Nasrat Hakim - President and Chief Executive Officer Carter Ward - Chief Financial Officer Kenneth Smith - Vice President of Legal

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 have 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 the FDA require of Elite in order to obtain the approval of the NDA. These forward-looking statements may include statements regarding the expected timing of approval, if at all, of SequestOx by the FDA and the actions the FDA require of the 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 approvals by the Food and Drug Administration and other regulatory authorities and the intellectual property protections and defenses, are discussed in Elite's filings with the Securities and Exchange Commission, including its reports on Forms 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 over to your host, Mr. Nasrat Hakim, President and Chief Executive Officer of Elite Pharmaceuticals. Sir, the floor is yours.

Thank you, Miles. Good morning, ladies and gentlemen, and 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. And I will answer few questions that you have submitted to Diane. Mr. Ward, the floor is yours.

Thank you, Nasrat, and thanks to everyone calling in today. On Friday, last Friday we filed our 10-Q for the quarter ended September 30, 2018. We're on a March 31 fiscal year, so the September quarter is the second quarter of the fiscal year ended March 31, 2019. So we call it our 2019 fiscal year, and we're halfway through. The Q is available on the Investor section of our website, which is elitepharma.com as well as sec.gov, and the many other websites that provide links to our filings. So if you haven't gone through the Q yet, please get a copy from elitepharma.com or any of the other usual sites. We're going to briefly take you through some of the key parts of the financials, providing some analysis, context and extra insight into the numbers. As always, we received questions and comments from shareholders and Elite followers. And I'll do my best to address those that are financials related as well. So let's start with the P&L. Revenues for the quarter ended September 30, 2018, this year, were $1.4 million as compared to $1.6 million for the September quarter of last year. That's a 16% decrease from last year. So looking at revenues from a product standpoint, the decrease was due mostly to three products: Hydromorphone, Phentermine and Methadone. First, Hydromorphone, that's a product sold under license through TAGI, our partner TAGI. And that has been steadily decreasing. Forecasts from TAGI indicate shipments remaining at current levels, mostly due to pricing and market conditions. So we don't expect any significant movement in this product for the remainder of the fiscal year. Second is Phentermine, Phentermine is one of those products where timing of shipments can influence quarterly revenues, and that was certainly the case for this September 2018 quarter. Overall, Phentermine sales are steady and we expect that to continue. We just had a few shipments right before the beginning of the quarter and a few just after the end of the quarter. It's not really a decrease when viewed in totality. But when we apply a hard and fast September 30 cut-off, variances will arrive. And lastly, there is Methadone. In 2017, we were manufacturing a single strength, the 10-milligram strength on a contract basis for a single customer. Now, when I say contract basis that means it's the customer that actually owns the product, owns the ANDA, and they have sub-contracted to us the manufacturing. In the September 2017 quarter, last year, we earned revenues in this manner. And on December 31 of 2017, this Methadone manufacturing, contract manufacturing expired, ending the revenue stream. So naturally, if you're comparing 2018 to 2017, there will be a decrease. Contracting existed last year and it did not exist this year. But that's not where this ends. Contract manufacturing of Methadone may have ended, but now, we have our own Methadone product that was recently launched. And we have two strengths: we have a 5-milligram strength, in addition to the 10-milligram strength. In August 2018, our own Methadone product, both the 5 and the 10 milligrams were approved by the FDA. They are the first products in our alliance with Glenmark and were commercially launched a few weeks ago. The launch occurred after September 30, that's how hard and fast that cut off. So these products had no effect on the financials that just got released, but shipments have begun and they are ongoing. And we expect Methadone to make a significant