Titan Pharmaceuticals Inc (TTNP) 2011 Q2 法說會逐字稿

Welcome to the Titan Pharmaceuticals second quarter of 2011 financial results and clinical 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 on 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.

Thank you, Deanna, and thank you all for joining us this morning and welcome to the Titan Pharmaceuticals call to review financial, clinical, and operational results for the second quarter of 2011. Before we begin, I just wanted to mention that we issued 2 press releases this morning, 1 detailing our second-quarter financial results and 1 providing an update on our phase III study of Probuphine. On the call today from Titan, we have Dr. Marc Rubin, our Executive Chairman; Dr. Kate Beebe, Executive Vice President and Chief Development Officer; and Brian Crowley, our Vice President of Finance. Also, on the call today I would like to welcome 2 of the lead investigators in the Probuphine confirmatory phase III study -- Dr. Walter Ling, Professor of Psychiatry and Director Integrated Substance Abuse Programs at the David Geffen School of Medicine at UCLA; and Dr. Rick Rosenthal, Chairman of Psychiatry at St. Luke's-Roosevelt Hospital Center, a teaching hospital of Columbia University, and past president of the American Academy of Addiction Psychiatry.

Welcome Dr. Ling and Dr. Rosenthal and thanks for joining us. Before we get into the details of the second quarter performance and 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, clinical programs, and regulatory strategies. 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 and subsequent SEC filings. 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. Well, having said all that, let's start. I would like to turn over the call to first to our Executive Chairman, Dr. Marc Rubin, for his overview. Marc?

Thank you, Sunil, and hello, everybody, and thank you for joining us today. Last time we spoke we were all preparing for the conclusion of the confirmatory phase III study of Probuphine and the announcement of the top line results, which were originally scheduled for release in early June. As you all know now, there was a slight delay due to last minute changes in the statistical analysis plan that were requested by the FDA, specifically the inclusion of an addition primary analysis. So we announced excellent top line results in early July. This was a month later than originally planned. I do want to take this opportunity to thank and congratulate Dr. Beebe and her team and of course Drs. Ling and Rosenthal and all the other clinicians and patients who participated in this important study.

Today you will have a chance to hear more about these study results, which I believe bring us one step closer to making Probuphine available as a medication to treat the disease opiate addiction. We have several goals ahead of us now and 2 of the most important of those being a pre-NDA meeting with the FDA for this fall and finding an appropriate partner for successful commercialization of Probuphine. With respect to the first goal, the Titan team is in the process of preparing all of the reports supporting the development of Probuphine, non-clinical, clinical and CMC pieces, so that we can conduct a comprehensive review with the FDA and confirm a path to filing an NDA when we meet with them in the fall.

With regards to the second goal of finding a commercialization partner, as we announced today, we are being helped in our efforts by the team of Woodside Capital Partners and Keelin Reeds Partners in all aspects of the business development activities, including establishing contacts with companies, providing initial information on Probuphine, and together with us, progressing the relationship through the next stages of the partnering process. We are very pleased with the efforts of the Woodside Capital/Keelin Reeds team thus far. I've been involved in all of these meetings and discussions myself and, now that we have the full results from the confirmatory study, I expect we are going to make very good progress. This is a busy and an exciting time and we will keep you all updated on our progress. Now I will pass the call back to Sunil.

Thank you, Marc. To get started, I will provide you with our second-quarter financial results and then we will turn the call over to Kate for a summary and discussion of our phase III Probuphine results. Drs. Ling and Rosenthal will then be making some brief statements about the current treatment landscape for opiate addiction and their thoughts regarding the potential impact of Probuphine for their patients. To conclude, we will open up the call for your questions for the Titan management team and Drs. Ling and Rosenthal.

Starting with the financial results. And as we explained in the press release, today, the total revenues for the second quarter of 2011 were $0.7 million, consisting of $0.6 million in royalties on net sales of Fanapt and $0.1 million in grant revenues from the National Institutes of Health and this is in support of both the confirmatory phase III clinical study of Probuphine and the SBIR grant for Titan's proprietary ProNeura drug delivery technology.

Total operating expenses for the second quarter were $4.9 million compared with $3.1 million for the second quarter of 2010, and as you can imagine, this year-over-year increase of $1.9 million in research and development expenses was related primarily to the phase III clinical study of Probuphine and was slightly offset by a little decrease in the G&A expenses and that was about $0.1 million decrease. Net other expense for the three-month period ended June 30 was approximately $2.8 million compared to about $0.1 million in the comparable period in 2010. This increase in net other expense during the quarter was primarily related to interest expense of approximately $1 million resulting from the Deerfield transaction and a $1.6 million non-cash loss related to an increase in the fair value of the Deerfield warrants. Net loss for the second quarter of 2011 was $7 million or $0.12 per share compared with a net loss of $1.8 million or $0.03 per share for the second quarter of 2010.

