Thank you for holding, and welcome to the Titan Pharmaceuticals Fourth Quarter and Full Year 2011 Financial Results Conference Call. [Operator Instructions] Please be advised 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, Kevin, and thank you all for joining us. Welcome to the Titan Pharmaceuticals call to review financial and operational results for the fourth quarter and full year 2011. Before we begin, let me remind you that we filed our 10-K and subsequently issued a press release on Friday last week, detailing our fourth quarter and full year financial results. This press release can be found on our website at www.titanpharm.com. 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, Vice President of Finance. Before we get into the details of the fourth quarter and full year performance and an update on the company, I want to remind everyone that certain matters we will discuss today, other than historical information, consists 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 the results of new information, future events or circumstances or otherwise. Having said all that, let's start with an overview from our Executive Chairman, Dr. Marc Rubin. Marc?

Thank you very much, Sunil, and hello, everybody, and thank you all for joining us this afternoon. To start, I would like to say that the board has been very, very pleased with the significant progress that the Titan team has been making in building the clinical data foundation and confirming our regulatory path for our Probuphine development program. Last summer, Titan announced positive top line results for our Phase III confirmatory study for the treatment of opioid dependence, as well as additional positive results demonstrating overall patient improvement and a similar clinical profile to the approved drug, Suboxone. Since that time, Titan has continued to add to the clinical support for Probuphine with consistent, positive results from an open label 6-month safety retreatment study just announced earlier this year. In the fall, the company had a very positive meeting with the FDA. At this meeting, we discussed and defined the regulatory path for Probuphine. And the FDA minutes from that meeting confirmed that Titan's clinical program completed to date is acceptable to the FDA to support the submission of an NDA via the 505(b)(2) pathway. Importantly, the FDA has also provided clear guidance on the submission requirements for an NDA to be considered for priority review. We are now working to complete the analytical testing of Probuphine to provide additional Chemistry, Manufacturing and Control or CMC data requested by the FDA; to complete the manufacturing facility expansion and qualification for commercial scale production of Probuphine; and to complete the preparation of integrated clinical data, summary reports and electronic document preparation. And we are on track to file our NDA in the third quarter of this year. This collective progress has strengthened our ongoing partnership discussions, and has recently advanced them into the initial term sheet phase. We are continuing to work with the teams at Woodside Capital Partners and Keelin Reeds Partners in all aspects of the business development activities, and we appreciate their hard work in helping us establish a strategic partnership. Ultimately, as you know, our goal is to bring a novel treatment for opioid dependence to the physicians, to the patients and the families that have shown a real and a critical need for new therapies. This is a very exciting time for Titan, and we look forward to keeping you updated on our progress as always. And with that, I will pass the call back to Sunil. Thank you.