contribution to future financials. Now, remember, there is a big difference between contract manufacturing and ANDA ownership. In the past, Elite earned a manufacturing fee and that is all. Now, as the ANDA owner, we earn manufacturing fees and profit splits. That's an enormous difference, providing for significant upside for the foreseeable future. Plus, with the additional strength, the additional 5-milligram strength, there is a larger market available to us. Now, moving down to P&L, we get to research and development expenses, our most important expense, which were $2.5 million for the September 2018 quarter, this year, as compared to $2.3 million for 2017. That's a 7% increase. On a year-to-year basis, the increase isn't really that much. The amounts are relatively equal, but the activities incurring these costs are not. I know I say this every quarter and it remains true that in regards to R&D, just as important as what was spent, is what it was spent on. Last year, our R&D focus included the two products recently approved: Methadone and Oxycodone, APAP; successful SequestOx pilot bio-studies and bio-studies in development of products, for which three additional ANDAs have already been filed. The spend last year has begun contributing to current revenues, in the case of the recently launched Methadone. And we expect several new approvals and product launches in the next half of this fiscal year to provide even more new additional revenue streams and contributions. Now, the R&D spend this year, while of similar dollar amount, is focused on the next round of product filings. During this fiscal year, we filed two new ANDAs, conducted successful pivotal bio-studies for two other products and are steadily progressing with the development of several other products in our pipeline. In addition, with the recent expiration of the generic manufacturing and marketing contract with Epic that happened in October, early October, October 5, we are bringing most of those products back to Elite. Isradipine, which was one of those products, is already approved manufacture at Elite and it is part of the Glenmark alliance. There were also several products in that contract that Epic [never lost] [ph], especially Dantrolene and Loxapine, that we are now bringing back to Elite and expect to launch during the early portion of our next fiscal year. Nasrat will, of course, go into more detail on this area. But from the finance side, the takeaway here is that the $2.5 million spent on R&D during the September 2018 quarter will have an impact on future periods in the form of new products, revenue streams and contribution in the same way that the $2.3 million spent last year has already begun contributing to Elite this year. And this effect compounds every quarter. So every time we develop more products through R&D, they add to each other in a compounding effect. Finally, on the P&L we had an operating loss of $2.7 million this quarter as compared to an operating loss of $2.1 million in the September 2017 quarter. Main driver here is what it usually is, revenues and product profitability. Started my comments was an analysis of revenues. And as per that, we expect revenues to rebound with 5 milligram and 10 milligram Methadone playing a large part. Also, we expect product profitability to improve. Again, thanks in part to Methadone with a new profit split coming on board as well as manufacturing revenues. So those are new revenue streams that will make a noticeable difference. In addition to Methadone, we're seeing improvement already in Isradipine forecast and sales since Glenmark took over this product last month, which will also provide significantly improved contributions over the past quarter. Now, before closing, there is one last question that I'd like to answer that we received. And that is relating to the resignation of Dr. Aqeel Fatmi. Dr. Fatmi is employed or has been employed by another company. That company was very supportive of him joining Elite as a director. That company was recently acquired and the new parent company advised Dr. Fatmi that unfortunately their internal policies require that he not serve as a director on the board of any other company. He was very sad and he regrettably had to resign from Elite's board. Aqueel remains a great friend to Elite, both personally and professionally. And we're grateful for his support and guidance which stretches back much further than his time on the board. We'll miss him on our board and we wish him well. Now, our Chairman and Chief Executive Officer, Mr. Nasrat Hakim, would like to give an update and his comments.

