Nasrat Hakim - President and Chief Executive Officer Carter Ward - Chief Financial Officer

Good morning, ladies and gentlemen. And welcome to the Elite Pharmaceuticals’ Conference Call. At this time, all lines have been placed on listen-only mode. Before management begins speaking, the Company has the following statement. This 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, Elite’s ability to obtain FDA approval of the transfers of the ANDAs or the timing of such approval processes, 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 forward-looking statements may include statements regarding the expected timing of approval, if at all, of SequestOx by the FDA, the steps Elite may take as a result of the CRL, and the actions of the FDA required of Elite in order to obtain approval of the NDA. These forward looking statements may include statements regarding the expected timing of approval if it all of SequestOx by the FDA and the actions the FDA require of Elite in order to obtain approval of the NDA. These forward-looking statements are not guarantees of future action or performance, these risks and other factors, including without limitation Elite's ability to obtain sufficient funding under the LPC agreement, or from other sources, the timing or results of pending and future clinical trials, regulatory reviews and approval by the Food and Drug Administration and other regulatory authorities and intellectual properties, protections and defenses are discussed in Elite's filings with the Security and Exchange Commission, including their report on form 10-K, 10-Q and 8-K. Elite is under no obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. With that covered, it is now my pleasure to turn the floor to your host Mr. Nasrat Hakim President and Chief Executive Officer of Elite Pharmaceuticals. Sir, the floor is yours.

Thank you, Kate. Good morning, ladies and gentlemen. Thank you for joining us today. My name is Nasrat Hakim. I am Elite's President and CEO. This is Elite's earnings call, so our Chief Financial Officer, Mr. Carter Ward will give us a summary of Elite's financials. As always, I will take this opportunity to give you a high level summary of Elite’s business and an update on the company’s progress since our last meeting less than two months ago. And I will answer few of the questions that you have submitted to Diane. Mr. Ward, you have the floor.