Thank you, Marc. Next, I will provide you with the fourth quarter and full year financial results, and then I'll turn the call over to Kate for an update on our Probuphine development program. And of course to conclude, we will open up the call for your questions for the Titan management team. So let's start with the financial results. Total revenues for the year 2011 were approximately $4.1 million, consisting primarily of $3.6 million in royalties on net sales of Fanapt and $0.5 million in grant revenues from the National Institutes of Health in support of the confirmatory Phase III clinical study of Probuphine and the Small Business Innovation Research grant for Titan's ProNeura technology. Total revenues for the year 2010 were approximately $10.1 million, consisting primarily of $7.6 million in grant revenues and $2.5 million in royalty revenues. Titan has paid approximately $1.8 million of the 2011 royalties on sales of Fanapt to Deerfield Management in accordance with the terms of the agreements entered into during 2011. Total operating expenses for the year 2011 were approximately $14.6 million, compared with approximately $16.1 million for the full year 2010. Research and development expenses for 2011 were approximately $11.2 million compared with about $12.9 million for 2010, a decrease of about $1.7 million. The decrease in R&D expense was primarily associated with a decrease in external expenses related to the Phase III clinical trials of Probuphine, which as you know, were completed in 2011. General and administration expenses for 2011 were approximately $3.4 million, compared to $3.2 [ph] million for 2010. So just about the same. Net other expense for 2011 was approximately $4.7 million compared to about $0.8 million in 2010. The increase in net other expense was primarily related to interest expense of approximately $6.2 million, which resulted from the accounting treatment of the Deerfield Management long-term debt, warrant liability and royalty liability, and about $0.2 million of interest expense related to the Oxford Finance Corporation loans, which were retired after completing the Deerfield Management financing. This was offset, in part, by a $1.9 million noncash gain related to decreases in the fair value of the Deerfield Management warrants. Net loss applicable to common shareholders for 2011 was approximately $15.2 million, or $0.26 per share, compared to a net loss of about $5.6 million, or $0.09 per share for 2010. The net loss for 2011 includes the noncash gain of $1.9 million resulting from changes in the fair value of warrants issued as part of our March 2011 transaction with Deerfield Management. As you know, during 2011, Titan entered into several agreements with Deerfield Management that collectively provided Titan with approximately $25 million in cash, of which, $10 million is in the form of debt. This, in return, for most of the future royalty payments from Fanapt that may be received by Titan under its sublicense agreement with Novartis. The debt bears an interest rate of 8.5% per annum which is paid quarterly, and the principal payments will be made in 4 equal annual installments of $2.5 million commencing in April 2013. Deerfield Management also receives 6 million warrants to purchase Titan common stock with an excellent [ph] price of $1.57 each. At December 31, 2011, Titan had cash of approximately $5.4 million, compared to approximately $3.2 million at December 31, 2010. Titan believes that its current working capital will be sufficient to sustain planned operations into the late second quarter of 2012. With the Probuphine NDA submission expected in the third quarter of 2012, the Titan board recognizes the need for additional funds to support our final NDA preparations and submissions, and we continue to assess all of the options in order to maximize long-term shareholder value. I am happy to report that our ongoing partnership discussions are progressing well. We just need [ph] to have interest from several companies and the due diligence process is ongoing with multiple potential partners. Also as Marc stated earlier, our partnership discussions have recently advanced into the initial term sheet phase. We will continue to keep you updated as these discussions progress over the next several months. At the end of the call, Brian and I will be happy to address any questions you may have about the quarter or the full year financial results. I will now turn the call over to Kate to provide an update on the Probuphine clinical development program and our NDA submission process. Kate?

Hi. Thank you, Sunil, and thanks to all of you joining us today. As Marc mentioned, in July and August of last year, Titan announced positive top line results for our Phase III confirmatory study of Probuphine for the treatment of opioid dependence as well as additional positive results demonstrating significant overall patient improvement, a very good safety profile and an overall clinical profile similar to the approved drug, Suboxone. In building on its findings, Titan announced the results of our open-label, 6-month safety retreatment study known as PRO-811 in patients with opioid dependence in February of this year. This was the fifth and final trial to be completed as part of our Phase III development program for Probuphine. This safety retreatment study enrolled 85 patients at 18 clinical sites and provided 6 months of open-label treatment with Probuphine. Study protocol included standard safety monitoring of patients similar to what we've done in previous clinical studies, including the evaluation of opioid withdrawal and opioid craving symptoms, as well as patient's self-report of illicit drug use. Additionally, this particular study also included a patient satisfaction survey that was completed by 53 of the 67 patients who finished the study, and the highlights are as follows: Essentially overall, more than 80% of eligible patients from the confirmatory Phase III clinical trial consented for treatment in this follow-on safety study. And of these, 86% of the patients who had previously been treated with Probuphine consented for retreatment. Our patients in the Phase III trial, you'll remember, received Probuphine or placebo implants for open-label sublingual buprenorphine. Also, 67 patients or 79% completed the 6-month retreatment study with more than 90% of the completers indicating that if given the option, they would elect to receive further treatment with Probuphine. And at the end of treatment in this study, 80% of patients who reported that they had not used illicit opioids within the last 2 weeks. According to patient-recorded data as well as clinician assessments, symptoms of opioid withdrawal were also well controlled during the study, with patients reporting that their opioid cravings were well controlled, and nearly 95% of patients reporting that they were able to improve their lives while taking part in the study. And overall, Probuphine was well tolerated, including the implant insertion and removal procedures. But the most common adverse events reported things like headache at 12%; upper respiratory infection at 8%; back pain, 6%; and urinary tract infection at 6%. On the regulatory front as Marc has mentioned, we've confirmed the regulatory pathway for Probuphine with the FDA. And we're now working to complete the analytical testing of Probuphine to provide additional CMC data as requested by the FDA; the manufacturing facility expansion and qualification for commercial scale production of Probuphine; and the preparation of integrated clinical data, the summary reports and electronic document preparation are all on track to file our NDA in the third quarter of this year. As you know, we've presented our Probuphine clinical data at several national and international scientific conferences and meetings. And for upcoming presentations, I'll be at the American Society of Addiction Medicine or ASAM, 43rd Annual Medical-Scientific Conference at Atlanta next month, where I'll present a poster on the Probuphine Phase III data, including the findings from our recent PRO-811 open label safety retreatment study. And this presentation is scheduled for April 20 at 1:30 p.m. Eastern time. We're also continuing to pursue future presentations and publications of the data, which we will update you on as appropriate. Ultimately, our goal is to deliver a safe and effective treatment option for patients with opioid dependence, and these recent clinical and regulatory advances continue to move us forward towards that goal. Now I'd like to turn the call back over to Sunil, and I would be happy to address your questions. Sunil?

