Nasrat Hakim – President, Chief Executive Officer, Director Carter Ward – Chief Financial Officer

Bob Parker – Private Investor James Smith – Private Investor Patrick Derek – Private Investor Chad Zack – Private Investor

Good morning, ladies and gentlemen, and welcome to the Elite Pharmaceuticals Year-end 2015 Financial Results and Business Update Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will open for your questions and comments following the presentation. Now, I’d like to turn the floor over to your host, Nasrat Hakim. Sir, the floor is yours.

Thank you, Dave. Good morning, ladies and gentlemen, my name is Nasrat Hakim, I’m Elite’s President and CEO. Our CFO Carter Ward will give us an update on the financial for our fiscal year, after which I’ll make a brief statement and take your questions. Carter, you have the floor.

Absolutely thank you Nasrat, and thank you everybody for calling in today. Before I start, I’d just like to read our forward-looking statement. The conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including those related to the effects if any on future results, performance, or other expectations that may have some correlation to the subject matter of this conference call. Listeners are cautioned that such forward-looking statements involve risks and uncertainties including without limitation, its ability to obtain FDA approval of the transfers of the ANDAs, or the timing of such approval process, delays, uncertainties, inability to obtain necessary ingredients, and other factors not under the control of Elite which may cause actual results, performance, or achievements of Elite to be materially different from the results, performance, or other expectations that may be implied by these forward-looking statements. These risks and other factors including without limitation, the Company’s ability to obtain sufficient funding under the Lincoln Park Capital Agreement or from other sources, the timing or results of pending and future clinical trials, regulatory reviews and approvals by the food and drug administration, and other regulatory authorities, intellectual property protections and defenses, and the Company’s ability to operate as a growing concern are discussed in Elite’s filings with the Securities and Exchange Commission, including its reports on Form 10-K, 10-Q, and 8-K. Elite undertakes no obligation to update any forward-looking statements. It’s our first time reading that disclaimer, thank you again, thanks Nasrat, thanks everybody calling in today. Yesterday, we filed our 10-K for the year ended March 31, 2015, that’s our 2015’s fiscal year or on our March fiscal year. The 10-K is available on our website elitepharma.com as well as the usual site such as sec.gov, otcmarkets.com, Google Finance, Yahoo Finance, so we haven’t seen our 10-K yet, please get your copy from one of those sites and my favorite is elitepharma.com for obvious reasons, go check us out there. Before discussing the financials, I’d like to point out something on the first page of the 10-K that’s usually overlooked. This 10-K that we’re filing is the first one that we’re filing as an accelerated file. Up until now, we were a small company filer which is defined as market cap of less than $75 million, market cap is now more than twice that in excess of $160 million actually, so we are small no more. Now, let’s look at some of the key areas of our financials. There are two significant and really positive areas of our financials. The first of these areas is our revenues, which were above $5 million for the first time in our 25-year history. So, taking 25 years to reach $5 million may not sound like so much, so I thought it’d be good time to give a little history on Elite to put this into proper context. Just over four years ago, not 25 years ago, four years ago we had no products on the market and close to zero revenues as a result of the 2011 FDA decision to remove more than 500 cough, cold, and allergy [indiscernible] products from the market, and including in that were our two Lodrane products from the old days. While starting from scratch in 2011, we formulated and executed a strategy of developing and acquiring a completely new generic product line, and that’s an expensive and lengthy proposition when you consider what is required and the timeframes for bringing new products to the market. In less than four years, we’ve launched nine new products with some having multiple strengths and dealt growing revenue streams that have crossed $5 million and continued to trend upward. In addition, we own seven additional generic products which are moving towards commercialization, and we recently launched Hydroxyzine in April of this year, and all these will have – will help to further increase and expand our revenue streams in the future. So, it’s not that it took a 25 years to reach the $5 million mark in revenues, it took us less than four years. Since every dollar of that $5 million was generated from products that are less than four years old in the market, in fact most of them have been in the market for just two to three years. Fiscal 2015 was also the second year in a row which we achieved record revenues. When I get to the next point, you’ll see that we have a really good shot at three years of record revenues going into fiscal 2016, so that brings us to the second major item on our financials, that’s found in the subsequent of that footnotes which is note 28 to the financials. In that footnote, we described the sales and distribution licensing agreement for ELI-200, which we signed with Epic just a little over a week ago. It was signed in June of this year, so it didn’t have any effect on our March financials, but it is without a doubt, the most significant item on our financial statements when considering future effect and benefits. Nasrat will have much more to say about this agreement, but here is a takeaway from a finance perspective. First, there are milestones totaling $15 million. This translates to revenues on our income statement. A significant amount of these milestones are expected to be earned during the 2016 fiscal year, and the full $15 million should be fully earned by the end of the 2017 fiscal year. So, it’s pretty clear that means fiscal 2016 is shaping up to be a good one with regards to revenues. Second, Elite will earn manufacturing fees and profit splits based on sales of the product. We expect that this will impact revenues beginning in fiscal 2017 when the product is scheduled for launch. Epic has substantial resources available to support this product, they have more than 200 employees and currently $120 million of revenues. So, we expect the contribution from these products to be significant, and we expect Epic to be quite successful with this product. And third, the $15 million in milestones timed and frontloaded as they are, provides us with much needed funding for the continued and expedited development of additional Abuse-Deterrent opioid products. Everybody needs to remember that ELI-200 is not the only Abuse-Deterrent opioid in our pipeline, it’s just the first of a full line of Abuse-Deterrent products. For these milestones, they’re really important in providing us with the finance necessary for our product development plans. Also, I want to mention that the milestones represent the first revenues which we have generated from an Abuse-Deterrent opioid product. Development of this technology has been our focal point for years now, and it’s exciting to all of us at Elite to see that these labors are starting to bear fruit, that’s a really big milestone from an Elite standpoint. Just a few more quick points on our financials, if you look at our cash flow statement you’ll see we’re reporting an operating cash burn of $15.1 million and also our P&L statement shows $14.8 million in R&D expense. So, if you put these two numbers together, this statement show that the cash burn is due to the R&D costs, not really a surprise there. These R&D costs are however starting to really pay off for us. Also included in the cash burn are the costs of increased resources in the form of personnel and facility which we are putting in place to support the projected increases in future operations. So, our finance – on our financials we report these costs as burn, but I really do that more as an investment which are starting to generate a return. And lastly, our balance sheet is once again the strongest on record. Our working capital was $7.3 million, our cash-on-hand was $7.5 million and all of our liabilities including the New Jersey Economic Development bonds were in compliance. So all of the defaults of the past has been resolved, they are all in the past. So to summarize, these are by far the best financials that I have had the privilege to report. We had record revenues for the second straight year, we booked $5 million for the first time, our generic products continue to perform well and we still have a robust pipeline to provide future increases and expansion. And the recent agreement with Epic represents the first revenues earned from Abuse-Deterrent opioid products and it provides clear indications that fiscal 2016 is well placed to outpace 2015 and lift the leak to a new and higher level. So now, Mr. Nasrat Hakim, our President and CEO will like to give an update and some comments.