Thank you, Carter. I'll start with a brief statement about our marketed product. Our business with TAGI remains as there is no new products there, Naltrexone, Hydromorphone and the bariatrics remain essentially the same. Our generic business with Epic has profoundly changed and that change is in Elite's favor. The launch of Methadone, another product with Glenmark, would substantially increase our revenues going forward. And we will see the effect of that this quarter, Q4 of 2018. Okay. Regarding our generic products and the new approvals, in August Elite received approval for generic Methadone for both 5 and 10 milligram strength. The finished product was delivered to Glenmark and Glenmark launched the product already. This is in less than 3 months and about 2 months. So that's a really good collaboration there. In July, Elite received approval for generic Percocet. We are in discussions with potential sales partners and product launch - will launch as soon as possible. We will give you an update when we have something concrete. As of today, we do not. We are anticipating more approvals from FDA. Elite has five ANDAs filed and we expect to have two more approvals within the next three months, four approvals by Q2 of 2018. Our generic pipeline and the new filings have been taking place starting actually this month. In November, this month, we filed, Elite filed a site transfer for generic Dantrolene. Dantrolene, as you recall, is a product that we signed with Epic five years ago and they did not transfer it. Dantrolene is already approved product and we will - and we have acquired it several years ago from Mikah actually. The total market sale for this product is $7 million and there is only one other competitor in the market. We look forward to identifying a sales and marketing partner once we get approval and we hope we get approval by Q2 of next year. Again, once we hear from FDA, we will keep you updated. Two months ago, in September, Elite filed a generic APAP with Codeine. The total brand and generic market for APAP with Codeine is about $45 million and our PDUFA date is July of 2019. We filed two other ANDAs earlier this year. One is the ANDA of an immediate release CNS product that we co-developed with our partner SunGen, for which there is a brand and generic sales of approximately $400 million. Elite is hopeful that this product will be approved in December of this year. That is our PDUFA date. We will wait to hear from FDA. The second ANDA is an extended release CNS product that we co-developed with our partner SunGen. The brand and generic sales of that product, the extended release version is $1.6 billion. There are currently four manufacturers including the brand and the authorized generic. We are expecting approval and launch in Q2 of 2018. This is the most important product that Elite and SunGen have. And we expect that we potentially could launch it and get it approved by Q2 of 2018. We have five ANDAs filed and we expect to file two more within the next three months. These are the two products that we have already updated you on that we successfully passed the BE in August and October. And they are two products that we have with our partner SunGen. Beyond these filed products, we will continue to develop other ANDAs, both with our partners and by ourselves. All of these products require sales and marketing, so our sales and marketing update is as follows. You already know that we have products that TAGI is selling for us. We've updated you all on our partnership with Glenmark that we have transitioned the Methadone to Glenmark and have already delivered the product to them. Our partner Glenmark will also have three more products to launch hopefully this quarter, a total of four of our products. But we expect that we will have a partnership for sales and marketing of the SunGen product with SunGen. It only makes sense for SunGen to - who has sales and marketing for us and developing another one to be able to sell the products that we have in common with SunGen. We may even form out some other products that Elite have to SunGen for sales and marketing. It is beautiful to have options and our options right now, Glenmark and SunGen in addition to TAGI. We received a lot of questions about SequestOx, so I'll give you an update on that, before I go through miscellaneous items. Since our last call, the FDA has - we have received from the FDA a positive response regarding our clinical trials on SequestOx. The FDA as we hoped, stated that, yes, you can go ahead, the move forward around a fed/fasted [NET] [ph] bio-equivalence study in order for us to overcome Tmax. That was excellent news for Elite. However, FDA is always full of surprises. They added two more requirements that we did not have before. One, they asked for additional characterization work of one of the excipients, and that's okay. But the second, they asked for an assessment of the risk of abuse by the intravenous route. We are evaluating that and seeing how much it's going to cost us and