Thank you, Nasrat, and thanks to everyone calling in today. Yesterday, we filed our 10-Q for the quarter ended June [ph] 30, 2018. We're on a March 31 fiscal year, so the June quarter is the first quarter of the fiscal year ended March 31, 2019 -- I’m sorry 2019 fiscal year. The 10-Q [ph] is available on the Investor section of our website, elitepharma.com as well as sec.gov and the many other websites that provide links to our filings. If you haven’t gone through the Q yet, please get a copy from elitepharma.com or any of the other usual sites. On to briefly take you through some of the key parts of the financials providing some analysis, context and extra insight into the numbers, and as always we have received questions and comments from shareholders and Elite followers and I’ll do my best to address those questions that are financials related. First, I got the usual question on the timing of the filing and this quarterly filings that are due [ph] 45 days after quarter end as per SEC regulations, that means that the Q was due on August 9, yesterday we filed on time and we usually have our investor calls on the next day. The next quarterly filing is our September 30 quarter and that’s one due November 9, which is a Friday, so I expect investor calls for that too, it will be on November 12, which is a Monday. And but as always, we’ll make the announcement in November for all of this, as you get closer, but that’s generally how the timing works. It’s all based on SEC regulations. Now onto our financials, starting with the question that I received on the number of shares outstanding on the balance sheet. The question was why are the number of shares, why have they shares of common stock, the number of shares decreased? We were 928 million shares in March 2017 and this past quarter, June 30, we were 805 million shares, so why did it go down? And this is due to Nasrat Hakim returning to Elite roughly 158 million shares that he owns. These shares were retired and put back into [Indiscernible] but not issued shares. In exchange, company issued Series J Preferred Stock that is convertible into the exact same number of shares that Nasrat returned to the company. And this happened in May of 2017, a little more than a year ago. There are restrictions on how and when he can convert back into common shares. Most notably, he has to wait at least three years, and he can only request conversion if Elite shareholders have approved an effective increase in authorized shares. So the Series J Preferred Shares, they are recorded as mezzanine equity, you’ll see them on the balance sheet, and there’s a note to the financial statements giving a lot more details. It’s note 10 on this Q that was issued yesterday. Nasrat’s return of the shares brought the number of shares outstanding down naturally and it also enabled us to enter into the $40 million equity line with Lincoln Park, which has been so important for the funding of ongoing product development activities. Now onto the P&L. Revenues for the quarter ended June 30, 2018 were $2.2 million as compared to $1.7 million for the June quarter of last year, that’s a 27% increase on a year-to-year basis. The increase was due mostly to strong quarters for Naltrexone and Phentermine as well as some Methadone sales this year that were not there last year. Those of you who have been following us over the years, reading our Qs and reading our Ks and listening to these calls will note that most of the time variances in revenues are related to Naltrexone and Phentermine, especially Naltrexone, and there’s a clear reason for this. First of all, Naltrexone is an expensive material, and therefore it's an expensive product. An extra few batches or a few less batches of Naltrexone has a large effect on top line revenues than to variations in other products. With regard to Phentermine, that’s not an expensive product, but it is a volume product, which varies from period to period. So this also has an effect on revenues for any specific periods. Overtime the variation in high-cost products and high volume products they smooth out. There’s an overall growth trend that we are observing with respect to these products. That brings us to the last product, and I just mentioned, contributing to increase revenues and that’s Methadone. The overall revenues, when you compare them to last year's quarterly revenues, which were zero, therefore the percentage increase was obviously very large. We had some Methadone sales this year. Last year, we had zero. Now this Methadone, that was a product that we contract, manufactured for one customer who owned the ANDA. Few years ago, it was our largest stream of revenue, but orders from this customer decreased as the customer moved production to its own facility. The contract to manufacture this Methadone product has expired, that’s just the nature of the contract manufacturing business. We however, have proactively addressed the situation by filing our own ANDA last year and that ANDA was approved by the FDA last week. This is Elite’s Methadone, it’s our own product. We own it, we manufacture it, there is no more contract manufacturing. And this product is included in our alliance with Glenmark, so there you will be marketing and distributing in the near future. Now commercial production of Methadone has commenced, and we expect to launch it back into the market with Glenmark in the short term. We will have manufacturing revenues, we’ll have a margin that is similar to that, which was earned from the old contract manufacturing product and most importantly, we will now be earning and receiving a share of profits earned from Glenmarks in market sales. This is not the case. This product wasn’t approved by June 30, so it had no effect on the June quarter, that we just announced, but I'm expecting this new product to be a contributor to future revenue increases, so Methadone will be coming back online. It is coming back online, but now it will be our own product which is definitely an improvement over the contract manufacturing situation. Moving down the P&L to R&D expenses which were 1.3 million for the June 2018 quarter as compared to 2 million for June 2017, that’s a decrease year-to-year of 35%. Now as I said numerous times, just as important as the amount being spent is what it’s being spent on, and in addition, R&D costs are expensed in the period that they are incurred which is required by accounting rules, but the benefit and the revenues achieved from these costs and activities are only realized in the future. That's especially true for us when it comes to a pharmaceutical business dealing with the FDA. Our efforts from last year, the money spent last year, is benefiting us only now, as you can see from the approvals that we just got. We’ve have two products approved in the last month. Generic Percocet and generic Methadone overwork and all the cost for these products were incurred at least a year ago. And there are four more products currently filed that are moving through the FDA process in similar fashion. These costs were all reported in prior 10-Ks and prior 10-Qs. The cost incurred during this June 2018 quarter were related to one ANDA being filed beginning of the quarter. Transfer production for Dantrolene and Loxapine and Isradipine through our Northvale Facility as well as development of additional products which we expect to file with the FDA in the short and medium term. Nasrat will have more to say on this as well, I’m sure. The benefits of those costs will begin to come online next year, just as last year's cost of benefiting us currently. Take away here, that R&D is the lifeblood of all pharmaceutical companies and Elite is no exception to this rule. We will continue to invest in product development, and most importantly, continue, hopefully to have our products being approved by the FDA. All of this will result in a larger and broader revenue stream, increase diversity in our product line, and improvement in shareholder value, so that’s the take away from R&D spend. Finally on the P&L, we had a net operating loss of $1.9 million for the June 2018 quarter as compared to a net loss last year of $2.2 million. So it's an improvement over last year, but it’s still a loss and the path to profitability requires increased revenues, the recent product approvals or alliance with Glenmark, pipeline of products in the FDA or review process, and additional products being developed and the generics of being transferred back to Elite or how we plan to achieve these revenues and profitability’s. We’re executing this plan, we’re on schedule of this plan and we continue to execute this plan. One last thing, not so much of 10-Q financial item per se, but it’s significant nonetheless. And that’s the appointment of our newest director, Mr. Aqeel Fatmi. Aqeel’s background experience and skill sets are really a right time, right place and right person for both Elite and for Aqeel. So we all welcome Aqeel to Elite and we look forward to working with him. Now, our Chairman and Chief Executive Officer, Mr. Nasrat Hakim would like to give an update and his comments.

