Merger Details - Titan Pharmaceuticals Inc (Nasdaq: TTNP) is proposing a merger with BSKE Ltd, under which Titan shareholders are expected to own approximately 13.3% of the combined company [1] Law Firm Information - Monteverde & Associates PC is investigating the proposed merger between Titan Pharmaceuticals and BSKE Ltd [1] - The law firm has a track record of recovering money for shareholders and is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report [1] - Monteverde & Associates PC is headquartered at the Empire State Building in New York City and has experience litigating in trial and appellate courts, including the U S Supreme Court [2] Contact Information - Shareholders of Titan Pharmaceuticals can contact Juan Monteverde, Esq via email at jmonteverde@monteverdelaw com or by telephone at (212) 971-1341 for additional information [3] - The law firm's address is The Empire State Building, 350 Fifth Ave Suite 4740, New York, NY 10118, United States of America [4]

Core Insights - Monteverde & Associates PC is investigating Titan Pharmaceuticals, Inc. regarding its proposed merger with BSKE Ltd, where Titan shareholders are expected to own approximately 13.3% of the combined company [1]. Group 1: Company Overview - Monteverde & Associates PC is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report and has a successful track record in recovering money for shareholders [1]. - The firm is headquartered in the Empire State Building, New York City, and specializes in class action securities litigation [2]. Group 2: Legal Context - The firm emphasizes that no company, director, or officer is above the law, indicating a commitment to shareholder rights [3]. - Shareholders of Titan Pharmaceuticals are encouraged to reach out for additional information regarding their rights and potential claims [3].

Merger Details - Titan will engage in a reverse merger with KE Sdn Bhd, resulting in Titan becoming minority stockholders of the combined company [2] - Post-merger, non-insider Titan stockholders will own only 13% of the combined companies, while Dato' Seow Gim Shen, Chairman and CEO of Titan, holds 47.4% of KE's outstanding shares [2] - The transaction agreement imposes significant penalties on Titan if it accepts a competing bid, limiting competing transactions [2] Investigation and Shareholder Concerns - Ademi LLP is investigating Titan for possible breaches of fiduciary duty and other violations of law in its transaction with KE Sdn Bhd [1] - The investigation focuses on whether Titan's board of directors is fulfilling its fiduciary duties to all shareholders [3] - Titan insiders are set to receive substantial benefits as part of change of control arrangements, raising concerns about fairness to non-insider shareholders [2] Legal Context - Ademi LLP specializes in shareholder litigation involving buyouts, mergers, and individual shareholder rights [4] - The firm is encouraging Titan common stock owners to contact them for additional information regarding the investigation [3]

Core Points - Titan Pharmaceuticals, Inc. has entered into a Merger Agreement with KE Sdn. Bhd. for a reverse merger transaction, which has been approved by Titan's board of directors [1][3] - The merger involves two steps: the merger of Titan with a wholly owned subsidiary of BSKE Ltd., followed by a share exchange agreement for KE shareholders [1] - Completion of the merger is contingent upon approval from Titan's and KE's stockholders, Nasdaq listing approval for BSKE, and satisfaction of other customary conditions [3] Company Overview - Titan Pharmaceuticals is a development stage company based in South San Francisco, CA, previously focused on developing proprietary therapeutics using ProNeura® technology [5] - KE Sdn. Bhd. is a Malaysian private limited company that distributes human capital management solutions and consulting services in the Asia Pacific region [6] Ownership Structure Post-Merger - Following the merger, existing security holders of KE and Titan (excluding certain stakeholders) are expected to own approximately 86.7% and 13.3% of the combined company, respectively [2] - Dato' Seow Gim Shen, Chairman and CEO of Titan, is expected to own 48.9% of the outstanding shares of the combined company after the merger [2]

Revenue and Expenses - Total revenues for the three months ended June 30, 2024 were $0, compared to $83,000 in the same period in 2023, primarily due to the completion of development grant activities[67] - Total revenues for the six months ended June 30, 2024 were $0, compared to $181,000 in the same period in 2023, primarily due to the completion of development grant activities[67] - Research and development expenses for the three months ended June 30, 2024 were $0, compared to $442,000 in the same period in 2023, primarily due to the completion of development grant activities and decreases in personnel-related costs[68] - Research and development expenses for the six months ended June 30, 2024 were $0, compared to $1,003,000 in the same period in 2023, primarily due to the completion of development grant activities and decreases in personnel-related costs[68] - General and administrative expenses for the three months ended June 30, 2024 were $2,074,000, compared to $1,229,000 in the same period in 2023, primarily due to increases in severance expenses and board payments[68] - General and administrative expenses for the six months ended June 30, 2024 were $3,137,000, compared to $2,463,000 in the same period in 2023, primarily due to increases in severance expenses and board payments[68] Net Loss - Net loss for the three months ended June 30, 2024 was approximately $2.1 million, or $2.29 per share, compared to a net loss of approximately $1.6 million, or $2.11 per share, in the same period in 2023[71] - Net loss for the six months ended June 30, 2024 was approximately $3.2 million, or $3.57 per share, compared to a net loss of approximately $3.3 million, or $4.34 per share, in the same period in 2023[71] Working Capital and Financing - Working capital as of June 30, 2024 was approximately $4.0 million, compared to $6.6 million as of December 31, 2023[72] - In September 2023, the company entered into a purchase agreement with Sire Group, issuing 950,000 shares of Series AA Convertible Preferred Stock for an aggregate purchase price of $9.5 million, with net cash proceeds of approximately $9.5 million[72] - $500,000 funding received in exchange for a convertible promissory note with 10% annual interest[74] - Hau Promissory Note converted into 54,132 shares of common stock at $9.32 per share[74] Asset Sales and Milestones - ProNeura Assets sold for $2.0 million, with $500,000 paid upfront, $500,000 as Cash Note, and $1,000,000 as Escrow Note[73] - Potential milestone payments of up to $50 million and royalties on future net sales of products[73] Cash Flow and Liquidity - Cash and cash equivalents of $4.1 million as of June 30, 2024, sufficient to fund operations through Q3 2025[75] - Net cash used in operating activities for six months ended June 30, 2024: $2.68 million[75] - Net loss of $3.2 million for six months ended June 30, 2024, offset by $0.5 million from net changes in operating assets and liabilities[75] - Net loss of $3.3 million for six months ended June 30, 2023, partially offset by $0.6 million of non-cash charges[75] Market Risk Disclosures - Market risk disclosures unchanged from Annual Report on Form 10-K for the year ended December 31, 2023[76]

Revenue and Financial Performance - Total revenues for Q1 2024 were $0, a decrease of $98,000 compared to Q1 2023, primarily due to the completion of development grant activities[74] - Net loss for Q1 2024 was $1.1 million ($1.36 per share), compared to a net loss of $1.7 million ($2.23 per share) in Q1 2023[78] Operating Expenses and Cost Management - Operating expenses decreased by $732,000 in Q1 2024, with R&D expenses dropping by $561,000 and SG&A expenses decreasing by $171,000[75][76] Cash and Liquidity - The company had $6.2 million in cash and cash equivalents as of March 31, 2024, which is expected to fund operations through Q2 2025[83] - Working capital decreased from $6.6 million at December 31, 2023, to $6.0 million at March 31, 2024[79] - Net cash used in operating activities was $613,000 in Q1 2024, a significant improvement from $1.9 million in Q1 2023[84] Asset Sales and Fundraising - In September 2023, the company sold ProNeura assets for $2.0 million, with potential milestone payments of up to $50 million and royalties on future net sales[71][81] - The company raised $9.5 million in September 2023 through the issuance of Series AA Convertible Preferred Stock[80] - The company discontinued commercialization of Probuphine in the U.S. in Q4 2020 and sold the product in September 2023[69] Equity Transactions - The company converted a $500,000 promissory note into 54,132 shares of common stock in March 2024[82]

