TTNP: Shipments Spike in 2H:18

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By John Vandermosten, CFA

NASDAQ:TTNP

We have now had more than two full quarters of in-house management of Probuphine commercialization by Titan Pharmaceuticals, Inc. (NASDAQ:TTNP) and indications are that shipment trends are strong. Since the company had their licenses returned in late May 2018 Titan has implemented a new strategy to grow sales for the innovative implant Probuphine, which is intended for maintenance treatment in patients that are stable on a transmucosal buprenorphine product. In a release last week the company highlighted a 20% sequential increase in shipments in the second half of the year. We anticipate continued strong sales as the company’s strategy in the US accelerates, sales in Canada ramp up and first sales in Europe are recognized.

The need for a solution to the opioid epidemic is clear, the problem lies in the execution. In the United States opioid overdose deaths exceed 70,000 in 20171. The solution to the problem is multi-faceted and includes using alternatives to opioids for pain treatment, employing new medications which can include Suboxone and later Probuphine for addiction and making overdose prevention and reversal interventions widely available2. Despite the staggering numbers, government programs to support these efforts have not yet engaged to an extent where these solutions are widespread. However, Titan is expanding its efforts to gain access to government resources for addiction that can help introduce this helpful new product to patients that will benefit from it.

While Titan traversed some rough patches during the period surrounding the license transition, they have since put in place a four pronged approach to advance the product into several high value segments. As we have previously discussed, this includes focusing on the following markets with a streamlined sales team:

‣ High Probuphine-prescribing physicians with long term recovery oriented treatment programs.
‣ Residential treatment facilities
‣ Academic institutions with addiction treatment and training programs
‣ Criminal justice system


View Exhibit I – Segmentation Strategy

One of the first efforts for the strategy was to engage with the Nevada Center for Behavior Health, which will evaluate the use of Probuphine for individuals with opioid use disorder in the Nevada criminal justice system. Probuphine’s unique ability to deter diversion makes it an attractive alternative for this population where only about 1% currently receives treatment. This relationship can also be a stepping stone for incarcerated populations in other states that may also be able to benefit.
To further execute this strategy, Titan has employed a small salesforce headed up by new hire Dane Hallberg who fills the role of Chief Commercial Officer. He has been able to strengthen relationships with previous prescribers of Probuphine and advance relationships with pharmacy directors and payors illustrating the benefits of medication assisted treatment (MAT). We are eager to hear an update on his efforts, which we expect in conjunction with the fourth quarter report next month.


View Exhibit II – Titan Pipeline

Titan provided an early look at what we might see in the quarters to come, highlighting a 20% sequential increase in 2H:18 vs. 1H:18 in total shipments. We anticipate additional specific revenue detail when the company reports in March.

Summary

Titan has worked hard over the last year to bring Probuphine back into the fold and undertake a relaunch. The process has taken many months, but initial indications are that efforts have been successful, aided by approval and first sales in Canada, additional sales to previous prescribers and the implementation of the company’s new strategy.

We anticipate additional positive news flow from Titan and see the current market capitalization of ~$20 million as severely below a reasonable valuation for a company that has an approved product with global potential and a pipeline of additional products in various stages of development. Additional detail on sales and progress are expected when the company reports and files its 10-K in March.

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1 Source: Centers for Disease Control and Prevention, National Center for Health Statistics. Multiple Cause of Death 1999-2017. CDC WONDER Online Database, Released December 2018.
2 National Institute on Drug Abuse. Opioid Overdose Crisis. https://www.drugabuse.gov/drugs-abuse/opioids/opioid-overdose-crisis