Thank you, Carter. Before I answer some of the questions that you have submitted, I’ll first go through a high-level update covering the status of Elite’s abuse deterrent program, status of the generic filings and pending ANDAs, Elite’s and SunGen’s, the status of the pending R&D projects for us and all the partner and sales and marketing. First, a full status of the abuse deterrent technology. Regarding SequestOx which you’ve had a few questions on. The only major issue that the FDA had with our NDA is the food effect. We have covered this many times before. We have tested every single requirement under the sun and some that weren’t on the books, and all of them were fine, the only issue the FDA had was the food effect. And as you know that the FDA did not want us to label the product with the traditional instructions; take this drug one hour before a meal or two hours after meal, but rather they wanted us to solve the food effect that is a Tmax's issue. We modified the formulation and ran in vivo and human pilot PK study that successfully overcame the food effect. We have given the FDA the results and ask them to confirm what studies are required for resubmission. We await their response. We have not heard from the FDA yet. In the meantime, Elite has filed a patent covering the modifications that resulted in the successful Tmax results from the pilot study. That patent has already been filed. As I stated before SequestOx is not the only ADF product that we are working on. We continue to do a lot of work on other anti-abuse opioid products in vitro, dissolution rate comparisons, stabilities, formulation development, formulation optimization. Before our last call we filed a patent for a platform technology for ADF product that is not pharmacologically based. ADF is and will continue to be one of our pipeline core foundations. Regarding our genetic pipeline we received two approvals in the last two months. That decrease the number of pending and as that we talked about two months ago from six to four. Of the four ANDAs that we have them is the genetic for OxyContin. That one, meaning OxyContin is complicated because of Court issues and patent challenges .So focusing on the three remaining ANDAs we expect approval one per quarter over the coming three quarters. Next quarter Q1 and Q2 all ANDAs -- OxyContin should be approved. We expect to keep on feeding our pipeline by filing at least the three ANDAs to substitute for the ones that get approved. So we will be filing an ANDA sometime in September/October time range and December/January and January/February, expect the three filings over the next six months or so. The last two ANDAs that we filed with our partner SunGen, we file them in February and May of this year and expect the approval next year, has a total IMS data of $2 billion. We are targeting three approvals as I stated in the next three quarters; two of which are with our partner SunGen and one that are Elite. We are kind of continued focusing on the pipeline by also bringing in the commercial products that we currently have that have been commercialized. We are signed a deal with Epic about five years to for them to transfer and sell a host of products that Elite has including Dantrolene and Loxapine. Some of these products have the license to Epic came on line such isradipine and hydroxyzine, and others have not yet. Therefore we are going to work with Epic, when the contract expires on October of this year to bring all the products to Elite. It is my expectations that by 2019 we will either transfer and launch or divest any products that were subject to the Epic agreement. Regarding sales and marketing, we have completed our strategic alliance with Glenmark. I have talked before how we have been assessing alternatives for sales of our products. Elite determined that we would continue to license our products for now rather than create our own sales and marketing force. That's really simple because when you create your own sales and marketing force you need working capital, you need to finances sales and marketing force. You need to add accountants for collecting receivables and billings. And at this time we are not ready for that. Glenmark seems to be a great choice for us. They have a large distribution channel -- larger distribution channel that could create ourselves at any time. And they have a larger channel than we've historically had with our other partners. So we are looking forward to partnering with Glenmark. Glenmark will begin selling methadone and phendimetrazine first and then branch out in to other Elite products. We expect that to happen very soon. As a side note, we are also been working with SunGen to create JV for sales and marketing and even entertaining whether SunGen can sell the five products that we haven’t come and sell so far, and that is still on the table. To summarize this year and 2018, we have filed two applications, one in February and one in May with our partner SunGen, and we intent to file three more over the next three quarters, we also intent to receive, hopefully approval for three more over the coming three quarters. So we keep filling the pipeline as we get approval. So this way our R&D pipeline will continue to have something in it and works to be filed with the approval as we get approval and as we go to sales and marketing. It’s a cycle that has to continue without our R&D pipeline we cannot survive and without revenues we cannot survive and now we're getting to the point where everything we've done in the past, all these filing have gone through or are gone through the FDA approval are going to get to market and we need to replenish that pipeline. We'll take some answers, some Q&A. SequestOx is always a topic and it’s the first one that we have got. Q - Unidentified Analyst: What is going on with SequestOx?