Part I [Business](index=5&type=section&id=Item%201.%20Business) Titan Pharmaceuticals is a development-stage pharmaceutical company. In September 2023, the company sold its ProNeura drug delivery platform assets, including its Probuphine and Nalmefene programs, to Fedson, Inc. for $2.0 million plus potential future milestones and royalties. This sale followed a strategic decision to discontinue the U.S. commercialization of Probuphine in late 2020 to conserve resources. The company is now exploring strategic alternatives to enhance shareholder value while curtailing activities on its remaining development program, TP-2021, a kappa opioid agonist implant for chronic pruritus, which has shown promising non-clinical results - In September 2023, Titan sold its ProNeura Assets, including its drug addiction portfolio (Probuphine and Nalmefene programs), to Fedson, Inc. for **$2.0 million**. The deal also includes potential future milestone payments up to **$50 million** and royalties on net sales[23](index=23&type=chunk) - The company **discontinued the U.S. commercialization of its first product, Probuphine**, in the fourth quarter of 2020 to focus limited resources on product development[21](index=21&type=chunk) - Titan has been **exploring strategic alternatives** since December 2021, which could include mergers, acquisitions, or other business combinations. This process continued after a board and management change in August 2022, with David Lazar becoming CEO[22](index=22&type=chunk) - The company's primary remaining development program is **TP-2021, a kappa opioid agonist peptide delivered via the ProNeura system for treating chronic pruritus**. Non-clinical studies have shown **potent antipruritic activity** in animal models for up to **84 days** post-implantation, but further development requires external funding or a partnership[28](index=28&type=chunk)[29](index=29&type=chunk) - The company has filed patent applications for the use of a kappa-opioid receptor agonist implant for treating pruritus in the U.S. and several other countries. Any resulting patents will expire in **2042**[34](index=34&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks, including a history of net losses and substantial doubt about its ability to continue as a going concern, requiring additional capital to fund its early-stage development programs. Business risks include the inherent uncertainty of clinical trials, reliance on third parties, intense competition, and extensive government regulation. Key stock-related risks involve share price volatility, potential delisting from Nasdaq, and a material weakness in internal financial controls identified due to limited staffing [Risks Related to Financial Condition and Capital Needs](index=11&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Need%20for%20Additional%20Capital) Financial Performance and Position | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Loss | ~$5.6 million | ~$10.2 million | | Net Cash Used in Operations | ~$7.1 million | ~$8.2 million | | Working Capital (at Dec 31) | ~$6.6 million | ~$1.0 million | | Cash and Equivalents (at Dec 31) | ~$6.8 million | - | - The company has a history of net losses, which raises **substantial doubt about its ability to continue as a going concern**[50](index=50&type=chunk) - Available cash is estimated to be sufficient to fund working capital needs only into the **second quarter of 2025**, and substantial additional funds are required to advance development programs[51](index=51&type=chunk) - As of December 31, 2023, the company had significant federal net operating loss (**$214.7M**) and tax credit (**$5.9M**) carryforwards, but their future usability is restricted and not assured[52](index=52&type=chunk) [Risks Related to Business and Industry](index=12&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) - The company's development program is at a very early stage and requires substantial additional resources, which may not be available[53](index=53&type=chunk) - Clinical trials are expensive, time-consuming, and their outcomes are uncertain. Delays or failures could force the abandonment of a product candidate[55](index=55&type=chunk)[56](index=56&type=chunk) - The company depends on third-party laboratories for preclinical studies and clinical trials, and third-party manufacturers for production, which are outside its direct control[57](index=57&type=chunk) - The company faces risks of being unable to protect its patents and proprietary rights, and could be sued by third parties for infringement[59](index=59&type=chunk)[60](index=60&type=chunk) - A **material weakness in internal controls over financial reporting** was identified as of December 31, 2023, primarily due to limited finance and accounting staffing levels following workforce reductions[86](index=86&type=chunk) [Risks Related to Common Stock](index=16&type=section&id=Risks%20Related%20to%20our%20Common%20Stock) - The company's common stock could be delisted from the Nasdaq Capital Market if it fails to maintain listing standards, such as the minimum **$1.00 bid price** or **$2.5 million stockholders' equity** requirement[76](index=76&type=chunk) - Future financing activities may involve issuing securities that could significantly dilute existing stockholders' ownership[80](index=80&type=chunk)[81](index=81&type=chunk) - A significant concentration of ownership exists, with one stockholder, Choong Choon Hau, controlling approximately **26.42%** of the voting power, which could influence corporate actions[82](index=82&type=chunk) - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2023, due to a **material weakness in internal control over financial reporting**[84](index=84&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[96](index=96&type=chunk) [Cybersecurity](index=22&type=section&id=Item%201C.%20Cybersecurity) The company manages cybersecurity risks through assessments, employee training, and monitoring by management and the Board of Directors. In 2023, no cybersecurity threats were identified that materially affected or are reasonably likely to materially affect the company's business, operations, or financial condition - The Board of Directors has oversight responsibility for cybersecurity risks, with management handling day-to-day assessment and management[99](index=99&type=chunk) - In 2023, the company did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition[98](index=98&type=chunk) [Properties](index=22&type=section&id=Item%202.%20Properties) The company's principal executive offices are located in approximately 3,295 square feet of leased office space in South San Francisco, California. The current operating lease is set to expire in June 2024 - The company leases approximately **3,295 square feet** of office space in South San Francisco, California, under a lease expiring in **June 2024**[100](index=100&type=chunk) [Legal Proceedings](index=22&type=section&id=Item%203.