PART I [Business Overview](index=5&type=section&id=Item%201.%20Business) Titan Pharmaceuticals develops chronic disease therapeutics using its ProNeura platform, discontinuing U.S. Probuphine commercialization to focus on development and strategic alternatives [Overview](index=5&type=section&id=Overview) [ProNeura Continuous Drug Delivery Platform](index=5&type=section&id=ProNeura%20Continuous%20Drug%20Delivery%20Platform) - The ProNeura system is a small, solid implant made of ethylene-vinyl acetate (EVA) and a drug substance, designed for subdermal administration and continuous, steady drug release for up to **12 months**[20](index=20&type=chunk)[21](index=21&type=chunk) - The platform has demonstrated feasibility with small molecules, hormones, and bio-active peptides, working with both hydrophobic and hydrophilic molecules[21](index=21&type=chunk) [Development Programs](index=6&type=section&id=Development%20Programs) - Development activities for current programs have been substantially curtailed due to the exploration of financing and strategic alternatives[23](index=23&type=chunk) - TP-2021 (kappa opioid agonist peptide) is being explored for chronic pruritus, with non-clinical studies showing potent antipruritic activity and sustained reduction in scratching behavior in animal models through **Day 84** post-implantation[24](index=24&type=chunk)[25](index=25&type=chunk) - The Nalmefene Development Program, a ProNeura implant for preventing opioid relapse, received FDA IND clearance in July 2022, with partial support from a NIDA grant. Additional NIDA funding of approximately **$6.3 million** may be available pending a progress review[26](index=26&type=chunk) - A **$500,000** grant from the Bill and Melinda Gates Foundation was received in October 2021 to develop a single ProNeura implant delivering a combination HIV preventative therapeutic and contraceptive[28](index=28&type=chunk) [Agreements](index=7&type=section&id=Agreements) - In October 2020, Titan acquired TP-2021 from JT Pharmaceuticals, Inc. (JT Pharma), with future milestone and earn-out payments. A **$100,000** milestone payment and **51,021 shares** of common stock were issued to JT Pharma in January 2022 for successful proof-of-concept[29](index=29&type=chunk) - Titan granted Knight Therapeutics Inc. an exclusive license to commercialize Probuphine in Canada, receiving low-teens to mid-thirties percentage royalty payments on net sales[30](index=30&type=chunk) [Intellectual Property](index=7&type=section&id=Intellectual%20Property) - Titan aims to obtain, maintain, and enforce patent protection for its product candidates, formulations, processes, and methods, both domestically and internationally[33](index=33&type=chunk) - A U.S. patent covering methods of using Probuphine for opiate addiction, owned by Titan, will expire in April 2024[36](index=36&type=chunk) - The company has pending patent applications for kappa-opioid receptor agonist implants for pruritus, implants for lipophilic/amphiphilic substances, loadable porous structures, and implants with reduced initial burst in various countries[36](index=36&type=chunk)[37](index=37&type=chunk) - Patents for a heterogeneous implant designed for structural integrity and enhanced drug delivery have been granted in multiple countries[38](index=38&type=chunk) [Competition](index=8&type=section&id=Competition) - The pharmaceutical and biotechnology industries are characterized by rapidly evolving technology and intense competition, with many competitors having significantly greater resources[40](index=40&type=chunk) [Manufacturing](index=8&type=section&id=Manufacturing) - Ongoing formulation development and cGMP manufacturing are conducted at Southwest Research Institute (SwRI) in San Antonio, Texas, compliant with FDA and DEA requirements[41](index=41&type=chunk) - Probuphine manufacturing was primarily at DPT Laboratories, Inc., with the facility transferred to Molteni in October 2020, retaining access for supply to Knight in Canada[42](index=42&type=chunk) [Government Regulation](index=9&type=section&id=Government%20Regulation) - Drug products are extensively regulated by government authorities in the U.S. (FDA) and other countries, requiring considerable data demonstrating quality, safety, and efficacy for marketing approval[44](index=44&type=chunk) - Products composed of both a drug and device are deemed combination products, with primary jurisdiction determined by the primary mode of action (expected to be the drug component for Titan's