At June 30, 2011 we had cash and cash equivalents of approximately $6.1 million and, as previously reported, we completed a transaction in April 2011 with entities affiliated with Deerfield Management for a loan of $20 million to the Company. Titan used a portion of the proceeds to repay the outstanding debt and fees of $7.7 million to Oxford Finance Corporation. We paid a facility fee to Deerfield of $0.5 million and fees and expenses totaling $0.9 million for legal and financial advisory services. With the cash on hand and the royalty revenues expected from the sales of Fanapt, we believe that we have sufficient cash resources to fund operations through the end of this year.

The inclusion of the FDA required additional primary analysis, as Marc mentioned earlier, delayed the results of the phase III study by a month or so and this is also -- had an impact on the overall timeline. Based on this, we may need to raise additional capital before the end of the year and we just wanted to mention that today as well.

As Marc mentioned, Titan has engaged the team of Woodside Capital Partners and Keelin Reeds Partners to assist the Company in business development activities for Probuphine. Both of these firms have extensive experience in valuing assets and structuring appropriate transactions for the development and commercialization of products and technologies. And we look forward to [venturing in] this important work together. At the end of the call, Brian and I will be happy to address any questions you may have on the financial report.

I will now turn the call over to Kate to discuss our phase III Probuphine program and results.

Thank you very much, Sunil, and thanks to all of you joining us today, especially to 2 of our leading Probuphine investigators and close colleagues of ours, Dr. Walter Ling and Dr. Richard N. Rosenthal.

As you saw in our press release issued earlier this morning, Titan has announced additional positive results from our phase III placebo and active drug controlled confirmatory clinical study of Probuphine evaluating the safety and efficacy of its investigational drug in treating patients with opioid dependence. These findings build upon the top line data that we announced in July of 2011, which confirmed the clinical and statistical superiority of Probuphine over placebo for the study's 2 primary efficacy endpoints. Now I'd like to discuss these data in more detail and describe the additional findings that we announced today.

First as background, Probuphine is an innovative, subcutaneous implant formulation that delivers a steady round-the-clock dose of the marketed drug Buprenorphine over 6 months following a single treatment in patients. Probuphine was designed using Titan's proprietary ProNeura technology and has been developed to reduce the risk of diversion and abuse, while also assuring compliance to treatment and potentially improved medical outcomes for these patients. As many of you know, this phase III confirmatory safety and efficacy study was jointly supported by a unrestricted grant from The National Institute of Drug Abuse, NIDA, and also by Titan. And the goal of our study was to confirm the safety and efficacy of the treatment with Probuphine compared to the treatment with placebo and then also demonstrate non-inferiority to treatment with Suboxone, which as you know is the currently approved and very widely used sublingual formulation of Buprenorphine for the treatment of opioid addiction.

This was a randomized placebo and active control to multi-center study that we conducted at 20 sites that were very experienced sites in the US who treated 287 patients ages 18 to 60 years across 3 different dosing arms. We randomized 114 patients to Probuphine treatment, we randomized 119 patients to Suboxone treatment, and then finally 54 patients were randomized to receive placebo implants. All the patients were randomized to treatment for up to 24 weeks, however the Probuphine and placebo dosing arms were double-blind, while the Suboxone arm was open labeled. Now our phase III confirmatory study demonstrated several key top line findings that I would like to review briefly. The study first met its primary efficacy endpoint, demonstrating the superiority of Probuphine over placebo on the cumulative distribution function of the percentages of opioid negative urines over the entire 24 week treatment period, with a P value less than 0.0001. And this result confirmed the efficacy of Probuphine that we previously demonstrated with a randomized placebo-controlled trial that we published in the Journal of the American Medical Association, otherwise known as JAMA, this past October in 2010.

Then a second FDA requested primary efficacy endpoint, that both Marc and Sunil mentioned, was also analyzed and demonstrated the superiority of Probuphine over placebo, again on the cumulative distribution function of the percentages of opioid negative urines while incorporating patients self-reported opioid use over the 24 week treatment period. And that was associated with a P value of less than 0.0001. Probuphine was also shown to be non-inferior to Suboxone in its ability to significantly reduce illicit opioid use over the 6-month trial and a proportion of negative urine samples with 31% for Probuphine and 33% for Suboxone in that cumulative distribution function.

And very similar, exactly similar, same rates of trial completion, 64% for Probuphine and 64% for Suboxone. We saw very similar safety profiles between those 2 treatment arms as well. Retention in the trial for Probuphine patients was also superior to placebo patients, with 64% of the Probuphine patients completing the study compared to only 26% of placebo patients, for a P value of 0.0002. And then consistent with our first controlled trial, the rates of adverse events were low and in some cases even lower, but similar between treatment groups. Finally, in office procedures that we used to administer and remove Probuphine and placebo implants were again shown to be very well tolerated by the patients in this particular study. And so building upon these very positive data, our additional analyses that we announced today have also shown some significant findings.