%20Legal%20Proceedings) As part of the September 2023 asset sale, the buyer, Fedson, Inc., assumed all liabilities related to a pending employment claim against Titan initiated by a former employee - A pending employment claim from a former employee alleging wrongful termination was assumed by Fedson, Inc. as part of the Asset Purchase Agreement in September 2023[101](index=101&type=chunk) [Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[102](index=102&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Titan's common stock is listed on the Nasdaq Capital Market under the symbol "TTNP." As of March 25, 2024, there were 914,234 shares outstanding held by 98 holders of record. The company has never paid cash dividends and does not anticipate doing so in the foreseeable future. Information regarding equity compensation plans is also provided - The company's common stock is listed on the Nasdaq Capital Market under the symbol "**TTNP**"[105](index=105&type=chunk) - As of March 25, 2024, there were **914,234 shares** of common stock outstanding[105](index=105&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[106](index=106&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, Titan's financial condition improved primarily due to a $9.5 million preferred stock issuance and proceeds from the sale of its ProNeura assets. The company's net loss decreased to $5.6 million from $10.2 million in 2022, largely due to a $1.76 million gain on the asset sale and reduced R&D and G&A expenses. Cash and cash equivalents increased to $6.8 million, which management believes is sufficient to fund operations into the second quarter of 2025. However, the company will require additional funding for future operations and continues to explore strategic alternatives [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Key Financial Metrics (in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $6,761 | $2,937 | | Working capital | $6,574 | $973 | | Cash used in operating activities | $(7,092) | $(8,183) | | Cash provided by investing activities | $732 | $0 | | Cash provided by financing activities | $10,000 | $4,984 | - As of December 31, 2023, the company had approximately **$6.8 million** in cash and cash equivalents, which is believed to be sufficient to fund planned operations into the **second quarter of 2025**[145](index=145&type=chunk) - In September 2023, the company raised net proceeds of approximately **$9.5 million** from the issuance of Series AA Convertible Preferred Stock to Sire Group[141](index=141&type=chunk) - The sale of ProNeura Assets to Fedson provided **$0.5 million** in cash at closing, with an additional **$1.5 million** in promissory notes paid in late 2023 and early 2024[142](index=142&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Revenues (in thousands) | Revenue Source | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | License revenue | $1 | $60 | $(59) | | Grant revenue | $183 | $497 | $(314) | | **Total revenue** | **$184** | **$557** | **$(373)** | Operating Expenses (in thousands) | Expense Category | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $1,913 | $4,758 | $(2,845) | | General and administrative | $5,548 | $6,034 | $(486) | | **Total operating expenses** | **$7,461** | **$10,792** | **$(3,331)** | - The decrease in R&D costs was primarily due to reduced activities related to the Nalmefene implant program and the TP-2021 program, along with lower personnel costs following a workforce reduction[148](index=148&type=chunk) - The company reported a net loss of approximately **$5.6 million** (**$7.41 per share**) for 2023, a significant improvement from the net loss of approximately **$10.2 million** (**$15.19 per share**) in 2022. The improvement was largely driven by a **$1.76 million** gain on the asset sale and lower operating expenses[150](index=150&type=chunk)[151](index=151&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - Not applicable[153](index=153&type=chunk) [Financial Statements and Supplementary Data](index=30&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the full financial statements and supplementary data, which are included in a separate section of the report starting on page F-1 - The response to this item is included in the 'Index to Financial Statements' on Page F-1[154](index=154&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=30&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[155](index=155&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that as of December 31, 2023, the company's disclosure controls and procedures were not effective. This was due to a material weakness in internal control over financial reporting, primarily related to limited finance and accounting staffing levels following workforce reductions. The company has developed a remediation plan, which includes hiring a new CFO and utilizing a Sarbanes-Oxley compliance firm - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2023[156](index=156&type=chunk) - A **material weakness** was identified in internal control over financial reporting, primarily due to limited finance and accounting staffing levels not being commensurate with the company's complexity and reporting requirements[162](index=162&type=chunk) - The material weakness resulted in a misclassification of approximately **$0.4 million** in issuance costs related to preferred stock during Q3 2023[163](index=163&type=chunk) - Remediation activities include hiring a new Chief Financial Officer and engaging a Sarbanes-Oxley compliance firm to assist with controls[164](index=164&type=chunk) [Other Information](index=31&type=section&id=Item%209B.%20Other%20Information) No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fourth quarter of 2023 - None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended December 31, 2023[167](index=167&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=31&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[168](index=168&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=32&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides biographical information for the company's executive officers and directors, including CEO David E. Lazar and President/COO Dr. Katherine Beebe DeVarney. It outlines the board leadership structure, with Dato' Seow Gim Shen as Chairman of the Board. The company has adopted a Code of Business Conduct and Ethics applicable to all personnel - Lists the names, ages, and positions of the company's executive officers and directors, along with their business experience[170](index=170&type=chunk) - David E. Lazar serves as Chief Executive Officer and Dato' Seow Gim Shen serves as Chairman of the Board[170](index=170&type=chunk)[179](index=179&type=chunk) - The company has adopted a Code of Business Conduct and Ethics, which is available on its website[180](index=180&type=chunk) [Executive Compensation](index=35&type=section&id=Item%2011.%20Executive%20Compensation) This section details the compensation for the company's named executive officers and non-employee directors for 2022 and 2023. CEO David Lazar's total 2023 compensation was approximately $1.47 million, including a $1.015 million bonus. President and COO Dr. Katherine Beebe DeVarney's total 2023 compensation was approximately $602,000. The report also outlines the terms of employment agreements and details of the company's stock incentive plans Summary Compensation Table (2023) | Name and Principal Position | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Comp ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | David Lazar, CEO | 406,000 | 1,015,000 | 52,180 | - | - | 1,473,180 | | Katherine Beebe DeVarney, Ph.D., President & COO | 462,000 | - | 32,947 | 107,162 | - | 602,109 | | Marc Rubin, MD, Executive Chairman | - | - | - | - | 238,157 | 238,157 | - Dr. Marc Rubin's employment was terminated in August 2022; the amount shown for 2023 represents severance payments[185](index=185&type=chunk) - CEO David Lazar's employment agreement provides for a base salary of **$406,000**, eligibility for annual and performance bonuses, and a change of control bonus[199](index=199&type=chunk)[200](index=200&type=chunk) - Dr. Beebe DeVarney's employment agreement provides for a base salary of **$385,000** and potential annual bonuses up to **50%** of base salary[196](index=196&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=39&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details the beneficial ownership of the company's common stock as of March 25, 2024. The largest beneficial owner is Choong Choon Hau with 26.4% ownership. Dato' Seow Gim Shen, Chairman of the Board, beneficially owns 16.4%. All executive officers and directors as a group beneficially own 22.2% of the outstanding common stock Security Ownership of Major Holders (as of March 25, 2024) | Name of Beneficial Owner | Shares Beneficially Owned | Percent of Shares Beneficially Owned | | :--- | :--- | :--- | | Choong Choon Hau | 241,531 | 26.4% | | Dato' Seow Gim Shen | 150,087 | 16.4% | | All executive officers and directors as a group (8 persons) | 211,992 | 22.2% | [Certain Relationships and Related Transactions, and Director Independence](index=40&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company discloses several related party transactions, including a short-term loan from CEO David Lazar in July 2023 (repaid in September 2023), a convertible promissory note issued to