Black Titan Corporation (BTTC) Q3 2014 Earnings Report, Transcript and Summary

Thank you for holding and welcome to the Titan Pharmaceuticals' Third 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 Web site starting later today. At this time I would like to turn the call over to Sunil Bhonsle, President of Titan Pharmaceuticals. Please go ahead, sir.

Thank you, Audra, and thank you all for joining us. Welcome to the Titan Pharmaceuticals call to review financial and operational results for the third quarter of 2014. Before we begin, I wanted to inform you that on November 13th, we filed our third quarter 2014 Form 10-Q with the SEC and the press release issued yesterday provides a summary of the results and can be found on our website at titanpharm.com. So 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. So 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 a result of new information, future events or circumstances or otherwise. So now as always, let’s start with an overview from our Executive Chairman, Dr. Marc Rubin. Marc?

Thank you, Sunil and hello everyone and thank you for joining us today. Today we will provide with you with an update on our Probuphine program as we have over the past several quarters and we'll also talk about the preparations we are making to further develop product candidates using our ProNeura long-term delivery technology. First we are very pleased with the progress of the Probuphine program for the maintenance treatment of opioid dependence. On September 23, Titan and our partner Braeburn Pharmaceuticals announced that the Phase III study of Probuphine had reached the halfway mark. We expect the trial to be completed on schedule by the middle of 2015 followed by the resubmission of the NDA later in the year. As you are aware, this current study is designed to address key questions posed by the FDA and its complete response letter last year after its review of the original NDA. In just a moment, Dr. Glassman-Beebe will provide additional details on this study especially with respect to patient selection and enrollment. 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, around-the-clock levels of buprenorphine for six months following a single treatment. Buprenorphine an approved agent for the treatment of opioid dependence and as you know the drug used in Probuphine is currently available for treatment of opioid addiction only in the form of daily dosed sublingual formations that together have annual sales of approximately $1.5 billion in the United States. As a sub-dermal implant, we believe Probuphine has several advantages over the daily dose formulations of buprenorphine. Specifically Probuphine can potentially reduce abuse and diversion as well as increased compliance and retention. Opioid addiction is a true epidemic and new treatments that are safe and effective are critically needed for patients, their families and healthcare providers. While we work with Braeburn to advance the Probuphine program, we are at the same time actively preparing to expand our ProNeura-based product pipeline. On October 8th, we closed a public offering with net proceeds of approximately of $9.6 million. These funds will be used to support preclinical development of ProNeura technology-based products including a program for the treatment of Parkinson's disease as well as ongoing Probuphine development and ex-U.S. partnering efforts. We were also very pleased to announce earlier in the week the addition of two new members to our Board of Directors, Joseph Akers, the former Bayer Healthcare Executive and James McNab Jr. Chairman and Co-Founder of Curis, Inc. Mr. Akers and Mr. McNab have deep experience in product development, commercialization, finance and corporate governance which will be highly beneficial to Titan as we work to expand our pipeline and grow the company and grow its value. We are very enthusiastic about the promise of the ProNeura long-term delivery platform, which we believe has been validated in our Probuphine program. The ProNeura platform is ideally suited to develop products for treating select chronic diseases for which maintaining consistent blood levels of the medication over long periods of time, has the potential to benefit patients by improving efficacy, safety or both. With the rapidly aging population and increasing life spans there is clearly a great medical need for improved treatments for product diseases that require long-term therapy. Most immediately, we have began making plans for the development of a ProNeura platform based product for Parkinson's disease and Dr. Glassman-Beebe will provide further details on the ProNeura program for Parkinson's in 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 into the potential use of the ProNeura platform for Parkinson' disease and other programs as we move forward. And with that, I will now pass the call back to Sunil to review the financial results of the third quarter of 2014. Sunil?

