TITAN PHARMACEUTICALS INC. Management’s Discussion and Analysis of Financial Position and Operating Results (Form 10-Q)

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Forward-looking statements

This Quarterly Report on Form 10-Q or in the documents incorporated by reference
herein may contain "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, or the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, the Exchange Act, that
involve substantial risks and uncertainties. We have attempted to identify
forward-looking statements by terminology including "anticipates," "believes,"
"can," "continue," "could," "estimates," "expects," "intends," "may," "plans,"
"potential," "predicts," "should," or "will" or the negative of these terms or
other comparable terminology. Although we do not make forward looking statements
unless we believe we have a reasonable basis for doing so, we cannot guarantee
their accuracy. Forward-looking statements included or incorporated by reference
in this report or our other filings with the SEC include, but are not
necessarily limited to, those relating to uncertainties relating to:

?the ability to raise capital when needed;
?difficulties or delays in the product development process, including the
results of preclinical studies or clinical trials;
?financing and strategic agreements and relationships;
?difficulties or delays in the regulatory approval process;
?uncertainties relating to manufacturing, sales, marketing and distribution of
our drug candidates that may be successfully developed and approved for
commercialization;
?adverse side effects or inadequate therapeutic efficacy of our drug candidates
that could slow or prevent product development or commercialization;
?dependence on third party suppliers;
?the uncertainty of protection for our patents and other intellectual property
or trade secrets; and
?competition.

Forward-looking statements should not be read as a guarantee of future
performance or results and will not necessarily be accurate indications of the
times at, or by which, that performance or those results will be achieved.
Forward-looking statements are based on information available at the time they
are made and/or management's good faith belief as of that time with respect to
future events, and are subject to risks and uncertainties, including the risks
and uncertainties referred to in this Quarterly Report on Form 10-Q or included
in our other public disclosures or our other periodic reports or documents filed
with or furnished to the SEC that could cause actual performance or results to
differ materially from what is expressed in or suggested by the forward-looking
statements.

Forward-looking statements speak only as of the date they are made. You should
not put undue reliance on any forward-looking statements. We assume no
obligation to update forward-looking statements to reflect actual results,
changes in assumptions or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities laws. If we
do update one or more forward-looking statements, no inference should be drawn
that we will make additional updates with respect to those or other
forward-looking statements. We caution you not to give undue weight to such
projections, assumptions and estimates.

References herein to “we”, “our”, “Titan” and “our company” refer to Titan Pharmaceuticals, Inc. Unless the context requires otherwise.

Probuphine® and ProNeura® are trademarks of our company. This Quarterly Report
on Form 10-Q also includes trade names and trademarks of companies other than
Titan.

All per-share and per-share data in this report is retroactive to a one-for-30 consolidation of shares carried out in november 2020.

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Overview

We are a pharmaceutical company developing therapeutics utilizing our
proprietary long-term drug delivery platform, ProNeura®, for the treatment of
select chronic diseases for which steady state delivery of a drug has the
potential to provide an efficacy and/or safety benefit. ProNeura consists of a
small, solid implant made from a mixture of ethylene-vinyl acetate, or EVA, and
a drug substance. The resulting product is a solid matrix that is designed to be
administered subdermally, in a brief, outpatient procedure and is removed in a
similar manner at the end of the treatment period. These procedures may be
performed by trained health care providers, or HCPs, including licensed and
surgically qualified physicians, nurse practitioners, and physician's assistants
in a HCP's office or other clinical setting.

We operate in a single line of business, the development of pharmaceutical products. We make our periodic reports available free of charge on our website, www.titanpharm.com as soon as reasonably possible after we have electronically filed such documents with, or provided to, the SECOND.

Recent accounting positions

See Note 1 to the accompanying unaudited condensed financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for information on recent accounting pronouncements.

