Georgi Kamburov

Elite Pharmacetuicals Inc (OTCMKTS:ELTP) Drops Further Down

by Georgi Kamburov July 20, 2016

Last Friday Elite Pharmaceuticals Inc (OTCMKTS:ELTP, ELTP message board) announced that they had received a complete response letter from the FDA in regards to the New Drug Application (NDA) for SequestOx, the abuse-deterrent opioid candidate of the company. In the letter the Agency stated that the NDA couldn't be approved in its current form.

The news had a devastating effect on the stock of the company - on Monday ELTP saw over 25% of its value simply disappear. The crash would have been even scarier with the ticker sinking to a new 52-week low of $0.151 just minutes after the opening bell but thanks to the conference call held by ELTP's CEO Mr. Nasrat Hakim the stock was able to reach a close at $0.23.

It seems that whatever confidence the conference call had inspired in investors dissipated rather quickly, though, and yesterday ELTP suffered another painful drop. This time there was nothing new to stop the ticker from going down and it crashed by 10.4%, closing the session $0.208 per share.

The stock could continue to exhibit heightened volatility in the coming days. While ELTP have stated that they have never been in a better financial state the potential of millions of cheap shares finding their way to the open market as well as the impact of the FDA's decision could drive the stock even further down. Investors should keep in mind that the S-1 registration statement for the resale of 63 million shares by Lincoln Park became effective last week. Between March 31, 2015, and June 7, 2016, close to 30 million shares had been sold to Lincoln Park. In the past couple of months ELTP also issued 9.3 million shares at an average of $0.065 per share through the exercise of warrants.

It is of vital importance to do your own research when approaching the stock of the company. Even if you believe in ELTP's potential you should use still use caution when putting any amount of money on the line. 

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