Most Titan Pharmaceuticals (NASDAQ:TTNP) investors did not expect the 40% drop in share price on the release of the briefing materials in advance of Thursday's FDA Psychopharmacologic Drugs Advisory Committee (PDAC) meeting. There is always a great deal of risk in biotech investing, especially when you are holding a position going into a big FDA decision. That is definitely the case as Titan approaches crucial votes on safety, efficacy, and application approval in the PDAC meeting on Thursday.
But why such a strong drop on the briefing materials, just two days before that vote?
If anything, investors like me expected the share price to be closer to $2.50 by Thursday as expressed in my recent background article on Titan. And with a high of $2.18 recorded on Monday, it was headed in that direction until the press reporting on the FDA document release.
Instead of continued optimistic expectation for Titan's committee votes on Thursday, what investors woke up to yesterday morning were the following headlines:
These headlines are very misleading and do not accurately reflect the full extent of the FDA's summary comments and Titan's clinical results. Upon a full review of the briefing materials on which these articles were based, investors who sold may be very sorry come Thursday and miss gains as the PDAC votes on Probuphine.
Why The Press Analysis of Today's Briefing Material Is Misleading
The thrust of the press reports focused on language in the report that questioned the dosing strength (efficacy) of Probuphine and the safety of Probuphine.
First, regarding the efficacy of Probuphine, the primary efficacy outcome measured in the Phase III trials was the percent of urine samples negative for opioids. The materials released today clearly sate that Probuphine met that efficacy endpoint by stating, "the results above suggest that patients treated with Probuphine were more likely than patients treated with a placebo to submit opioid-negative urine samples on more occasions, and were less likely to require supplemental sublingual buprenorphine for treatment of subjective symptoms of withdrawal or craving."
The press reports do not emphasis this positive comment on efficacy but instead focus on the comment that only three Probuphine-treated patients were fully abstinent from opioids and only 8% provided negative samples for at least 80% of tests.
Somehow the press failed to mention the summary conclusion in the Titan materials on the clinical efficacy of Probuphine stated in this definitive language,
"Collectively, the data indicate that Probuphine is effective for maintenance treatment of opioid dependence in individuals with opioid dependence. Probuphine was superior to placebo implant in both double-blinded studies for primary outcome measure, the proportion of urine samples negative for opioids. Secondary and exploratory endpoints supported the conclusion that Probuphine was more efficacious than placebo implant."
I do not believe the PDAC members on Thursday will base their vote on Probuphine's efficacy on whether a certain number of patients were 100% drug free. We are talking about addicts here who are being treated in a maintenance therapy to allow them to begin living a normal life while slowly reducing their cravings for opioids. Additionally, being 100% drug free was not the primary endpoint. Instead, I believe the committee will favorably vote on Probuphine's efficacy based on its FDA defined primary endpoint, clinical superiority over the placebo as stated in the briefing materials issued yesterday.
Second, regarding the safety of Probuphine, the press reports would lead investors to believe that this implantable rod had major issues with serious adverse events relating to the insertion of the rod. This too could not be further from the definitive statements issued by the FDA on Probuphine's safety.
In the Phase III studies for Probuphine, 331 patients received an implant. Only 15 (4.5%) of those patients suffered adverse events relating to the implanted rod and "several of the events were of an infectious nature, including abscesses potentially related to intravenous drug use" which were not related to the implant at all. Other adverse events included depression and implant site pain. Hardly enough to warrant an unfavorable vote on safety.
As a matter of fact, the materials' concluding remarks on Probuphine's safety profile state, "In general, the common adverse events associated with Probuphine treatment were similar to those seen with sublingual buprenorphine treatment." I believe the committee will vote favorable on Probuphine's safety profile because it remains on par with currently approved buprenorphine treatments.
Background On Process Leading Up to Advisory Committee Votes
In the weeks and months in advance of the PDAC's meeting, a team of FDA government bureaucrats known as "reviewers" prepare briefing materials for the members of the committee. Committee members and the sponsor (Titan Pharmaceuticals) were given these materials a few weeks ago to help them prepare for the scheduled meeting on Thursday, March 21. Therefore, I expect Titan's management team and medical experts to be very prepared for any questions on Thursday, especially those addressed in the briefing materials questioning Titan's Risk Evaluation and Mitigation Strategy (REMS).
As Titan's Chief Development Officer Katherine Beebe, said in Monday's conference call, "we will be presenting as part of our Advisory Committee core presentation sort of a more details proposal for that REMS and answering question around that."
The committee's briefing materials were released yesterday to the public and include the bureaucrats' opinions on the clinical data provided to the FDA by Titan. Some of the cautionary language in the materials regarding efficacy and safety is designed to facilitate a robust discussion at the PDAC meeting. It is important to note that the materials released today were not written by the distinguished doctors, medical professionals, and academics who will vote to advise the FDA on Probuphine's future this Thursday.
Titan's lead product, Probuphine, is currently under review by the FDA and will receive notice of approval by April 30, 2013. On December 17, 2012, Titan signed a very lucrative $305 million partnership agreement with Apple Tree Partners (via Braeburn Pharmaceuticals) for exclusive Probuphine commercialization rights in the U.S. and Canada. As of December 31, Titan had cash and cash equivalents of $18.1 million with a $50 million payment due from Braeburn upon FDA approval on April 30, 2013.
Probuphine is an investigational subcutaneous implant capable of delivering continuous and persistent, around the clock blood levels of buprenorphine for six months following a single treatment, enhancing patient compliance and retention. Buprenorphine, an approved agent for the treatment of opioid dependence, is currently available in the form of daily dosed sublingual tablets and film formulations, with reported 2012 sales of $1.5 billion in the United States. Titan estimates Probuphine sales could reach $300-500 million per year at peak.
Titan's sudden plunge is a case where investors sold on headlines and asked questions later. Upon a full review of the FDA's PDAC background materials, investors like me actually increased their positions yesterday and bought more Titan shares as low as $1.07/share.
While it is expected for risk-adverse biotech investors to panic sell without full due diligence, it is also expected that the full PDAC committee of doctors, medical professionals, and academics will actually read every word of the briefing materials and hear every word of the committee testimony and presentations before making their decision to accept or reject Titan's breakthrough, new opioid dependence treatment drug, Probuphine.
Upon that analysis, the FDA-stated need for new treatment options to fight this opioid abuse epidemic, and my faith in the committee's deliberate and reasoned view of the data, I stand by my March 15 article and still expect the PDAC to vote favorably for Probuphine's efficacy, safety, and approval.
Disclosure: I am long TTNP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.