Titan Pharmaceuticals (TTNP) Q1 2014 Results - Earnings Call Transcript

May.15.14 | About: Titan Pharmaceuticals, (TTNP)

Titan Pharmaceuticals, Inc. (NASDAQ:TTNP)

Q1 2014 Earnings Conference Call

May 15, 2014 1:00 PM ET


Sunil Bhonsle – President, Secretary and Director

Marc Rubin – Executive Chairman

Katherine L. Glassman-Beebe – Chief Development Officer and Executive Vice President


Jason Napodano – Zacks Investment Research, Inc.

Francesco Pellegrino – Sidoti & Co. LLC


Welcome to the Titan Pharmaceuticals First Quarter 2014 Financial Results Conference Call. At this time all participants are in a listen-only mode. There will be a question-and-answer session following today’s remarks. Please be advised that this call is being taped at the company’s request and will be archived on the company’s website starting later today.

At this time I would like to turn the call over to you Sunil Bhonsle, President of Titan Pharmaceuticals. Please go ahead.

Sunil Bhonsle

Thank you, Matt, and thank you all for joining us. Welcome to the Titan Pharmaceuticals call to review financial and operational results for the first quarter of 2014. Before we begin, I wanted to inform you that on Wednesday May 14, 2014. We filed our Form 10-Q with the SEC. And the press release issued yesterday provides the summary of the results and can be found on our website at titanpharm.com.

Joining me on the call today from Titan are Dr. Marc Rubin, our Executive Chairman; Dr. Glassman-Beebe, Executive Vice President and Chief Development Officer; and Brian Crowley, our Vice President of Finance.

Before we get into the details of the first quarter and provide an update on the company, I want to remind everyone that certain matters we will discuss today, other than historical information, consist 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 the results of new information, future events, or circumstances, or otherwise.

Having said that, let’s start with an overview from our Executive Chairman, Dr. Marc Rubin. Marc?

Marc Rubin

Thank you, Sunil. Hello to everyone and thank you all for joining us today. As many of you know the Titan Braeburn team has been interacting with the U.S. Food and Drug Administration, and it’s been successful in establishing a path forward for Probuphine, which as you know is Titan’s investigational subdermal implant for long-term maintenance treatment of opioid dependence.

During the first quarter we continued to work on and focus on this critical goal. And on April 30, we were pleased to announce that the FDA have provided clear guidance on the full study protocol of Probuphine, which allows Titan and its partner Braeburn Pharmaceuticals to begin patient enrollment in the new study around mid-year.

We anticipate the study will be completed by the middle of 2015 and will pave the way for the resubmission of an NDA in 2015. I will let Dr. Glassman-Beebe, to provide details on the preparations that are currently underway to begin enrollment in the trial as well as additional details of the trial later in the call. The Titan board is very pleased with the progress that the company has made in advancing Probuphine to date.

The opioid addiction epidemic continues to grow and new treatments that are safe and effective are desperately needed for patients, their families and health care providers. Buprenorphine which is an approved agent for the treatment of opioid dependence and the drug used in Probuphine is currently available as daily dosed sublingual formulations that have sales of about $1.5 billion in the United States.

If approved for the long-term maintenance treatment of opioid dependence in adults, Probuphine would be the first and only commercialized treatment for opioid dependence to provide continuous, round-the-clock blood levels of buprenorphine for six months. The potential to reduce of use and diversion and accidental ingestion and over dosing children and other adverse populations.

Importantly with the Probuphine program now on a solid path forward and the ongoing support from our Probuphine development and commercial partner Braeburn Pharmaceuticals. The board and Titan management are a highly enthusiastic about further delivering on the value of Titan’s proprietary ProNeura drug delivery platform.

ProNeura which was at the core of Probuphine has the potential to be used in developing products for treating multiple chronic conditions. Particularly those for which maintaining consistent blood levels of a medication may benefit patients and improve medical outcome. Most immediately, we will be moving forward with ProNeura for Parkinson’s disease and Dr. Glassman-Beebe will provide further details on that program shortly.