Thank you, Carter. Ladies and gentlemen, we have been working on multiple projects at Elite, but our focus remains on ELI-200. To that sense, we are upgrading our manufacturing facility [indiscernible] preparation for ELI-200 commercial launch. The construction and equipment startup should be done by Q4 2015. We are continuing to execute on our development plan and clinical price in preparation for filing Elite’s first Abuse-Deterrent and DA later this year. We have secured a good partnership to commercialize ELI-200. Epic Pharma is a great success story. About seven years ago, Epic was funded by three gentlemen with an investment of about $4 million. Today, Epic’s revenues exceed a $120 million. Epic does not own any shares in Elite today, but few years ago Epic called about 25% of the shares in Elite were $3.75 million. Today Epic paid Elite $15 million for the privilege of marketing one of our products. The terms has been tremendous between the past and the present. This $15 million is only a non-refundable milestone payments that will happen within the short future. There will be a premium on Elite manufacturing the lots for Epic to sell, so we’ll make them a cost plus a premium. Epic will take care of the sales and marketing aspect and we will have a profit split as well. Today we announced that we have one more pattern issue. I believe we published yesterday and that is a very good addition to our Abuse-Deterrent portfolio. We continue to improve and refine our infrastructure on all fronts and preparation for uplifting on [ph] [00:14:00] NASDAQ. And finally, before I take some questions, I want to emphasize that we are working on multiple projects that we will discuss in more detail once we form ELI-200. Until then, our update will remain focused on ELI-200. David, please open the lines for Q&A.