major shareholder Choong Choon Hau in August 2023, and a $9.5 million preferred stock sale to Sire Group (controlled by Chairman Dato' Seow Gim Shen) in September 2023. The report also confirms the independence of five board members and details the composition of its audit, compensation, and nominating committees - In July 2023, CEO David E. Lazar provided a **$250,000** unsecured promissory note, which was paid off in September 2023[210](index=210&type=chunk) - In August 2023, the company issued a **$500,000** convertible promissory note to major shareholder Choong Choon Hau, which was converted into common stock in March 2024[211](index=211&type=chunk) - In September 2023, the company sold **950,000 shares** of Series AA Preferred Stock to The Sire Group Ltd., an entity controlled by Chairman Dato' Seow Gim Shen, for an aggregate price of **$9.5 million**[212](index=212&type=chunk) - Five members of the Board are considered independent under Nasdaq rules: Brynner Chiam, Eric Greenberg, Matthew C. McMurdo, David Natan, and Dato' Seow Gim Shen[214](index=214&type=chunk) [Principal Accounting Fees and Services](index=41&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) This section details the fees billed by the independent registered public accounting firm, WithumSmith+Brown, for fiscal years 2023 and 2022. Total fees were $377,592 in 2023 and $346,799 in 2022, primarily for audit and tax services. The audit committee reviewed and approved all services provided Accountant Fees (WithumSmith+Brown) | Fee Category | 2023 | 2022 | | :--- | :--- | :--- | | Audit Fees | $330,160 | $301,079 | | Tax Fees | $47,432 | $45,720 | | **Total** | **$377,592** | **$346,799** | - The audit committee has established pre-approval policies and procedures for all audit and permissible non-audit services provided by the independent auditor[225](index=225&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=43&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index to the financial statements, which begin on page F-1, and notes that all financial statement schedules have been omitted as they are not applicable. It also refers to the list of exhibits filed with the report - An index to the Financial Statements is provided, starting on page F-1[230](index=230&type=chunk) [Form 10-K Summary](index=43&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for this item - None[232](index=232&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=45&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor, WithumSmith+Brown, PC, issued an opinion stating that the financial statements are fairly presented in conformity with U.S. GAAP. The report highlights a critical audit matter concerning the company's ability to continue as a going concern, given its history of recurring losses. It also notes that the company restated its 2023 quarterly information to correct an error in the accounting for stock issuance costs - The auditor's opinion is that the financial statements are fairly presented in all material respects[237](index=237&type=chunk) - A **critical audit matter** was identified regarding the evaluation of the company's **ability to continue as a going concern** due to recurring losses and an accumulated deficit[243](index=243&type=chunk) - The report notes that the company restated its 2023 quarterly information due to an error in accounting for stock issuance costs[238](index=238&type=chunk) [Notes to Financial Statements](index=52&type=section&id=Notes%20to%20Financial%20Statements) The notes provide detailed information supporting the financial statements. Key disclosures include the sale of ProNeura assets to Fedson for $2.0 million, the company's assessment that its $6.8 million in cash is sufficient to fund operations into Q2 2025, and details of significant financing activities in 2023, including a $9.5 million preferred stock issuance. The notes also describe a restatement of Q3 2023 financials due to a $406,000 expense misclassification and subsequent events like a 1-for-20 reverse stock split in January 2024 - Note 1: The company had **$6.8 million** in cash at year-end 2023, which management believes is sufficient to fund operations into **Q2 2025**. However, additional funds will be required to finance future operations[265](index=265&type=chunk) - Note 6: Details the asset sale to Fedson, Inc. for a purchase price of **$2.0 million**, consisting of **$0.5 million** cash at closing and **$1.5 million** in promissory notes, plus potential future milestones and royalties[315](index=315&type=chunk) - Note 7: In September 2023, the company issued **950,000 shares** of Series AA Convertible Preferred Stock for an aggregate purchase price of **$9.5 million**[318](index=318&type=chunk) - Note 9: The company has significant net operating loss carryforwards but has recorded a **full valuation allowance** against its net deferred tax assets due to uncertainty of realization[343](index=343&type=chunk)[345](index=345&type=chunk) - Note 12: The company **restated its Q3 2023 financial statements** to correct a material error where a **$406,000** payment was improperly classified as a stock issuance cost instead of a general and administrative expense[354](index=354&type=chunk)[355](index=355&type=chunk) - Note 13: A **1-for-20 reverse stock split** was effected on January 9, 2024. All share and per-share amounts in the report are retroactively adjusted for this split[369](index=369&type=chunk)

Revenue Changes - Total revenues for the three months ended September 30, 2023 decreased by $91,000 compared to the same period in 2022, primarily due to decreased activities related to the NIDA grant and Gates Foundation grant[94] - Total revenues for the nine months ended September 30, 2023 decreased by $252,000 compared to the same period in 2022, primarily due to decreased activities related to the NIDA grant and Gates Foundation grant[94] Research and Development Expenses - Research and development expenses for the three months ended September 30, 2023 decreased by $508,000 compared to the same period in 2022, primarily due to reduced activities related to non-clinical studies for the Nalmefene implant and TP-2021 implant program[96] - Research and development expenses for the nine months ended September 30, 2023 decreased by $1,889,000 compared to the same period in 2022, primarily due to reduced activities related to non-clinical studies for the Nalmefene implant and TP-2021 implant program[96] General and Administrative Expenses - General and administrative expenses for the three months ended September 30, 2023 decreased by $165,000 compared to the same period in 2022, primarily due to decreases in legal and professional fees and other expenses[97] - General and administrative expenses for the nine months ended September 30, 2023 decreased by $641,000 compared to the same period in 2022, primarily due to decreases in employee-related expenses, legal and professional fees, and other expenses[97] Other Income (Expense) - Other income (expense), net for the three months ended September 30, 2023 increased by $1,718,000 compared to the same period in 2022, primarily due to the gain related to the sale of the ProNeura Assets to Fedson and decreases in tax-related expenses[98] - Other income (expense), net for the nine months ended September 30, 2023 increased by $1,763,000 compared to the same period in 2022, primarily due to the gain related to the sale of the ProNeura Assets to Fedson and decreases in tax-related expenses[98] ProNeura Assets Sale - The company sold its ProNeura Assets to Fedson for a purchase price of $2.0 million, consisting of $500,000 in readily available funds, $500,000 in the form of a promissory note due on October 1, 2023, and $1,000,000 in the form of a promissory note due on January 1, 2024[89] - The company is eligible to receive potential milestone payments of up to $50 million on future net sales of the products and certain royalties on future net sales of the products[89] - Sold ProNeura Assets for $2.0 million, with potential milestone payments up to $50 million and royalties on future net sales[103] Net Loss - Net loss for Q3 2023 was $0.3 million ($0.02 per share), a significant improvement from $2.6 million ($0.18 per share) in Q3 2022[100] - Net loss for the nine months ended September 30, 2023 was $3.6 million ($0.24 per share), compared to $7.6 million ($0.59 per share) in the same period of 2022[100] Working Capital and Financing - Working capital increased to $8.0 million as of September 30, 2023, up from $1.0 million at December 31, 2022[101] - Company raised $9.5 million through issuance of Series AA Preferred Stock in September 2023, with net cash proceeds of $9.1 million[102] - Received $500,000 funding through Hau Promissory Note in August 2023, accruing 10% annual interest[104] - Net cash provided by financing activities for nine months ended September 30, 2023 was $9.6 million, mainly from preferred stock issuance[110] Cash Position and Operating Activities - Cash and cash equivalents stood at $8.1 million as of September 30, 2023, expected to fund operations through December 2024[106] - Net cash used in operating activities for nine months ended September 30, 2023 was $4.8 million, primarily due to net loss of $3.6 million[108]

