SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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ELITE PHARMACEUTICALS, INC.
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[Elite Letterhead]
THREE GOOD REASONS TO VOTE BLUE
September 24, 2002
Dear Fellow Stockholder:
Since the Freedman Group first launched its costly and unprovoked
attempt to seize control of Elite by removing all of Elite's independent board
members and installing its hand-picked slate, your duly elected, independent
Board of Directors has advised you that in its judgment the Freedman Group's
slate was not qualified to control your company, the Freedman Group had no
experience operating a drug delivery development company and that Elite's
existing management had the right plan to grow and develop the Company's
business. Institutional Shareholder Services, Inc. ("ISS"), a leading
independent proxy advisory firm, has recently issued a report recommending that
stockholders revoke or withhold consents solicited by the Freedman Group in
support of its proposals.
ISS is widely recognized as the nation's leading independent proxy
advisory firm. Its recommendations are relied upon by hundreds of major
institutional investment firms, mutual funds, and other fiduciaries throughout
the country. We believe that ISS's recommendations carry great weight and should
be considered carefully by stockholders, since the ISS Report was prepared by an
independent third-party advisor that made its recommendation only after careful
consideration of the positions of your Company and the Freedman Group.
INSTITUTIONAL SHAREHOLDER SERVICES, INC. RECOMMENDS
AGAINST SUPPORTING THE FREEDMAN GROUP' S PROPOSALS
In a report released by ISS on September 20, 2002, ISS states:
"Nowhere in the [Freedman Group's] written material does the [Freedman
Group] outline a specific strategy with respect to how the company can
expand its product line, improve its product development process, or
enter into new collaborative agreements with other drug companies.
Ultimately, the [Freedman Group's] plan is insufficient for the purpose
of controlling the board. Management, on the other hand, has
communicated a revised strategy that focuses on branded products,
expanded research and development activities, and alliances with other
drug companies."
"The [Freedman Group's] slate does not appear to have the relevant
industry and FDA regulatory expertise. The company is at a critical
stage in its development.... As such, a board that is well equipped
with relevant industry and FDA regulatory experience is vital to the
company's success. Two of management's independent nominees have
expertise in the pharmaceutical industry as well as experience in
manufacturing drug products and FDA regulatory matters. Management's
other independent nominee has experience in investment banking
services."
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The ISS Report concludes as follows:
"[T]he company is at a critical stage in its development. Electing the
[Freedman Group's] slate poses a significant risk to the company and
its shareholders for the following reasons. First, the [Freedman
Group's] slate does not appear to have any relevant FDA expertise or
expertise in the areas of developing and/or manufacturing drug delivery
products. Second, the [Freedman Group's] plan to improve shareholder
value is simply too vague and insufficient for assuming control of the
board. Management, on the other hand, has implemented a business plan
which: (1) addresses the FDA regulatory issues and the manufacturing
and development needs of the company's drug delivery products; and (2)
positions the company for accelerated growth as indicated by expanded
research and development activities and alliances with big
pharmaceutical companies. Moreover, management's nominees have relevant
industry and FDA regulatory experience to execute the company's goals.
ISS concludes that there is no compelling evidence to suggest that a
change in control of the board is warranted. The current board should
be given an opportunity to grow the company in hopes of maximizing
shareholder value."
We agree completely with ISS' findings, and strongly urge all
stockholders to vote against the Freedman Group's proposals and to support your
existing Board of Directors. Do not return any WHITE Consent Card sent to you by
the Freedman Group, even to vote against them. Throw it away. If you have
previously sent in a WHITE Consent Card there is still time to change your vote.
Please sign, date & return your BLUE Consent Revocation Card today!!!
ETHYPHARM S.A. AGREEMENT
In its solicitation materials, the Freedman Group has attacked your
management for failing to enter into agreements with other pharmaceutical
companies. Last week, however, Elite announced that it had entered into a
manufacturing agreement with Ethypharm S.A. for the manufacture of a new
prescription drug product. Elite will receive an upfront manufacturing fee for
the first phase of the technology transfer and is entitled to receive fees in
advance for each phase of the manufacturing. In addition, upon FDA approval and
if requested by Ethypharm, Elite will manufacture commercial batches of the
product on terms to be agreed.