Thank you very much. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] Okay, and we’ll take our first question from [indiscernible]. Your line is live.

Yes, you’re welcome. Good to hear all the good updates. My question is, I asked you on the last conference call, now that we have received from the FDA on what we’re supposed to do, are the next drugs coming out supposed to what we have to do HAL studies and a Phase 3 study and also how soon before you start buying stocks back?

Okay, let me start with the first one, it is a very complicated question, so I’ll give you the simplest answer I can. In some cases you are correct, because of what we have done we will not do any HAL studies, and in other cases, that is not true, we still have to do HAL studies. It would depend on the indication whether it’s an ARIR, the components of it, how many [indiscernible] – it gets complicated. But everything we’ve done does account for something if that’s the point you’re getting to. Buying back shares, well first let’s generate enough money to introduce all the products that we want, and then we’ll start thinking about that [indiscernible] this time.

Okay, we’ll take our next question from Bob Parker. Your line is live.

Good morning, Nasrat. Given the recent Elite, Epic marketing and sales partnership, how will this enable Elite to create an endgame of either getting to NASDAQ without an official stimulus like a reverse split or being acquired or both?

Okay, short term, it doesn’t do either, okay. Short-term, we have secured the partner, we continue to work on the clinical trials, we’re going to file by the end of the year. FDA already told us in writing that we qualify for expedited review as we’ve updated you on before. If all of that goes as plan, we’ll launch, let’s say early in Q3 of 2016. Revenues will start coming in, people usually don’t pay for 90 days or more, so we’re talking about a year plus from now before we start to see that. I’ve always said, I need fundamentals before I go on to NASDAQ, and I’m not going to get us to NASDAQ without company logos. Those make us viable for a merger or acquisition, yes it does and ladies and gentlemen, this is why we took the poison pill or the stockholders – shareholders act …

Shareholders act, correct.

Shareholders act, because at the time, Elite’s market cap was only $28 million or $30 million. So, anybody that’s invested in $50 million could double up 50% of the company and take it, and as you can tell one of our products now is worth 10 times that.

Yeah, the focus is really on launching the product and generating the fundamentals, and then that opens up all of the options which will be considered then.

Once the [indiscernible], and I guess 200 through we’re going to launch it and we have [indiscernible] on the way, and if the money comes then and the fundamentals are there organically, that’s what we’ll do, if not, mergers/acquisitions us buying another company or them buying us, everything is on the [indiscernible], looks as it is in our stockholders best interest.

Okay, we’ll take our next question from Jay Dena. Your line is live.

Thank you very much. Nasrat, what is the revenue opportunity to Elite for ELI-200 a year, year and a half out after it’s commercially introduced? I’m just trying to – obviously you can’t give me exact numbers, but I’m trying to figure out is this a $10 million, $20 million, $30 million in your product, is this $200 million in your product, just trying to gauge some level of magnitude with the impact of maybe your top line?

Carter?

Yeah, the market of this product is in the nine figures, and we expect to get a decent share of that.

It’s a difficult question to answer as you know, frankly, all martial plans are above successful launch of execution. And when you’re introducing an alter [ph] product, it’s really hard to predict, so I hate not to give you numbers, but the truth is, if I did, they wouldn’t be accurate.

Right, this is – got it, this is – I think your question is the nature of the product, this is not a small [indiscernible] market with a limited – product with a limited market.

That is correct.

Okay, we’ll take our next question from Frank [indiscernible]. Your line is live.

Hey Nasrat, congratulations on all the accomplishments so far. My question is basically on the technology, is it based on your background, and what you’ve dealt with other companies, is it crazy to put a $1 billion plus valuation in technology that you’re holding right now for these products?

