Observations
I need to process this. Be back sometime next week. Thoughts:
1. I have been so wrong on this one. I never anticipated a lack of sales to this extent. I’m embarrassed, and it is humbling. But I cannot blame it on Titan. Braeburn takes part of the blame for a lousy launch, the FDA takes part of the blame for an unduly restrictive REMS and insurance companies take a huge part of the blame for making it nearly impossible to get approved for treatment, or for doctors to get paid for doing it. All this talk about the opioid crisis is just that: talk.
2. The Titan-Braeburn relationship is horrible. The fact that Titan didn’t know the sales numbers until a few days ago is pathetic; it’s not how you treat a “partner.” I appreciate that Titan is looking into what happened, but what can they do if they find out? Sale of probuphine is entirely in Braeburn’s control, and it’s pretty clear that they are basically sitting on probuphine until injectables are approved. Although they could, they are not going to price probuphine more competitively, because that could cut into their injectables sales.
3. One ray of hope comes in the form of Braeburn's complaint regarding the REMS. Back in 2013, the CRL was issued because, even though probuphine demonstrated non-inferiority to suboxone, the FDA felt Titan should supply new clinical data demonstrating probuphine's effectiveness at additional higher dose levels more close approximating the blood levels of patients taking sublingual buprenorphine. Instead, Braeburn and Titan agreed with the FDA to conduct limited further studies on patients that had been stabilized on 8mg or less of buprenorphine a day for a period of at least six months.
The CRL becomes very interesting in light of the FDA's upcoming approval decisions for depot injections of buprenorphine (Indivior Pharmaceuticals for RPB 6000 and Braeburn Pharmaceuticals for CAM 2038). Both of these drugs did supply buprenorphine at higher dose levels comparable to the blood levels of patients taking sublingual buprenorphine. And yet both drugs performed no better than probuphine in terms of patients remaining drug free. If approved, they will be allowed to be used as a "first line" of treatment for recovering addicts.
I think there is a good possibility Braeburn goes back to the FDA to get the REMS changed (perhaps eliminate the 6 months requirement) especially in light of the whole “one size does not fit all” movement that we’ve seen demonstrated at the Opioid Commission meetings (and more recently promoted by Alkermes).
4. Titan does seem to be progressing on other fronts. I think they’ve done well. There are only 14 employees after all.
The EU marketing application is finally filed. I presume there is no partner because no one is interested as this time. They’ve showed some fight in them with the implant for a vivitrol like drug (with Opiant) and implant for pain (mystery, but I think Cara Therapeutics). Braeburn is probably more mad about pain (which they are going after) than the vivitrol implant (which is a complete antagonist and not really comparable to an agonist like buprenorphine). Ropinirole is hard to get excited about, but there is a huge potential for T3. I think these technologies would add value to the sales price in a sale of the company. The army malaria study is unlikely to result in any money unless we go to war in Southeast Asia or Africa. So let’s hope Titan doesn’t make anything off of that one.
5. In a weird way, the stock split is forcing management into the decision to sell the company.
As bad as things are, if the split had not happened I don’t think TTNP would be trading at $0.28 per share (the pre-split price as of today’s close). Probably closer to $0.40 a share. Psychologically for many retail investors, it’s easier to sell Titan at $1.55 than $0.28 cents. It doesn’t make sense but it’s true.
The facts are what they are, and Titan's cash runway expires in August of next year, just nine months away. In order to raise even a year's worth of funding, Titan would need to issue well over 20% of its capital stock; a transaction requiring stockholder approval under NASDAQ rules. I don’t think they have the votes for that.
Even if they went ahead and did such a transaction without stockholder approval (and got de-listed from NASDAQ for doing it), it still messes up management’s retirement plans. One year’s operating expenses ($12 million) at $1.50 a share would require them to issue 8,000,000 shares, diluting all shareholders by 25%. A share in TTNP becomes worth 25% less after such a transaction, and it would probably have to be followed by yet another for 2019 with no certainty that probuphine sales will materialize or that current development programs would have made any progress.
Note that management has been very adverse to dilution. It’s one thing to dilute when you have 120 million shares, and its all just OTCBB monopoly money and they can issue themselves replacement options without NASDAQ rules to comply with. With only 24 million shares outstanding, any dilution dramatically affects what Rubin and Bhonsle will eventually receive. For that reason, I think they will take what they can for the company, or sell one or more of its development programs, over the next few months. Sunil stated they were exploring “strategic alternatives.” Do an online search for “strategic alternatives” and see the types of press releases that come up.