candidates)[45](index=45&type=chunk) - The regulatory approval process involves extensive nonclinical and clinical testing, IND application, IRB approval, adherence to GLP and GCP, NDA submission, FDA inspections, and review[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) [Employees](index=10&type=section&id=Employees) - As of **March 24, 2023**, the company had **four full-time employees**[50](index=50&type=chunk) [Corporate Information](index=10&type=section&id=Corporate%20Information) - Titan Pharmaceuticals, Inc. was incorporated in Delaware in February 1992, with principal executive offices in South San Francisco, California[51](index=51&type=chunk) - Titan Pharmaceuticals develops therapeutics using its proprietary long-term drug delivery platform, ProNeura, for chronic diseases[17](index=17&type=chunk) - Probuphine (buprenorphine implant), the company's first ProNeura-based product, is approved in the U.S., Canada, and EU for opioid use disorder. U.S. commercialization was discontinued in **Q4 2020** to reallocate resources to product development[18](index=18&type=chunk) - The company is exploring strategic alternatives (e.g., acquisition, merger, asset sales, licensing) to enhance stockholder value, following a significant ownership acquisition by Activist Investing LLC and changes to the Board and CEO in 2022[19](index=19&type=chunk) - Cost reduction measures, including salary reductions and workforce reduction, were implemented in June and December 2022[19](index=19&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) Significant risks include recurring losses, capital needs for early-stage programs, intense competition, and potential Nasdaq delisting [Risks Related to Our Financial Condition and Need for Additional Capital](index=11&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Need%20for%20Additional%20Capital) [Risks Related to Our Business and Industry](index=12&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) [Risks Related to our Common Stock](index=16&type=section&id=Risks%20Related%20to%20our%20Common%20Stock) - The company has incurred net losses in almost every year since inception, with approximately **$10.2 million** and **$8.8 million** net losses in 2022 and 2021, respectively, raising **substantial doubt about its ability to continue as a going concern**[53](index=53&type=chunk) - Available cash and cash equivalents are estimated to fund operations only into **Q2 2023**, requiring substantial additional funds for product development programs[54](index=54&type=chunk) - The company's ProNeura development programs are at very early stages, requiring substantial additional resources that may not be available, and clinical trials are expensive, time-consuming, and uncertain[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) - Failure to protect patents and proprietary rights, intense competition from companies with greater resources, and dependence on a small number of employees and consultants pose significant business risks[64](index=64&type=chunk)[69](index=69&type=chunk)[71](index=71&type=chunk) - The common stock's market price may be volatile, and the company faces risks of delisting from Nasdaq due to non-compliance with minimum bid price and stockholders' equity requirements[77](index=77&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) [Unresolved Staff Comments](index=19&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC [Properties](index=19&type=section&id=Item%202.%20Properties) The company's executive offices are located in South San Francisco, California, under an operating lease expiring in June 2024 - Executive offices are located in South San Francisco, California, occupying approximately **3,295 square feet** under a lease expiring in June 2024[94](index=94&type=chunk) [Legal Proceedings](index=20&type=section&id=Item%203.