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Thursday, June 6, 2013

Titan Pharmaceuticals: Will Braeburn Throw in the Towel

Titan Pharmaceuticals (NASDAQOTC: TTNP) announced on Wednesday an amendment to its agreement with Braeburn Pharmaceuticals. This amendment specifies some very important concepts for Titan's shareholders. The amendment changed the termination clause in the agreement:
"The amendment primarily modifies certain of the agreement's termination provisions by providing Braeburn the right to terminate the license in the event significant additional clinical work or a material change to the product label will be required by the U.S. Food and Drug Administration (FDA) as a condition to approval of the New Drug Application (NDA) or if the NDA is not approved by June 30, 2014."

There are a few important parts of this agreement. The "in the event significant additional clinical work" is important, as Braeburn will be able to opt out if additional work is needed. Unfortunately, the press release does not define 'significant' additional clinical work. However, given Titan's CRL had the following quote:
The CRL states that the FDA cannot approve the application in its present form. The FDA has requested additional data supporting the efficacy of Probuphine, including:
  • The ability of Probuphine to provide opioid blockade of relevant doses of agonists
  • The effect of higher doses of Probuphine, ideally doses more closely approximating the blood plasma levels associated with sublingual doses of buprenorphine of 12 to 16 mg / day
  • Human factors testing of the training associated with Probuphine’s insertion and removal
The CRL also included recommendations regarding product labeling and the implementation of the Risk Evaluation and Mitigation Strategy (REMS)."
It looks as though the FDA may look for additional clinical trials if it is going to want to know about the 12 to 16mg/ day dosage point. If Titan has to conduct additional clinical trials, expect for Braeburn to find an excuse to get out of its partnership with Titan.
Furthermore, it is not entirely certain that the label will not change as the press release even says that the CRL also included recommendations regarding product labeling. As you notice above, if the product label changes, Braeburn has the right to abandon ship. This possible change could also provide a scenario for Braeburn to leave.
However, the most important part of Braeburn's amendment, and why I personally believe that Braeburn will abandon the partnership is the part about an NDA being approved by June 30, 2014. Given the current timeline for FDA submissions, the likelihood of the FDA even reviewing the NDA by that time is relatively low. It would depend upon Titan getting a favorable classification for the response, as well as Titan not having to conduct any additional clinical trials. It is unlikely that Titan will be able to draw up its response in time for a possible approval by June 30, 2014 and thus Braeburn's hand will be strengthened. However, in this scenario an interesting possibility exists. If the review is not completed by June 30th Braeburn could possibly renegotiate the terms of the partnership with Titan to be much more favorable to Braeburn, otherwise Braeburn could threaten to leave the partnership and stick Titan with a product for which Titan will have to find a marketing partner. This strategy could work out for Titan in the end, or it could end up horribly for Titan. 

Only time will tell what Braeburn will end up doing about its relationship with Titan. One thing is clear though; Braeburn is looking for a way out if the relationship does not work done. Braeburn has found its ticket out of the relationship, and the question will simply come down to the FDA, Titan, and Braeburn to see if this partnership will last. This amendment reminds me a great deal of what happened to Alexza Pharmaceuticals (NASDAQ: ALXA)  with their previous partnership before finding in my opinion an even better partnership. Overall, this could work out for Titan either way, but for right now it seems to be out of Titan's hands and solely dependent upon what the FDA chooses to require. 

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