Part I. [Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This section presents the unaudited condensed financial statements and related notes, along with management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial activities for the periods ended June 30, 2023 [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) The company's financial position significantly deteriorated from December 31, 2022, to June 30, 2023, with a substantial decrease in cash and total assets, leading to a negative stockholders' equity | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $105 | $2,937 | $(2,832) | | Total current assets | $498 | $3,603 | $(3,105) | | Total assets | $812 | $4,058 | $(3,246) | | Total current liabilities | $1,846 | $2,630 | $(784) | | Total liabilities | $1,846 | $2,695 | $(849) | | Total stockholders' equity (deficit) | $(1,034) | $1,363 | $(2,397) | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) Titan Pharmaceuticals experienced a decrease in total revenues and operating expenses for both the three and six months ended June 30, 2023, compared to the prior year, resulting in a reduced net loss | Metric (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change (3 Months) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change (6 Months) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total revenues | $83 | $150 | $(67) | $181 | $341 | $(160) | | Research and development | $442 | $974 | $(532) | $1,003 | $2,383 | $(1,380) | | General and administrative | $1,229 | $1,618 | $(389) | $2,463 | $2,939 | $(476) | | Total operating expenses | $1,671 | $2,592 | $(921) | $3,466 | $5,322 | $(1,856) | | Net loss | $(1,586) | $(2,462) | $876 | $(3,261) | $(5,002) | $1,741 | | Basic and diluted net loss per common share | $(0.11) | $(0.18) | $0.07 | $(0.22) | $(0.41) | $0.19 | [Condensed Statements of Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) The company's stockholders' equity shifted from a positive balance at December 31, 2022, to a deficit by June 30, 2023, primarily due to net losses, partially offset by stock-based compensation | Metric (in thousands) | December 31, 2022 | March 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Total Stockholders' Equity (Deficit) | $1,363 | $(312) | $(1,034) | | Net loss (Q1 2023) | - | $(1,675) | - | | Net loss (Q2 2023) | - | - | $(1,586) | | Stock-based compensation (Q2 2023) | - | - | $864 | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, the company experienced significant net cash outflow from operating activities, with no cash generated from financing activities, leading to a substantial decrease in cash, cash equivalents, and restricted cash | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,011) | $(4,731) | | Net cash used in investing activities | $- | $- | | Net cash provided by financing activities | $- | $4,984 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(3,011) | $253 | | Cash, cash equivalents and restricted cash at end of period | $122 | $6,585 | [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Titan Pharmaceuticals is a pharmaceutical company focused on its ProNeura drug delivery platform for chronic diseases. The company has discontinued U.S. commercialization of Probuphine to focus on product development and is actively exploring strategic alternatives, including asset sales, due to significant financial challenges and going concern doubts [Note 1. Organization and Summary of Significant Accounting Policies](index=8&type=section&id=Note%201.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note details the company's business, its proprietary ProNeura drug delivery platform, the discontinuation of U.S. Probuphine commercialization, and the ongoing exploration of strategic alternatives. It also covers the basis of financial statement presentation, including the going concern assessment, and key accounting policies for inventories, revenue recognition, R&D costs, leases, and recent accounting pronouncements [The Company](index=8&type=section&id=The%20Company) Titan Pharmaceuticals develops therapeutics using its ProNeura platform, discontinued U.S. Probuphine commercialization, and is exploring strategic alternatives including asset sales - Titan Pharmaceuticals develops therapeutics using its proprietary long-term drug delivery platform, ProNeura, for chronic diseases[18](index=18&type=chunk)[82](index=82&type=chunk) - Probuphine, the first ProNeura product, is approved in the U.S., Canada, and EU for opioid use disorder, but U.S. commercialization was discontinued in Q4 2020 to focus on product development[19](index=19&type=chunk)[83](index=83&type=chunk) - The company is exploring strategic alternatives, including acquisition, merger, asset sales, or licensing, and implemented cost reduction measures in June and December 2022[20](index=20&type=chunk)[84](index=84&type=chunk) - In July 2023, the company entered an agreement to sell certain ProNeura assets, including drug addiction products (Probuphine and Nalmefene implant programs), to Fedson, Inc[21](index=21&type=chunk)[85](index=85&type=chunk) [Basis of Presentation](index=8&type=section&id=Basis%20of%20Presentation) Unaudited financial statements are prepared assuming going concern, despite substantial doubt beyond Q3 2023 without additional funding - The unaudited condensed financial statements are prepared assuming the company will continue as a going concern, despite substantial doubt about its ability to do so beyond Q3 2023 without additional funding[25](index=25&type=chunk)[26](index=26&type=chunk) [Discontinued Operations](index=9&type=section&id=Discontinued%20Operations) The company discontinued U.S. Probuphine sales in October 2020 to focus on early-stage product development, recasting related financial items as discontinued operations - In October 2020, the company decided to discontinue selling Probuphine in the U.S. and wind down commercialization activities to focus on early-stage ProNeura-based product development[27](index=27&type=chunk) - Assets, liabilities, revenue, and expenses related to U.S. commercialization activities have been recast as discontinued operations in the financial statements[28](index=28&type=chunk) [Going Concern Assessment](index=9&type=section&id=Going%20Concern%20Assessment) As of June 30, 2023, the company lacks sufficient cash for the next 12 months, raising substantial doubt about its ability to continue as a going concern - As of June 30, 2023, the company concluded it does not have sufficient cash to fund its operations for the next 12 months, raising substantial doubt about its ability to continue as a going concern[30](index=30&type=chunk) - The company is exploring several financing and strategic alternatives; however, there can be no assurance that its efforts will be successful[30](index=30&type=chunk) [Use of Estimates](index=9&type=section&id=Use%20of%20Estimates) Financial statement preparation involves management estimates and assumptions, where actual results may differ - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, and actual results could differ[31](index=31&type=chunk) [Inventories](index=10&type=section&id=Inventories) Inventory, primarily raw materials and finished goods, is classified as assets held for potential sale | Inventory Component (in thousands) | December 31, 2022 | | :--- | :--- | | Raw materials and supplies | $60 | | Finished goods | $46 | | Total | $106 | - Approximately **$106,000** of raw materials and supplies and finished goods inventory at June 30, 2023, are classified as assets held for potential