Sunil Bhonsle - President & CEO Marc Rubin - Executive Chairman Kate Beebe - EVP & Chief Development Officer Brian Crowley - VP, Finance

Thank you for holding. And welcome to the Titan Pharmaceuticals' Fourth Quarter and Full Year 2015 Financial Results Conference. 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 and CEO of Titan Pharmaceuticals. Please go ahead.

Thank you, Angela, and thank you all for joining us today. Welcome to the Titan Pharmaceuticals call to review financial and operational results for the full year and fourth quarter of 2015. Before we begin, I wanted to inform you that on March 15 we file our 2015 Annual Report on Form 10-K with the SEC and the press release issued this morning provides a summary of the results, and can be found on our website at titanpharm.com. Joining me on the call today from Titan are 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 go into the details of the financial results and provide 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, development programs, partnering arrangements, regulatory strategies and business plans. 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. 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. So as always, let's start with an overview from our Executive Chairman, Dr. Marc Rubin. Marc?

Thank you very much, Sunil, and hello everyone, good afternoon and thank you for joining us today. We are very pleased to be here today to provide you with an overview of our accomplishments in 2015 and to discuss the progress we're making in advancing our pipeline of product candidates based on our ProNeura continuous long-term growth delivery platform. Titan has made significant progress in 2015 as we advanced our Probuphine program for the maintenance treatment of opioid addition through the final phase 3 trial with positive results followed by the acceptance of the new drug application by the FDA and a 12 to 5 vote recommending approval of Probuphine by the FDA Psychopharmacologic Drugs Advisory Committee, also known as PDAC. During the committee meeting, questions were raised about the Risk Evaluation and Mitigation Strategy or REMS and our partner, Braeburn, responded promptly with answers to those questions. In February, the FDA extended its action date by three months to May 27 of this year citing changes submitted to the REMS section of the NDA as a major amendment requiring additional time for completion of their review. We are working with Braeburn and the agency to finalize the REMS and the product labelling as the FDA completes the review process. If approved for the long-term maintenance treatment of opioid addiction in adults, Probuphine would be the first and only commercial treatment for opioid addiction to provide continuous, round the clock levels of Buprenorphine for six months following a single treatment. As you all know, buprenorphine is currently available in the form of daily dose sublingual formulations with annual sales of approximately $1.8 billion in the United States. As a proprietary subdermal implant, with patent coverage in the U.S. to at least 2014, we believe Probuphine has several advantages over the daily dose formulations of Buprenorphine. Clearly, new treatments that are safe and effective are critically needed for patients, their families, and healthcare providers. In addition to our progress with Probuphine in 2015, we continue to advance and expand our pipeline of products based on our ProNeura Technology. We have continued with the non-clinical studies in our ProNeura implant for Parkinson's disease with a goal of completing these studies and submitting an investigation on new drug application to the FDA in the fourth quarter of this year, and commencing pharmacogenetics proof-of-concept clinical studies shortly thereafter. We're also very pleased to add an implantable triiodothyronine or T3 for the treatment of hypothyroidism. This is added to our product development pipeline which was added late last year. We have plans to target a pre-IND meeting with the FDA for the fourth quarter of 2016. In just a moment, Dr. Beebe will provide additional details on our product pipeline. In addition to the progress we've made in our pipeline in October of 2015, Titan uplifted its common stock to the NASDAQ capital market following a 1 for 5.5 reverse stock split at the company outstanding shares of common stock warrants and options in September. The reverse stock split was approved by the company's shareholders at the August 2015 Annual Meeting enabling Titan to meet the initial requirements for trading on the NASDAQ capital market to satisfy its obligation to have sufficient shares available for potential future exercise at the warrants issued in the 2014 public offering, and to provide the company with available shares for future financing, for equity compensation and for other business transactions. The move to NASDAQ has increased our visibility among a broader range of investors and holds potential for generating increased value for all shareholders. So the Board is very pleased with the progress Titan made in 2015, we feel we are well positioned for a really transformational 2016 with the potential commercialization of Probuphine, our first product based on Titan's proprietary ProNeura Technology and importantly, the continued advancement of our product pipeline. And with that, I will now pass the call back to Sunil to review the financial results of the fourth quarter and full year 2015. Sunil?

Thank you, Marc. I will next provide you with our full year and fourth quarter 2015 financial results, and then Dr. Beebe will update you on the development activities during the year and the product development plans for the coming year. And then to conclude, we will open up the call for your questions for the Titan. So to start the full year of 2015, the total revenues for the year were approximately $1.7 million compared with about $3.6 million in 2014. Both reflecting the amortization of the upfront license fee received from development and commercialization partner, Braeburn Pharmaceuticals in December of 2012. Total operating expenses for the year 2015 were approximately $8.4 million, compared with approximately $7.1 million for 2014, and these consisted largely of research and development expenses of about $4.7 million compared with about $4.1 million in R&D expenses for 2014. This represented an increase of about $0.6 million and primarily associated with increases in external R&D expenses related to supporting Titan's Probuphine and Ropinirole implant programs. General and administrative expenses were about $3.8 million during this year compared with approximately $3 million in 2014, an increase of about $0.8 million. This increase in G&A was primarily related to increase in non-cash stock compensation and employee related costs, as well as some legal and professional fees. Net other expense for 2015 was approximately $4.5 million consisting primarily of non-cash losses on the change in value of warrant liabilities, this compares to net other income of approximately $1 million in 2014 which consisted primarily of non-cash gains on changes in the fair value of warrant liabilities. Net loss applicable to common shareholders for 2015 was approximately $11.3 million or $0.56 per share compared to net loss of about $2.4 million or $0.14 per share for 2014. At December 31, 2015, Titan had approximately $7.9 million in cash compared with approximately $15.5 million at December 31, 2014. Titan believes that its working capital at December 31, 2015 is sufficient to fund planned operations through the end of 2016, not taking into account any potential milestone payments we may receive during the year. A little bit of the details of the fourth quarter. Titan reported no revenue in the fourth quarter of 2015 compared with about $0.9 million in 2014. Total operating expenses for the fourth quarter of 2015 were approximately $2.3 million consisting primarily of R&D expenses of about $1.1 million and G&A expenses of about $1.1 million. Operating expenses for the same period in 2014 were about $2.2 million consisting primarily of R&D expenses of about $1.6 million and G&A expenses of about $0.6 million. Net other expense for the fourth quarter of 2015 was approximately $44,000 compared with the net other income of about $0.8 million in 2014. Net loss applicable to common shareholders for the fourth quarter of 2015 was approximately $2.3 million or $0.11 per share, compared with $0.5 million or $0.02 per share last year. These financial results were as expected, and as Mark mentioned, we are well positioned heading into this year. Most importantly, we continue to work with Braeburn as the FDA completes its review, and we look forward to potentially seeing Probuphine become available to physicians and their patients later this year. We see great potential in our Ropinirole implant and our new T3 implant programs, and we will be actively moving them toward the clinic throughout this year. And now to provide you an update of recent development activities, let me turn the call over to Dr. Beebe. Kate?

Thank you, Sunil, and hello everyone. I'm pleased to provide you with additional details on our product development pipeline including Probuphine for opioid addiction, our Ropinirole implant for Parkinson's disease and our most recent addition, ProNeura-T3 implants for hypothyroidism. As Mark mentioned, the FDA Psychopharmacologic Drugs Advisory Committee, otherwise known as PDAC, voted 12 to five on January 12, 2016 to recommend approval of Probuphine for the maintenance treatment for opioid addiction. The focus of this discussion was related to both efficacy [ph] including human factors data that validates the training of the implant clinicians. And with regards to efficacy, committee members discussed how to best define treatment responders, given missing or incomplete urine toxicology data and the infrequent use of sublingual buprenorphine dose adjustments by a small percentage of patients in the trial. More specifically, the FDA sought guidance from the committee on the best way to analyze the data and then present it several sensitivity analysis to further test the efficacy data. These included zero month opioid use, missing urines considered positive up to two instances of supplemental buprenorphine use in the Probuphine arm and unlimited supplemental use in the sublingual buprenorphine arm. So even under the most conservative post hoc analysis, the non-inferiority primary efficacy endpoint was met and the committee recommends approval of Probuphine. Now with regards to safety procedures, the committee wanted to know given the possibility of procedural complication, whether or not the training program was sufficiently adequate to insure that clinicians will be able to safely perform Probuphine insertions and removal. The safety data and human factors validation information were presented and discussed by the committee along with the REMS. As Mark mentioned earlier, our partner Braeburn has responded promptly with answers to those questions about the REMS and we continue to work with Braeburn and the agency to finalize the REMS and the product labeling in anticipation of the May 27 action date. While the FDA completes its review of Probuphine, Titan continues to work with Braeburn and our contract manufacturer to prepare for its potential approval and commercial production. As a proprietary sub-dermal implant with patent coverage in the U.S. to 2024, Probuphine has several advantages over the daily dose formulation of buprenorphine and new treatments that are safe and effective or critically needed now for patients, families and healthcare providers. The U.S. market for addiction treatment has continued to grow. With prescriptions for buprenorphine products increasing by more than 12% in 2014, and there are now three proprietary daily dosed formulations on the market along with a few generic versions. Also worth noting, there are three injectable, one month deeper formulations in early to mid-stage clinical development, and this emphasizes the importance of long-term treatment. Probuphine with a six-month treatment option has the potential to be the first such product on the market. In addition, Probuphine can play an expanding role in the treatment of opioid addiction as government officials call for expanded access to evidence-based medication assistance therapy, and consider a revision to the cap on the number of patients who could be treated with buprenorphine. In addition to these important U.S. efforts, we're evaluating opportunities for regulatory approval and commercialization of Probuphine outside of the U.S. and Canada. Having seen doctors' initial discussions with opinionators and regional pharmaceutical companies in countries where buprenorphine products are used for the treatment of opioid addiction. Our plan now is to obtain additional regulatory guidance to confirm the pathway to product approval in these countries. We expect to initiate regulatory discussions outside of the U.S. in the coming weeks. Last year, we also continue to move our Ropinirole implant for Parkinson's disease program forward. In December, Titan submitted to the FDA some briefing materials on the Ropinirole implant development program in support of the pre IND meeting, and we have now received a written feedback from the agency. We remain on track to meet our goal with completing the required non-clinical studies and submitting the IND in the fourth quarter of this year, probably shortly thereafter with the commencement of the pharmacokinetic proof-of-concept clinical study. In June of 2015 we presented non-clinical data at the 19th International Congress of Parkinson's Disease and Movement Disorders in San Diego demonstrating the potential of the Ropinirole implant in the treatment of Parkinson's disease. The dose escalating study in Parkinsonian primates should at motor function could be significantly improved with no onset of dyskinesias following the continuous non-fluctuating release of Ropinirole in the subdermal implant. There were also nodes of scientific irritation, inflammation or fibrotic capsule formation at the implant site. So continuous non-fluctuating release of Ropinirole was observed in the study for a period of several months following implantation. There are 1 million people in the U.S. suffering from Parkinson's and that number is expected to double by 2030 due to the ageing populating according to the Parkinson's disease foundation. Dopamine agonist therapy, which is the current standard of care, is designed to replace dopamine in the brain in early-stage Parkinson's patients. But this typically stops working efficiently after several years and can trigger serious side-effects. In fact about one-third of treated patients develop motor response fluctuations and/or drug induced dyskinesias within three to five years of treatment. Clinical and non-clinical research suggests that these motor may rise from the pulsatile different energy stimulation resulting from current oral treatment. In clinical studies, Dopaminergic simulation by continuous infusion has been shown to palliate these motor complications. And if you also delay or prevent the onset of dyskinesias to upto one year in Parkinson's patients. The ProNeura long-term continuous drug delivery platform can offer a simple way of providing around the clock stable levels of medication such as dopamine act in slightly Ropinirole and now patients started [ph] which we believe they have the potential to alleviate some of the motor complications and offer another option in treating this serious disease. In November we announced the addition of an implantable triiodothyronine or T3 product for the treatment of hypothyroidism to our product development pipeline with plans to target a pre-IND meeting with FDA in the fourth quarter of 2016. Hypothyroidism is a disease affecting about 15 million Americans, mostly women. And based upon symptoms and blood tests it is estimated that as many as 15% to 20% hypothyroid patients are not adequately treated with the standard therapy resulting in a persistent deficiency in a primary active form of triiodothyronine or T3. And physicians typically added oral T3 regimen to the treatment of these patients. Once-daily synthetic T3, Cytomel, is an effective medication for hypothyroidism but is also associated with potential side-effects including headache, nervousness, irritability, sweating and cardiac arrhythmias which are driven by the peak-and-trough blood level fluctuations associated with standard oral delivery. Continuous delivery of T3 by the oral or parenteral route is highly desirable but it has been difficult to achieve because of unique solubility characteristics of the compound. And implantable T3 product utilizing Ropinirole platform could more closely replicate normal thyroid physiology and avoid the unwanted side-effects associated with the current pulsatile-release of the oral formulation and represent a significant market opportunity. I'm very pleased with our progress to-date and the T3 implant formulation development, and look forward to providing further updates as we advance towards regulatory discussions for this potential product candidate. As we look towards the potential approval of Probuphine, we remain enthusiastic about the prospects through Ropinirole drug delivery platform and its role in the treatment of select chronic diseases which maintaining consistent levels of medication in the blood over long periods of time, they offer significant safety or health benefits. We look forward to adding more potential product candidates to our portfolio. And now I will turn the call back to Sunil. Sunil?