Great. Thank you, Kate. And Kevin, we are now ready to take questions from the participants.

[Operator Instructions] We'll go first to Jason Napodano with Zacks.

Give us an update on the manufacturing facility expansion. What's exactly going on there? And has the FDA been out to inspect the facility? And is that something that they have planned to come and do later in the year?

Sure. In terms of the facility expansion, as we have indicated previously, this is geared towards the commercial scale, the manufacturing capability, which essentially is a 2.5x the clinical scale level. So it's not a huge jump in the quantity of production, but it requires automating some steps in the downstream processing. And that's the work that is going on at DPT Laboratories at this time. It is continuing as we said in the last time, and we felt that the air handling equipment that is necessary was going to take a little bit longer, whether that is on schedule and we continue to expect to complete this in late second, early third quarter of this year. At which point, we will make the qualification runs that are necessary before we can file an NDA. So that's sort of the status on that. Now as far as the FDA, when we met with the FDA, they had accepted the overall plan that we have presented on this scale up. And they said that they will evaluate and validate the process when they inspect it, which is normal for any new product. They will look at it after the NDA has been submitted and during the process of review. So that's the status, Jason.

Is there any chance that you could file the NDA before the -- all of the batches have been created? Like a supplement essentially?

One of the requirements for filing an NDA is that you have completed the capability to manufacture at a commercial scale. So you have to be ready for inspection as of the day that you file. So that's the guideline and that's what we're following, Jason.

Okay, that makes sense. Let me ask a question about the data from the -- that you generated from the Phase III program. If I recall correctly, if a patient missed a follow-up visit, they were counted as a negative in your 805 and 807 trials. Was that the same...

Positive. Counted as positive.

I'm sorry, positive. Correct. Positive in 805, positive urine. Correct. Was that the same protocol that was in the open label program? And did you see any actual difference in positive urine samples between the blinded programs and the open label programs?

Good question, Jason. And just a reminder that the open label safety retreatment trials were really for safety assessment. That was the primary objective of those, the 807 and the 811 trials. And as such, we were collecting medically related safety information such as adverse events, serious adverse events, vital signs, laboratory values and some pharmacokinetic data. The secondary endpoints included assessment of efficacies that do not include urine toxicology. So we looked at patient-rated and clinician-rated opioid withdrawal symptoms, patient-rated craving symptom, clinician-rated and patient-rated overall global disease severity and improvement in disease severity and things like this. From the efficacy standpoint, we saw very good control of opioid withdrawal symptoms and cravings as reported by both patients and their doctors, as well as the majority of patients being rated as responders, that has very much improved or much improved by their clinicians at endpoint. So no urine toxicology data in the safety extension studies, but good signal in terms of control of the symptoms for which most patients will then use their illicit opioids.

Okay. And then one final question. As far as your conversations with partners, have you guys -- are handling the analytical work? You're obviously working at the manufacturing facility, have your partners given you interest that they're of a desire to be part of the NDA filing? Or do you think that, that is something that they're happy to let you guys handle and file essentially without a partner?

Sure, Jason. In general, the process with the partners has been one where there is a lot of due diligence, where they evaluate all of the work that is being done, understand what we need to complete, and it goes from there. We currently are absolutely comfortable with doing all of the work for the NDA. We have a very strong team in place. Both external experts, CROs who are helping us do a lot of the work, and companies that we have worked with in the last, I don't know, few years, with regard doing the analytical work. So we feel very confident of being able to do these ourselves. Certainly, our goal is to be able to establish a proper commercial partner so that we can take advantage of all of the time before this gets commercialized, to make sure that it’s properly commercialized. So that goal still remains. But the NDA, we are happy to take help or do it ourselves, both works fine with us.