what is really required for that attribute or for that clinical trial that has never been on the table before, was not a part of the Complete Response Letter we got or from adequate correspondence we have with FDA. Okay. We will request some time in order to review all of this and understand from the FDA, the scope and also the cost of all of this before we update you. We're going to ask the FDA, we already have this week for an extension and also for us to be able to do all this work that they asked for, for the PDUFA filing fee, as well as an extension and time for us to re-file the application. Again, as soon as we have a clearer idea on the new requirements from FDA, we will definitely update you. A final look on SequestOx, Elite filed a patent application covering the modification to the product for the Tmax. This is not an obvious issue. Our competitors have struggled with it. Therefore, we have filed the patent and Dr. Ken Smith will update us on that later on today. Other miscellaneous items, as previously mentioned, Elite has transitioned from contract manufacturing of Methadone to becoming actually an ANDA holder and a partner with Glenmark in selling the product. This transition is definitely favorable to Elite financially and also to our partner, Glenmark. I also mentioned that some products other than Methadone will be transitioned to Glenmark and one of them will be the products we got from Epic and another will be Trimipramine that Dr. Reddy was selling for us. Both products - sorry, all three products are expected to be transitioned in Q4 of this year. I'm also very happy to report that Elite has passed another FDA inspection. With 0483, this is the third inspection that we have, that we haven't gotten a single observation. Now, why is this one, which we had about six weeks ago, so special, because the FDA inspected, performed the pre-approval inspection for the two products that we have with SunGen, the IR and ER. And they recommended approval to the center. This is huge for us, because getting these two products, especially the ER, the $1.6 billion sales and marketing product with only four approved manufacturers today or ANDAs today is huge for us and for our partner SunGen. And that's going to be the focus of our business for the coming few months, in getting quote, getting sales figures, working with the DEA, manufacturing product and preparing for launch. As we continue to address any FDA issues that they have with respect to the filed ANDA. They have no concerns with respect to the site. As I said they recommended approval from the district. We also received a notice of allowance for a new patent. I mentioned this and some of our shareholders are asking about it. The patent covers a technology we invented while working on abuse deterrent product was the invention that's not currently used in our product. It may be useful in developing future products. To wrap up, we continue to move forward with SequestOx. We just need some more clarity from FDA. But we know exactly what we're going to do next. Glenmark is launching four products for Elite. It's a game-changer for short-term and long-term. This is going to add to our revenues. As I said, beginning this quarter. Elite has two approved ANDAs this year and we expect two more before the end of the year, and two more filings as well. For next year, we are expecting one more approval in Q1 and one in Q2 for the extended release. But that sums it up actually. That's a lot of work within a year. We've got four ANDAs for this year that we're actually getting approval for and four that we filed and potentially five. So Diane sent me a host of questions that which she was kind enough to group them for you or for me. And the first one is SequestOx status. All right, so many of you have asked multiple questions and some of them are redundant. And I'm looking at them right now and decipher through them as I'm going along. Some of them are redundant and some of them that are not really relevant for today's discussion, projections for the future, I cannot do that. But Diane grouped them up for me. And the very first one is SequestOx, so I will start with that. Have we received the response from FDA? I already answered that. It's not why the delay. Actually, we received one, and as I explained a few minutes ago, it was everything we hoped for. But then, they added a few things that we really were not expecting. With regard to SequestOx, since we have waited for a clearer picture from FDA and from the agency as to whether the data is for the small-scale is adequate, are going to go ahead and risk it? No, we're not going to do that. We always need to wait for FDA to give us clear path. Elite is a small company. We cannot afford to waste money by second guessing the FDA or taking risk. We will wait for a clear path from FDA. And that's when we'll assess how we're going to raise the money and how best we can spend it. Patents, there were a few questions about the patents. I'll ask Dr. Smith to address them.