In my opinion, that platform is a $1 billion platform. And what you do is measure it to what’s out there. Alpharma had the same exact technology we did, as a matter of fact, my former boss at Alpharma was in constant contract with Elite. In case, if Alpharma’s technology fails, he would have partnered with Elite. And that company was sold to King which were divested to Pfizer with one product for $1.2 billion, with one product in this technology. And now Pfizer is carrying on that technology and introducing products within that technology. So yes, I do believe it is a billion dollar platform.

Okay, we’ll take our next question from James Smith. Your line is live.

Hi, great quarter everybody. Just a systematic certain time for this company, but I am just shocked. You have any idea why the stock is just not doing anything? Can you share any kind of write on that Nasrat?

I honestly can’t, all I can do is stay focused on doing my job, bring in the best value for you guys and I true believe this part will take care of itself. How many time people have fundamentals, people are going to get in and get out and especially on the [indiscernible] situation, guess how many time they make a little bit of money. I am hoping that once we get the NASDAQ things will change.

Okay, we’ll take our next question from [indiscernible]. Your line is live.

I want to know if you are as proud of your progress as we are?

Thank you, [indiscernible].

And as far as going to NASDAQ and all that, [indiscernible] like the stock the same way [indiscernible] admitted that every time any stock, small, big whatever goes up 5% they short it, and then they dive back and this keeps churning it’s like wash and rip the stocks. We really need stocks under $2 do not be shorted, we need to work on that kind of legislation with the congress, do not short incubated stocks that are technologies and biotechnologies up them all, other countries don’t allow this manipulation and [indiscernible] stuff going on constantly, that’s why your stock couldn’t go up. And as far as going to the NASDAQ, it does not affect you from [indiscernible] and it’s better to let the stock as you said grow on its own, just a good price, I think it will be at $2 stock, I don’t think we have to even consider any reverse split. I think with what you’re doing is going to be a winner, and thank you for all of your hard works, all of you.

Thank you, [indiscernible].

Thank you, [indiscernible], nice to hear from you.

Okay, we’ll take our next question from Patrick Derek. Your line is live.

Hi, good morning. Just want to quickly ask if you could comment on the current studies that are going on and how much the FDA can elude and if we’re still on the fast track for FDA approval and the projections for that’s going to work out if there is still any doubt or any concern, any prompt on the research and development side? Thank you.

Okay, the fast track was given to us a while back and I believe I’ve not filed everybody’s debt in conference calls before. What we do is submit to the FDA plan and they conclude and they conclude from it, that yes, you’re qualified for anti-abuse and therefore when you submit your paperwork if you’re telling that’s the truth we’ll give you six months [indiscernible] review. That’s what they do with all companies. Now, if you’re not telling them the truth when they review your paperwork they’ll kick you back out. So, today we are definitely on the fast track because we are 100% anti-abuse and we proved it through the HAL studies, so that’s one. Two, the last time we met with the FDA they requested three studies, we finished two of them. Now both of these studies, the FDA made it very clear that for information only that for labeling purposes only, one with such study whereby they wanted to write on the label whether you should take it half an hour before your meal, two hours for a meal or you can take it with food. It doesn’t matter if you pack or fail, there is no such thing, it’s just a labeling issue. And the second thing is with the HALF study which was very unique study, I’ve never been through one of these before where people who are on an opioid we introduce the second opioid and see if they have withdrawal, so both of these studies are completed. The third study which was more a critical study is an efficacy study that we already started, okay, and that one is on track any time where anything happens we need to file the FDA. I do not see a reason why we should not be able to execute and complete the whole thing within six to eight weeks.

Okay, we’ll take our next question comes Chad Zack. Your line is live.

Hi guys, thank you very much for taking my call, and congratulations for a great quarter. My question…

Thanks, Chad.

And my question is on the R&D expense. Last year it was $15 million and can you guys comment on what you think that number might be for this year and how you might fund that? What I’m trying to get as that how much is there a chance that you guys have to go back to Lincoln Park line and you start to help fund R&D? Thank you.