First, we demonstrated statistical and clinical superiority over placebo on the cumulative distribution function of the percentages of urine samples negative for opioid over weeks 1 to 16, with a P value of less than 0.0001 and weeks 17 to 24 with a P value of less than 0.0002. Again, this is consistent with the findings of our first placebo-controlled trial with Probuphine, which was published in JAMA in October of 2010. Probuphine also demonstrated statistical and clinical superiority over placebo for the 24 week treatment period in the mean percentages of urine samples that are negative for illicit opioids, with a least square mean of 36% for Probuphine versus 14% for placebo and a P value of less than 0.0001. Probuphine treatment resulted in significant improvement in clinician rated global severity with a P value of 0.0003 and for clinician rated global patient improvement with a P value of 0.0002 versus placebo at the end of treatment.

Consistent with our top line findings regarding the non-inferiority of Probuphine to Suboxone on the cumulative distribution function of the percentages of urine samples negative for opioids over 24 weeks of treatment, additional data analysis confirm that there were no treatment differences in the mean percentage of negative urine results between these groups, the least square mean of 36% for Probuphine versus 35% for Suboxone. There were also no treatment differences observed between Probuphine and Suboxone in clinician rated global severity with a P value of 0.7831 and clinician rated global improvement with a P value of 0.9881. Probuphine was very well tolerated with the majority of adverse events being mild to moderate in severity and unrelated to the study treatment. In addition, the implant procedures for inserting and removing Probuphine and placebo implants were well tolerated.

Now, we have highlighted the most common adverse events in our press release today and you can see that the rates were low overall and consistent with those seen in our placebo-controlled trial that we published previously. The most common adverse events in the Probuphine treated group were -- headache with 13.2% in the Probuphine arm, 9.3% in the placebo arm and 16% in the Suboxone arm; upper respiratory tract infection 8.8% for the Probuphine group, 7.4% for the placebo group, and 9.2% for the Suboxone group; depression 8.8% for Probuphine, 3.7% in the placebo group and 2.5% in the Suboxone group; and also insomnia, 7.9% in the Probuphine group, 14.8% in the placebo group, and 13.4% in the Suboxone group.

So given our strong results and findings to date, we believe Probuphine represents a very important step forward in the treatment of opioid dependence and we are very much looking forward to sharing these additional findings with the scientific and clinical community at our plenary and poster presentations at the ISAM annual meeting next month in Oslo, Norway, and at future medical conferences and in peer-reviewed medical journals. In terms of next steps, we are planning to review the program at a pre-NDA meeting, as Marc and Sunil both announced, with the FDA this fall. We are also working to achieve our near-term goal to establish a strategic commercialization partnership. Ultimately, our goal is to deliver a safe and effective treatment option for patients with opioid dependence.

And now I'd like to thank Dr. Ling and Dr. Rosenthal for joining us today and I will ask them to make their remarks regarding their experiences with Probuphine. Dr. Ling.

Thank you, Kate. As a clinician involved in patient care and research, I think the most compelling argument for the development of Probuphine is in fact the clinical success of the sublingual form of Buprenorphine. The introduction of Buprenorphine itself is probably the most significant development since the introduction of methadone treatment in this field. Given success though, we frequently attributed to its safety and the effectiveness, of course, we are looking for in helping curtail the (inaudible) opiate use, but most importantly the availability of different norphines literally changed the landscape of treatment. It makes it possible for the first time in about 100 years for the doctors to treat the patients with opiate dependence of all the other patients I have. Which is to say return the treatment of opiate addiction to the hands of the physician in about a century and so they can treat these patients in their usual and customary places like their office.

Although sublingual Buprenorphine was introduced only about a decade ago. There already more patients receiving treatment with Buprenorphine then with methadone, which was introduced more than 40 years ago. And the increase in the number of patients being treated with Buprenorphine is not at the expense of people they have been treated with methadone, because there was a fear in the beginning about losing patients with methadone treatment into Buprenorphine and as a matter of fact, what happened is that Buprenorphine attracts a whole host of new patients into treatment. Still, given norphine success is not unqualified. In the sense that the advantages are also disadvantages. So the strength and the weakness are both sides of the same coin. It's ease of prescribing for patients also led to the problem of having a lot of pills floating around in patients hands and on the street. And so the issue of medication compliance and the potential for diversion of the medications become a real issue for clinicians. And that is exactly where Probuphine comes in.

Strictly speaking, Probuphine is just another way, hopefully a better way, of delivering the same medication as the sublingual Buprenorphine. The unique (inaudible) contribution of Probuphine is that it eliminates the concerns by the clinician about medication compliance and the problems of diversion, which are nearly the 2 most troubling things among the clinicians prescribing Buprenorphine. So I believe Buprenorphine gives the physicians a better sense of comfort and ease of treating their patients and that, after all, is in fact the core mandate of medicine, which is to do no harm. That, of course, hopefully to do some good as well.