%20Legal%20Proceedings) A legal proceeding has been initiated by a former employee alleging wrongful termination and other claims, which the company intends to vigorously defend despite potential material impact on its business - A former employee initiated a legal proceeding alleging wrongful termination, retaliation, emotional distress, negligent supervision, hiring and retention, and slander[96](index=96&type=chunk) - An independent investigation found the whistleblower retaliation allegations unsubstantiated[96](index=96&type=chunk) - The company intends to vigorously defend the lawsuit, which has been compelled into arbitration, but acknowledges that the defense/settlement could materially impact its business due to its cash position[96](index=96&type=chunk) [Mine Safety Disclosures](index=20&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company PART II [Market for Common Equity and Related Matters](index=21&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock is listed on Nasdaq, with **15,016,295 shares outstanding** held by **94 record holders**, and no cash dividends are anticipated [Market for Registrant's Common Equity](index=21&type=section&id=Market%20for%20Registrant's%20Common%20Equity) [Approximate Number of Equity Security Holders](index=21&type=section&id=Approximate%20Number%20of%20Equity%20Security%20Holders) [Dividends](index=21&type=section&id=Dividends) [Equity Compensation Plan Information](index=21&type=section&id=Equity%20Compensation%20Plan%20Information) - Common stock is listed on the Nasdaq Capital Market under the symbol 'TTNP'[100](index=100&type=chunk) - As of **March 24, 2023**, **15,016,295 shares** of common stock were issued and outstanding, held by **94 record holders**[7](index=7&type=chunk)[101](index=101&type=chunk) - The company has never declared or paid cash dividends on its common stock and does not anticipate paying any in the foreseeable future[92](index=92&type=chunk)[102](index=102&type=chunk) Equity Compensation Plan Information (as of December 31, 2022) | Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (c) | | :------------------------------------------------ | :-------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------ | :------------------------------------------------------------------------------------------------- | | Equity compensation plans approved by security holders | 925,738 | $7.29 | 74,262 | | Equity compensation plans not approved by security holders | 1,189 | $541.80 | - | | **Total** | **926,927** | **$7.97** | **74,262** | [Reserved](index=21&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis](index=22&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights the ProNeura platform focus, strategic alternatives, and cost-cutting, with a **$10.2 million net loss** in 2022 and liquidity concerns raising going concern doubt [Overview](index=22&type=section&id=Overview) [Critical Accounting Policies and the Use of Estimates](index=22&type=section&id=Critical%20Accounting%20Policies%20and%20the%20Use%20of%20Estimates) - Revenue is recognized from collaborative R&D, technology sales/licenses, government grants, and Probuphine material sales, allocated based on standalone selling price and recognized as performance obligations are satisfied[110](index=110&type=chunk)[111](index=111&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Grant revenue is recognized as services are performed and funding is committed, with associated expenses recognized as R&D expense[113](index=113&type=chunk) - Inventories are recorded at the lower of cost or net realizable value, with regular review for impairment based on future demand and market conditions[125](index=125&type=chunk) - Compensation expense for share-based awards is recognized at fair value over the vesting period, using the Black-Scholes option pricing model with subjective assumptions[126](index=126&type=chunk)[127](index=127&type=chunk) - Accruals for estimated ongoing clinical trial costs are recorded as R&D expenses, based on trial progress, patient enrollment, and contracted costs[131](index=131&type=chunk) - Warrants issued in equity financings are generally accounted for as equity, unless cash settlement is deemed possible, in which case they are recorded as a liability at fair value[132](index=132&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) - Operations have been funded primarily through securities sales, debt, warrant/option exercises, licensing, royalty sales, and government grants[135](index=135&type=chunk) Liquidity and Capital Resources Summary (in thousands) | Metric | 2022 | 2021 | | :-------------------------------- | :----- | :----- | | Cash and cash equivalents | $2,937 | $6,037 | | Working capital | $973 | $4,560 | | Current ratio | 1.37:1 | 2.7:1 | | Cash used in operating activities | $(8,183) | $(7,899) | | Cash used in investing activities | $- | $(23) | | Cash provided by financing activities | $4,984 | $8,841 | - Net cash used in operating activities for 2022 was approximately **$8.2 million**, primarily due to a **net loss of $10.2 million**, partially offset by non-cash items[136](index=136&type=chunk) - Net cash provided by financing activities