That’s really another difficult question, Chad. When you buy and sell stock it does nothing to Elite, okay. If somebody who is selling a stock because they think it’s – today the price is going to go down or because they need money and somebody else they’re buying it will [indiscernible] going to go up, that doesn’t generate any money for Elite. The Lincoln Park deal which in my opinion was an excellent move on the board’s part, generate money for Elite and that is where you have a change in form of equity. We sacrifice stocks in order for us to build equity that is NDAs which will bring in a profit for you guys in the future. So that’s where the $15 million came from. How much we spend next year with the bank on how much is the company willing to sacrificing or to slowdown the development program, okay. I’ve said this before, I have more than a dozen ideas of our stock that are ready to go into clinical trials and into the market. We don’t have to mind or to execute all of them, so when we decide which are the cream of the top, the top two, three or four and focus on these, keeping in mind how much they’re going to cost, okay, once we fight out with the term on how much money we need next year.

Okay, we’ll take our next question from [indiscernible]. Your line is live.

Hey Nasrat. I just wanted – just two quick questions, one is, what is the profit split between Epic and Elite? And also you’ve been listened to about two or three of the conference calls and you put out timelines on when things are going to get completed. What’s – can you provide us the shareholders an explanation of why that’s been delayed time in and time out? Thank you.

Okay, first as to the split, the profit split with Epic we did not disclose that, okay. It is a reasonable split, it’s a very fair deal, it’s a win-win deal and I’m very happy with it. With respect to the timeline, I’m not sure what are you referring to. We have faith at you guys on every meeting we had with FDA, we’ve updated you on what we believe is going to happen and what our consultants and buyers going to happen and we’ve updated you on what the FDA came back with, okay. If you go through that as we missed deadlines we need to talk about the pharmaceutical industry. So to that end let me say something, we have started executing on Abuse-Deterrent opioid filing NDA in November, December of 2013. We will be filing NDA for an Abuse-Deterrent product by November, December of 2015. In less than two years we executed what other companies have been struggling with for 10, 15 years. There are accomplishments of this seen and what we have done with FDA is remarkable, where anybody had the sound of my voice that on the central [indiscernible] how did you do that, okay. So, if the FDA decides to come back and ask for something else, we’ll update you on it but till then the achievements of this team have been outstanding.

Okay, we’ll take our next question from [indiscernible]. Your line is live.

Hello gentlemen, I had a question and hopefully you could answer. Does this study that we’re doing on ELI-200, is that basically the [indiscernible]?

No, it is really an efficacy study, the FDA wanted to see if the product is effective. None of the consultants gambled on that or [indiscernible] asking for that, we’re surprised when they asked us in December, but that’s the purpose of the study. The other study I talked about with respect to withdrawal that’s when they want to know if there is something similar that happens on pharma because if there is an [indiscernible] then you can see some kind of a withdrawal. This study that they really wanted to focus on is definitely an efficacy study where people had a surgery for [indiscernible] is removed which is fairly a painful procedure in the clinical thing, then they put them on our product and they see if the pain is relieved.

Okay, we’ll take our next question from [indiscernible]. Your line is live.

Hello, good afternoon. Can you give me an update on ELI-201 and ELI-202?

The update I gave the guys on ELI-201 is still the same, and let me refresh everybody’s memory. We ran a mega [indiscernible] study with three different formulations against the brand and they were all successful. So we moved [indiscernible] and our formulation in the patients work perfectly, two of the patients that was taking the brand had what you call bumping mechanism, tremendous amount of [indiscernible] that’s build into their block. So, we filed the report with FDA, there is nothing wrong with our formulation, how can you fix the formulation that there is nothing wrong with it. And the FDA after the review said, we agree, go ahead and submit in writing and we’ll evaluate it and let you know. And we’re still waiting for them to let us know, that’s where we stand in there. I will give you all on our page on other products 200, 201 and 202 at later base, now we’re staying focus on 200.

Okay, we’ll take our next question from [ph] Jon Karen. Your line is live.

Yes, hi, the question on the distribution agreement. I’ve been a long-term investor with high expectations and had been pleased with the progress. The statement has been made that it’s possibly a $1 billion product, there has been talk on conference calls about interested parties. And here we are on conference call below 20% share and we guess a agreement with the $120 million little company who’ve done a share profits with, not what I expect, I’m very disappointed.