So the latest patent for which we have received a Notice of Allowance is actually a continuation of an already issued patent, which is U.S. patent 9560054. These patents relate to a technology based on a compressed micro-tablet. And as Nasrat said, we don't currently use this technology, but it can be used for an abuse deterrent product which would be different than SequestOx. In addition, as we previously disclosed, Elite has filed two provisional patent applications this year. And the one that Nasrat alluded to is the technology that Elite used to solve the fed/fasted Tmax different than the SequestOx. The other provisional application is actually to a different type of abuse deterrent technology, which is also different than SequestOx.

Excellent. Thank you, Ken. All right, the next set of questions are about product launches regarding Methadone. I just updated you on that. We've already launched Methadone with Glenmark. When are we launching Phendimetrazine? Phendimetrazine is rather being - and Trimipramine will all be launched this quarter. At least that's our target right now with our partner. When is the anticipated approval for narco? According to FDA, it's this quarter. And as soon as we do we'll let you know. Do you have - is it likely that the partner for Percocet and narco be the same? Highly likely, they both are very similar in distribution, in DEA control in marketing. So it's very highly likely, yes. And we're talking to whomever we end up with about having both of them or actually only three. There is one more as well. Is Elite proactively lining up partners for products under active FDA review? And in product development, are you looking for partners? Yes, we are. We spent a lot of time in preparing for launches. We're always looking for new sources API to make sure that we're competitive. We're always looking for the sales and marketing partner that we can work with very well. That's number one. Number two that is really a win-win for both of us. But there are times where you cannot spend the money and buy material and do all of the stuff, and make an investment when you haven't heard from FDA. So we always do our homework, but the triggering point is hearing from FDA, yes, you have an approval. And that's when we move forward. In addition the DEA is not going to give you any quota, unless you actually have an approval from FDA. So we do lot of work. But many of it - some of it we cannot move forward till certain things happens. Hard shell generic Oxycontin filing to be bio-equivalent to produce Oxycontin, does your product have to have the same ADT? Yes, it does. What is the status of the Oxycontin ADT? It's still a pending. The FDA added one more [incult] [ph] to all of us in the industry and they are requiring now human abuse liability testing for Oxycontin. After we went through all the in-vitro studies that took us about nine months and all of that, now, they came back and ask everybody to actually have patients [note] [ph] Oxycontin versus the genetic, and report back on it. And that's going to cost some money and delay for all those who are in the industry. Epic, whole bunch of questions about Epic. What is the plan for the products partnered with Epic? As I just updated you, we're moving them back in house. For those who were already approved, we're launching them. And the rest we already started by filing Dantrolene already. Loxapine will be next. Will there be interruption in revenue? I don't think so. We are working closely with Epic and our sales and marketing team and others will not have any interruption, because you do not want Epic to leave their customer stranded. So we are working very closely with them to make sure that they continue to fill in their pipeline till we take over.

We're looking at increases in revenue actually with Glenmark.

Absolutely, from the standpoint of cost and also profit split. Does Elite have any estimate approval time for two filed SunGen product? Yes, one in Q1 and the second one in Q2. This is our current estimate. Okay. Sales of products outside of the U.S., we have no intention of starting sales and marketing outside of U.S., except potentially with our partner Epic, with the abuse deterrent products. Okay. Other than that, at this time, we can't afford to do anything else. We really need to focus on the business in the U.S. and stay focused till we make this business a very successful model. However, there is a model in my head that I've discussed with the CEO of EPIC. And potentially, we could launch a product together in China. And that requires a lot of work. It's not going to happen anytime soon. Okay. Elite's stock is being manipulated by the market and marketers on OTC platform. Can Elite meet the criteria to make applications to be listed on NASDAQ? Yes, we can. There are a lot of advantages of getting off the bulletin board. And we're working hard to get there. Carter has been working hard for the past year-and-a-half on Sarbanes-Oxley and getting us certified to certain levels. I do believe that we definitely qualify and we will be there. Does Nasrat still believe that we will be at NASDAQ in 2020? Absolutely. Okay. Drug delivery, are there any other plans for Elite to branch out into other delivery systems such as injectable, topicals and so on? Not at this time. If an opportunity comes up that is good enough for Elite and we can accommodate it on our facility. Okay. For example, the person who asked question said injectable. Our facility is not set up for injectables. It's set up for solid doses forms or tablets and capsules. Injectables will require laminar air. It requires different environmental controls. We don't have that. For now, we're focusing on the core business and on growing it. We're extremely excited about the products coming down the pipeline. The filings we have done. The approvals we are getting and we're about to get, because that is going to be the future of the company. Thank you, operator, and thank you all for listening today. And we will talk to you in a few months.

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. Q -: