Titan Pharmaceuticals Inc (TTNP)

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Research Report Update
TTNP: Newly NASDAQ-listed Titan Moves Closer to Probuphine® Approval; Announces ProNeura-T3 for Hypothyroidism
11/17/2015

By: Nisha Hirani, MD & David Bautz, PhD
NASDAQ:TTNP

Financial & Business Update

On November 17, 2015, Titan Pharmaceuticals, Inc. (NASDAQ:TTNP) reported financial results for the third quarter of 2015 ended September 30, 2015. The company reported no revenues in the third quarter of 2015. This was in-line with our expectations.

Operating expenses for the third quarter 2015 totaled $1.8 million, compared with approximately $1.7 million in the same quarter in 2014, and were lower than our expectations. The increase was driven primarily by higher research and development expenses totaling approximately $1.0 million in the third quarter of 2015, compared with approximately $0.8 million in the second quarter of 2014. This increase was associated with external research and development expenses related to the support of Titan's Probuphine® and ProNeura-ropinirole product development programs in addition to other R&D expenses and employee-related costs. General and administrative expenses for the third quarter of 2015 and 2014 were approximately $0.8 million and approximately $0.9 million, respectively. Both R&D and G&A expenses were slightly lower than our expectations.

Net other expenses for the third quarter of 2015 were approximately $5,000 compared with approximately $1.5 million for the same period in 2014, and consisted primarily of non-cash gains and losses on changes in the fair value of warrants. Net loss for the third quarter of 2015 was approximately $1.8 million, or approximately $0.09 per share, compared with net income of approximately $0.7 million, or approximately $0.04 per share in the same quarter in 2014.

Titan exited the third quarter of 2015 with approximately $9.7 million in cash. Net cash burn in the quarter totaled $1.8 million, and was slightly less than the cash burn in the first two quarters of 2015 (approximately $2 million). We believe that these funds are sufficient to support Titan’s planned operations into the fourth quarter of 2016. By that time, we expect U.S. approval of Probuphine, which will net Titan a $15.0 million milestone payment from Braeburn. We also believe that potential licenses outside the U.S. could occur in 2016, thus bringing in more non-dilutive cash to the company. All-in-all, we believe Titan is currently in a strong financial position, especially with the possibility of receiving the $15.0 million milestone payment from Braeburn.

Uplisted to the Nasdaq

On October 12, 2015, Titan’s common stock began trading on the NASDAQ Capital Market. As a reminder, on September 28, 2015, Titan announced a 1-for-5.5 reverse stock split which became effective on September 29, 2015 in anticipation of uplisting to the NASDAQ, decreasing the number of common shares outstanding from approximately 110 million to approximately 20 million. The reverse stock split satisfied one of the initial requirements for uplisting to the NASDAQ. We believe the uplisting is an important milestone for the company as it increases liquidity in Titan shares as well as enhances the company’s profile among potential investors.

NDA for Probuphine® Accepted for Review

On September 28, 2015, Titan also announced that the U.S. Food and Drug Administration (FDA) accepted the resubmission of the New Drug Application (NDA) for Probuphine® for six-month priority review. We had anticipated this event to occur prior to year end and thus, we are pleased with the results occurring in the third quarter of 2015. With the PDUFA date set for February 27, 2016, we believe that Probuphine is on track to receive FDA approval this time around. Titan announced resubmission of the NDA for Probuphine for the maintenance treatment of opioid addiction by Braeburn Pharmaceuticals to the FDA on August 31, 2015. The Probuphine NDA resubmission included results from the Phase 3 double-blind, double-dummy study that we have reviewed in previous updates. The study met the pre-specified primary endpoint of non-inferiority in addition to secondary efficacy endpoints. We previously mentioned that we believed that the positive Phase 3 data cleared the way for a re-filing of the U.S. New Drug Application (NDA) in the near term, and are pleased to see that things are moving along as expected.

With the NDA now accepted for priority review by the FDA, and the new action date is set, we continue to remain optimistic, and are expecting approval for Probuphine at that time. As a reminder, approval earns Titan a $15.0 million milestone from Braeburn, and we believe that this will help fund the rest of the developmental programs, which we will discuss below.

Introducing ProNeura in Hypothyroidism

On November 16, 2015, Titan announced the addition of an implantable triiodothyronine (T3) product for the treatment of hypothyroidism to its product development pipeline. The goal of ProNeura-T3 is to replicate normal thyroid physiology and could potentially prevent unwanted side effects associated with the current pulsatile-release oral formulation. Management believes that the ProNeura-T3 could potentially offer significant advantages over once-daily oral delivery for patients who require T3 as part of their treatment regimen.