Okay, I appreciate your point of view, I don’t see the question but I appreciate your point of view. I appreciate what you’re saying, but the fact is, every single big company tried to double up the entire technology for next to nothing. I will give you two examples, the very first company that came to [indiscernible] offer and the one before Epic, and both of them may have had a little bit higher number in the down payments but all of them wanted the right for the first refusal, they wanted to right to own the technology or sharing the pattern, they wanted the right to diverse it internationally and that’s not acceptable. You do not sell a $1 billion technology for one product’s price. Epic was honorable enough and great enough to look for a win-win and they actually ask us to write the contract. So, the work with Epic is outstanding, I am very happy with them.

Okay, we’ll take our next question from David [indiscernible]. Your line is live.

Hi, I’ve just wanted to move away from ELI-200 and I know you guys really focused on that but at the end of last year or at the end of last your calendar year there was mention about more generics and we launched one during the spring early this year. Are you guys putting down the generic stuff also sort on [indiscernible] gone through or can we expect other updates in the next coming months on things that may have been scheduled that [indiscernible] earlier but are still progressing.

No, we are not putting any of these in hold and that’s where Epic comes in. David, we launched [indiscernible], okay, we already – that’s been marketed for a year plus now. We’ve launched [indiscernible] early this year. We’ve just launched Hydroxyzine all three strength. So it takes time to launch pharmaceutical products, it takes equipment [indiscernible] scheduling and we have done a reasonable job by getting few of these products in the market and still working closely with Epic in order to get the rest into the market. That’s why we divested that portion to Epic, so we will not have to be side track with it if you will and they have more capabilities than we do to get into the market.

Okay, we’ll take our next question from Steve [indiscernible]. Your line is live.

Hi, good morning, thank you. In the Phase 3 study I believe there were numerous locations that were going to [indiscernible] study. And Nasrat mentioned earlier in the call that that study would be most likely completed within seven to eight weeks. Is that to assume that the enrollment is a 100% complete and are there any early indications of either issues or successes in that study at this point?

There were, there are five sides nationwide that is selected and all that to get their study assessment. If you select one site, let’s say located in Cincinnati, Ohio, then you have to find a total of a 165 people who have [indiscernible] who need that surgery that need to enroll in the program. But if you spend it over five sides, however they [indiscernible] chances of recruiting are a lot higher and you can get the job faster, okay. So that’s why we did that. The second thing, you don’t know who is going to come in because recruitment always starts once they received the medicate [indiscernible] the actual drugs from us and the protocols, okay. So all of them once we gave them everything, they start recruiting and yes, last week we’ve had substantial amount of being recruited and substantial amount of surgery conducted, I do not see any reason why this should take more than six to eight more weeks.

Okay, and last question we’ll take today will be coming from Craig [indiscernible]. Your line is live.

Nasrat, I just wanted to follow-up on that comment from the disappointed investor. I think a lot of people that followed this company are investors off on the board things like that and maybe they just don’t realize how long it takes to develop drugs and get them approved to market. I couldn’t be more pleased of what you’ve done so far you and your team, you’re building up a world-class company and it takes time and I just want you to know that you keep your focus on what you’re doing and everything including the share price is going to fall in a big way. So, I just wanted you to know that I’m very pleased and the share price will take care of itself and it’s going to be a couple of years but people that are patient I think are going to be very well rewarded.

I really appreciate your comment on [indiscernible], we are working very hard and diligently. We had achieved a lot since last year and the year before, and since I’m taking over things are happening and moving forward. The facilities are better, they’re upgraded, the [indiscernible] are better. The clinical trials that we have conducted have been phenomenal, it takes time. So I appreciate your comment, thank you very much.

Okay, ladies and gentlemen, this concludes our session today. We will be talking to you in about eight weeks, okay.

Yeah, in the middle of August with our 10-K, it’s August 10, so shortly after that.

We will set up a meeting for then. Thank you very much. Thank you, Dave.

Thanks everybody.

Thank you very much, ladies and gentlemen, this concludes today’s presentation. You may disconnect your lines and have a wonderful day. Thank you for your participation.