[Operator Instructions] We'll go next to Hank Beinstein with Gagnon Securities.

I wondered if you could add a little color to the partnership negotiations. You said in the call -- I think Marc said in the call, that the negotiations were progressing well and that the negotiations have developed into multiple potential partners and term sheets have been developed. With that in mind, could you give us a little more color on just how many people or how many entities we are negotiating with? And if everything went well, what would be the approximate timing in your estimation for a transaction to be announced?

Hank, in terms of what Marc said earlier, essentially, that we have now entered the initial term sheet phase. And what I wanted to mention -- and they're 2 or 3 things. First, several companies, both specialty and larger pharmaceutical companies have expressed interest in Probuphine and continue to evaluate the opportunity with their due diligence of the information. And they also are doing independent market research of their own along the way. We are in initial term sheet stage, and to provide anything more would really be inappropriate at this stage. So -- and it's not something I can provide a lot of details on right now. But absolutely, we will keep everyone updated as we continue to make progress in this setting. So, Hank, unfortunately, I cannot give you a lot of details, but we will keep you updated.

Okay, that's a fair enough answer. I guess it really focuses back on your ability to have adequate capital, which you kind of indicated will take you through the end of Q2, and the filing which may take place in Q3. So have you -- how are you going to deal with that?

I understand. And as you can imagine, the Titan board is very aware of the resources that we need to complete the NDA submission. And we continue to assess all of the options to make sure that the appropriate resources are available in a timely manner. Okay? It's always our goal, is to maximize long-term shareholder value and we will continue to do that and continue to look at all the options in this setting. But Marc, anything else you may want to add? I think that's a good -- good enough -- Hank?

Okay, I'm satisfied with that...

I'm sorry, my microphone was on mute there momentarily, but, Sunil, I think you said that all -- we're looking at all of the options. The board is very much aware, Hank, of what we need, where we need to be, and where we want to go. And we want to maximize -- overall, maximize shareholder value. And we can give you our word that we are going to be making every effort we can to do that in evaluating the options as we go forward. I probably can't say much more than that at this point.

I appreciate that. I guess I would just ask the question slightly differently. Have you developed a plan B in the unlikely event that you haven't been able to come to a final conclusion on maximizing shareholder value? And would plan B get us over the goal line of filing the NDA on a timely basis? Is that a reasonable question to ask without getting into the details of what plan B might be?

Hank, I think we should probably leave it where we left it. I know there's always a desire to understand more of the specifics. But let me just assure you, we are looking at all of the options financial and otherwise at this point. And as soon as it is appropriate to let you all know more, we will do so.

We'll go next to our Arthur Davis, a private investor.

Not to beat a dead horse, but on August 16, the term nitty-gritty was used in connection with the stage at which potential partners were interested and the number of 5-plus companies was given at that point in time. In November, at a subsequent CC, it was indicated that the same level of parties were interested eyeing [ph] for a 5-plus companies. Is the same number of companies interested at this point in time? Or is it greater or fewer than it was in August and in November?

Arthur, I appreciate your question. Certainly, as I've said earlier, several companies, in terms of levels and numbers and so on, I don't want to make specific reference to numbers, but it would be termed similar to what we have had as far as interest from companies, okay?

All right. So the number used in August of 2011, which was 5 plus, would still apply today?

Certainly.

We'll go next to Marc Cohen with Westside Investment Management.

I guess my first question would be, could you name the product the iPatch?

Well, how about an Apple patch, right?

That would work, too. I'm not going to really dwell on this, but I'm just trying to get a little color on the progress you've made from your own perspective, from the market’s perspective, from the medical community perspective, is before the positive Phase III results were finally released, stock was about $2. Now everything seems to be unusual with you guys in some way, you make the positive announcement and the stocks down close to 35%, 40%, which is not a reflection on you, it's the market. Do you think, subsequent to the release of the positive Phase III clinical results, that the actual information that you're continuing to accumulate is better than you expected? About what you expected? And do you think the medical community is looking at the information that is better than you might have anticipated, seeing that they could anticipate or worse than they might have anticipated?