for 2022 was approximately **$5.0 million**, primarily from equity offerings[137](index=137&type=chunk)[138](index=138&type=chunk) - As of **December 31, 2022**, cash and cash equivalents of approximately **$2.9 million** are believed to be sufficient to fund operations only into **Q2 2023**, indicating **substantial doubt about the company's ability to continue as a going concern** without additional funding[140](index=140&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) [Revenues](index=26&type=section&id=Revenues) Revenue Comparison (in thousands) | Revenue Type | 2022 | 2021 | Change | | :------------- | :--- | :--- | :----- | | License revenue | $60 | $13 | $47 | | Product revenue | $- | $236 | $(236) | | Grant revenue | $497 | $1,277 | $(780) | | **Total revenue** | **$557** | **$1,526** | **$(969)** | - License revenue increased due to an upfront payment for ophthalmic use of ProNeura technology and royalties from Probuphine sales in Canada[142](index=142&type=chunk) - Product revenue decreased to zero in 2022 as it consisted of Probuphine material sales in 2021, which were discontinued[143](index=143&type=chunk) - Grant revenue decreased primarily due to reduced activities related to the NIDA grant for nalmefene implant development[143](index=143&type=chunk) [Operating Expenses](index=27&type=section&id=Operating%20Expenses) Operating Expenses Comparison (in thousands) | Expense Type | 2022 | 2021 | Change | | :---------------------- | :----- | :----- | :----- | | Cost of goods sold | $- | $199 | $(199) | | Research and development | $4,758 | $5,692 | $(934) | | General and administrative | $6,034 | $4,989 | $1,045 | | **Total operating expenses** | **$10,792** | **$10,880** | **$(88)** | - Research and development costs decreased by **$934,000**, mainly due to reduced activities for the NIDA nalmefene grant and the TP-2021 implant program, as well as lower personnel-related costs[145](index=145&type=chunk) - General and administrative expenses increased by **$1,045,000**, primarily due to higher non-cash stock-based compensation, employee-related expenses, and legal/professional fees[146](index=146&type=chunk) [Other Expenses, Net](index=27&type=section&id=Other%20Expenses,%20Net) Other Income (Expense), Net Comparison (in thousands) | Item | 2022 | 2021 | Change | | :-------------------------- | :--- | :--- | :----- | | Interest income, net | $53 | $1 | $52 | | Other expense, net | $(24) | $(84) | $60 | | Non-cash gain on debt extinguishment | $- | $661 | $(661) | | **Other income, net** | **$29** | **$578** | **$(549)** | - The decrease in other income, net, was primarily due to a **$661,000** non-cash gain on debt extinguishment in 2021 from the forgiveness of the PPP Loan, which did not recur in 2022[147](index=147&type=chunk) [Net Loss and Net Loss per Share](index=28&type=section&id=Net%20Loss%20and%20Net%20Loss%20per%20Share) Net Loss and EPS Comparison | Metric | 2022 | 2021 | | :------------------------------------------ | :----------- | :----------- | | Net loss applicable to common stockholders | $(10.2) million | $(8.8) million | | Basic and diluted net loss per common share | $(0.76) | $(0.90) | | Weighted average shares outstanding (thousands) | 13,434 | 9,730 | [Off-Balance Sheet Arrangements](index=28&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company has not entered into any off-balance sheet financing arrangements, established special purpose entities, or guaranteed debt/commitments of other entities[149](index=149&type=chunk) - The company is a pharmaceutical company developing therapeutics using its proprietary long-term drug delivery platform, ProNeura, for chronic diseases[106](index=106&type=chunk) - U.S. commercialization of Probuphine was discontinued in **Q4 2020** to focus limited resources on product development programs[107](index=107&type=chunk) - Strategic alternatives are being explored, and cost reduction measures (salary reductions, operating expense scale-back, workforce reduction) were implemented in 2022[108](index=108&type=chunk)[19](index=19&type=chunk) - The company's financial statements are prepared assuming it will continue as a going concern, but recurring losses and insufficient cash raise **substantial doubt about this ability**[53](index=53&type=chunk)[140](index=140&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[269](index=269&type=chunk) [Market Risk Disclosures](index=28&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company [Financial Statements and Supplementary Data](index=28&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item refers to the separate section of the report containing the audited financial statements and supplementary data [Changes in Accountants and Disclosures](index=28&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure [Controls and Procedures](index=28&type=section&id=Item%209A.