Thank you very much, Dr. Ling, for your remarks. We really appreciate that. And now Dr. Rosenthal, would you like to offer your thoughts?

Sure, thank you, Kate. In my opinion, the strength here is that Probuphine combines the right medication with the right delivery system. We all know people that have opioid addiction may have difficulty taking even effective medications reliably. Remember, medication adherence is not a problem simply with the addicted population, but folks with chronic illnesses, like diabetes and hypertension, nationwide/worldwide are well described as having difficulties with adhering to medication regimens that they need to take overtime, chronically. And we also know that people with opioid addition can lose or divert non-implantable forms of Buprenorphine, which puts the public at risk. The Pro-806 trial results confirm that this medication strategy has specific promise in our national battle against opioid dependence, because it's both efficacious and reduces the potential risk to patients for missed doses and also reduces risk of harm to the public through intentional or unintentional diversion.

In addition, similar to the findings of other medications with efficacy in addictions in clinical trials, it's clear that Probuphine has a striking retention effect compared to placebo. Nearly two-thirds of the Probuphine treated subjects stayed in treatment to the end of the study compared to a little over a quarter of the participants in the placebo group. And as you probably know, in addiction trials there is usually pretty high dropout rates. Given the low rate of Probuphine related side effects, which are generally benign, this combined with both the efficacy and retention data should signal an important lowering of the barrier to longer-term engagement of patients and improved compliance with treatment. And this is basically something any clinician is going to want in a medication for treating an addiction.

Thank you very much, Dr. Rosenthal. And thank you again, Dr. Ling and Dr. Rosenthal, for your participation and for your leadership in this study and the Probuphine program overall. It's especially interesting and valuable to get the perspective of 2 practicing clinicians, who are also experienced treating patients with Probuphine over several trials now and with the trial results. And now I'd like to turn the call back over to Sunil and Drs. Ling and Rosenthal and I would be very happy to address your questions. Sunil.

Thank you, Kate. With that, we will conclude our remarks and ask the operator to set up for your questions. Deanna?

(Operator Instructions)

Jason Napodano, Zacks Investment Research.

Congratulations on completing your phase III trial for Probuphine. It was an outstanding results. Thank you for having Dr Ling and Dr. Rosenthal on the call. This is very helpful to listen to what these guys have to say.

Your plans to file for approval, can you give us an update on what the total number of patients -- it was included in the phase III trial the numbers that you plan to include in the filing for both the six months and 12 months, because I know the FDA had established some guidelines there on what they would like to see.

In terms of the overall numbers, as you mentioned, the FDA guidance initially, and recognize this was in 2005 when we first met with them, was to establish a safety database of 500 patients treated for six months and 100 patients treated for a year. And this was also of course on top of having two controlled studies that would provide peer evidence of efficacy. So as you know, we have completed the two control studies now and have established, we believe, excellent efficacy for Probuphine. And in terms of numbers of patients that we have treated, we are just under 300, about 290 patients approximately, maybe 287 exactly, I think, that have been treated for six months with Probuphine. And about 110 patients that have been treated for a year or will be treated, I think there is one study that is still continuing as you know and will end towards the end of this year, which will provide some of these safety database.

Now, in terms of when you think of safety, clearly the way we look at it, Buprenorphine itself is not really in question in that and it is clear that Buprenorphine has been used and there's a lot of safety history on that. The implant procedure and the long-term treatment over here with that, we've established clearly in these two studies with these 287 patients that it is a very safe and long-term treatment. And we've done now more than 500 procedures of actually implanting and removal. This is in both six-month and one-year studies and the placebo patients, and that provides a very good safety database.

So that is where we are in terms of numbers and in our discussions that we will have with the FDA in the pre-NDA meeting this is what we will discuss and we believe that data is very supportive of the program. And we would like to use that to submit an NDA for approval.

Are you seeing good enrollment in your follow-up program? The 811 program. I know from the first phase III trial going from 805 to 807 you had over 70% enroll in that extension. Where are we with enrolling in a 811?

Jason, hi, this is Kate. We are seeing very similar rates of enrollment, actually better. It's over 80% of the patients that were eligible coming out of the 806 trial, which is the confirmatory efficacy and safety study that I just described, signed consent to go into what's called the 811 open label six-month re-treatment trial.

We have actually enrolled 85 patients into that trial. A number of them have completed at this point, some of them are still ongoing and we will be wrapping that trial up before the end of this year. And so all of the studies in our phase III development program that we consider to be adequate efficacy and safety information for the FDA to at least have a discussion about what our NDA should look like will be completed and we believe that we, as Sunil said, have very good evidence of efficacy and safety that would support an NDA.

And one final question and then maybe I will jump back in the queue. Can you give us a sense of what six months of therapy of Suboxone costs? I know it's early to start talking about pricing for a drugs, but if you can give us a sense of what six months of Suboxone costs, I think it would be helpful? And then just in terms of we heard what the doctors perceptions of the drug, but give us a sense of the pharmaco-economics that are going on there? What additional savings or benefits maybe from a cost standpoint or a logistic standpoint does having a six-month implant offer versus a daily pill?