Results of Operations for the Three and Nine Months ended September 30, 2021 and
2020

Revenues




                       Three Months Ended              Nine Months Ended
                          September 30,                   September 30,
                   2021      2020      Change     2021       2020       Change

                                          (In thousands)
Revenues:
License revenue    $   4    $     -    $     4   $     9    $     6    $       3
Product revenue       36          -         36       236         39          197
Grant revenue        224      1,018      (794)     1,146      3,348      (2,202)
Total revenues     $ 264    $ 1,018    $ (754)   $ 1,391    $ 3,393    $ (2,002)



The decrease in total revenues from continuing operations for the three and nine
months ended September 30, 2021 was primarily due to decreases in grant revenues
primarily related to the type and timing of development activities performed
during the periods presented, which were partially offset by an increase in
product revenues. Product revenues from continuing operations for the three and
nine months ended September 30, 2021 consisted of sales of Probuphine related
product materials to Molteni for the EU. Revenue from the sale of Probuphine in
the U.S. during the three and nine months ended September 30, 2020 has been
reclassified to discontinued operations (see Note 9 to the condensed financial
statements included in this report for more information).

Operating Expenses




                                               Three Months Ended               Nine Months Ended
                                                  September 30,                   September 30,
                                           2021       2020      Change     2021       2020      Change

                                                                 (In thousands)
Operating expenses:
Cost of goods sold                        $     -    $     -    $     -   $   199    $     -    $   199
Research and development                    1,193        887        306     4,716      4,343        373
Selling, general and administrative           979      1,327      (348)    
3,341      4,052      (711)
Total operating expenses                  $ 2,172    $ 2,214    $  (42)   $ 8,256    $ 8,395    $ (139)




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Cost of goods sold from continuing operations reflects costs and expenses
associated with sales of Probuphine related product materials to Molteni for the
EU. Cost of goods sold related to the sale of Probuphine in the U.S. during the
three and nine months ended September 30, 2020 has been reclassified to
discontinued operations (see Note 9 to the condensed financial statements
included in this report for more information).

The increase in research and development costs from continuing operations for
the three and nine months ended September 30, 2021 was primarily associated with
activities related to non-clinical studies required for the planned
Investigational New Drug submission as part of our NIDA grant for the
development of a nalmefene implant and initial non-clinical proof of concept
studies related to our TP-2021 implant program. Other research and development
expenses include internal operating costs such as research and development
personnel-related expenses, non-clinical and clinical product development
related travel expenses, and allocation of facility and corporate costs.
Research and development expenses related to our U.S. Probuphine activities
during the three and nine months ended September 30, 2020 have been reclassified
to discontinued operations (see Note 9 to the condensed financial statements
included in this report for more information). As a result of the risks and
uncertainties inherently associated with pharmaceutical research and development
activities described elsewhere in this document, we are unable to estimate the
specific timing and future costs of our clinical development programs or the
timing of material cash inflows, if any, from our product candidates. However,
we anticipate that our research and development expenses will increase as we
continue our current or any future ProNeura development programs to the extent
these costs are not supported through grants or partners.

The decrease in general and administrative expenses from continuing operations
for the three and nine months was primarily related to the substantial
non-recurring consulting, legal and other professional fees incurred in
connection with the stockholder meetings held in 2020 which were partially
offset by increases in non-cash stock-based compensation. Selling and marketing
expenses related to the sale of Probuphine in the U.S. during the three and nine
months ended September 30, 2020 have been reclassified to discontinued
operations (see Note 9 to the condensed financial statements included in this
report for more information).

Other income (expenses), net


                                               Three Months Ended               Nine Months Ended
                                                  September 30,                   September 30,
                                           2021      2020       Change     2021       2020       Change

                                                                  (In thousands)
Other income (expense):
Interest expense, net                     $    -    $ (246)    $    246   $  (2)    $   (718)    $   716
Non-cash loss on changes in fair value
of warrants                                    -          -           -        -        (923)        923
Gain on debt extinguishment                    -          -           -      661            -        661
Other expense, net                           (7)       (13)           6     (30)        (233)        203
Other income (expense), net               $  (7)    $ (259)    $    252   $  629    $ (1,874)    $ 2,503




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The decrease in other expense, net for the three months ended September 30, 2021
was primarily due to decreases in interest expense resulting from the settlement
of debt in October 2020. The increase in other income, net for the nine months
ended September 30, 2021 was primarily due to a gain on debt extinguishment
resulting from the May 2021 forgiveness of our outstanding PPP Loan and
decreases in interest expense resulting from the settlement of debt in October
2020. During the nine months ended September 30, 2020, we incurred approximately
$0.9 million in non-cash losses on changes in the fair value of warrants,
approximately $0.7 million of interest expense related to our debt, and
approximately $0.2 million in costs attributable to the issuance of warrants.