sale[33](index=33&type=chunk) [Revenue Recognition](index=10&type=section&id=Revenue%20Recognition) Revenue is primarily from collaborative R&D, technology sales/licenses, and government grants, with milestone payments recognized when probable - Revenue is generated principally from collaborative research and development arrangements, sales or licenses of technology, and government grants[34](index=34&type=chunk) - Grant revenue from contracts with NIDA and the Bill & Melinda Gates Foundation is recognized as services are performed when funding is committed[36](index=36&type=chunk) - Milestone payments are included in the transaction price if probable of being achieved and not subject to significant revenue reversal; regulatory approvals are not considered probable until received[40](index=40&type=chunk) [Research and Development Costs and Related Accrual](index=11&type=section&id=Research%20and%20Development%20Costs%20and%20Related%20Accrual) R&D expenses include internal costs like salaries and facility costs, and external costs such as contract research and sponsored studies - Research and development expenses include internal costs (salaries, facility costs) and external costs (contract research organization activities, sponsored research studies)[46](index=46&type=chunk) [Leases](index=12&type=section&id=Leases) The company leases its office facility under an operating lease expiring in June 2024, with total minimum lease payments of $132,000 - The company leases its office facility under an operating lease that expires in June 2024[47](index=47&type=chunk)[60](index=60&type=chunk) | Year | Minimum Lease Payments (in thousands) | | :--- | :--- | | 2023 | $66 | | 2024 | $66 | | Total minimum lease payments | $132 | | Less: imputed interest | $(4) | | Total operating lease liabilities | $128 | [Recent Accounting Pronouncements](index=12&type=section&id=Recent%20Accounting%20Pronouncements) The adoption of ASU 2016-13 had no material impact, while ASU 2020-06 is currently being evaluated for future impact - The adoption of ASU 2016-13 (Credit Losses) on January 1, 2023, did not have a material impact on the condensed financial statements[50](index=50&type=chunk) - The company is currently evaluating the impact of ASU 2020-06 (Convertible Instruments and Contracts in an Entity's Own Equity), effective after December 15, 2023[51](index=51&type=chunk) [Fair Value Measurements](index=12&type=section&id=Fair%20Value%20Measurements) Financial instruments are carried at cost with fair values approximated due to their short-term nature, and no money market investments were held at June 30, 2023 - Financial instruments like receivables, accounts payable, and accrued liabilities are carried at cost, with fair values approximated due to their short-term nature[52](index=52&type=chunk) - The company had no investments in money market funds at June 30, 2023, compared to approximately **$2.6 million** at December 31, 2022[53](index=53&type=chunk) [Note 2. Stock Plans](index=13&type=section&id=Note%202.%20Stock%20Plans) The company granted a significant number of stock options in late 2022, which were approved by shareholders in June 2023, leading to an increase in outstanding options and stock-based compensation expense, particularly in general and administrative costs | Stock Option Activity (in thousands) | December 31, 2022 | June 30, 2023 | | :--- | :--- | :--- | | Options Outstanding | 927 | 1,936 | | Weighted Average Exercise Price | $7.97 | $3.56 | | Options Granted (6 months to June 30, 2023) | - | 1,025 | | Stock-Based Compensation (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $26 | $123 | $54 | $246 | | Selling, general and administrative | $239 | $94 | $500 | $197 | | Total stock-based compensation | $265 | $217 | $554 | $443 | [Note 3. Net Loss Per Share](index=14&type=section&id=Note%203.%20Net%20Loss%20Per%20Share) The calculation of diluted net loss per common share excludes a significant number of common shares underlying stock options and warrants due to their anti-dilutive effect for both periods presented | Anti-Dilutive Common Shares (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | From options | 934 | 986 | 926 | 982 | | From warrants | 7,380 | 9,038 | 6,761 | 6,433 | | Total | 8,314 | 10,024 | 7,687 | 7,415 | [Note 4. JT Pharmaceuticals Asset Purchase Agreement](index=14&type=section&id=Note%204.%20JT%20Pharmaceuticals%20Asset%20Purchase%20Agreement) In October 2020, Titan acquired JT Pharma's TP-2021 for use with its ProNeura technology, involving an initial payment and future milestone/earn-out payments. A proof-of-concept milestone was achieved in January 2022, resulting in a cash payment and stock issuance - Titan acquired JT Pharma's kappa opioid agonist peptide, TP-2021, in October 2020 for use with its ProNeura technology for chronic pruritus[59](index=59&type=chunk) - The agreement includes a **$15,000** closing payment, future milestone payments (cash or stock), and single-digit earn-out payments on net sales[59](index=59&type=chunk) - In January 2022, a proof-of-concept milestone was achieved, leading to a **$100,000** payment and issuance of **51,021** common shares to JT Pharma[59](index=59&type=chunk)[66](index=66&type=chunk) [Note 5. Commitments and Contingencies](index=14&type=section&id=Note%205.%20Commitments%20and%20Contingencies) The company has an operating lease for its office facility expiring in June 2024 and is involved in a legal proceeding initiated by a former employee, with liabilities for this claim assumed by Fedson as part of an asset purchase agreement - The company leases its office facility under an operating lease expiring in June 2024, with rent expense of approximately **$64,000** for the six months ended June 30, 2023 and 2022[60](index=60&type=chunk) - A former employee initiated a legal proceeding alleging wrongful termination, retaliation, infliction of emotional distress, negligent supervision, hiring and retention, and slander[61](index=61&type=chunk)[107](index=107&type=chunk) - Fedson, Inc. has agreed to assume all liabilities related to this pending employment claim as further consideration for the Asset Purchase Agreement[61](index=61&type=chunk)[107](index=107&type=chunk) [Note 6. Stockholders' Equity (Deficit)](index=14&type=section&id=Note%206.%20Stockholders'%20Equity%20(Deficit)) As of June 30, 2023, and December 31, 2022, the company had 15,016,295 shares of common stock outstanding. In June 2023, stockholders approved an increase in authorized shares for the 2015 Omnibus Equity Incentive plan - Common stock outstanding was **15,016,295** shares at June 30, 2023, and December 31, 2022[62](index=62&type=chunk) - In June 2023, stockholders approved an amendment to the 2015 Omnibus Equity Incentive plan, increasing the number of authorized shares to **2,500,000**[63](index=63&type=chunk) - In February 2022, the company completed a registered direct offering and a concurrent private placement, raising approximately **$5.0 million** in net cash proceeds[64](index=64&type=chunk)[97](index=97&type=chunk) [Note 7. Discontinued Operations](index=15&type=section&id=Note%207.%20Discontinued%20Operations) The company's discontinued U.S. commercialization activities for Probuphine are reflected in the condensed balance sheets, showing minor assets and liabilities associated with these operations | Discontinued Operations (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Current assets | $32 | $14 | | Current liabilities | $190 | $129 | [Note 8. Assets Held for Sale](index=15&type=section&id=Note%208.%20Assets%20Held%20for%20Sale) In July 2023, the company entered an agreement to sell certain ProNeura assets, including drug addiction products, to Fedson, Inc., with associated assets and liabilities classified as held for sale at June 30, 2023 - In July 2023, Titan entered an Asset Purchase Agreement with Fedson for the sale of certain ProNeura Assets, including the Probuphine and Nalmefene implant programs[69](index=69&type=chunk) - As of June 30, 2023, assets held for sale included approximately **$0.1 million** of inventory and **$0.1 million** of property and equipment, net, with **$0.2 million** of accrued liabilities[69](index=69&type=chunk) - Fedson will assume all liabilities related to a pending employment claim as part of the transaction[69](index=69&type=chunk) [Note 9. Related Party Transactions](index=16&type=section&id=Note%209.