Thank you, Kate. This brings us to the end of our formal remarks, and now Angela, if -- we are ready to take questions.

[Operator Instructions] And we will take John Stifel [ph], Private Investor.

Good afternoon. Specifically, how will Titan and/or Braeburn market Probuphine to clinic, doctors, rehabs, prisons, law enforcement and government to replace Suboxone, Methadone and Vivitrol, and what will be the pricing of the implant and what will Titan receive as royalties? Thank you.

Hi, John. It's a long question and with a lot of potential items that come up in the future, but I'll try and give you a sense of the commercial plans in this setting. We cannot obviously talk about pricing or anything like that. That is really something that happens only after approval of a product, and so I won't go into those aspects of it. But Braeburn is fully preparing on product launch activities, and as you understand there is a component of training involved before this product can actually be used by a physician and that training program is a very rigorous training program to certify a physician that they properly insert the implant and remove the implant, and this is part of the REMS program that the FDA is reviewing at this time. So the first steps in launching a product like this is to make sure that the physicians are properly trained, and Braeburn has already started to setup dates and times and programs to establish a full segment of physicians who can then start doing these procedures. And so that's the first part of it, and from that stage on, the product itself and the distribution of it, that will set of activities, something that Braeburn has also outlined in the REMS program. It's a very controlled distribution system that gets the product directly to the physician and it never goes through the hands of a patient until it is inserted in their arms, so that minimizes any chance of diversion or misuse of the product. So these are the kinds of things that are really appropriate for a product like this, and Braeburn has fully put in place the systems that are necessary to launch such a product. In terms of what Titan will receive, as we've indicated in the past upon approval of this product Titan will receive $15 million milestone payment. We will receive royalties that start in the mid-teens and go up to the low 20 percentages on net sales of all products sold in the U.S. and Canada, and this is specific to this partnership with Braeburn. In addition to that, we stand to receive up to $165 million in sale space milestones and this start at relatively modest annual sales numbers. So they're very achievable, and certainly if, we've said in the past that the potential sales projections by analysts where they show peak sales around $250 million to $300 million and even higher. At those levels we would have received almost two-thirds of the sale space milestone. So it's a very attractive partnership and a value creating partnership for Titan, both in the short term and the long term. So that's as much as I can tell you about all of the things right now, John, and I hope that addresses your concerns.

Thank you very much, you did.

Great.

At this time there are no other questions. [Operator Instructions] And it appears that there are no other questions at this time. I will now turn the call back over to Mr. Bhonsle for any additional or closing remarks.

Thank you very much, Angela. And thank you all for attending our call. We're certainly looking forward to the progress over the next few months, and we'll keep you posted on all of the results. Thank you.

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