By Brady Huggett

Elite Pharmaceuticals Inc. and Elan Corp. agreed to form a joint venture to develop several pharmaceutical products, a deal Elite said sets it free.

"The only thing that was holding us back was money," said Atul Mehta, president and CEO of Elite. "We think we have a very bright future."

Under the agreement, the companies will exclusively license each other's selected technologies to develop the products and Elan will make a $5 million equity investment in Elite.

Elite, of Northvale, N.J., said it has $9 million in cash after Elan's investment and will use the money to continue work on the nine products in its pipeline. The products are for cardiovascular, diabetic, arthritic, infective and central nervous system indications.

The coupling with Elan, of Dublin, Ireland, expands Elite's horizon, Mehta said.

"They are leaders," Mehta said. "It's a good endorsement that such a large company decided to join up with us. Now we are two companies combining our technologies. If Elite were to do it alone, we would still have to look for a marketing partner because we don't market anything. But since Elan has the sales force and everything, there is a chance it will be them."

Mehta stressed that Elan isn't locked into the marketing of resulting products, and, in fact, each company is free to pursue side projects and form partnerships with other companies.

Elite has been granted three patents, and focuses on drug delivery systems to promote greater therapeutic efficiency, increase patient compliance, decrease side effects and contribute to the overall effectiveness of medications. It has delayed-release, sustained-release, targeted-release, pulse-release and other controlled-release delivery systems, including taste masking.

The drug delivery systems are aimed at making life easier for users by either supplanting injections or reducing the number of pills a patient is required to take. Sustained release is the most conventional release profile, with drug released over 24 hours. Delayed-release drugs are intended to deliver the drug at a predetermined period following administration. Pulsatile release mimics natural secretion in the body, rising and falling during the day to imitate interval dosing.

Elite was incorporated in 1990, but Mehta said life really began for the company two years ago when it began to raise money. The company raised a combined $10 million in two private placements in 1997 and 1998, then another $3 million through the issuance of tax-exempt bonds in 1999.

Elite also recently formed a joint venture with Japan-based Inabata & Co. to license and market Elite products in Japan. Under the memorandum of understanding, Elite will control the joint venture company and contribute products and technology; Inabata will provide funding and marketing support. Inabata had sales exceeding $2.5 billion in 1999.

Mehta said Elite most likely would continue to seek partnerships.

"We are very satisfied [with this deal]," he said. "Now we can start digging the gold mine we feel we are sitting on."

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