Jason, certainly can give you a range when you look at Suboxone treatments based on the reimbursements in different programs. The cost to the patient itself varies, but in terms of the overall cost, what I've seen are numbers that range from and I'm saying six months treatment that will range from anywhere $1800, $2000 to $3000, in that range. And depending on patients and a coverage of different types and the actual cost to the patient can vary anything from $200 to $300 to $1000. That's just to give you a range within that.

And in terms of advantages of Probuphine and I'll have Kate and Dr's Ling and Rosenthal comment as well. But what we have always mentioned are and clearly compliance has been one of the key advantages that we feel in the setting are very valuable. It truly affects the medical outcome. Kate?

Yes, sure. I think that this is probably a great question for Dr. Rosenthal or Dr. Ling to address, because they are actually seeing patients benefiting from this treatment. Dr. Rosenthal or Dr. Ling, would you care to comment?

Yes, just purely subjectively only looking at my small neck of the woods -- the numbers, the patients that we've had come through this various studies. One of the things I am particularly struck by, and this may have to do, I'm probably getting into the weeds here a little bit, but it may be having to do with the fact that what is interesting is if you think about the cumulative dosing over six months time it is not that high in terms of the brain's exposure to Buprenorphine. But the thing that's really amazing about it is because it is released over time in a consistent fashion, you are not going to see the peaks and troughs that you do with a sublingual medication. And I believe, and we are going to have to look at those data and we're going to have to do further studies to figure this stuff out, but I really believe that that consistent steady state blood level that doesn't change whether you are awake or asleep or what you are doing, is really associated with something different.

And I've seen -- we were dealing with a lot of street addicts. People that were really -- we had a pretty, somewhat wide demographic and a lot of these guys were disenfranchised from their families, were not working. Here your sort of typical opioid addicts. And I've seen these guys heal their relationships with their families, go out and look for jobs, and it didn't happen overnight, it took a while. And these people were also getting psychotherapy, they were getting drug counseling, manualized drug counseling as part of the trial and I think that that combination is incredibly powerful, because they were receptive and I've been treating addicts for a long time. These folks were receptive to the therapies. And they usually not.

So there is something going on here and, again, this is not objective data. This is something subjective, but as a clinician I am struck by the progress that these patients made. Not just in terms of the numbers that we see in the study, vis-a-vis their negative year-end toxicologies for opiates, but more in general their recovery of function as citizens. I am very struck by that.

Thank you very much for that comment. Dr. Ling, anything to add to Dr. Rosenthal's comments?

No, I agree with Rick. I think some of the advantage were external. And we can see that. Pointing to their not having to go to the doctors office all the time. They're not having to attend a clinic, those things we could see.

But I think some of the things that Rick mentioned internal, within the patient's own thinking and perception and then it wasn't all that clear to us in the beginning and that's a positive that is very satisfying when you see them in these trials. We got this idea of having to get up in the morning and think about vacation. Where am I go to a clinic or go to a doctors office or wherever, it is always on the patients mind. And even though we know that they don't have to go across town and all that, but in their mind it makes a huge difference that they don't have to think about it.

Very good. Jason, did that answer your question?

Yes, that was excellent. And just a follow-up to that for the doctors, as far as the implant procedure, this is just routine to you? This is anything that -- is this anything that could inhibit uptake. I mean, do you have any issues with implanting the drug? Are there people that would not want to get an implantable drug?

Jason, I think it's a really good question. I think there is going to be a sub-population of folks that don't want something put in them. There's going to be as a sub-population of folks who are basically opioid addicted, but highly compliant with treatment and high functioning, for whom a sublingual delivery system is going to be good enough.

But I also think that there's a wide array of folks for whom, as Walter said, the ease, the lack of having to remember, the absence of the schlep factor of having to go to a clinic or to a doctors office. Having this thing be on board overtime, is going to lower the barrier to acceptance. I think as the word gets out that is going to propagate.

I think that once, because I know from my own experience of the folks we randomized into the trial, there was some reticence about getting something stuck under their skin and carrying around for six months. But it turned into pretty much a no-brainer after the first implant and after the word got out, they were basically begging -- last couple weeks of recruitment they were literally banging the door down. I don't think that that is going to be much of a barrier.

Appreciate the update guys, thank you.

Thank you very much, Jason.

Jason Kantor, RBC Capital Markets.

Real quick, you mentioned a process for partnering. I am just wondering if you could give us idea of what criteria you are looking in terms of type of company, types of geographic coverage, types of terms? What would you be hoping to achieve?

Sure. In this setting, for us we see Probuphine certainly both, as being used both in the US and in European countries as well. And so our approach to partnering is one of looking at companies that could help us in commercializing this both in the US and overseas. And in that setting, we are looking at companies that are already either in this arena or certainly addressing the -- in the markets whether they are specific to addiction or to the related therapies where the same doctors and so on are being seen routinely.