Net loss and net loss per share

Our net loss from continuing operations for the three-month period ended
September 30, 2021 was approximately $1.9 million, or approximately $0.19 per
share, compared to our net loss from continuing operations of approximately $1.5
million, or approximately $0.45 per share, for the comparable period in 2020.
Our net loss from discontinued operations for the three-month period ended
September 30, 2020 was approximately $3.5 million, or approximately $1.07 per
share. Our net loss from continuing operations for the nine-month period ended
September 30, 2021 was approximately $6.2 million, or approximately $0.64 per
share, compared to our net loss from continuing operations of approximately $6.9
million, or approximately $2.25 per share, for the comparable period in 2020.
Our net loss from discontinued operations for the nine-month period ended
September 30, 2020 was approximately $8.3 million, or approximately $2.70 per
share.

Liquidity and capital resources

We have funded our operations since inception primarily through the sale of our
securities and the issuance of debt, as well as with proceeds from warrant and
option exercises, corporate licensing and collaborative agreements, and
government-sponsored research grants. At September 30, 2021, we had working
capital of approximately $6.9 million compared to working capital of
approximately $3.1 million at December 31, 2020.

In May 2021, around $ 0.7 million of outstanding debt related to our
april 2020 The PPP loan has been canceled.

In January 2021, we completed an offering with several accredited institutional
investors pursuant to which we issued 2,725,000 shares of our common stock in a
registered direct offering and warrants to purchase 2,725,000 shares of our
common stock with an exercise price of $3.55 per share in a concurrent private
placement. The warrants were exercisable immediately and will expire in
July 2026. The net cash proceeds from this offering were approximately $8.8
million after deduction of underwriting fees and other offering expenses.

In January 2020, we completed a financing with several institutional investors
pursuant to which we issued 8,700,000 shares of our common stock in a registered
direct offering and warrants to purchase 290,000 shares of our common stock with
an exercise price of $7.50 per share in a concurrent private placement pursuant
to which we received net cash proceeds of approximately $1.9 million, after
deduction of underwriting fees and other offering expenses.

During the nine months ended September 30, 2020, we received an aggregate of
approximately $7.0 million in cash proceeds from the exercises of warrants to
purchase approximately 1,038,147 shares of our common stock.

At September 30, 2021, we had cash and cash equivalents of approximately $7.4
million, which we believe is sufficient to fund our planned operations into the
second quarter of 2022. There is substantial doubt about our ability to continue
as a going concern. We will require additional funds to finance our operations.
We are exploring several financing alternatives; however, there can be no
assurance that our efforts to obtain the funding required to continue our
operations will be successful.

Sources and Uses of Cash




                                                                 Nine Months Ended September 30,
                                                                    2021                2020

                                                                          (In thousands)
Net cash used in operating activities                                 (6,818)             (12,642)
Net cash used in investing activities                                    (18)                (531)
Net cash provided by financing activities                               8,841               12,023
Net increase (decrease) in cash and cash equivalents                    2,005              (1,150)




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Net cash used in operating activities for the nine months ended September 30,
2021 consisted primarily of our net loss of approximately $6.2 million,
approximately $0.7 million related to a gain on debt extinguishment, and
approximately $1.4 million related to net changes in operating assets and
liabilities, partially offset by approximately $1.5 million of non-cash charges
primarily related to stock-based compensation and depreciation and amortization.
Net cash used in operating activities for the nine months ended September 30,
2020 consisted primarily of our net loss of approximately $15.2 million,
partially offset by approximately $0.3 million related to net changes in
operating assets and liabilities, approximately $2.0 million of non-cash charges
mainly related to non-cash losses on changes in fair value of warrants, interest
expense, stock based compensation and depreciation and amortization and
approximately $0.2 million in costs attributable to the issuance of warrants.
Uses of cash in operating activities were primarily to fund product development
programs, administrative expenses and our commercialization activities which
were discontinued during the fourth quarter of 2020.

The net cash used in investing activities was mainly related to equipment purchases.

Net cash provided by financing activities for the nine months ended September
30, 2021 consisted of net cash proceeds from the January 2021 offering. Net cash
provided by financing activities for the nine months ended September 30, 2020
consisted of approximately $4.3 million of net cash proceeds from equity
offerings, approximately $7.0 million of net cash proceeds from the exercises of
warrants to purchase our common stock and approximately $0.7 million from our
April 2020 PPP Loan.

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