product is less than a defined minimum amount.



Products Under Development



Elite's research and development activities are primarily focused on developing
its proprietary abuse deterrent technology and the development of a range of
abuse deterrent opioid products that utilize this technology or other approaches
to abuse deterrence.


Elite's proprietary abuse-deterrent technology utilizes the pharmacological
approach to abuse deterrence and consists of a multi-particulate capsule which
contains an opioid agonist in addition to naltrexone, an opioid antagonist used
primarily in the management of alcohol dependence and opioid dependence. When
this product is taken as intended, the naltrexone is designed to pass through
the body unreleased while the opioid agonist releases over time providing
therapeutic pain relief for which it is prescribed. If the multi-particulate
beads are crushed or dissolved, the opioid antagonist, naltrexone, is designed
to release. The absorption of the naltrexone is intended to block the euphoria
by preferentially binding to same receptors in the brain as the opioid agonist
and thereby reducing the incentive for abuse or misuse by recreational drug
abusers.



We filed an NDA for the first product to utilize our abuse deterrent technology,
Immediate Release Oxycodone 5mg, 10mg, 15mg, 20mg and 30mg with sequestered
Naltrexone (collectively and individually referred to as "SequestOx?"), on
January 14, 2016. Please see "Filed products under FDA review; SequestOx? -
Immediate Release Oxycodone with sequestered Naltrexone" above.



On September 20, 2017, the Company filed an ANDA with the FDA for generic
version of Oxycontin (extended release Oxycodone Hydrochloride). Please see
"Filed products under FDA review; Oxycodone Hydrochloride extended release
(generic version of Oxycontin" above. Please note that there can be no
assurances of this product receiving marketing authorization or achieving
commercialization. In addition, even if marketing authorization is received and
the product is commercialized, there can be no assurances of future revenues or
profits in such amounts that would provide adequate return on the significant
investments made to secure marketing authorization for this product.



On May 30, 2018, the Company filed an ANDA with the FDA for a generic version of
an extended release CNS stimulant. The ANDA represents the second filing for a
product co-developed with SunGen under the SunGen Agreement. Please see "Filed
products under FDA review Generic version of extended release Central Nervous
System stimulant" above. Please note that there can be no assurances of this
product receiving marketing authorization or achieving commercialization. In
addition, even if marketing authorization is received and the product is
commercialized, there can be no assurances of future revenues or profits in such
amounts that would provide adequate return on the significant investments made
to secure marketing authorization for this product. Please also see the section
below titled "Master Development and License Agreement with SunGen Pharma LLC".



                                       11





On September 18, 2018, the Company filed an ANDA for a generic version of
Tylenol with Codeine (acetaminophen and codeine phosphate) 300mg/7.5mg,
300mg/30mg and 300mg/60mg tablets. Acetaminophen with codeine is a combination
medication indicated for the management of mild to moderate pain, where
treatment with an opioid is appropriate and for which the alternative treatments
are inadequate. Acetaminophen with codeine products have annual U.S. sales of
approximately $45 million according to IQVIA (formerly QuintilesIMS Health
Data).



On January 3, 2019, the Company filed an ANDA for a generic version of an
antibiotic. This is the third ANDA that Elite has co-developed and filed
pursuant to the SunGen Agreement. According to QVIA (formerly QuintilesIMS
Heath) data, the branded product for this antibiotic and its equivalents had
total annual U.S. sales of approximately $94 million for the twelve months
ended
September 30, 2018.


The Company believes that the abuse deterrent technology can be applied to and
incorporated into a wide range of opioids used today for pain management and
has, to date, identified 10 additional products for potential development. All
of these products are at early stages of development, with research and
development activities mainly consisting of in-house process development and
laboratory studies. Extensive efficacy and safety studies, similar to those
conducted for SequestOx?, Generic Oxy/APAP and Generic Hydrocodone/APAP, have
not yet been conducted for these other products. As a result, costs incurred in
relation to the development of these 10 products have not been material.



On June 4, 2015, the Company entered into a sales and distribution licensing
agreement which included a non-refundable payment of $5 million to Elite for
prior research and development activities, with such representing the first
material net cash inflows being generated by ELI-200. On January 14, 2016, the
Company filed an NDA with the FDA for SequestOx?, thereby earning a
non-refundable $2.5 million milestone. An additional $7.5 million non-refundable
milestone is due upon the FDA's approval of Elite's NDA. Please note, as further
detailed above, there can be no assurances of the Company receiving marketing
authorization for SequestOx?, and accordingly, there can be no assurances that
the Company will earn and receive the additional $7.5 million or future license
fees. The non-receipt by the Company of these payments and or fees will
materially and adversely affect our financial condition.



