Seeking Alpha
Special situations, micro-cap, biotech, healthcare
Profile| Send Message|
( followers)  

We're seeing some new interest in Titan Pharmaceuticals (OTCQB:TTNP) ahead of its PDUFA goal date of April 30th, 2013 for flagship drug Probuphine®. Bulls are expecting an FDA approval in line with the advisory committee vote that was held a month ago, which yielded an overall positive vote of 10-4-1 (10 in favor, 4 against, and 1 abstain) for approval of the Probuphine NDA that the company submitted in 2012.

Those who aren't familiar with Probuphine should note that the "drug" itself is actually a formulation of buprenorphine that is built into a subdermal implant (or "rod") which releases the active ingredient into the bloodstream over time. Probuphine is designed to provide a controlled, continuous dose of buprenorphine to opioid addicts for 6-12 months. Ideally, the implanted rod would not only improve compliance amongst recovering opioid addicts, but would prevent other forms of misuse.

The initial reaction to the preliminary adcom documents suggested that the vote could have turned against Titan's NDA due to the FDA's concerns with inadequate dosing for Probuphine-taking patients. In the phase III trials that reached completion in 2011, patients in the Probuphine arms were given 4 implants against the buprenorphine (Suboxone) arms.

The issue with Probuphine's dosing was never really dismissed (and remains an issue), although it was later argued that an overwhelming need for abuse deterrents (particularly for opioid addiction) was a bigger issue and supported an FDA approval with a REMS. The panel ultimately voted 10-5 in favor of the efficacy of Probuphine, and 12-2 (with one abstention) in favor of the safety profile of the implant.

Although there are dosage nitpicks that could result in an complete response letter (even with the REMS), many Titan Pharma supporters are making the "big picture" argument that the availability of alternatives to pills (like Suboxone) is a very important tool in the fight against opioid addiction. Subdermal implants like Probuphine allow patients to receive their medication for an extended period of time without much thought, and also provide much higher barriers for abuse relative to crush-resistant pills.

In a recent Wall Street Journal article, the huge threat of generic OxyContin was discussed in light of the huge surge of opioid abuse that we've seen throughout the last few years in the United States. We can also see the upward demand for opioid addiction treatments when analyzing the success of Suboxone, which is a standard-of-care formulation of buprenorphine and naloxone that was used as a control in Probuphine's clinical trials.

Suboxone generated $1.7 billion in 2012 on roughly 7.7 million prescriptions, which represents over 300% revenue growth from the product since 2008. With the introduction of generic OxyContin onto the market, we may see a further rise in opioid abuse from this alone if Purdue fails to convince the FDA to extend the date of its patent expiration.

As always, it's not certain whether or not the FDA will follow the advice of the advisory committee. The general opinion in the market seems to be that the FDA is more eager to win its fight against opioid addiction in the United States than to win its fight against the questionable dosing of Probuphine. Offering a subdermal implant that has been proven to be very safe in large clinical trials and will be approved under a REMS seems to be a very favorable bet, which is why the market is leaning towards an approval on the PDUFA goal date of April 30th, 2013 (assuming no extension due to tweaking of the REMS).

On the other hand, the market is not that confident on Probuphine's commercial success. TTNP would likely be trading 200-300% of its current value if the market believed that Probuphine could generate even one tenth of the revenue that Suboxone does.

The product still has dosage issues and may not be practical for most of the physicians treating opioid addiction. Adding to the challenge is the very slow start that the product would have due to the REMS, which would require physicians to train specifically for the installation of Probuphine. This may limit it to a niche market that doesn't provide enough revenue to justify Titan's current valuation.

The Takeaway

The FDA decision on the Probuphine NDA is generally expected to be positive due to the incredible rise in opioid abuse in the United States, and the strong safety profile that the product has built throughout the clinical development phase. The efficacy profile is less certain due to dosage uncertainties, although the biggest challenges for Titan may actually come after FDA approval as the company has to compete with the likes of Suboxone for opioid addiction treatment.

Source: Titan Pharma Approaches Expected FDA Approval