As always we look forward to keeping you informed of Probuphine’s progress with the regulatory process and to providing you additional insights and the potential use of the ProNeura platform for Parkinson’s disease and for other programs.

And I will now turn the call back to Sunil to review the financial results of the first quarter 2014. Sunil?

Sunil Bhonsle

Thank you, Marc. Next I will provide you with our first quarter 2014 financial results. And then Dr. Glassman-Beebe will update you on the development activities during the first quarter and additional development plans for the coming year. To conclude, we will open up the call for your questions for the Titan management team.

Now for the first quarter financial numbers. Titan generated total revenue in the first quarter of $0.9 million compared with approximately $5.2 million in the first quarter of 2013. First quarter 2014 revenues consisted of license revenue of $0.9 million, compared with license revenue of approximately $3.8 million for first quarter of 2013.

License revenue in both quarters reflects the amortization of the upfront license fee received from development and commercialization partner Braeburn Pharmaceuticals in December of 2012. Titan did not recognize any Fanapt royalty revenues during the quarter ended March 31, 2014, while the net royalty revenue during the first quarter in 2013 was $1.4 million. Beginning in April of 2013, Titan discontinued recognizing Fanapt royalty revenues, as all royalties are being paid to third parties.

Total operating expenses for the quarter ended March 31, 2014 were approximately $1.8 million, compared with approximately $5 million in the same quarter in 2013. These expenses consisted primarily of research and development expenses of about $1 million, compared with approximately $3.9 million in the first quarter of last year, a decrease of $2.9 million or 74%.

The decrease in R&D costs was due to lower external R&D expenses related to the Probuphine product development program and preparation and review of the NDA for Probuphine with the FDA. General and administrative expenses for the first quarter of 2014 were approximately $0.9 million, compared with about $1.1 million for the same period in 2013, a small decrease of about $0.2 million, or 18%.

Net other expense for the first quarter of 2014 was about $0.9 million, which was primarily related to non-cash losses on changes in the fair value of warrants. Net other income for the first quarter of 2013 was about $5.8 million, consisting primarily of about $9.0 million and other income generated by the termination of Titan’s royalty repurchase agreement with Deerfield, and about $1.9 million gain resulting from the settlement of indebtedness to Deerfield from the exercise of all of the Deerfield warrants, which amounts were offset in part by interest expense of approximately $1.6 million related to the Deerfield loans, non-cash losses on changes in the fair value of warrants of approximately $3 million and about $0.5 million in other expenses related to unamortized transaction fees related to the initial Deerfield debt transaction.

Net loss for the first quarter of 2014 was about $1.8 million, or about $0.02 per share, compared with net income of about $6 million, or about $0.08 per share in the same quarter in 2013. At March 31, 2014, Titan had cash of approximately $10.2 million. Titan believes that its working capital at present is sufficient to fund planned operations into April 2015. These financial results were as expected and this quarter was a very positive one for Titan.

We are pleased that the discussions with the FDA on Probuphine have provided a clear path forward for this important program and Braeburn is proceeding expeditiously, to initiate the clinical study. We are also enthusiastic about our work in the area of Parkinson’s disease. And about the broad potential for our ProNeura drug delivery platform.

Now to provide you an update of recent development activities let me turn the call over to Dr. Kate Glassman-Beebe. Kate?

Katherine L. Glassman-Beebe

Thank you, Sunil, and hello everyone. I am glad to have this opportunity to update you on our progress. As Marc mentioned earlier enrollment for the new clinical study of Probuphine will commence in the next few months, preparations are currently underway to qualify investigator site, obtain site Institutional Review Board approval and to train clinicians in all study procedures. We continue to support Braeburn in these efforts and are encouraged by the support and very positive feedback from our potential investigators.