Thank you, Marc. Next I will provide you with the third quarter 2014 financial results and Dr. Glassman-Beebe will update you on the development activities during the third quarter and additional development plans for the coming year. And then to conclude, we will open up the call for your questions for the Titan management team. So for the third quarter financial results, Titan generated total revenue in the third quarter of approximately $0.9 million compared with about 2.2 million in the third quarter of 2013. Revenue earned during the quarter's ended September 30 this year and last year reflects the amortization of the upfront license fee received from development commercialization partner Braeburn Pharmaceuticals in December of 2012. Total operating expenses for the quarter ended September 30 were approximately 1.6 million compared with approximately 2.3 million in the same quarter last year. These expenses consisted of research and development expenses of about 0.8 million compared with about 1.7 million in the third quarter of 2013 a decrease of about 0.9 million or 53%. The decrease in R&D expenses was primarily related to lower external R&D expenses for the Probuphine product development program, as this is primarily being borne by Braeburn Pharmaceuticals. General and administrative expenses for the third quarter of 2014 were approximately 0.9 million compared with about 0.6 million in the same period in 2013 an increase of about 0.3 million. The increased G&A expenses for the third quarter 2014 were primarily related to increases in legal and consulting fees and board fees and the depreciation expense in non-cash stock compensation and employee related costs. Net other income for the third quarter of 2014 was approximately 1.5 million which was related to non-cash gains on changes in the fair value of warrants. This compares to net other expense of approximately 1 million in the same quarter in 2013 which was primarily related to non-cash losses on changes in the fair value of warrants. Net income for the third quarter of 2014 was 0.7 million or approximately $0.01 per share compared with the net loss of about 1.1 million or about $0.01 per share in the third quarter of 2013. At September 30, 2014, Titan had approximately $7.5 million in cash. As Marc mentioned on October 8, 2014, Titan closed a public offering raising net proceeds of $9.6 million. These funds together with the cash on hand are sufficient to support our planned operations into the fourth quarter of 2016. These financial results were as expected and this quarter was a very positive one for Titan. The rapid enrollment in the Phase 3 clinical trial of Probuphine managed by Braeburn Pharmaceuticals is a testament to the great need for new treatments of opioid dependants and we look forward to completion of this study by middle of next year and resubmitting the NDA later that year. At the same time, we are aggressively pursuing our development program in the area of Parkinson's disease and we're very enthusiastic about the broader potential our ProNeura drug delivery platform. Now to provide you an update of recent development activities and plans for the next year, let me turn the call over to Dr. Glassman-Beebe. Kate.

Thank you Sunil and hello everyone. I'm very pleased to update you on the Phase 3 clinical trial of Probuphine and our initial plans for ProNeura for Parkinson's disease. As you know from the Titan and Braeburn announcements in September enrollment in the clinical study was progressing rapidly and has surpassed the halfway mark. This study currently includes 21 clinical research sites and as of this week, the study is more than 90% enrolled. Now just to remind everybody, the study is a randomized double blind, double dummy design that will enroll approximately 180 patients into two parallel treatment arms. Study participants will be clinically stable patients who are receiving maintenance treatment with an improved sublingual formulation containing Buprenorphine at a daily dose of 8 milligrams or less. Patients will be randomized to receive either four Probuphine implants or to continue their 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 sublingual Buprenorphine 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. 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 this study design is robust and will provide a well-controlled evaluation of Probuphine compared with the current standard of care in stable maintenance patients. Off note, all participants will receive active treatment during the study. We continue to support Braeburn in all study related efforts and are very encouraged by their progress to date. In addition to these important U.S. efforts, we are also evaluating opportunities for regulatory approval and commercialization of Probuphine outside of the U.S. and Canada. From our discussions with opinion leaders and regional pharmaceutical companies in countries where buprenorphine products are used for the treatment of opioid dependence, we have realized that additional regulatory guidance is necessary to fully understand the pathway to approval in these countries and we are now in the process of working with regulatory experts to submit appropriate documents and seek meetings with select regulatory agencies, which we hope to have in early 2015. Now as Sunil and Marc have mentioned, we are moving aggressively forward with plans to expand our ProNeura-based product portfolio. At the fore of our efforts is ProNeura for Parkinson's disease. And we've commenced work on now optimizing an implant formulation of ropinirole, a widely used dopamine agonist therapy and this work along with the input from key scientific and regulatory advisors that help us plan the non-clinical studies as well as an appropriate proof-of-concept clinical study so that we can prepare for a pre-IND meeting with the FDA in early 2015. Our goal is to complete all the work required and file the IND in time to commence the clinical study in the first half of 2016 following potential approval of Probuphine. About 1 million people in the U.S. suffer from Parkinson's disease and that number is expected to double by 2030 due to aging population according to the Parkinson's Foundation. Dopamine agonist therapy, which is a current standard of care, is designed to replace dopamine in in the brain in early stage Parkinson's patients, but typically stops working efficiently after several years and can trigger serious side effects. About one-third of treated patients develop motor response fluctuations and/or drug-induced dyskinesias within only three to five years of treatment. Clinical and nonclinical research indicates that these motor side effects arise from pulsatile dopaminergic stimulation resulting from current oral treatment modalities. Continuous dopaminergic stimulation by subcutaneous infusion has been shown to palliate these motor complications and to also delay or prevent the onset of dyskinesias. Consequently, we believe that the ProNeura drug delivery system could be very effective for Parkinson's disease. I look forward to providing periodic updates on the progress of the Probuphine clinical study and other ProNeura development programs. Now I will turn the call back to Sunil. Sunil?