The size of the companies also is varies. We are looking at both specialty pharmaceutical companies and the larger companies as well. And those that have a specific interest in this market arena.

And over the past few months, prior to having these results, our goal has been to educate these companies on Probuphine, on the market, on what we see as the advantages and opportunities out there. And we have done that along with Woodside Capital and Keelin Reeds. They went through the process of find several companies that were contacted. We have just spoken with many companies and educated them. And we are now into the next steps of getting them to look at the most recent data set, taking them through that process and getting to the next stages of where seeing the interest deepen and get into looking at the nitty-gritties of any partnering process, going through the due diligence so on.

Does that address where we are, Jason?

Yes, that is helpful, thank you.

Great, thank you very much.

John Cangelosi, Private Investor.

In early of July, the FDA wanted additional information on the phase III trials of Probuphine. Was there any progress on that matter?

In terms of the additional information and what was asked was specifically to analyze the data from this trial, including some additional information besides the urine negatives. And this was specifically including information on patients self reporting of opiate use to combine that with the urine negative or positive data and then analyze that. And we did that and that was the second primary analysis which also showed to be highly significant in this setting. Kate, any -- ?

Yes and that was really what they were interested in seeing from us, John. As both Sunil and Marc and I have mentioned, we are going to be meeting with the FDA later this fall to discuss the content format of our NDA. And so we will be providing the FDA further information at that time, greater details around the current study or other studies and our plans. Does that answer your question?

Yes.

Very good, thank you.

Thank you very much.

(Operator Instructions)

Private Investor Arthur Davis.

I really have two or possibly three questions. The first question is do you have a date certain for your meeting with the FDA? And if not, what steps have you taken to get one?

Sure. Arthur, certainly we have requested for a meeting and, yes, there are some tentative dates that have been talked about and we are waiting to confirm those. But we expect it to really be in October timeframe is where the dates seem to be at this point. I cannot give you a specific date at this stage, but that is the timeframe.

Thank you. Next question, there seems to be some ambiguity concerning the royalty rights that would accrue from the various uses of Fanapt in foreign countries and the extent of royalty rights in this country. Can you shed any light on that? This question results from some e-mails you have exchanged with some private investors and the 10-Q that was filed yesterday.

I can certainly tell you what the inner royalties are based on. I don't know about the e-mails, but there have been certainly e-mails from investors to me asking to clarify and I though provided the same thing we have said in the last couple of Q's. Essentially, the royalties to Titan are based upon the patents that were licensed from Sanofi-Aventis and that is specifically on those patents. If those patents have expired in countries, then Titan receives no royalty from those -- from any sales in those countries.

Currently, the patent in the US just recently the extension of -- the five-year extension on top of the original patent was granted by the patent office. And so the orange book and so on, if you're familiar with that, is being updated so that royalties in the US definitely will go through September of 2016. And this is a composition of matter patent, which means any formulation using Haloperidol in it will be covered by this patent and therefore royalties will be owed to Titan.

There's the potential of an additional six-month extension passed that September 2016 date and that is based on pediatric extensions, you may be familiar with that. It requires certain work that has to be done and that needs to be filed. I do not know for a fact whether that will be done or not, but generally every pharma company tends to try and receive that extension. And so does the work. Outside of the US, there are specific countries which are included in our 10-Q, Portugal, Lichtenstein, Georgia, Korea, Philippines and so on, that where the patent is still valid and any sales in those countries would be covered by those patents. Outside of those countries, the patents have expired and Titan would not be getting any royalties from Iloperidone, any form of Iloperidone in those countries, as I state.

Thank you very much, that's an excellent answer and I appreciate it.

Sure, no problem.

(Operator Instructions)

Mark Cohen, Westside Investment Management.

I had a question for our guest or actually a few questions for our guest panel members this morning and I was wondering if they would discuss possibly why practices or physicians would be reluctant to prescribe this for their patients?

Rick, do you or Walter, do want to address that question for us

Yes, as I said before, I was discussing barriers and I think that there is probably going to be some initial barriers to prescription. As you well know, the Institute of Medicine talked about 10 to 15 year gap in transmission of clinical research data into clinical practice. I think part of that is going to be the job of marketing and communication to get the word out. The fact that there has been a prior implantable medication in OB/GYN, I guess, helps so that there is at least a cognitive space there in clinicians mind that there is something there that is not completely newfangled in terms of an approach.

But I do think that people are creatures of habit and they don't adopt things that quickly. One of the barriers just might be inertia and adoption of new technology. I think the data more than speak for themselves, upon approval, proper education is going to help adoption.

But as you well know, the addiction field is a funny one, because the primary care domain is undereducated and underutilized as the existing approved methodologies for treating addictions, both alcohol, opiate, et cetera. There should be a whole lot more folks getting treated with these medications and I think that that's a national level problem and a national physician education problem. So that's a more generic response, because I don't think there is all that much specific to Probuphine that will be a barrier.