Hypothyroidism, a condition in which the thyroid gland does not produce enough thyroid hormone, affects about 15 million Americans. Women over the age of 60 are more likely to be affected by hypothyroidism. Signs and symptoms of the condition can vary depending on the level of hormone deficiency, but typically include chronic fatigue, weight gain and obesity, dry skin, constipation, cold intolerance, impaired mental activity, and depression. Hypothyroidism is usually diagnosed via thyroid function tests (blood tests), and treatment typically consists of synthetic prohormone thyroxine (T4) given as a once-daily oral medication (Synthroid®, Levoxyl®, and other generics), which in turn is converted to the active T3 in the body. Most of the T3 in the body comes from the conversion of T4. It often takes months or even longer to determine the proper dosage for hypothyroid patients.

Titan believes that up to 15-20% of hypothyroid patients are not adequately treated with T4, which can result in a long-term deficiency of T3. These patients typically also require T3 therapy. Pfizer’s Cytomel® is a once-daily synthetic T3 hormone, and is an effective medication for hypothyroidism but can come with potential side effects of headache, nervousness, irritability, sweating, and cardiac arrhythmias due to peak-and-trough blood-level fluctuations of T3 associated with standard oral delivery. This is where Titan believes an implantable T3 product could be helpful as continuous delivery of T3 by the oral or parenteral route is highly desirable, but has been difficult to achieve because of the solubility characteristics of the compound.

Currently, Titan is working on optimizing the formulation of this product. We believe ProNeura-T3 is approximately 6 months behind the ProNeura-PD candidate, and that management will begin regulatory discussions with the FDA regarding the product in mid-2016, and if all goes well, could potentially enter the clinic by mid-2017. We look forward to sharing more details regarding this program as they are made available

As mentioned in previous updates, Titan had been looking for additional product opportunities, and to expand the use of its ProNeura platform. At the Rodman & Renshaw 17th Annual Global Investment Conference that took place in September 2015, Titan mentioned the potential for ProNeura expansion for the treatment of select chronic diseases for which low-dose, long-term delivery and stable drug levels may offer advantages over oral administration. Titan is currently evaluating additional compounds in other chronic disease settings such as hormonal deficiencies, type 2 diabetes, attention deficit hyperactivity disorder (ADHD), benign prostatic hyperplasia (BPH), and pre-exposure prophylaxis therapy for HIV-1 prevention. We believe Titan is conducting early feasibility studies with potential ProNeura compounds and we were expecting that the company would add at least one additional product candidate to the pipeline by the end of 2015 (ProNeura-T3). Although it is early, we do see upside in ProNeura expansion to select chronic disease settings, especially if Probuphine gets approved, and believe that this may present Titan with additional opportunities such as joint development projects and/or potential licensing of the ProNeura platform to other companies. We look forward to hearing more about the ProNeura expansion to hypothyroidism and other indications in the near future.

Conclusion

With positive Phase 3 data in place, the Probuphine NDA back under priority review with the FDA, and a new PDUFA date set for February 27, 2016, we see a clear path to approval this time around. Titan continues to work with its contract manufacturer and Braeburn in preparation for product launch. We are not sure how long the final labeling and packaging will ultimately take, but if all goes well and Probuphine gets approved this time around, we could see a product launch as early as mid-2016. We remain optimistic regarding the Titan story, and believe that the uplisting to the NASDAQ should act as a catalyst to further drive institutional awareness.

Titan exited the third quarter of 2015 with approximately $9.7 million in cash. We believe that these funds are sufficient to support Titan’s planned operations into the fourth quarter of 2016. By that time, we expect U.S. approval of Probuphine, which will net Titan a $15.0 million milestone payment from Braeburn, and additional potential sales milestones of up to $165 million and a tiered royalty based on a percentage of net sales from the mid-teens to the low twenties. We also believe that potential licenses outside the U.S. could occur in 2016, thus bringing in more non-dilutive cash to the company. Overall, we believe Titan is currently in a strong financial position.

We would also like to point out that Titan has also made progress in evaluating additional compounds that can be delivered in the ProNeura implant, and just added an implantable triiodothyronine (T3) product for the treatment of hypothyroidism to its product development pipeline. We are looking forward to learning more about this product and additional pipeline candidates in the future. With both late and early-stage programs utilizing the ProNeura platform under way, we continue to see the shares worth $8.25 right now, with potential upside upon Probuphine approval in 2016. At this point, our model has very little contribution from ProNeura in Parkinson’s disease, hypothyroidism or other chronic indications or in value for Probuphine outside the U.S. We believe these situations may also present additional upside to our financial model.

Source http://scr.zacks.com/News/Press-Releases/Press-Release-Details/2015/TTNP-Newly-NASDAQ-listed-Titan-Moves-Closer-to-Probuphine-Approval-Announces-ProNeura-T3/default.aspx