%20Controls%20and%20Procedures) The principal executive and financial officers evaluated the effectiveness of disclosure controls and procedures as of **December 31, 2022**, concluding they were effective, and management also concluded that internal control over financial reporting was effective as of **December 31, 2022** [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) [Management's Annual Report on Internal Control Over Financial Reporting](index=28&type=section&id=Management's%20Annual%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) [Changes in Internal Control Over Financial Reporting](index=29&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - Disclosure controls and procedures were evaluated as **effective as of December 31, 2022**[153](index=153&type=chunk) - Management concluded that internal control over financial reporting was **effective as of December 31, 2022**, based on the COSO (2013 framework)[157](index=157&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[158](index=158&type=chunk) [Other Information](index=29&type=section&id=Item%209B.%20Other%20Information) There is no other information to disclose under this item [Foreign Jurisdictions Inspection Disclosure](index=29&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company PART III [Directors, Executive Officers and Governance](index=30&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section details executive officers and directors, including CEO David E. Lazar, Board composition, Code of Ethics, and committee oversight of risk management [Executive Officers and Directors](index=30&type=section&id=Executive%20Officers%20and%20Directors) [Board Leadership Structure](index=33&type=section&id=Board%20Leadership%20Structure) [Code of Ethics](index=33&type=section&id=Code%20of%20Ethics) [Changes in Director Nomination Process for Stockholders](index=33&type=section&id=Changes%20in%20Director%20Nomination%20Process%20for%20Stockholders) - David E. Lazar assumed the role of Chief Executive Officer and Chairman of the Board in August 2022, following Activist Investing LLC's acquisition of a significant ownership interest[19](index=19&type=chunk)[163](index=163&type=chunk)[176](index=176&type=chunk) - Katherine Beebe DeVarney, Ph.D., serves as President and Chief Operating Officer, with **26 years** of experience in the pharmaceutical industry[165](index=165&type=chunk) - The Board consists of **eleven members**, with Joseph A. Akers, Avraham Ben-Tzvi, Peter L. Chasey, Eric Greenberg, M. David MacFarlane, Matthew C. McMurdo, James R. McNab, Jr., and David Natan identified as independent directors[163](index=163&type=chunk)[214](index=214&type=chunk) - The company has a Code of Business Conduct and Ethics applicable to all directors, officers, and employees[177](index=177&type=chunk) - The Board has established Audit, Compensation, and Nominating and Governance Committees, with specific responsibilities including overseeing financial reporting, executive compensation, and director nominations[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) [Executive Compensation](index=34&type=section&id=Item%2011.%20Executive%20Compensation) This section details executive compensation for 2022 and 2021, including salary reductions, executive changes, and the impact of a change of control on equity awards [SUMMARY COMPENSATION TABLE](index=34&type=section&id=SUMMARY%20COMPENSATION%20TABLE) [Employee Benefits Plans](index=34&type=section&id=Employee%20Benefits%20Plans) - The 2015 Omnibus Equity Incentive Plan, as amended, authorized **1,000,000 shares** of common stock for issuance, with **925,738 options** outstanding and **74,262 shares** available for grant as of **December 31, 2022**[190](index=190&type=chunk)[335](index=335&type=chunk) - The 2014 Incentive Plan had **1,189 options** outstanding as of **December 31, 2022**, and the 2002 Stock Incentive Plan had no options outstanding[188](index=188&type=chunk)[187](index=187&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk) [Outstanding Equity Awards at Fiscal Year-End](index=35&type=section&id=Outstanding%20Equity%20Awards%20at%20Fiscal%20Year-End) [Pension