%20Related%20Party%20Transactions) During the first six months of 2023, the company made payments for legal fees to a law firm operated by one of its Board members - Payments of approximately **$75,000** were made for legal fees to a law firm operated by one of the Board members during the six months ended June 30, 2023[70](index=70&type=chunk) [Note 10. Subsequent Events](index=16&type=section&id=Note%2010.%20Subsequent%20Events) Post-June 30, 2023, the company entered into an asset purchase agreement with Fedson for ProNeura assets, secured two promissory notes from its CEO and another individual for immediate funding, and granted fully vested common stock to board members and management - In July 2023, Titan entered an Asset Purchase Agreement with Fedson for ProNeura Assets, including drug addiction products, for an upfront price of **$2 million** (**$1 million** at closing, **$1 million** in escrow) and potential milestone payments up to **$50 million** plus royalties[72](index=72&type=chunk)[73](index=73&type=chunk) - In July 2023, the company received **$250,000** from CEO David E. Lazar via an unsecured promissory note (Lazar Promissory Note), due January 1, 2024, or upon certain financing/asset sale proceeds[74](index=74&type=chunk)[118](index=118&type=chunk) - In August 2023, the company received **$500,000** from Choong Choon Hau via a convertible promissory note (Hau Promissory Note), due January 1, 2024, convertible into common stock at **$0.5287** per share[76](index=76&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - In July 2023, **450,000** shares of fully vested unrestricted common stock were granted to six Board members and one management team member[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Titan Pharmaceuticals' business, its ProNeura drug delivery platform, and development programs. It analyzes the financial performance for the three and six months ended June 30, 2023, highlighting decreases in revenues and operating expenses, and discusses the company's liquidity, capital resources, and ongoing going concern challenges [Forward-Looking Statements](index=17&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to risks and uncertainties, with no obligation for the company to update them - The report contains forward-looking statements regarding future performance, which are subject to substantial risks and uncertainties, including the ability to complete strategic transactions, raise capital, and navigate product development and regulatory processes[78](index=78&type=chunk)[79](index=79&type=chunk) - Forward-looking statements are based on information available at the time they are made and are not guarantees of future performance; the company assumes no obligation to update them[79](index=79&type=chunk)[80](index=80&type=chunk) [Overview](index=17&type=section&id=Overview) Titan Pharmaceuticals is a drug development company utilizing its ProNeura platform for chronic diseases. Following the discontinuation of U.S. Probuphine commercialization, the company is focusing on product development and actively pursuing strategic alternatives, including asset sales, to enhance shareholder value and address financial challenges - Titan Pharmaceuticals develops therapeutics utilizing its proprietary long-term drug delivery platform, ProNeura, for the treatment of select chronic diseases[82](index=82&type=chunk) - U.S. commercialization of Probuphine was discontinued in the fourth quarter of 2020 to focus limited resources on product development programs[83](index=83&type=chunk) - The company is exploring strategic alternatives, including acquisition, merger, asset sales, or licensing, and implemented cost reduction measures in 2022, including a workforce reduction[84](index=84&type=chunk) - In July 2023, an Asset Purchase Agreement was entered into with Fedson for the sale of certain ProNeura assets, including drug addiction products (Probuphine and Nalmefene implant programs)[85](index=85&type=chunk) [ProNeura Continuous Drug Delivery Platform](index=18&type=section&id=ProNeura%20Continuous%20Drug%20Delivery%20Platform) The ProNeura platform is a subdermal implant designed for continuous, steady drug release, avoiding fluctuations seen with oral dosing. Its feasibility has been demonstrated with various molecules and approved by regulatory bodies for Probuphine, offering long-term outpatient treatment - The ProNeura system is a small, solid subdermal implant designed for continuous, steady drug release, avoiding fluctuating drug levels seen with oral dosing[86](index=86&type=chunk) - The platform aims to provide long-term outpatient treatment for up to 12 months, with its benefits demonstrated by Probuphine's clinical results and regulatory approvals (FDA, EMA, Health Canada)[87](index=87&type=chunk) - ProNeura has shown feasibility with small molecules, hormones, and bio-active peptides, working with both hydrophobic and hydrophilic molecules, and allowing for flexible release characteristics[87](index=87&type=chunk) [Development Programs](index=18&type=section&id=Development%20Programs) The company's primary development program is TP-2021, a ProNeura implant for chronic pruritus, but development activities are substantially curtailed while strategic and financing alternatives are explored - The primary development program is TP-2021, a subdermal ProNeura implant for the potential treatment of chronic pruritus, designed for up to six months or longer of therapeutic delivery[88](index=88&type=chunk) - Development activities for TP-2021 have been substantially curtailed as the company explores several financing and strategic alternatives[88](index=88&type=chunk) [Recent Accounting Pronouncements](index=19&type=section&id=Recent%20Accounting%20Pronouncements) Information on recent accounting pronouncements is detailed in Note 1 to the unaudited condensed financial statements - Information on recent accounting pronouncements is provided in Note 1 to the accompanying unaudited condensed financial statements[89](index=89&type=chunk) [Results of Operations for the Three and Six Months ended June 30, 2023 and June 30, 2022](index=19&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20ended%20June%2030,%202023%20and%20June%2030,%202022) The company experienced a decrease in total revenues and operating expenses for both the three and six months ended June 30, 2023, compared to the prior year, primarily due to reduced R&D activities and cost-cutting measures, leading to a lower net loss [Revenues](index=19&type=section&id=Revenues) Total revenues decreased due to reduced NIDA grant activities, partially offset by increased Gates Foundation grant activity | Revenue Type (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | License revenue | $1 | $3 | $(2) | $1 | $5 | $(4) | | Grant revenue | $82 | $147 | $(65) | $180 | $336 | $(156) | | Total revenues | $83 | $150 | $(67) | $181 | $341 | $(160) | - The decrease in total revenues was primarily due to decreased activities related to the NIDA grant for the development of a nalmefene implant, partially offset by increased activity related to the Gates Foundation grant[90](index=90&type=chunk) [Operating Expenses](index=19&type=section&id=Operating%20Expenses) Operating expenses decreased due to reduced R&D activities, lower employee-related expenses, and professional fees, partially offset by increased stock-based compensation | Operating Expense (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Research and development | $442 | $974 | $(532) | $1,003 | $2,383 | $(1,380) | | General and administrative | $1,229 | $1,618 | $(389) | $2,463 | $2,939 | $(476) | | Total operating expenses | $1,671 | $2,592 | $(921) | $3,466 | $5,322 | $(1,856) | - Research and development costs decreased primarily due to reduced activities related to the NIDA grant for nalmefene implant development, initial non-clinical TP-2021 studies, and personnel-related costs following a December 2022 workforce reduction[91](index=91&type=chunk) - General and administrative expenses decreased primarily due to lower employee-related expenses, legal and professional fees, partially offset by increases in non-cash stock-based compensation[92](index=92&type=chunk) [Other Income (Expense), Net](index=20&type=section&id=Other%20Income%20(Expense),%20Net) Other income (expense), net, increased primarily due to higher interest income and reduced tax-related expenses | Other