As we announced during the quarter, this study is a randomized, double blind, double dummy design that will enroll approximately 180 patients into two parallel treatment arms. Participants will be clinically stable patients through our receiving maintenance treatment with an improved sublingual formulation containing Buprenorphine at daily doses of 8 milligrams or less. Patients will be randomized to receive either four Probuphine implants or to continue the daily sublingual Buprenorphine therapy.

To enable the double blind design, those receiving Probuphine implants will also be required to take daily placebo sublingual pills, while those continuing on their stable dose of Buprenorphine sublingual pills will be required to be treated with four placebo implants. The patients are expected to be treated for six months, and the primary analysis will be a non-inferiority comparison of responders in the two treatment arms.

Now responder status will be based on and agreed upon clinical algorithm which is based on urine testing for opioid use together with patient self-reported opioid use. We believe the study design is robust and will provide a well controlled evaluation of Probuphine compared with the current standard of care in these stable maintenance patients, and if note all participations will receive active treatment during the study.

In addition to these important U.S. efforts, we are also evaluating opportunities to regulatory approval and commercialization of Probuphine outside of North America. Our efforts include speaking with key opinion leaders, regulatory consultants and regional pharmaceutical companies in countries where Probuphine products or Buprenorphine products are used with the treatment of opioid dependence and also chronic pain with the goal of establishing one or more partnerships in these countries.

We are also focusing our efforts on other potential products employing our preparatory ProNeura drug delivery platform. Within the next several months, we will be consulting closely with scientific advisors and key opinion leaders and seeking regulatory guidance on the submission of an investigational new drug application in the U.S. for ProNeura for Parkinson’s disease some time next year.

As some of you may know in 2012, Titan successfully completed a pre-clinical investigation into the feasibility of a long-term round-the-clock non-fluctuating dopamine agonists treatment for Parkinson’s disease. We believe that the ProNeura drug delivery system to be very effective for Parkinson’s disease and other series chronic diseases for which maintaining stable, round-the-clock blood levels of given medication may benefit patients. Titan has been issued patents covering certain dopamine agonist implants in Europe, Japan, Australia, Canada, South Korea, Mexico, New Zealand, South Africa, and Hong Kong, while prosecution or patent applications continues in the U.S., Israel, India and China.

I look forward to providing periodic updates on the progress of the Probuphine clinical study and other ProNeura development programs.

And now I’ll turn the call back over to Sunil. Sunil?

Sunil Bhonsle

Thank you, Kate. This brings us to the end of our formal remarks, and now Matt, we are ready to take questions from the call participants.

Question-and-Answer Session

Thank you. (Operator Instructions) And at this time we’ll take a question from Jason Napodano of Zacks. Please go ahead.

Jason Napodano – Zacks Investment Research, Inc.

Hi guys, thanks for taking the question.

Sunil Bhonsle

Hi, Jason. How are you?

Katherine L. Glassman-Beebe

Hi, Jason.

Jason Napodano – Zacks Investment Research, Inc.

Doing well, thanks. And just curious of the confirmatory Phase 3 study that’s going to start shortly, the endpoint you mentioned the algorithm of urine and self-reported positive, is that pretty much the same endpoint or pretty much the same algorithm that you guys used for the two previous Phase 3 studies or is there a difference there?

Katherine L. Glassman-Beebe

Well, if you recall the other Phase 3 studies did not rely on a responder definition for the primary endpoint, so this is slightly different than that however it’s the same, and then it’s based on urine toxicology results together with patient self report. So that part of the algorithm is the same, but it is a responder status.

Jason Napodano – Zacks Investment Research, Inc.

Okay, in terms of your responsibilities are deliverables or cost associated with that program, can you guys provide any color on what you guys are doing in terms of helping Braeburn get prepared to run that study and then while the study is running what kind of support you guys are providing?

Sunil Bhonsle

Sure, Jason as we mentioned the primary lead in this study is Braeburn Pharmaceuticals and they are involved with a lot of the details of establishing and on the CRO agreements the entire process of managing the clinical study. Now in that Kate and her team fully involved as part of the Braeburn team to make sure that all of the knowledge and information and the activities that need to be done are fully supported. In the study as we mentioned previously Braeburn is paying for the clinical study and as (indiscernible).