Benefits](index=36&type=section&id=Pension%20Benefits) - The company does not sponsor any qualified or non-qualified defined benefit plans[196](index=196&type=chunk) [Nonqualified Deferred Compensation](index=36&type=section&id=Nonqualified%20Deferred%20Compensation) - The company does not maintain any non-qualified defined contribution or deferred compensation plans but sponsors a tax-qualified 401(k) plan[197](index=197&type=chunk) [Employment Agreements](index=36&type=section&id=Employment%20Agreements) Summary Compensation Table for Named Executive Officers (2022 vs. 2021) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) | Stock Awards ($) | All Other Compensation ($) | Total Compensation ($) | | :-------------------------- | :--- | :--------- | :-------- | :---------------- | :--------------- | :------------------------- | :--------------------- | | Marc Rubin, MD, Executive Chairman | 2022 | 204,083 | - | 57,582 | - | 164,583 | 426,248 | | | 2021 | 390,244 | - | 490,003 | - | - | 884,247 | | David Lazar, Chief Executive Officer | 2022 | 152,250 | - | - | - | - | 152,250 | | Katherine Beebe DeVarney, Ph.D., President and COO | 2022 | 308,000 | - | 54,340 | - | - | 362,340 | | | 2021 | 383,641 | - | 490,003 | - | - | 877,644 | - Dr. Rubin's employment was terminated in August 2022, with severance payments of approximately **$0.4 million**, of which **$165,000** was paid by **December 31, 2022**[19](index=19&type=chunk)[183](index=183&type=chunk) - In June 2022, a company-wide salary reduction plan was implemented, including a **40%** waiver of base salaries for Dr. Rubin and Dr. Beebe DeVarney for **six months**[184](index=184&type=chunk) - David Lazar's employment agreement, effective **August 16, 2022**, provides for an annual base salary of **$406,000**, eligibility for annual and performance bonuses, and a change of control bonus[185](index=185&type=chunk)[202](index=202&type=chunk) - A change of control on **August 15, 2022**, due to the election of new directors, resulted in the immediate vesting of all unvested options granted under the 2015 Plan prior to that date[193](index=193&type=chunk)[343](index=343&type=chunk) Outstanding Equity Awards at Fiscal Year-End (December 31, 2022) | Name | Number of Securities Underlying Unexercised Awards () Exercisable | Exercise Price ($) | Expiration Date | | :-------------------------- | :----------------------------------------------------------------- | :----------------- | :-------------- | | Marc Rubin, M.D. | 203 | 594.00 | 3/16/2025 | | | 506 | 918.00 | 12/14/2025 | | | 440 | 918.00 | 02/02/2026 | | | 390 | 702.00 | 02/13/2027 | | | 946 | 174.60 | 03/07/2028 | | | 2,779 | 52.50 | 4/2/2029 | | | 150,000 | 4.02 | 2/10/2031 | | | 65,000 | 1.18 | 01/05/2032 | | Katherine Beebe DeVarney, Ph.D. | 142 | 594.00 | 3/16/2025 | | | 223 | 46.58 | 12/14/2025 | | | 223 | 46.58 | 2/13/2027 | | | 945 | 174.60 | 3/7/2028 | | | 150,000 | 4.02 | 2/10/2031 | | | 55,000 | 1.18 | 01/05/2032 | [Security Ownership and Related Matters](index=39&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details beneficial ownership by significant shareholders, directors, and executive officers, with David E. Lazar holding approximately **24.96%** of voting power Security Ownership (as of March 24, 2023) | Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Shares Beneficially Owned | | :----------------------------------- | :------------------------ | :----------------------------------- | | Joseph A. Akers | 37,504 | * | | Avraham Ben-Tzvi | - | - | | Peter L. Chasey | - | - | | Kate Beebe DeVarney, Ph.D. | 206,613 | 1.4% | | Eric Greenberg | - | - | | David E. Lazar | 3,747,968 | 24.96% | | M. David MacFarlane, Ph.D. | 36,237 | * | | James R. McNab, Jr. | 89,009 | * | | Matthew C. McMurdo | - | - | | David Natan | - | - | | Marc Rubin, M.D. | 225,590 | 1.5% | | All executive officers and directors as a group (11) persons | 4,342,921 | 27.9% | *Less than 1%. - David E. Lazar controls approximately **24.96%** of the voting power, which may significantly influence management and corporate affairs[91](index=91&type=chunk)[211](index=211&type=chunk) [Related Transactions and Director Independence](index=40&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) This section discloses related party transactions, identifies **eight independent directors**, and details the Board's committee structure and risk oversight role [Certain Relationships and Related Transactions](index=40&type=section&id=Certain%20Relationships%20and%20Related%20Transactions) [Independence