THE FREEDMAN GROUP'S UNQUALIFIED CANDIDATES
As stated in the ISS Report, we believe that the Company is currently
at a critical juncture in its development. We believe that now more than ever
your company needs directors and senior management that have FDA expertise
and/or expertise in the development, manufacturing and licensing of drug
delivery products. When you compare the qualifications of the current
independent directors elected by stockholders to those of the Freedman Group's
hand-picked slate, we believe that stockholders should conclude that your
existing Board is better qualified to lead the Company at this time. Based on
publicly available information and additional information obtained by Elite, we
have set forth below the background and qualifications of the current
independent directors and the members of the Freedman Group's slate:
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Current Independent Director Freedman Group Nominee
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Harmon Aronson, Ph.D. Harris Freedman
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> since 1997 President of Aronson > since 1978 has provided general
Kaufman Associates, Inc., a business consulting services.
consulting firm that provides
manufacturing, FDA regulatory and > during the 1970s, worked, among
compliance services to other things, as a salesman for a
pharmaceutical and biotechnology lawn chemical treatment company.
companies. Its clients include
United States and international > prior thereto sold life insurance
firms manufacturing bulk drugs and products.
finished pharmaceutical dosage
products who are seeking FDA > was a stockbroker from 1960 to 1964
approval for their products for the before being barred from the
US market. industry in 1967 by the SEC and
being convicted for securities
> prior to 1997, was employed by fraud.
Biocraft Laboratories, a leading
generic drug manufacturer, most > never graduated from college.
recently in the position of Vice
President of Quality Management;
prior to that he held the position
of Vice President of Non-Antibiotic
Operations, where he was responsible
for the manufacturing of all of the
firm's non-antibiotic products.
> holds a Ph.D. in Physics from the
University of Chicago.
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Donald S. Pearson Sharon Will
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> since 1997 President of Pearson & > since 1994 has provided investor
Associates, Inc., a company that relations services.
provides consulting services to the
pharmaceutical industry > from 1992 to 1994 worked as a
stockbroker.
> from 1992-1997 served as the
Director of Licensing at Elan > from 1988 to 1992 served as a
Pharmaceuticals manufacturing sales representative
> from 1962-1992 was employed by > from 1982 to 1988, sold textile
Warner-Lambert Company, a products and office equipment
pharmaceutical company, in various
marketing, business development and > never graduated from college
licensing capacities
> received a B.S. in Chemistry from
the University of Arkansas and
studied steroid chemistry at St.
John's University
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Eric L. Sichel, M.D. Michael H. Freedman
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> since 1997 President of Sichel > since 1990 has been a securities
Medical Ventures, Inc. which company lawyer in private practice with
provides biotechnology company several law firms
assessments and investment banking
services. > received undergraduate degree from
Hofstra University
> from 1995 through 1996, was a senior
analyst in the biotechnology field > received a law degree from St.
for Alex, Brown & Sons, Inc. of New John's University
York, NY.
> prior thereto was affiliated with
Sandoz Pharmaceuticals Corp. in
various capacities, including
associate director of
transplantation/immunology.
> Dr. Sichel is licensed to practice
medicine by the State of New York.
> Holds an M.B.A. from Columbia
University and an M.D. from
UMDNJ--New Jersey Medical School
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PLEASE SEND A STRONG MESSAGE TO THE FREEDMAN GROUP
We believe that the Freedman Group's hand-picked slate is not qualified
to lead your company. In addition, we believe that the Freedman Group has no
real agenda for creating stockholder value. We believe that these views have
been corroborated by the ISS Report.
In our opinion, the Freedman Group is acting only for the purpose of
extending the terms of warrants held by them and other investors at a cost to
the Company of over $1,000,000. Please help us defeat the Freedman Group's
proposals by voting against the proposals of the Freedman Group.
If your shares are registered in your name, please sign, date and mail
the enclosed BLUE Consent Revocation Card to Georgeson Shareholder
Communications Inc. in the postage-prepaid envelope provided to you. If your
shares are held in the name of a brokerage firm, bank nominee or other
institution, only it can sign a BLUE Consent Revocation Card with respect to
your shares and only after receiving your specific instructions. Accordingly,
please sign, date and return the enclosed BLUE Consent Revocation Card in the
postage-paid envelope provided. To ensure that your revocation is completed, you
should contact the person responsible for your account and give instructions for
a BLUE Consent Revocation Card to be issued representing your shares.
For more information about how to vote, please call Elite's proxy
solicitor:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET, NEW YORK, NEW YORK 10004
TOLL FREE TEL: 866-297-1267
FAX: 212-440-9009.
On behalf of your Board of Directors, thank you for your continued
interest and support in your company.
Very truly yours,
/s/ Atul M. Mehta
Atul M. Mehta, Ph.D.
President and Chief Executive Officer
For The Board of Directors
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