Titan Pharmaceuticals (TTNP) Q2 2014 Results - Earnings Call Transcript

Aug.14.14 | About: Titan Pharmaceuticals, (TTNP)

Titan Pharmaceuticals, Inc. (NASDAQ:TTNP)

Q2 2014 Results Earnings Conference Call

August 13, 2014; 01:00 p.m. ET

Executives

Sunil Bhonsle - President

Dr. Marc Rubin - Executive Chairman

Dr. Kate Glassman-Beebe - Executive Vice President & Chief Development Officer

Brian Crowley - Vice President of Finance

Analysts

Michael Higgins - Highline Research Advisors

David Bautz - Zacks Investment Research

Operator

Thank you for holding and welcome to the Titan Pharmaceuticals, Second 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 for the company’s website starting later today.

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

Sunil Bhonsle

Thank you, Wes, and thank you all for joining us. Welcome to the Titan Pharmaceuticals call to review financial and operational results for the second quarter of 2014.

Before we begin, I wanted to inform you that on August 13 we filed our second quarter 2014 Form 10-Q with the SEC and the press release issued yesterday morning provides a summary of the results and this 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. Kate Glassman-Beebe, our Executive Vice President and Chief Development Officer; and Brian Crowley, our Vice President of Finance.

Before we get into the details of the second 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 result of new information, future events or circumstances or otherwise.

As always, let’s start with an overview from our Executive Chairman, Dr. Marc Rubin. Marc?

Marc Rubin

Thank you, Sunil and thank you to all of you joining us on the call today. On July 21 we were pleased to report enrollment of the first patients in the current Phase 3 trial of Probuphine, Titan’s investigational subdermal implant for the long-term maintenance treatment of opioid dependence.

This study is designed to address key questions posed by the FDA and the complete response letter that we received last year following their review of the original NDA. This marks an important advance in the Probuphine program, as upon successful completion, this trial will pave the way for re-submission at the NDA in late 2015.

To-date our partner Braeburn Pharmaceuticals has been rapidly screening and enrolling patients in the clinical trial and we anticipate the study will be completed by the middle of 2015. In just a moment Dr. Glassman-Beebe will provide additional details on the study, especially with respect to patient selection and enrollment.

As you are aware, the opioid addiction epidemic shows no signs of abating and unfortunately has been increasing in severity. New treatments for opioid dependants that are safe and effective are critically needed for patients, their families and healthcare providers now more than ever.

Buprenorphine, an approved agent for the treatment of opioid dependence and the drug used in Probuphine is currently available in the form of daily dosed sub-lingual formulations, with annual sales of approximately $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 dependants to provide continuous around the clock levels of Buprenorphine for six months, with the potential to reduce abuse and diversion and accidental ingestion and overdose in children, as well as other at risk populations.

With the Probuphine program now steadily advancing, Titan is actively working towards expanding our ProNeura product pipeline. The ProNeura drug delivery platform, which is at the core of Probuphine of course has the potential to be applied in the development of treating select, chronic diseases, for which maintaining consistent blood levels of the medication over long periods of time, offer potential benefits to patients through improving medical outcomes.

Most immediately we’ve begun making plans for the development of a ProNeura platform based product for Parkinson’s disease, a potentially ideal disease for the application of our ProNeura technology.

Of note; during the second quarter Titan received a notice of allowance from the U.S. patent and trademark office for a patent application covering the sustained release of Dopmine Agonists, utilizing the ProNeura platform. The patent term is expected to run at least through 2024 and Dr. Glassman-Beebe will provide further details on the potential utility of ProNeura for Parkinson’s disease in just a few minutes.

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

And with that, I will now pass the ball back to Sunil to review the financial results of the first quarter of 2014. Sunil.

Sunil Bhonsle

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

So for the second quarter financial results, Titan generated total revenue in the second quarter of 2014 of approximately $0.9 million compared with about $2.2 million in the second quarter of 2013.

The revenue earned during the quarters ended June 30, 2014 and last year reflects the amortization of the upfront license fee received from development and commercialization partner, Braeburn Pharmaceuticals in December 2012.

Our total operating expenses for the quarter ended June 30 were approximately $1.5 million compared with about $2.5 million in the same quarter in 2013. These expenses consisted primarily of research and development expenses of about $0.7 million this year, compared with approximately $1.8 million in the second quarter of 2013, a decrease of about $1.1 million or 61%.

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 New Drug Application for Probuphine with the U.S. FDA. Just as a reminder, these expenses now are born by Braeburn Pharmaceuticals.

Our general and administrative expenses for the second quarter of 2014 remained relatively flat compared with the same period in 2013, with Titan reporting approximately $0.7 million in G&A expenses in both the periods.

Net other expense for the second quarter of 2014 was approximately $0.3 million, which was primarily related to non-cash losses on changes in the fair value of warrants. This, compared with net other income of approximately $5.4 million in the same quarter of 2013, which was primarily related to non-cash gains on the changes in the fair value of warrants.

Net loss for the second quarter of this year was approximately $0.8 million or about $0.01 per share, compared with net income of about $5.1 million or approximately $0.06 per share in the same quarter in 2013. At June 30, 2014, Titan had cash of about $8.9 million and we believe that this working capital is sufficient to fund planned operations into June 2015.

These financial results were as expected and this quarter was a very positive one for Titan. We are pleased with the progress Braeburn is making in enrolling patients in the Phase 3 clinical trial of Probuphine and importantly, we are very enthusiastic about embarking on our development program in the area of Parkinson’s disease and about the broader 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. Glassman-Beebe. Kate.

Dr. Kate Glassman-Beebe

Thank you Sunil and hello everyone. As Marc mentioned earlier, enrollment for the new clinical study of Probuphine is progressing very well. As we announced previously, the 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 who are receiving maintenance treatment with an improved sublingual formulation containing Buprenorphine at a daily doses of 8 milligrams or less. Patients will be randomized to receive either four Probuphine implants or to continue their daily sublingual Buprenorphine therapy.

Now 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 sublingual Buprenorphine pill 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.

Responder status will be based on an FDA agreed upon clinical algorithm, based on urine testing for opioid use, together with patient self-reported 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 of note, all participants will receive active treatment during the study.

An investigator meeting was conducted by Braeburn and Titan in June to review the clinical study procedures, including the special training for implant insertion and removal. We expect a total of 20 sites in this study and more than two-thirds of these are already activated.

As we announced previously, enrollment started in mid-July and at this point almost 20% of the patients have already enrolled in the first few weeks of the study. We continue to support Braeburn in all study related efforts and are very encouraged by their progress to-date.

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

In June we held several meetings with potential partners at the BIO International Convention. Though these conversations were initial in scope, we’re encouraged by the positive response to the program and we intend to continue many of these discussions as we seek new business partners.

As mentioned, we have also been focusing our efforts on other potential products employing our proprietary, ProNeura drug delivery platform. We’ve been 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 next year.

In 2012, Titan successfully completed a non-clinical investigation into the feasibility of a long-term, around-the-clock, non-fluctuating, dopamine agonists treatment for Parkinson’s disease. About 1.5 million people in the U.S. suffer from Parkinson’s disease and that number is unfortunately expected to double by 2030 due to the aging population according to the Parkinson’s disease foundation.

Dopamine agonists therapy, which is the current standard of care is designed to replace dopamine in the brain in early stage Parkinson’s patient, but it typically stops working efficiently after several years and can trigger serious side effects. About a third of treated patients develop motor response fluctuations and/or drug induced dyskinesias within only two years of treatment, increasing to over about 50% within three to five years of treatment.

Clinical and non-clinical research indicates that these motor side effects may arise from the pulsatile dopaminergic stimulation resulting from current oral treatment modality. Continuous dopaminergic stimulation by subcutaneous infusion has been shown to palliate these motor complications and to also delay or prevent the onset of dyskinesias. So consequently we believe that the ProNeura drug delivery system could be very effective in Parkinson disease.

We commenced work on optimizing an implant formulation of ropinirole, a widely used Dopamine Agonist therapy, which will be used for generating the necessary data for the IND. And at the same time we are working with key scientific and regulatory advisors to design an appropriate proof of concept clinical study, so that we can plan for a pre-IND meeting with the FDA in late 2014 or the first quarter of 2015.

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

Now, I’ll turn the call back to Sunil. Sunil.

Sunil Bhonsle

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

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) We will take our first question from Michael Higgins from Highline Research Advisors.

Michael Higgins - Highline Research Advisors

Thank you operator. Congrats on the quarter guys.

Sunil Bhonsle

Hey, thanks Michael. How are you?

Dr. Kate Glassman-Beebe

Thanks Michael.

Michael Higgins - Highline Research Advisors

If I could start of with some questions on the quarter in particular, and it looks like your burn is around the $6 million rate. You got almost $9 million on books. Your guidance goes till June of next year. Any increases in incentives we should look for over the next four quarters and if you could call out what that may be.

Sunil Bhonsle

Sure. When you look at this quarter, not every quarter obviously the expense are identical. There is some variations between the quarters and the G&A, but most importantly as we start our program for Parkinson’s disease, that is going to require some non-clinical studies that we will be conducting as we prepare the data for the IND and that’s essentially where the additional expenses will be going.

Michael Higgins - Highline Research Advisors

Okay, fair enough. And then second, I have a handful of questions. I’ll probably stop part way through and let others join in here. But the second one I think it’s at the top of the mind for most, is the enrolment. I think what you had mentioned – if I can just go over this and two thirds of the sites are activated. 20% enrolled of the 180 patients in the first few weeks.

Any additional feedback you can provide us and also as long as I am at it, how much awareness do you have of the enrolment? Is it on a daily basis? Do you know it from a particular site of what kind of feedback do you get as the trial progresses.

Dr. Kate Glassman-Beebe

Hi Michael, this is Kate. Great question and nice to hear from you. We think that we are on track as we have previously announced, to finish enrolment by the end of this year and the current enrolment pace would certainly suggest that we are in a position to be able to attain that, but its still a little bit too early to really make definitive promises there.

We are – as I said earlier, we are working very closely with Braeburn and also with our Contract Research Organization partner PPD International. We have regular contact with them and I can tell you that we are keeping our finger on the pulse of this one very closely. So I hope that answers that question.

Michael Higgins - Highline Research Advisors

You know from them if any particular sites is opened or not or are they just giving you an overall feedback as for the number of sites or the number of enrolment of a particular site.

Dr. Kate Glassman-Beebe

We are aware of all the study details very similar to fashion which we managed the other studies in the Phase 3 program.

Michael Higgins - Highline Research Advisors

Okay, fair enough. Looking ahead here a bit, has Braeburn given you any feedback and the amounts of times they would need between the approval and launch? Have they given any feedback on the number of reps? We know they are committed to spending $75 million on the launch. They are very focused here, but anything you can share as we look ahead that far out.

Dr. Kate Glassman-Beebe

I think it’s too early for them to know and for them to have shared that with us and we really haven’t had those discussion at this point. We’re really very focused, all hands on deck. We are just getting the study done.

Michael Higgins - Highline Research Advisors

Okay. Well, on Braeburn, do you know if they have initiated any investigator sponsor study with Probuphine or any plans along the way to do additional pilot studies?

Dr. Kate Glassman-Beebe

I’m not aware of any investigator-initiated studies. It would be highly unusual for them to do that in a per-approval environment. I’m not aware of any Michael.

Michael Higgins - Highline Research Advisors

Okay and the last one before I jump back in. There is an increasing level of feedback from the international organizations that track opioid production and sales. It looks like Europe is “training to be more like the U.S.” when it comes to opioid consumption trend there that maybe a decade or so behind us.

Any progress you can report for us besides that what you’ve mentioned in your BIO meetings. Any discussions with European regulatory authorities at this point or are you are at a stage where you’re talking with the thought leaders ahead of that, and any outlook you can provide us as to when you may meet with European authorities will be helpful.

Dr. Kate Glassman-Beebe

Yes. As I mentioned, we met with a number of European companies at the BIO International Convention in San Diego June and there is a high degree of interest in that opioid space, opioid dependency space in Europe. But its still early days and as you know, Europe kind of shuts down two months (ph) in the summer, so those discusses will be on going shortly.

In terms of the regulatory strategy, we are at the stage now where we are talking to key opinion leaders, we are talking to experts in the European regulatory strategy arena and we are putting together our plan for going to European Health Authorities this fall.

Sunil Bhonsle

Okay, thank you. Well, it’s just turning to (inaudible) of the call and there’s a little disagreement that Europe is heading where America is. I’m not seeing that in a way for us to comment here or there, but those attract the consumption levels are reporting it, but it doesn’t seem to be well know phenomenon at this point. All right. I’ll jump back in the queue. That’s all I wanted to hear, thanks guys.

Dr. Kate Glassman-Beebe

Thanks Michael.

Sunil Bhonsle

Thanks Michael.

Operator

We’ll take our next question from Jason Napodano from Zacks Investment Research.

David Bautz - Zacks Investment Research

Hi, this is David. I‘m dialing-in for Jason today.

Sunil Bhonsle

Hi David. How are you?

Dr. Kate Glassman-Beebe

Hi David.

Sunil Bhonsle

I know Jason was going to be on the flight or somewhere I think today.

David Bautz - Zacks Investment Research

That is correct, yes. I just have a quick question for you about future projects in regards to vindication, will be the company be doing early studies there on your own or will you only be taking up – we are going to have a new indication if a partnership is already in place first.

Sunil Bhonsle

Yes. In this setting David, clearly with the Parkinson’s program that we have stated, our intention is to do the kind of proof of concept study. So the initial study ourselves, we want to establish the clinical benefit from this study before we look to see partners and so on. Obviously understand the value of it really can be established at that point. So that’s out goal.

David Bautz - Zacks Investment Research

Okay, great. Thanks for taking the question.

Sunil Bhonsle

Sure. No problem.

Dr. Kate Glassman-Beebe

Thanks David.

Operator

And now we have a follow up questions from Michael Higgins from Highline Research Advisors.

Michael Higgins - Highline Research Advisors

Hello again, guys. I’ll jump back in here.

Sunil Bhonsle

Hi Michael.

Dr. Kate Glassman-Beebe

Hi Michael.

Michael Higgins - Highline Research Advisors

When would you learn about other medical conditions that you are planning to develop with ProNeura. If you read the patent, because I have it. It describes the wide variety of uses. The release technology is very intricate, very (inaudible). So there is a wide range, but when do we start to hear more from you about more specific programs or types of drugs, proteins, etcetera, that you can put in.

Sunil Bhonsle

Sure. I think the best way to address that clearly for us right now, and with the limited resources we have to look at moving programs forward at a pace that kind of matches what our resources are and with that in mind, Parkinson’s we feel is the best one to move forward right now.

We have done experiments. Very preliminary experiments with other compounds and we believe there are other chronic diseases where this technology will be very beneficial. But I expect as we progress into next year, we will start digging future and doing some additional experiments and reporting on those. So I would expect it to be starting in the next year.

Michael Higgins - Highline Research Advisors

Okay, all right. You are certainly not alone where companies want to watch the stem, but under their high end you have a lot of book side with the technology platform.

And then last one from me; you’ve had a lot of interaction with SGA in the last 18 months or so, almost 24 months I guess now at this point, maybe September and its tough during that time to have a constant dialog with investors.

Now that you are in this Phase 3, would that change any plans to go out with the investors on a more regular basis, present at industry conferences, anything like that where retail guys maybe be interested as well. Any change in the outreach plans for the next six months or so.

Sunil Bhonsle

Absolutely Michael. I mean I think as we’ve indicated previously, we wanted to get the Probuphine program up and reestablished, so that there is a clear timeline for that and its outcomes. And now we want to make sure everyone is fully conversant with Titan and understands that potential of both Probuphine and especially the ProNeura technology platform, which can generate several products in this setting.

And we have already started talking to investors, doing an outreach program to try and get the word out as much as we can and we will indeed continue to do that, including presenting in the key conferences.

Michael Higgins - Highline Research Advisors

Okay, very good. Well, thanks for the level of detail on 814 and continue with success. Thanks.

Sunil Bhonsle

Thank you very much Michael. I appreciate it.

Dr. Kate Glassman-Beebe

Thanks Michael.

Operator

It appears we have no further questions at this time. Mr. Bhonsle, I’d like to turn the conference back to you for any addition or closing remarks.

Sunil Bhonsle

Thank you Wes. I thank you all for participating in this call. We are enthusiastic about the progress we have made this year in our Probuphine program and are condiment that if approved, Probuphine will be a transformative new treatment for opioid dependants.

We are equally excited about the prospects for our ProNeura drug delivery platform, which we believe holds great promise for patients suffering from chronic diseases that may require a consistent blood levels of medication to maintain and improve health.

As always, we appreciate your ongoing support and look forward to speaking to you again soon. Thank you.

Operator

And that concludes today’s call. Thank you for your participation.

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