Please note that, while the FDA is required to review applications within
certain timeframes, during the review process, the FDA frequently requests that
additional information be submitted. The effect of such request and subsequent
submission can significantly extend the time for the NDA review process. Until
an NDA is actually approved, there can be no assurances that the information
requested and submitted will be considered adequate by the FDA to justify
approval. The packaging and labeling of our developed products are also subject
to FDA regulation. Based on the foregoing, it is impossible to anticipate the
amount of time that will be needed to obtain FDA approval to market any product.
In addition, there can be no assurances of the Company filing the required
application(s) with the FDA or of the FDA approving such application(s) if
filed, and the Company's ability to successfully develop and commercialize
products incorporating its abuse deterrent technology is subject to a high level
of risk as detailed in "Item 1A-Risk Factors-Risks Related to our Business" of
the Annual Report on Form 10-K filed with the SEC on June 14, 2018.



Abuse-Deterrent and Sustained Release Opioids




The abuse-deterrent opioid products utilize our patented abuse-deterrent
technology that is based on a pharmacological approach. These products are
combinations of a narcotic agonist formulation intended for use in patients with
pain, and an antagonist, formulated to deter abuse of the drug. Both, agonist
and antagonist, have been on the market for a number of years and sold
separately in various dose strengths. We have filed INDs for two abuse resistant
products under development and have tested products in various pharmacokinetic
and efficacy studies. We expect to continue to develop multiple abuse resistant
products. Products utilizing the pharmacological approach to deter abuse such as
Suboxone, a product marketed in the United States by Reckitt Benckiser
Pharmaceuticals, Inc., and Embeda, a product marketed in the United States by
Pfizer, Inc., have been approved by the FDA and are being marketed in the United
States. We have developed, licensed to Epic the marketing rights to SequestOx?,
immediate release Oxycodone with Naltrexone, and retain the rights to the
remainder of these abuse resistant and sustained release opioid products. We may
license these products at a later date to a third party who could provide
funding for the remaining clinical studies and who could provide sales and
distribution for the product.



We also developed controlled release technology for oxycodone under a joint
venture with Elan which terminated in 2002. According to the Elan Termination
Agreement, we acquired all proprietary, development and commercial rights for
the worldwide markets for the products developed by the joint venture, including
the sustained release opioid products. Upon licensing or commercialization of an
oral controlled release formulation of oxycodone for the treatment of pain, we
will pay a royalty to Elan pursuant to the Elan Termination Agreement. If we
were to sell the product itself, we will pay a 1% royalty to Elan based on the
product's net sales, and if we enter into an agreement with another party to
sell the product, we will pay a 9% royalty to Elan based on our net revenues
from this product. We are allowed to recoup all development costs including
research, process development, analytical development, clinical development and
regulatory costs before payment of any royalties to Elan.



                                       12





Patents


Since our incorporation, we have secured the following patents, of which two have been assigned for a fee to another pharmaceutical company. Our patents are:




PATENT                                                    EXPIRATION DATE
U.S. patent 5,837,284 (assigned to Celgene Corporation)    November 2018
U.S. patent 6,620,439                                      October 2020
U.S. patent 6,926,909                                       April 2023
U.S. patent 8,182,836                                       April 2024
U.S. patent 8,425,933                                       April 2024
U.S. patent 8,703,186                                       April 2024
Canadian patent 2,521,655                                   April 2024
Canadian patent 2,541,371                                 September 2024
U.S. patent 9,056,054                                        June 2030
E.P. patent 1615623                                         April 2024



We also have pending applications for two additional U.S. patents and two foreign patents. We intend to apply for patents for other products in the future; however, there can be no assurance that any of the pending applications or other applications which we may file will be granted. We have also filed corresponding foreign applications for key patents.




Prior to the enactment in the United States of new laws adopting certain changes
mandated by the General Agreement on Tariffs and Trade ("GATT"), the exclusive
rights afforded by a U.S. Patent were for a period of 17 years measured from the
date of grant. Under GATT, the term of any U.S. Patent granted on an application
filed subsequent to June 8, 1995 terminates 20 years from the date on which the
patent application was filed in the United States or the first priority date,
whichever occurs first. Future patents granted on an application filed before
June 8, 1995, will have a term that terminates 20 years from such date, or 17
years from the date of grant, whichever date is later.



Under the Drug Price Competition Act, a U.S. product patent or use patent may be
extended for up to five years under certain circumstances to compensate the
patent holder for the time required for FDA regulatory review of the product.
Such benefits under the Drug Price Competition Act are available only to the
first approved use of the active ingredient in the drug product and may be
applied only to one patent per drug product. There can be no assurance that we
will be able to take advantage of this law.



Also, different countries have different procedures for obtaining patents, and
patents issued by different countries provide different degrees of protection
against the use of a patented invention by others. There can be no assurance,
therefore, that the is
						



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