Titan Pharmaceuticals Inc. (NASDAQ:TTNP)
Q1 2013 Earnings Conference Call
May 16, 2013 13:00 pm ET
Sunil Bhonsle - President
Marc Rubin - Executive Chairman
Thank you for holding and welcome to the Titan Pharmaceuticals First Quarter 2013 Financial Results Conference Call. At this time all participants are in a listen only mode. Please be advised that this call is being taped to the company’s request and will be archived on the company’s website starting later today.
At this time, I’d like to turn the call over to Sunil Bhonsle, President. Please go ahead sir.
Thank you, Adra. And thank you all for joining us. Welcome to the Titan Pharmaceuticals call to review financial and operational results for the first quarter of 2013.
Before we begin, I wanted to inform you that we timely filed our Form 10-Q with the SEC yesterday detailing our first quarter financial results. And I just wanted to remind you that since we are no longer an accelerated filer with the SEC, we get 45 days after the end of the quarter. We know that the OTC Bulletin Board mistakenly changed our symbol and we have been advised that today’s daily list will reflect the removal of the E by tomorrow.
The press release issued yesterday provides a summary of the results and can be found on our website at titanpharm.com. On the call today from Titan, we have Dr. Marc Rubin, our Executive Chairman.
Before we go into the details of the first quarter performance and an update on the company, I want to remind everyone, that certain matters we will discuss today, other than historical information, consists of forward-looking statements relating to among other things, our expectations concerning our financial results, available cash, development programs, partnering arrangements, regulatory strategies and business plans.
The forward-looking statements are not guarantees of future performance and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties are described in our Annual Report on Form 10-K filed with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. We undertake no obligation to update or revise the information provided in this call whether as a results of new information, future events, or circumstances or otherwise.
Having said that let me also note that we will not be hosting a question-and-answer session at the conclusion of today’s call. We know this is a departure from our normal practice but it is necessary to accommodate the rigorous process we are following. We fully understand that you want to know as much detail as possible but we must balance this with an awareness of the regulatory requirements and the competitive environment as well.
Please note that providing limited information is in no way reflective of a lack of preparation on our part or our desire to share our strategy with you. Instead it is due to the fact that we all operate in a competitive environment and there are details that we are unable to share at this point given our on going process with the FDA about the New Drug Application for Probuphine.
Many of you have reached out to us and we truly appreciate your support, encouragement and the questions you have posed. Let me assure you that we are proceeding in the most expeditious and thorough manner and that we will provide all of the information and updates that we are able to during the remarks portion of the call.
The Titan team is committed to providing you with ongoing updates and additional details as soon as you are able to do so.
So let’s start with an overview from our Executive Chairman Dr. Marc Rubin. Marc?
Thank you, Sunil and hello to all thank you for joining us this afternoon. The first quarter was obviously a very critical time for Titan. We participated and meeting with the FDA Psychopharmacologic Drugs Advisory Committee or PDAC. And their the Titan team along with Braeburn Pharmaceuticals our partner for the U.S. and Canadian commercialization of Probuphine along with a host of experts discuss Probuphine and its potential utility and benefits as an important new maintenance treatment for opioid dependence.
In terms of outcomes of the PDAC meeting, there was more clarity requested around the risk evaluation and mitigation strategy or REMS as a program we’re still in discussion with the FDA. The largest portion of the committee members abstained on that vote 6 abstentions with 5 positive votes and 4 negative votes. However, the committee voted strongly in favor of the effectiveness with 10 positive and 5 negative votes and safety with 12 positive and 2 negative votes and 1 abstention of Probuphine.
And most importantly following a discussion on the risk benefit profile of Probuphine, the PDAC members voted strongly for approval, 10 positive votes in favor, 4 negative and 1 abstentions.
Given the FDAs priority review designation for our Probuphine. New Drug Application and the PDAC member strong support for Probuphine approval. We were both extremely surprised and disappointed by the complete response letter, we received. This happened on April 30, as you know. The CRL requested additional data supporting the efficacy of Probuphine and question the clinical benefit to patients at the testing dose.
Titan remains committed to addressing the concerns raised by the FDA and the CRL and we are in active discussions with our commercialization partner Braeburn Pharmaceuticals as we move forward.
