Titan Pharmaceuticals Inc (TTNP)

[Doctor Detroit]

Zachs 2017 Numbers

Zach’s estimate is $21.3 million in probuphine royalty income. It gets complicated, because all of 2016 revenue is based on “new sales,” but going forward you have to factor in a percentage for how many prior sales will continue treatment after six months. I’ve heard something like 90% of trial participants would continue with probuphine, but to be conservative let’s assume 20% drop out after each treatment cycle.
So, first we have to deal with reoccurring sales from 2016. There should be 3.28 million in royalty income in the 1H of 2017 (80% of 4.1 million), and $2.62 million in royalty income in the 2H of 2016 (80% of $3.28 million), for a total of $5.9 million in royalty revenue from reoccurring sales from 2016.

That leaves $15.4 in “new” 2017 royalty income, which roughly speaking means $100 million in sales. That could be accomplished with (a) $33 million in new sales in 1H 2017, with a royalty of $4.95 million, and other $26.4 million in reoccurring sales (80%) in the 2H2017 with $3.95 million in royalties, plus (b) $44 million in new sales in the second half of 2017 with a royalty of $6.6 million.

Back to our 1,500 trained doctors (assuming that number doesn’t increase), $33 million in new sales for 1H of 2017 would mean 15,000 new probuphine patients. So each doctor is assumed in treat 10 new patients over 6 months. For the 2H 2017, the number goes up to 20,000 new patients, with each doctor treating 13.3 new patients in the second half of 2017 (about two a month). I’ll leave it to you to determine whether that is overly conservative.

Zachs has not included any milestone revenue, but assuming Braeburn meets its published expectations and files a sNDA for probuphine for chronic pain in 2017, there is a milestone due. There’s 35 million total in potential regulatory milestones under the license agreement (other than the 15 million on probuphine approval for opioid abuse), so I would assume Titan would get $10 million of that upon filing the chronic pain NDA. I also assume EU approval would take a year from filing in 2016, and they’d get another $5 million upon EU approval in 2017. So total royalty ($21.3) and milestone ($20.0) income should be $41.3, less expenses of $15.0 (Phase II for ropinrole) for income of $26.3, or $1.05 per share assuming 25 million outstanding at that point in time.