Mark, in terms of -- obviously, the reactions to the market, I will not make any comments on that. But on the medical community -- and Kate can address that very well. It's been excellent response from the medical community. But, Kate?

Yes, Mark, very good question. And I can tell you that given the really consistent pattern of results that we've seen across all 5 studies that we've now completed on our Phase III program, including the very robust clinical efficacy findings in the 805, in the 806 study, the fact that we were able to publish the 805 study in JAMA. We currently have a manuscript under review for the 806 study. And we've been presenting these results at various import medical conferences, internationally as well as nationally, since we've even had results to present. There's been very good acceptance. We have a lot of support from NIDA. As you know, they funded $7.6 million that helped us complete the 806 study. We have very strong advocacy from the American Society of Addiction Medicine where I'll be presenting another lecture next month, on April 20, from the NAABT, the National Alliance of Advocates for Buprenorphine Treatment, and from various other stakeholders, including interests from potential partners as we've discussed. So I would say from a scientific and a medical point of view, we are doing very, very well. In addition to that, the fact that the FDA has accepted our existing clinical safety and efficacy data as sufficient for their review and the submission, which as you are probably aware, is slightly fewer patients than they had originally asked us for, that is another good indicator of the strength of these data. And as Sunil and Marc have both said and I said, we're very active right now in the process of putting that submission together with an experienced submission team, and we're on target to file in the third quarter of this year.

Okay. And given reference I made with the stock price which I prefaced by saying you can't control and it's not a reflection on you, is a benchmark because that is something that either the financial community will look at relative information that comes out, or what have you. But it's sort of like scoring in the fourth inning of a baseball game. It's just a status point. And I'm trying to, in my mind, gauge whether the market is pricing in some respect your diminished cash, the length of time it's taking to work through the progress or if in fact, there might be questions, concerns about the market for the product itself. And can you comment on how would companies do their market analysis that you've just indicated that they're doing their own research to gauge the size of the market. And what type of information have you received that makes you feel very confident that you have a firm market of some substance and scope that a partner will want to make a fairly sizable commitment?

Sure. As you are well aware, of course the market for buprenorphine products today, specifically Suboxone, that's over $1 billion market in the U.S., so that part of the market is already there and proving that it is indeed a substantial sizable market. The question as you asked is, how does Probuphine fit in that market? We, ourselves, have done some market research. Companies that are interested have also done some market research. And independent decision resources group, as you know, published a report as well, in which they had also done a market survey with physicians, psychiatrists and so on, who are familiar with buprenorphine treatment. In that decision resources report, they talked to Probuphine and pointed out that the biggest -- one of the biggest hurdles in terms of compliance is something that the physicians rate very highly. And in their minds, they saw Probuphine as a potential future gold standard in that manner. So the value from that standpoint has certainly been reviewed and established, and Probuphine provides certain advantages that are very significant. It's the compliance, it's the reduction, and the diversion of buprenorphine on the street. So these are things that add value for our product. In terms of the assessment of what the market potential is, we have publicly stated in our presentations as well, that we see peak sales in the range of $300 million to $500 million a year. And as we review these with potential partners or companies that are interested in this product, they recognize that potential as well and market opportunity as well.

I also referenced to comment the professor from Columbia may have rethought that 30% to 40% of his patients might be compatible with this type of treatment, which fits into your $300 million to $500 million of $1 billion. But next question, to the extent that you can answer it is, if you had your wish-list, how would you like to design the term sheets, not dollar amounts, but the structure of the term sheets?

Mark, I appreciate you're asking the question, but I will not answer that in any detail. I want to only point out that as we said earlier, we will look at it to see whatever approach maximizes shareholder value. I really cannot get into any other details. It will be very inappropriate for me to do that.

Thank you. And with that, we have no other questions in this setting. So I would say that first of all, thank you very much for joining us today. As Marc mentioned, this is a very exciting and important time for Titan. We have completed the clinical development program and we are on track to submit our NDA in the third quarter of this year. Our important recent advances are positioning us strongly in our ongoing partnership discussions. And we look forward to continue to provide you with updates on our progress. Thank you very much, and have a great day.

And ladies and gentlemen, once again, that does conclude today's call. We do appreciate everyone's participation.