Income (Expense) (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Interest income (expense), net | $7 | $5 | $2 | $29 | $5 | $24 | | Other expense, net | $(5) | $(25) | $20 | $(5) | $(26) | $21 | | Total other income (expense), net | $2 | $(20) | $22 | $24 | $(21) | $45 | - The increase in other income (expense), net, was primarily due to increases in interest income and decreases in tax-related expenses[94](index=94&type=chunk) [Net Loss and Net Loss per Share](index=20&type=section&id=Net%20Loss%20and%20Net%20Loss%20per%20Share) The company reported a reduced net loss and net loss per share for both the three and six months ended June 30, 2023 | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net loss from operations (in thousands) | $(1,600) | $(2,400) | $(3,300) | $(5,000) | | Net loss per share | $(0.11) | $(0.18) | $(0.22) | $(0.41) | [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The company's working capital shifted from a surplus to a deficit, and its cash and cash equivalents significantly decreased. Despite recent funding from promissory notes and anticipated asset sale proceeds, there is substantial doubt about its ability to continue as a going concern beyond Q3 2023 without further financing - At June 30, 2023, the company had a working capital deficit of approximately **$1.3 million**, compared to working capital of approximately **$1.0 million** at December 31, 2022[96](index=96&type=chunk) - As of June 30, 2023, cash and cash equivalents were approximately **$0.1 million**[98](index=98&type=chunk) - The company believes that current cash, along with **$250,000** from the Lazar Promissory Note, **$500,000** from the Hau Promissory Note, and **$1.0 million** anticipated from the Fedson asset sale, will fund operations to the end of the third quarter of 2023[98](index=98&type=chunk) - There is substantial doubt about the company's ability to continue as a going concern, as it explores several financing and strategic alternatives with no assurance of success[98](index=98&type=chunk) [Sources and Uses of Cash](index=20&type=section&id=Sources%20and%20Uses%20of%20Cash) For the six months ended June 30, 2023, the company primarily used cash in operating activities, with no cash generated from investing or financing activities, leading to a significant net decrease in cash | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,011) | $(4,731) | | Net cash used in investing activities | $- | $- | | Net cash provided by financing activities | $- | $4,984 | | Change in cash, cash equivalents and restricted cash | $(3,011) | $253 | - Net cash used in operating activities for the six months ended June 30, 2023, consisted primarily of a net loss of approximately **$3.3 million** and changes in operating assets and liabilities, partially offset by non-cash charges[100](index=100&type=chunk) - Net cash provided by financing activities for the six months ended June 30, 2022, was primarily from net cash proceeds from the February 2022 equity offering[101](index=101&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk disclosures have not materially changed from those reported in its Annual Report on Form 10-K for the year ended December 31, 2022 - The market risk disclosures have not materially changed from those set forth in the Annual Report on Form 10-K for the year ended December 31, 2022[102](index=102&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the period [Disclosure Controls and Procedures](index=21&type=section&id=Disclosure%20Controls%20and%20Procedures) The CEO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, ensuring timely and accurate reporting - The Chief Executive Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, ensuring timely and accurate reporting[103](index=103&type=chunk) [Changes in Internal Control Over Financial Reporting](index=21&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the six months ended June 30, 2023 - There were no changes in internal control over financial reporting during the six months ended June 30, 2023, that materially affected, or were reasonably likely to materially affect, internal controls[104](index=104&type=chunk) Part II. [Other Information](index=22&type=section&id=Part%20II.%20Other%20Information) This section provides additional information including legal proceedings, risk factors, equity sales, other disclosures, and exhibits [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) A legal proceeding by a former employee alleging wrongful termination and other claims is ongoing, but Fedson, Inc. has agreed to assume all related liabilities as part of an asset purchase agreement - A legal proceeding has been initiated by a former employee alleging wrongful termination, retaliation, infliction of emotional distress, negligent supervision, hiring and retention, and slander[107](index=107&type=chunk) - An independent investigation into the whistleblower retaliation allegations concluded they were not substantiated[107](index=107&type=chunk) - Fedson, Inc. has agreed to assume all liabilities related to this pending employment claim as further consideration for the Asset Purchase Agreement[107](index=107&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial doubt about its ability to continue as a going concern due to recurring net losses and negative cash flows. It also faces significant risks related to maintaining its Nasdaq Capital Market listing due to non-compliance with minimum stockholders' equity and bid price requirements, which could lead to delisting and adverse effects on its stock and ability to raise capital - The company has incurred net losses in almost every year since inception and expects continued losses, raising substantial doubt about its ability to continue as a going concern[109](index=109&type=chunk) - As of June 30, 2023, the company had cash and cash equivalents of approximately **$0.1 million** and expects to continue incurring net losses and negative operating cash flow[109](index=109&type=chunk) - The company's stockholders' equity of **$1,363,000** as of December 31, 2022, did not satisfy Nasdaq's **$2,500,000** minimum requirement, and it has until October 2, 2023, to regain compliance[110](index=110&type=chunk) - The company is also not in compliance with Nasdaq's minimum bid price requirement of **$1.00** per share and has until September 12, 2023, to regain compliance[113](index=113&type=chunk) - Failure to meet Nasdaq listing standards could result in delisting, reducing stock price, liquidity, and the ability to raise additional capital, potentially leading to trading in the over-the-counter market and application of 'penny stock' rules[111](index=111&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds occurred during the period[117](index=117&type=chunk) [Item 5. Other Information](index=23&type=section&id=Item%205.%20Other%20Information) In July and August 2023, the company secured **$750,000** in funding through unsecured and convertible promissory notes from its CEO and another individual, respectively, with both notes due January 1, 2024 - In July 2023, the company received **$250,000** in funding from David E. Lazar, its CEO, in exchange for an unsecured promissory note, due January 1, 2024, or upon certain financing/asset sale proceeds[118](index=118&type=chunk) - In August 2023, the company received **$500,000** in funding from Choong Choon Hau in exchange for a convertible promissory note, due January 1, 2024, convertible into common stock at **$0.5287** per share[119](index=119&type=chunk)[120](index=120&type=chunk) [Item 6. Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various agreements, promissory notes, certifications, and XBRL documents - Key exhibits include the Fourth Amended and Restated 2015 Omnibus Equity Incentive Plan, the Asset Purchase Agreement with Fedson, Inc., unsecured and convertible promissory notes, and certifications[121](index=121&type=chunk) [SIGNATURES](index=26&type=section&id=SIGNATURES) The report was duly signed on behalf of Titan Pharmaceuticals, Inc. by David Lazar, Chief Executive Officer, on August 14, 2023 - The report was signed by David Lazar, Chief Executive Officer of Titan Pharmaceuticals, Inc., on August 14, 2023[126](index=126&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number 001-13341 Titan Pharmaceuticals, Inc. (Exact name of registrant as specified in its charter) | Delaware | 94-3171940 | | --- | --- ...