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Biotech Stock Mailbag - Titan Pharma

BOSTON ( TheStreet) -- Welcome back to another installment of the Biotech Stock Mailbag. The first email comes from Tom S., who writes:

"Any updated thoughts on Titan Pharmaceuticals(TTNP.OB)? I follow your articles so I know where you stand on Fanapt. What are your thoughts on Probuphine and Proneura? Titan just received funding and with whatever Fanapt royalties come its way the company should be solvent for some time. I believe Titan has three full-time employees, any chance it tries to ramp up to be a viable company or is it an inevitable sale?"

For those unfamiliar, Titan, like Vanda Pharmaceuticals (VNDA - Get Report), receives a royalty payment based on sales of the schizophrenia drug Fanapt. Given my very skeptical outlook on Fanapt (see my negative comments to the next reader below) I don't see those monies amounting to much for Titan, although every little bit does help when you're as small as Titan is.

Probuphine is interesting. It's a small rod containing the opioid addiction drug buprenorphine that doctors implant just under the skin, usually in the arm. The rod slowly releases buprenorphine into a patient's bloodstream, giving a consistent steady dose of the drug for up to six months.

Probuphine works. Results from an older phase III study were published last week in Journal of the American Medical Association and Titan is working on a confirmatory, phase III study. I expect this second study to be positive too because buprenorphine is known to be effective in treating opioid addiction and the technology used in the implantable rods has been around for some time.

The issue with Probuphine is more commercial -- I think the market for the drug is very small. Nearly all opioid addicts treated with buprenorphine today take the drug orally on daily basis. Probuphine would likely only be used for those addicts who can't seem to stick with the routine of taking a daily buprenorphine pill or who constantly relapse back into their opioid or heroin addiction.

If a patient suffers side effects from the medication, the implanted rod needs to be removed, which would be a hassle and something most doctors would want to steer away from.

Very few, if any, implantable drugs have ever been commercially successful. Implantable birth control for women, for instance, was tried years ago but never caught on.

As Tom points out, Titan is a tiny, almost virtual company, so Probuphine doesn't need to be a huge success to have a meaningful impact. The ideal outcome would be for Titan to confirm the efficacy of Probuphine in the second phase III study and then sell either the drug or the entire company. Perhaps Reckitt Benckiser, which sells buprenorphine tablets under the Suboxone brand name, would want Probuphine as a smallish line extension.

The risk to this buyout thesis: Is there really anything unique about the implantable drug delivery technology that Titan brings to the table? Alternative drug delivery, whether it's implantable rods or buccal films, etc., is a bit of a commodity business these days.
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