I think another piece that is more specific might be primary care docs knowing somebody who knows how to do the implant. Having an OB/GYN that has done that kind of implantation before, because those folks are usually very comfortable doing Probuphine implants because they know how to do it already. But the truth is that it's not a big surgical deal. It's a relatively simple procedure and well-tolerated.

But again, you ask what are the potential barriers to uptake and I think that may be one, as the learning curve in terms of both the intrinsic knowledge base or the referral base to people who know how to do that. But I also think that combined with that, there is going to be a subgroup of probably younger docs that will be interested in picking up a new procedure, especially on the behavioral health side. I wanted to do it for the study and I was prohibited because I was a principal investigator and I couldn't break the blind. So I couldn't learn how to do it.

But my intention is now as a practicing clinician, I do those procedures myself. So I'm going to learn how to do it and be done with it. And I suspect there's going to be a lot of folks that will be interested in gaining, especially, as I said, on the behavioral health side that will be interested in getting a procedure that they can do in the office and administer Probuphine.

Thank do so much Dr. Rosenthal. Mark, did that address that question for you?

Yes, that sort of addresses that. But I would be curious within their own practices, to the extent that they are treating patients, what percentage of patients within their own practices would they use this treatment for? Roughly?

Walter or Rick? Either one of you want to take that question?

This is an interesting one. Off the top of my head, you would sort of intuit that this is for the really rough patients. The ones that are non-compliant and difficult and, as I said earlier, there are folks that I have that are high functioning, but addicted for whom I am not that worried about compliance and what have you.

But the truth is, is that in early recovery, especially when I get new folks, many of them really have to go in and out a number of times before they get it. And that's the history of recovery from addictions is that people kind of quote, hit bottom, unquote or slam against the wall a bunch of times or have to be detoxed a bunch of times before they get it, especially when you're working with younger age groups. And I think that I am more likely to use these medications, like Probuphine, in that population, because it's a stabilizer, as I was talking about earlier. I've seem just really amazing stabilization and if that's what you're going for, even if it's going to be -- we are only going to do this for the first six months. And then we can decide afterwards if you want to go to sublingual or not. I think it's a terrific first choice for someone getting into early opioid dependence recovery.

And of course if it ain't broke you don't fix it, so my hunch is that a lot of people will want to stay on it for a while. So I think a number, I don't know, 40%, 35%? A goodly percentage of new cases, I think, would be really good candidates for stabilization in this way. Maybe more. And I think that that will be -- that will require lived experience in the community much in the way that the uptake of sublingual Buprenorphine took a while and took a lot of pushing and then people started to see just how efficacious it was. And then you got a pretty good uptick and a lost of people getting their waiver and getting trained to do it.

Great, thank you so much, Dr. Rosenthal. Any other questions.

Two other quick ones. One is a little bit of a follow-up to that, which would be given the acceptance rates of the medical community in general with treatments like -- I won't say like this, but on the medication side, how long do you think it would take for the medical community at large to adopt something like this? What is the learning curve? I assume this would be years, but how long do think it would take to get to any sort of real scale?

That is really a good question and I think actually it is accelerating, because if you look at the FDA approvals for medications over the last 40 years, there is a long, there's a several decade gap between the first and the second medications. Between the second and third it was about 12 years. Between the third and the fourth I think was eight or something like that. And so it is starting to increase.

I think that the uptake may be even shorter than that with Buprenorphine -- sublingual buprenorphine, because I think once people kind of get wind, oh, this thing is really good and you put it in once and it is good for six months and people do really well, that's going to create some buzz. And I think that with the diversion issue pushed aside, a lot of the reticence that some clinicians have towards getting on board with office based treatment of opioid dependence is going to fall away. I would hazard a guess you are going to have a steeper implementation curve.

And how would this affect the economics of the individual physician or clinic practices?

I think it's going to allow you to take on more patients. I think that the visit rate is likely to decrease over time, because people will probably stabilize more quickly. Which will allow the focus to be more on the psychosocial recovery from addiction and grabbing your life back, because the medical stuff has been stabilized, which is really the right frame.

So do think this would actually increase a practice's revenues or possibly decrease it?

It may be neutral, because I think that you're going to get a procedure fee from doing the implementation and explantations every six months. It's hard to suss that out, but I don't think it's going to be -- I think it's going to allow people to take on more patients. I certainly know from my colleagues who started Buprenorphine practices, that once word got out, they were swamped.

And just to add one comment to that and thank you so much, Dr Rosenthal, for your insights there. Mark, we are planning a very significant pre-launch and obviously post launch educational outreach to clinicians, physicians. The Company that markets the sublingual forms of the drug Suboxone has done just a suburb job, particularly over the past several years in raising awareness, growing the market. We think there is a lot of growth still to be had and I can tell you just anecdotally in terms of acceptance and in adopting this new treatment, in both of our clinical trials -- control trials that we have done to date, we enrolled them early.