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

Thank you. [Operator Instructions]. Jason Napodano at Zacks Investment Research.

I've got three questions for you. The first question on Phase III trial. It looks like the trial is enrolling well, it's actually maybe a little bit ahead of schedule on what I thought. And I am just kind of curious, you are looking for a little bit different type of patient than you were looking for in the first Q Phase III trial, you have to find somewhat is stable on buprenorphine as opposed to the previous trials. I am wondering it doesn't seem like it's hard to find those patients because the trial is enrolling well, but I am wondering what percent of patients are coming in and qualifying versus being turned away because maybe they are not stable and just in terms of the size of the market, again the trial seems to be enrolling well, so it looks like the market is a fairly large size compared to the previous, but I am just kind of interested in that dynamic.

Yes, very good question Jason. I have to give a lot of credit to the Braeburn team and to our CRO partner PPD, who also worked with us on the earlier Phase III studies. They have just done a tremendous job in getting set up, in recruiting these patients and working very closely with the investigators, with the implant clinicians and they actually did quite a bit of work upfront in helping investigators learn how to identify the correct patients for the studies. So while this trial like the other Probuphine trials is enrolling very rapidly. I take that as a sign that there is a lot of demand for this type of treatment for a long-term delivery system of buprenorphine and that these are underserved patients. So I think this is all good news for what will eventually result once the drug is commercialized and we are hoping that we have positive results from this study, but things are going well so far, the study conduct.

The second question on the Parkinson's program, are there any differences in terms of either the PK profile or the release profile or how the product is made between the ropinirole product and the Buprenorphine product, I'm just -- I'm curious to say, how quickly this preclinical program can move along, given that you've already moved obviously into Phase III trial with the same technology?

In terms of the -- and our technology itself, obviously the primary structure of the implants using a technique that allows steady delivery is very dependent both on the surface area as well as the number of basically pores on the surface that allow release of the drug. And that is something that we control based on the solubility of the compound. So, in this case where ropinirole maybe a little more soluble than say Buprenorphine is, we have to make sure that the release rate is such that it will provide the right PK profile. And that type of work is what has been done initially with some of the non-clinical studies that we did, especially the one in MPTP monkey model. Now we are so fine-tuning that and getting it ready to do the next set of non-clinical studies, which and I mean I think, our goal is really to be ready to start a clinical study in early 2016. And we feel very confident that along with the work that has been done with the EVA safety kind of studies in the past with Probuphine, which helps obviously in our dialog with the FDA. We will have a pre-IND meeting early next year, work out the details of what's necessary, but we certainly feel that it can be completed in time to start clinical studies in the early part of 2016 which hopefully it's the time where we get approval for Probuphine as well and provides us the basis to continue expanding the programs.

Last question, the offering that you did in October, I'm just curious if Braeburn participated in that?

In terms of participation, obviously we didn't and we're not allowed to put out the list in the setting, as you know however, Broadfin filed their documents to indicate that they passed the 5% mark prior to that, obviously Braeburn had filed documents to show that they had more than 10% of the company stock. So, in this setting, those obviously are the two major shareholders for Titan right now, but we're really very pleased with the participation of some very key long-term institutions who -- we're very pleased with the type of progress we've made and the technology and showed it by investing substantial amounts of money in the company.

