First looks can be deceiving. In its latest quarterly report, Titan Pharmaceuticals (TTNP) reported revenue of $1.3 million, a year-over-year increase of 160%. However, a closer inspection reveals Titan was the recipient of a $1.2 million grant. Which means product sales of $115,000 have actually declined by 45% since the previous quarter.
Although Maxim analyst Jason McCarthy admits the latest quarterly drop in revenue was largely due to COVID-19 “limitations impeding marketing efforts and patient/physician interaction,” the 5-star analyst is nonetheless concerned by the company’s financials.
“While COVID is a factor, fundamentals are sound and Titan is taking steps to work on aspects of the relaunch of probuphine,” McCarthy noted. “Our concern is the cash balance. Titan ended the period with cash of $5.4M. The cash balance is expected to fund the company only through 3Q20.”
Titan’s success currently hinges on its only commercial product, Probuphine, a buprenorphine implant used to treat opioid use disorder (OUD).
The drug was approved by the FDA in 2016 and bought to market the following year by former partner Braeburn Pharmaceuticals. However, due to various factors, Braeburn returned the product to Titan in 2018. Titan has since relaunched Probuphine. Last June, the EU approved the product under the brand name Sixmo and Titan has since partnered with Molteni Farmaceutici. The Italian pharma company are overseeing the commercialization of Sixmo in all 28 EU member states.
Additionally, in the US, Titan has entered into several collaboration agreements which should help strengthen nationwide payer coverage and improve patient access. These include deals with specialty pharmacies such as CVS Caremark, Southside Specialty Pharmacy, and Accredo.
The company has also used the pandemic to set in motion various promotional activities. These include training a commercial team to use digital communication techniques to form relationships both with existing and new health care providers (HCPs) and making use of social media to raise awareness of Probuphine.
But with extra promotional activity come additional outlays and McCarthy increased expense estimates for 2020 from $16.3 million to $19 million, and for 2021 from $19.5 million to $22.7 million.
That’s where McCarthy’s cash balance concerns come into play. Accordingly, while the company “addresses its capital needs,” McCarthy downgraded his rating from Buy to Hold alongside taking the previous $1 price target off the table. (To watch McCarthy’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