Jason Napodano – Zacks Investment Research, Inc.

In terms of your guidance, in terms of the cash balance going to April 2015 it’s interesting to hear you guys talking about Probuphine outside the U.S. or potentially starting filing in IND for ProNeura in Parkinson’s disease next year, it makes me wonder if there is opportunities for non-dilutive cash in terms of either out licensing or striking the deal outside the U.S. for Probuphine or finding somebody. I know it’s early with PD and ProNeura, but finding somebody that’s willing to fund that development and get you guys some non-dilutive cash before that April 15 runway.

Sunil Bhonsle

Absolutely, Jason that would be primary reasons to start looking at countries outside of North America is twofold, and one is of course we think the package of information that’s already there and with the clinical study that will be done now fully defined. It puts us in a good position to establish the interest of other companies in different countries based on the use of Probuphine products in different parts of the world, and so we’re going to actively pursue that. And the second reason is obviously getting non-dilutive capital is also very important for us and so we wanted to explore every opportunity towards that.

Jason Napodano – Zacks Investment Research, Inc.

Or any of the countries that you’re looking at do any of them recognized U.S. approval for essentially pre-sale or are there going to be additional trials that are necessary for example if you targeting Europe or they going to require another study.

Sunil Bhonsle

It’s a little premature to really establish the exact route needed and we’re in the early stages when we had spoken with European regulatory agencies last that was five, six years ago. And so, we really need to update that now and see what would be necessary. At that time, the indication was that the overall program we were doing for the U.S. would provide sufficient information. But we have to now go back and update that, and as you know some of them will look at what the FDA is considering and some may look at the data on its own we just don’t know yet.

Jason Napodano – Zacks Investment Research, Inc.

Got it, okay. All right guys, thanks for taking the questions.

Sunil Bhonsle

Sure, Jason. Thanks very much.

Katherine L. Glassman-Beebe

Thank you, Jason.


(Operator Instructions) At this time we’ll take a question from Francesco Pellegrino with Sidoti.

Francesco Pellegrino – Sidoti & Co. LLC

Hi, guys. Thanks for taking my question. Can you – just one question can you elaborate on the efforts of the company during these trials, in regards to the training of the Doctors on insertion and removal of the implant, is that’s going to be paid down during the trials or if its something that can be expiring after the trial. It seems as if this is the – a major concern of the FDA and its complete response. I was just wondering, if you could just elaborate on the companies plan going forward. (Indiscernible) benefit rather unique variable?

Katherine L. Glassman-Beebe

Yeah, absolutely. Hi, this is Dr. Glassman-Beebe, and, just to let you know that we – as we did in our earlier Phase 3 studies, we provide detailed training to the implant clinicians as part of the investigator meeting, which is a key activity that happens right before our patients start to be enrolled in the study. So, we’re in the process of planning that with our partners at Braeburn and that training will be conducted and will be comprised part of what eventually will be our risk evaluation, mitigation plan that will be resubmitted with the NDA.

Francesco Pellegrino – Sidoti & Co. LLC

Okay, that’s really – I appreciate your time in regard to the question, it seems as if nothing has really changed in terms of what’s been disclosed regarding the trial. So, I was just really interested in the removal and insertion process? So, I appreciate your time today.

Katherine L. Glassman-Beebe

Thanks for your question.

Francesco Pellegrino – Sidoti & Co. LLC

Thanks again.


And that will conclude the question-and-answer session. At this time I’ll turn things over to management for additional or closing remarks.

Sunil Bhonsle

Thank you everyone for participating in this call. We remain confident in our belief, that Probuphine if approved will be a transformative new treatment for opioid dependence, and that our ProNeura drug delivery platform holds great promise for patients suffering from chronic diseases that may require consistent blood levels of medication to maintain an improved health. We as always appreciate your ongoing support and thank you for joining us today.


And this does conclude today’s conference call. Thank you for your participation. You may now disconnect.

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