And we'll move next to Michael Higgins of Highline Research Advisors.

First of all, congratulations on the completion -- on your completion of enrollment over 90% it's great, it's excellent, also congrats on securing two excellent board members. I've got a Pro-814 related questions as well as pipeline, business development activities, I'll try to keep this as tight as I can. On Pro-814, would there be any interim looks, I don't believe so, but I just wanted to check. And also related is the timing between data locks and reporting of data is six weeks are relatively deep and [deftness] [ph], as to how long it will take you to get that NDA ready?

There are no interim data locks and the time between database lock and top-line results is a standard for the industry, so it would be within a couple of weeks, two weeks, three weeks.

In your recent communications with the FDA regarding 814 on Probuphine's developments, manufacturing, clinical stability, anything recently, anything special to come up in near-term?

No, nothing like that, just retained -- we're in contact with them, they're continuing to be very supportive, but nothing out of the ordinary.

Okay. Just checking on those. Also related to the Parkinson's potential product, have you had any preclinical studies recently, I know that you've got some information out there, but if there's anything been done this fall of its more of a 2015 event?

Michael, in this setting really the work that’s been down right now is geared towards optimizing the formulation, and so actually we've done some both in vitro and very small in vivo studies sort of to optimize that. The bulk of work will really be in 2015.

Okay. So more on the formulation development fees, okay. Looking at the recent board numbers the conversations about ProNeura, I’m kind of wondering it will see increase in the pace of extending the pipeline given these two guys coming in their backgrounds. Taking some time to take look at that their overlap before you are or you’re headed might their evolvement pick up the pace a bit?

Our first priority obviously is Probuphine and wanting to support that fully to get that to a stage where we can resubmit the NDA. We are at the same time moving rapidly with the product in Parkinson’s disease. There are a couple of other programs that in a very early looks that we are working on now and with the help of our current board members and the new board members we'll look at some additional opportunities but want to be cautious at the same time to make sure that the financial resources and so that we have will fully support what we can do in a timeframe that is meaningful and so in this setting I expect towards the end of next year or early 2016 we would have the opportunity to look at more programs beyond these ones and we will keep you posted on our progress of that during the year. But certainly the new board members can add a lot of value and we truly are very pleased with that addition.

Okay, thanks. It’s very helpful. One last one here, any updates for [indiscernible] discussions with European partners? You’ve been helpful in providing some little detail in the past. Any updates you can provide?

Not beyond what I mentioned earlier on the call Michael, we’re in the process now of working hard with some regulatory experts and preparing to communicate with health authorities outside of the U.S. to setup meetings to early 2015.

Okay. And is it more a deal to have country specific partners or one larger partner, certainly there is dramatic circumstances from country-to-country in the opioid addiction and reduce rates. But just curious to hear your thoughts on one or many partners in Europe.

Yes, that’s a very astute observation you’re making about that environment and as we have more information as we progress further we’ll be happy to update you there.

Okay. One last question on this would be your plans for talking to European regulators which maybe in a country-by-country basis but any updated thoughts there?

At this point we’re really open to anything and we’re still in the process of talking to our regulatory experts and devising a strategy for how to move forward successfully within the European [realm] [ph].

Okay. And for competitive reasons and [partnering] [ph] reasons I’m sure you can’t be too explicit but appreciate you coming [indiscernible]. Congrats and back in the queue. Thanks guys.

And that does conclude today’s Q&A. I’d like to turn the conference over to Mr. Bhonsle.

Thank you. Thank you everybody for participating in this call. We are enthusiastic about the progress we’ve made this year along with Braeburn and our Probuphine program and we’re confident that if approved, Probuphine will be a transformative new treatment for opioid dependence. We are equally excited about the prospects for our ProNeura drug delivery platform which will believe holds great promise for patients suffering from chronic diseases that may require a consistent blood level of medication to maintain and improve health. So we appreciate your ongoing support and we wish you all a happy holiday season coming up. Thank you.

And that does conclude today’s conference. Again, thank you for your participation.