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Monday, March 21, 2011

Titan Announces $20 Million Credit Facility

From VFC's News, Notes & Weekly Stock Watch at VFC's NEW Stock House.

TTNP:  Titan Pharmaceuticals announced last week that it will release results for the fourth quarter of 2010 on Friday March 25th, with a conference call and webcast to follow on Tuesday the 29th.

The Fanapt numbers have been in for over a month now, so there should be no surprises, although investors will expect to hear comments regarding the $20 million credit facility with Deerfield Management announced last week and the progression of potential partnership talks for Probuphine.

Results from the Phase III Probuphine confirmatory trial are expected in at the end of the second quarter and past actions and statements from Titan have indicated that the company may be looking for a partner, although I have always thought an outright buyout of the company was more likely.

Last week's credit facility in effect repays another existing credit facility, and it's yet to be seen how Titan will employ this line of credit - is it a holdover event to buy additional time to find the right partnership/acquisition deal, or does Titan truly plan to go-it-alone in bringing Probuphine to market?

If the latter is the case, then more money is going to be needed at some point.

The one aspect of the deal that I don't like, however, is the 2.5% of Fanapt revenue that now does not go into the Titan bank account.  That could turn into Titan giving away free money in the long run because the future Fanapt sales are still tough to determine.

That said, Titan might not plan on sticking around long enough to find out; if this deal is just a holdover until the right buyout terms materialize.

The market reacted ho-hum to the announcement last week, but with the conference call and earnings announcement set, TTNP might garner a little bit more attention this week.

Disclosure:  Long TTNP

1 comment:

  1. RE: Titan giving up 2.5% of future Fanapt sales to Deerfield.

    I'm not sure you have had a chance to read the detailed 8-k filed, but in short Titan received $3 million from Deerfield for their percentage rights to Fanapt. (See page 1, Royalty Agreement, Exhibit 10.3)

    You said you didn't like the loss of part of the Fanapt revenue. With this new information, I'm curious to see if this changes your opinion? To me, Titan immediately brought forward almost 2 years of Fanapt sales. (I used $400K a quarter times 8 quarters and got $3.2 million.) I understand sales could increase, but this seems like a decent trade off given the size of the credit facility?

    Your thoughts are appreciated.
    Thanks,
    C.C.

    ReplyDelete

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