Okay. I pretty much cover that. In our last announcement we announced positive results for the pilot. We send the information to FDA. The FDA hasn't gotten back to us. As soon as we know what the FDA want us to do to resubmit we'll proceed with that.

Will Elite pursue resubmission?

Yes. Depending what FDA's response is, we will do that.

Is PuraCap or Epic is still the licensee?

The answer is yes and that is still 2020.

AND filings, now that Elite have approval for generic Percocet, how soon will you launch? And then, now that Elite has approval for Methadone, how soon would you launch?

The two parts are very different. For Methadone we intent to launch immediately within the next few weeks, because it’s a smaller product and we started the negotiation with Glenmark while back and already signed the contract. Percocet it’s a much bigger product. So the sales for Methadone, I believe the IMS status about $30 million to $40 million. And for Percocet it's in the hundreds of million, $5 million, $6 million. So the volume becomes an issue anytime you need evolve and you need the partner that can handle those large quantities. So for Methadone we've already got locked in with the Glenmark and we'll forward within the next few weeks. For Percocet it's probably the next few months.

Will Elite still be filing additional ANDA this calendar year?

Yes. We've answer that. We intend to file at least one in the coming quarter.

Opioid and the press. There is a lot in the press about opioid and lot of government discussion, can you comment on that, are opioid obsolete or here to stay?

Opioid are here to stay. There is no alternative for treating pain at this time for people who are acute or chronic pain. Opioids really work for people who need them and there are lots of people that need opioids, those who have cancer and going through muscular dystrophy and other elements and arthritis and so on. So the drug itself is an outstanding drug. Opioids have never been an issue for treating people. The issue was so far within our society is the NDA [ph] abuse. And we don't want to penalize people who need it for pain because somebody is abusing it. Okay. So definitely have to take that in consideration, but we cannot dismiss the fact that opioids are needed. What we have to do is be responsible, look for rims, look for educating the doctors and the pharmacists and look for creating an anti-abuse formulation similar to what Elite has. Our Methadone for example is used for opioid addiction in clinics. The Oxy APAP we just got approved had APAP in it which is also an anti-abuse. And because of the APAP acetaminophen, people snort it and they don't inject because it has massive effect on the liver. There's a lot in the press about opioid, the latest if you've read it there is the consolidation of litigations about a 1000 cases has been consolidated in the District Court in Cleveland. The goal of the Judge, the reason is consolidating all of this is to try and resolve all of them without going to trial. We'll see how that goes. We are not a part of that, but just about most companies are. Generic OxyContin for Purdue, with a sue, of course, they sue everybody, of course when the time comes they'll do that. One, Purdue, exclusivity in for OxyContin, the last I read they got a patent for 2027, okay. Right now they do not have exclusivity. Just to be clear that exclusivity for selling the product when they came up with the new formulation expired. The way they are controlling the market is with their patent. It's patent infringement not exclusivity, so the FDA exclusivity. So right now the last one they filed is 2027. Okay.

Patent filings in the last conference calls, it was discussed that Dr. Smith would be filing a patent application covering the modification that resulted in the successful Tmax?

Yes, we have, we've already filed that. That patent has been filed. If the patents were filed, would I give you exclusivity, okay? That's – that extend the exclusivity. I'm not sure. I'll have to check to Dr. Smith on that.

Glenmark, will Glenmark distribute the regional – be distribution be a regional or national?

Glenmark will be selling and licensing the product in the United States and in the territories. That is what we get approval from the FDA and that is what we will able to sell. We cannot give them license for what we don't have.

Loxapine and Dantrolene, what is the status of the transfer of these two products?

Well, both products technically are with Epic. They have exclusivity for these two products. The exclusivity expires in October of this year and we're bringing them both homes in 2019. We've already begin some work in that action.

Pfizer Troxyca has Elite reach out to FDA for their help to figure out how we get into the market since Pfizer chooses not to launch Troxyca?

Well we have not reach out to the FDA, but we've reach out to people and the industry. Troxyca is very important product for us and we have done a lot in the formulation arena for that in order o match and we will be doing more as a time comes.

Unique abuse interim product, can you provide an update on the product which is the unique abuse internal property that was included in SequestOx pilot study?

Yes. We ran that to the pilot study. It was very successful. We are running right now on some animal studies in order to look for excipient and compatibility and once we get these results we'll decide on the next step.

How robust is the formulation?

The formation itself and the product is very stable. We have it on stability since we made it. Again we're looking for formulation excipient compatibility. And as I said we're conducting animal trials right now and we'll have a better idea in couple of months.

Is that TNM Parkinson's disease?

Yes. I'm familiar with the clinical trials that showed promising data for treating Parkinson's with Isradipine and the current Phase 3 I believe trial is going with 336 patients, 56 sites across the U.S. and they are suppose to have data in March of 2019. We will see what happens with this. I don’t see any pharmaceutical companies not driven by specific pharmaceutical company; I believe its university and Michael J. Fox’s foundation. We are watching that very closely and we’ll see what the results are in March of next year. Frankly, regardless of the business, I hope it’s successful for the sake of people with Parkinson’s because it’s a horrible disease and we need to treat it and this is a treatment whether Elite benefits or not. That will be a wonderful thing for our society. Now we are getting low on questions. Now people are asking what are the moods of the employees. Are they happy with the recent events? And also -- feeling about FDA? Well the employees are happy because Carter issued them a memo asking them to be happy, definitely we are all happy with the most recent events getting two approvals in less than two months is always a very positive, especially after we went through last year with the challenges. I always feel positive about Elite regardless of the FDA so this doesn’t change much. And the last question is about the outstanding shares and I believe Carter answered that. The income statement shows approximately 803 million shares outstanding and that decreased to [Indiscernible] and you already answered that. And that was the last question. Keeping watching for Elite, we have a lot of news, good news coming between now and the end of the year. As I told you, we are expecting a filing soon, an announcement hopefully of launch for sales from marketing among others. Quite a exciting time between now and the end of the year. This concludes this earning call. Thank you for listening and thank you Kate and have a great weekend.

Thank you ladies and gentlemen. This does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.