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TTNP: Titan Regains Probuphine License

By John Vandermosten, CFA


On May 30, Titan Pharmaceuticals, Inc. (NASDAQ:TTNP) announced that it had come to an agreement with Braeburn Pharmaceuticals to regain rights to Probuphine commercialization in the US and Canada. The terms of the agreement include the return of commercialization and development rights, a $1 million payment from Braeburn to Titan, and the return of all regulatory documentation and development data related to the implant. Titan indicated that it will continue the sub-licensing agreement that Braeburn had with Knight Therapeutics in Canada. Braeburn will also assist in the transition of the operation to Titan.

Titan reiterated its strategy of focusing on a market segmentation strategy, but it is unclear how this will be done. It appears that Titan will seek addiction specialists and market directly to them. We anticipate that the company will provide additional information as the strategy becomes clearer.

First Quarter 2018 Financial and Operational Results

Titan Pharmaceuticals, Inc. reported first quarter 2018 results in its May 15th release. It was only last month when the company updated the investment community with their fourth quarter report. The only major event that has occurred since the last update was the addition of Federico Seghi Recli to the Titan Board of Directors.

In the first quarter, Titan reported total revenues of $1.1 million compared to $40 thousand in 1Q:17. This amount consisted of $25,000 in Probuphine royalty revenues and slightly over $1 million in revenues from the sale of property rights to Molteni. Research and development costs totaled $1.9 million, falling 13%. The contraction was due to lower levels of spending on external research and development programs for Probuphine and ProNeura. General and administrative expenses rose 20% to $1.6 million due to costs related to the Molteni transaction offset by lower personnel costs.

Cash and equivalents as of March 31, 2018 were $3.5 million, compared to $7.5 million at the end of 2017. Debt was $3.4 million, declining sequentially due to the pay down of debt to Horizon Technology Finance. Partner Molteni also took on some of the debt obligation with Horizon to ensure that there are no distractions in Titan’s push to commercialize Probuphine in the US. Cash burn was ($1.1) million in 1Q:18 compared to ($3.1) million in 1Q:17.

Return of Probuphine

Titan announced on January 22 that it is in discussions with Probuphine license holder Braeburn regarding the disposition of Probuphine. Sales of the implant have been disappointing since the 2Q:16 launch of the product as Braeburn worked through payor, reimbursement, and Risk Evaluation and Mitigation Strategy (REMS) requirements among other complexities since first sales. Due to the shift of Braeburn management’s attention toward addressing the CRL, a transfer of the development license from Braeburn has emerged as the most efficient path forward.

As per the agreement between Titan and Braeburn, the latter is required to make commercially reasonable efforts to sell Probuphine. More specifically this means that the company must use its skill, effort, expertise and resources to commercialize the drug. As Braeburn reduced the size of its sales force in the face of poor sales, the requirement to fully commercialize the drug appears to be violated and Titan has begun the process to transfer commercialization rights from Braeburn to Titan and on May 30, 2018 announced that they had come to an agreement with Braeburn. Titan has also suggested that they may directly participate in commercial activities and has begun to research select market segments for targeted commercialization. We note that Titan will need to obtain additional capital or assistance in order to pursue such a course. Braeburn had sublicensed Probuphine to Knight Therapeutics (TSE: GUD) who has filed a new drug submission (NDS) to Health Canada. A response from the regulatory agency is expected this summer. Based on commentary in the May 30 press release, Knight will continue to commercialize Probuphine in Canada likely under the same conditions as they held with Braeburn.

We anticipate that it will take several months to complete the transition and to achieve material growth; however, the return of the license to Titan is an important milestone and the $1 million in payment a modest sweetener that will cover about a month of cash needs. Titan may also choose to work with a partner in which case, we believe that Titan can obtain an upfront payment as well as sales milestones and royalties, as the majority of these arrangements are structured.


While Probuphine has consistently fallen behind our estimates due to a variety of difficulties which have been discussed in our reports, we see it as a positive that rights are transferring back to Titan. The May 30 announcement regarding the termination of the license agreement is a positive milestone. Little is known about the strategy to commercialize Probuphine now that Titan has control, but we think there is a very low hurdle to surpass in order to improve upon the current situation.


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