The first trial enrolled completely one month early. The second trial enrolled almost four months early. And so the word is starting to get out there. We have patients on waiting lists now that would like to get into subsequent trial. I regularly get e-mails from parents, from colleagues, from patients themselves who want to know when this drug is going to be in the market.

So I really think it is going to be a matter of very good strategic outreach, community, physician, and third-party payer education about this. But the market is already there and, as I said, it's been a growing market. The amount of growth over the past five or six years has really been tremendous.

I was wondering if there is any way to develop a six month treatment for day traders for very little Prozac here or something?

(laughter) We could work on that given the right infrastructure if you could provide that.

Thank you for having Dr. Ling and Rosenthal be available, it was very helpful.

Hello?

Yes, hi, Walter.

I am sorry. I don't know why I got cut off.

I am glad you are all right.

Walter, any other comments from you, we are going to wrap up the call very shortly, I think.

No, I think Rick addressed the issues about the potential varies and all that. Opiate treatment with an opiate is always controversial, but there is more of a philosophical issue other than logistic issue. I think the logistic issue not easy to overcome.

I like things like the implant. Get someone to do or learn how to do it, those are easy. Philosophically, there are always some people who believe that they don't want to keep in agony to an adict and all that. I had a lot to do with philosophical beings. But if you look at the success of sublingual Buprenorphine, then you know that when it gets down to real life, patients, that's why they like it.

Great. Well, thank you very much, Dr. Ling. That was a great added comment there.

Hank Beinstein, Gagnon Securities.

I want to congratulate you on really putting together a very informative presentation. I had two unrelated questions. The first, I guess, would be addressed to Dr. Beebe or Dr. Rosenthal about were there any incarcerated prisoners who were included in the trial. Because I believe this is an area that has some significant need with respect to addicted inmates at various institutions who are released into the general population and then revert back to their opioid addictions and so forth. I was curious to know if any incarcerated prisoners were involved in the trial?

That's a really insightful question, Hank, and it's certainly a population that is of great interest to us and to the addiction community, as I'm sure you know. We did not enroll prospectively any incarcerated patients. That was not really the focus of this particular program. Our main goal here is to get FDA approval and once we do get FDA approval, we would be likely to study incarcerated subjects.

We did have, however, a number of subjects who became incarcerated during the course of the trial. Many of them were able to stay in the trial and did very well. These were short-term incarcerations, not long term. But that is certainly a patient population that I think could greatly benefit from this type of treatment.

Subjectively, I had one patient who had just done 24 years and he had come out and was back on the street using and then got into the study. And he had a lot of work to do in terms of learning how to maintain himself, not behind bars and in the community and dealing with his parole officer, et cetera. And he's actually gone on to be in a long-term inpatient drug free community, because after six months in the study he had stabilized so much that he chose voluntarily to continue on and really put some work into his recovery. But he did exceedingly well and one of his concerns was about going out and ending up back behind bars and he, at least subjectively, he attributed being in the program -- in the study as helping him stay out in the community. For what it is worth.

That is great to hear, thank you. My other question related to one of the financial issues. I noted that we have hired both Woodside Capital and Keelin Reeds Partners, they are two separate and independent firms. And I'm curious to know why we opted to hire two firms and what each one of them is doing for us?

Sure, Hank. In this setting, obviously, you've probably seen names of different firms who provide both advisory and analytical services to small companies to run the process of partnering and help out in the business development activities.

These two, although they are separate firms, they work well together and have worked together on other transactions as well. And Keelin Reeds is primarily focused in the analytics and valuation of assets and in that arena. And Woodside Capital focuses more on identifying companies, contacting them, working with companies. And the two together provide the full breadth of services that we felt were important to do this transaction and get the best value for the shareholders and so on.

Excellent. And between the two of them round numbers, how many interested entities have expressed interest in the drug?

As always, we have talked to many companies and numbers, I think I've even mentioned in the past, we've talked to 10 or more companies initially. And then as we continue to educate them, it gets to where who are the most interested at this stage? I can certainly say there are more than five companies that we -- that have continued on to dig further and further. I certainly hope they all are there as we get into the next stages as well.

Excellent to hear. Thank you so much for such a comprehensive report.

Sure, thank you very much, Hank, and appreciate all of you.

I think with that wanted to thank everyone for participating, especially Rick and Walter, Dr. Rosenthal and Dr. Ling, for their participation both in the study and in today's call. Especially interesting and valuable to get their perceptives in the setting as well.

With that, would like to thank everyone. It's an exciting and important time for Titan. The positive results from our phase III study of Probuphine. These mark an important corporate and clinical milestone for us.

And we are continuing our ongoing discussions to advance this program and potentially establish a strategic partnership that will help bring this new and novel treatment to patients and help realize the value of Probuphine for all our shareholders. With that, thank you for this call and look forward to speaking with you again in a few months.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation.