Market Analysis: Titan's Probuphine Faces Challenges Ahead

| About: Titan Pharmaceuticals, (TTNP)


I examine the market opportunity for Probuphine.

I expect a slow ramp up in sales.

I see competition from CAM2038 reducing the long-run opportunity for Probuphine.

I am neither long nor short and this article focuses primarily on Probuphine and not the overall viability of Titan Pharmaceuticals as an investment vehicle.

Titan Pharmaceuticals' (NASDAQ:TTNP) Probuphine is a really compelling product for a certain demographic of individuals who are seeking treatment for opioid addiction. This assertion is backed by the fact that it won Popular Science's "Best of What's New" honors. Out of thousands of candidates each year, Popular Science selects 12 of the most transformative technologies. However, even great therapeutics with clear use cases and zero competition have seen sales slow to ramp and my analysis suggests that Probuphine isn't a straightforward winner.

History of Buprenorphine For the Treatment of Opioid Dependence

  • October 2002: The Food and Drug Administration approved Subutex and Suboxone tablets
  • October 9, 2009: The FDA approved a generic version of Subutex.
  • 2010: Suboxone tablets were discontinued and replaced with Suboxone Film.
  • 2011: Subutex was discontinued.
  • February 25, 2013: The FDA approved Suboxone generics.
  • July 6, 2013: Zubsolv sublingual tablets were FDA-approved.
  • November 2014: Bunavail buccal film came to market.
  • May 2016: Probuphine, a buprenorphine under-the-skin implant, was FDA-approved.

Overall Market

The company has stated it believes peak sales of $300 million to $500 million is possible. Overall, you're looking at a potential market of 2 to 4 million individuals, depending upon how you define the market, and the market to treat opioid addiction is around 2 billion in sales. However, the actual market for this drug is smaller due to the use case outlined by the FDA.

The FDA outlined that the ideal candidate for Probuphine is someone who is already stabilized on low doses of Buprenorphine, so this isn't the go-to in the early innings of treatment. Stabilization is likely to be a 90-day process, assuming everything goes exactly as planned. The ideal candidate has to appear self-motivated, has been demonstrating improved psychosocial function, displays low levels of criminality, has adhered to regular clinical visits, and has low rates of positive urine tests.

This is certainly a fairly high hurdle that I think isn't being appreciated by those pushing the bull case. For example, a patient must be adhering to his current medication and be stabilized on it, but this can be difficult because the person has to be fully motivated to take the medication, and even if the individual is motivated, the medication could get lost, stolen, or the individual simply forgets to take it.

Furthermore, it states that a prospective patient needs to be in regular contact with their healthcare professional, ideally via regular monthly visits, and this could be difficult simply for logistical reasons.

I fully expect medical professionals to adhere to the outlined use case because they are currently addressing their patients through Buprenorphine, so it's not a situation where it's either this treatment or nothing and you could potentially get your patient killed. A medical professional has to make sure to only prescribe this to a person whom not only is stabilized, but also appears to be in a mental state where continued sobriety seems possible because otherwise overdose is fairly likely.

The very reason this is a great option for some patients, namely constant stable blood levels of Buprenorphine, is the very same reason it can get a patient killed. An individual chasing a high will have to flood their system with dangerously high levels of opioids in order to feel the effects, and this is how you run the risk of overdose.

Clearly, the stipulations outlined for the use case cuts into the potential market, but I think a prospective investor should also consider the human element. There is going be a percentage of professionals and patients that will not want to transfer to Probuphine because, by definition of the use case, Buprenorphine is working just fine and Probuphine is an invasive treatment.

Clearly, opioid addiction is a life or death matter, but this point should be taken into account. I think it's perfectly reasonable that either the medical professional or the patient won't want to fix something that isn't broken given that Probuphine is an invasive option. Furthermore, the FDA already shot down this treatment once. I think that it was a mistake of the FDA to do so, but it was primarily due to safety concerns over the invasive nature of the therapeutic. Furthermore, the FDA is requiring post-marketing studies in order to further study safety concerns like implant migration.

Expect a Slow Rollout

I think the bulls are giving to much credit to Braeburn's ability to drive demand. A hurdle to overcome right out the gate is the fact that only medical professionals who have completed the Probuphine Risk Evaluation Mitigation Strategy program can prescribe, insert, and remove Probuphine. Braeburn has done a fairly good job with their initial thrust of getting 2,400 medical professionals certified, but they have a ways to go, and it doesn't appear that Braeburn is pushing as hard as they once were.

For example, their end of the year goal was to have 4,000 medical professionals certified but the number hasn't changed from Q2 to Q3, and it would appear that they didn't hit their number. Titan will say that this is due to Braeburn taking a different approach. Braeburn's initial push involved large sessions in various cities, but now they're only training "select groups". This change in strategy occurred, from what I can glean from the conference calls, because Braeburn realized that they were wasting time and money with their initial approach. This makes me think that Braeburn realized that there is a swath of medical professionals who are certified, but will likely not drive much business.

The 2,400 professionals are pretty well spread out across the country with a professional likely being within a 2 to 3 hour drive from any prospective patient that lives on the East coast, West coast, or in the South. However, coverage is fairly sparse from North Dakota over to Idaho, from Idaho down to Nevada and across West Texas. Also, it should be noted that even in places with good coverage it's likely that an addict will end up going to a medical professional that is not certified. Thus, it is essential that addicts know about this product too in order to get max penetration.

Yet another concern of mine is the long sale cycle that exists from getting a medical professional certified to when the therapeutic is actually prescribed. Lastly, I appreciate management teams that under promise and over deliver, but Titan pharmaceuticals seem downright unsure of their abilities, alongside Braeburn, to make Probuphine into a winner. I base this statement off of the tepid responses to soft ball questions that were asked in previous conference calls.

Competition around the Corner

Braeburn just announced positive phase three results to a therapeutic that will compete with Probuphine:

Braeburn Pharmaceuticals and Camurus (NASDAQ STO: CAMX) are pleased to announce positive top-line results from a pivotal Phase 3 randomized, double-blind, double-dummy, active controlled trial of weekly and monthly injections of buprenorphine (CAM2038) for treatment of moderate-to-severe opioid use disorder. In addition to achieving the primary endpoint of non-inferiority versus daily sublingual buprenorphine/naloxone (current Standard of Care), CAM2038 also demonstrated superiority for the key secondary endpoint

Braeburn's results are extremely compelling with CAM2038 meeting both FDA and EMA primary endpoints of non-inferiority p<0.001. Also, CAM2038 achieved statistical significance for such endpoints as responder rate and percent of negative urine samples for opioids. CAM2038 buprenorphine products are injectables that come in a weekly and a monthly form. The company will file for a NDA in mid 2017 and I have little doubt that it will be rejected given the strength of the data and given the field that CAM2038 is in.

Investors in Titan pharmaceuticals should be aware of this development because I see tremendous overlap in the use cases for Probuphine and CAM2038. CAM2038 is superior to daily sublingual buprenorphine, but it also offers the benefits of Probuphine without some of the shortcomings. For example, CAM2038 is an injectable that allows for a steady dose of Buprenorphine, but it is not invasive like Probuphine is.

Furthermore, I think the real competitive advantage of CAM2038 over Probuphine is that it allows for more flexibility so that treatment is more customizable. CAM2038 is really able to offer superior treatment regardless if a patient is just starting treatment for the first time or is in the middle of a long-term regimen, and regardless if the patient is stable or not. Dr. Edward Nunes, MD, Professor of Psychiatry at Columbia University Medical Center and Investigator in the study stated:

A weekly buprenorphine injection would be an attractive option for initiation, early treatment, and treatment of unstable patients, where weekly medical visits are common, whereas a monthly injection is an attractive option for longer term maintenance treatment where monthly visits are common practice.

Braeburn has stated that they see Probuphine and CAM2038 working together, but I have my doubts given everything I just outlined. Braeburn picked up the US and Canadian rights to Probuphine in late 2012. I believe Braeburn was motivated to make this move due to the overlap in science, it was a way to diversify their portfolio, mitigate the risk of trial failures for CAM2038, and they saw a way to make money and build out relationships in a market of intimate concern.

However, Probuphine failed to receive FDA approval the first time and Braeburn's portfolio has since advanced. Probuphine was originally going to have more time to itself in the market, but now CAM2038 is right on its heels. Lastly, CAM2038 is currently in phase three for the treatment of pain, which diminishes to some extent the opportunity or interest to broaden the use case of Probuphine to also cover pain.

The Bottom Line

Investors should expect a slow ramp-up in sales, and should take note of CAM2038 coming online, as it will directly compete against Probuphine, whether Braeburn wants this cannibalization to occur or not. The ProNeura platform is certainly interesting, but I think the best bet for their platform is Parkinson's disease. However, that application is in its infancy so there is considerable time, money and risk involved in bringing it to market.

Author's note: To get more investment ideas like this as soon as they are published, click on my profile and hit the big orange "Follow" button and choose the real-time alerts option. I write about various topics, but I have a particular passion for biotech equities and gold. My biotech analysis mostly consists of market analysis, evaluating the likelihood of various trials succeeding, full length long pieces, and I generate swing trade ideas. My last swing trade idea returned 41.66% in six market days and can be reviewed here.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.

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