We believe our clinical development program for Probuphine was well-thought out and as the 505(b)(2) submission met the criteria agreed upon with the FDA demonstrating safe and effective treatment with Probuphine. Our belief was bolstered by the strong support we received from PDAC in a favor of approval of the product.
We are systematically evaluating the options available to us as we prepare to address the issues in the CRL. And we are all working closely with regulatory council and the team of expert advisors to address the FDAs response to our Probuphine NDA. Well, this is a sequential process with a timeframe that is not always predictable. Titan has taken the first steps in addressing the CRL and we will determine all possible next steps including a possible appeals process following the dialogue with the FDA.
We are diligently preparing our response to the issues raised by the FDA using existing data from the development program and we will respond to the FDA as the appropriate time. We also will be requesting a meeting with the FDA to discuss Titan’s response and clarification on the regulatory path forward for Probuphine.
The Board fully supports the strategy and we all look forward to keeping you updated and providing you more details when available and when appropriate. Given the nationally recognized growing and devastating opioid dependence epidemic, there is a critical need for safe and effective treatments that reduce the likelihood of abuse diversion and accidental pediatric exposure. Titan remains unwavered in our goal which is to make Probuphine available to those clinicians, patients and families that need it. We thank you for your continued support.
And now for more insights on the first quarter financial results, I will now pass the call back to Sunil. Sunil?
Thank you, Marc.
Next I will provide you with our first quarter financial results. The net income for the quarter ended March 31 was approximately $6 million or about $0.08 per share compared to a net loss of about $5.2 million or $0.09 per share for the comparable period in 2012.
Net income in the quarter consisted of licensing revenue of approximately $3.8 million resulting from the amortization of the nonrefundable upfront license fee of $15.75 million. This is related to our licensing agreement with Braeburn for the exclusive U.S. and Canadian Commercialization rights for Probuphine, which has you know was announced in December 2012. Probuphine as you k now is in investigational long acting subdermal implant formulation of buprenorphine for the maintenance treatment of adult patients with opioid dependence.
Titan also generated royalty revenues on the sales of Fanapt during the three months period ended March 31, 2013 of approximately $1.4 million compared to about $1.2 million for the comparable period in 2012. The royalty revenues will be paid to Deerfield in accordance with the terms of the agreements entered into in 2011. The company generated no grant revenues during the quarter compared to about $42,000 for the period in 2012.
Total operating expenses for the quarter were about $5 million compared with approximately $4.8 million for 2012 and consisted largely of research and development expenses of about $3.9 million compared to approximately $3.1 million for 2012. This increase in R&D costs as you can imagine was primarily associated with an increase in external R&D expenses related to the review of the New Drug Application for Probuphine with the FDA and especially included the preparation for the March 21, 2013 meeting of the Psychopharmacologic Drugs Advisory Committee.
General and administrative expenses for the quarter were approximately $1.1 million compared to approximately $1.7 million in 2012. The decrease in G&A expenses is primarily related to decrease in non-cash stock compensation of about $0.7 million. Net other income for the three months period ended March 31 was approximately $5.8 million compared to net other expense of about $1.6 million for the comparable period in 2012.
The increase resulted from approximately $9 million of non-cash other income generated by the termination of our royalty repurchase agreement with Deerfield and approximately $1.9 million non-cash gain resulting from the $7.5 million settlement of our indebtedness to Deerfield as a result of Deerfield’s exercise of 6 million warrants. This was offset in part by approximately $3 million related to non-cash losses on changes in the fair value of warrants and approximately $0.5 million of other expense related to unamortized transaction fees from the initial Deerfield debt transaction.
At March 31, 2013, Titan had approximately $17.6 million of cash compared to approximately $18.1 million at December 31, 2012. We believe that our working capital at March 31, is sufficient to fund planned operations through April of 2014 inclusive of estimated expenses associated with the process corresponding to the complete response letter regarding the Probuphine NDA that was received on April 30.
Thank you very much for participating in this call. And we remain confident in our belief that Probuphine has the potential to be a transformative new treatment for opioid dependence.
Lastly, we will keep you informed as we progressed through the regulatory process we must follow. And we fully appreciate your support. Thank you.
And that does conclude today’s conference. Again, thank you for your participation.
[No Q&A Session for this event].
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