of Directors](index=40&type=section&id=Independence%20of%20Directors) [Board Committees](index=40&type=section&id=Board%20Committees) [Role of the Board in Risk Oversight](index=41&type=section&id=Role%20of%20the%20Board%20in%20Risk%20Oversight) [Board Meetings](index=41&type=section&id=Board%20Meetings) - In January 2022, a **$100,000** payment and **51,021 shares** of common stock were issued to JT Pharma, a company where James R. McNab, Jr. (a Board member) serves as CEO, for achieving a proof-of-concept milestone[212](index=212&type=chunk)[354](index=354&type=chunk) - Approximately **$75,000** in legal fees were paid to a law firm operated by one of the Board members during 2022[213](index=213&type=chunk)[355](index=355&type=chunk) - **Eight directors** (Joseph A. Akers, Avraham Ben-Tzvi, Peter L. Chasey, Eric Greenberg, M. David MacFarlane, Matthew C. McMurdo, James R. McNab, Jr., and David Natan) meet Nasdaq's independence requirements[214](index=214&type=chunk) - The Board has Audit, Compensation, and Nominating and Governance committees, with the Audit Committee overseeing risk management processes[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[220](index=220&type=chunk) - The Board met **32 times** during 2022, with most directors attending at least **75%** of meetings[221](index=221&type=chunk) [Principal Accounting Fees and Services](index=41&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) This section details fees billed by WithumSmith+Brown for audit and tax services, with the audit committee pre-approving all services to ensure auditor independence [Aggregate Fees Billed](index=41&type=section&id=Aggregate%20Fees%20Billed) [Pre-Approval Policies and Procedures](index=42&type=section&id=Pre-Approval%20Policies%20and%20Procedures) Aggregate Fees Billed by Independent Auditors (in thousands) | Fee Type | 2022 | 2021 | | :--------------- | :----- | :----- | | Audit Fees | $301,079 | $297,850 | | Audit-Related Fees | $- | $- | | Tax Fees | $45,720 | $48,850 | | **Total** | **$346,799** | **$346,700** | - Audit fees include services for annual financial statement audits, internal control effectiveness, quarterly report reviews, and statutory/regulatory filings[222](index=222&type=chunk) - The audit committee reviews and pre-approves all audit and non-audit services to maintain auditor independence, with specific policies for recurring and non-recurring services[224](index=224&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=43&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This item lists the financial statements and schedules included in the report, along with a comprehensive list of exhibits incorporated by reference - An index to Financial Statements appears on page F-1 (page **44** of the document)[232](index=232&type=chunk)[236](index=236&type=chunk) - All financial statement schedules are omitted as they are not applicable or the information is provided in the financial statements or notes[233](index=233&type=chunk) [Form 10-K Summary](index=43&type=section&id=Item%2016.%20Form%2010-K%20Summary) There is no Form 10-K Summary provided Financial Statements This section presents the company's audited financial statements and related notes for the fiscal years presented [Report of Independent Registered Public Accounting Firm](index=45&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) WithumSmith+Brown, PC issued an **unqualified opinion** but noted a **Going Concern Uncertainty** due to recurring losses and insufficient cash, identifying warrant accounting as a **critical audit matter** - The independent auditor, WithumSmith+Brown, PC, issued an **unqualified opinion** on the financial statements for the years ended **December 31, 2022** and **2021**[238](index=238&type=chunk) - A **'Going Concern Uncertainty'** was noted due to recurring losses, an accumulated deficit, and insufficient cash to fund operations for the next **twelve months**, raising **substantial doubt about the company's ability to continue as a going concern**[239](index=239&type=chunk) - Accounting for warrants was identified as a **critical audit matter** due to complex provisions affecting classification and requiring extensive audit effort[246](index=246&type=chunk) [Balance Sheets](index=47&type=section&id=Balance%20Sheets) The balance sheets show a decrease in total assets from **$7.994 million** in 2021 to **$4.058 million** in 2022, driven by reduced cash, and a significant decline in total stockholders' equity Balance Sheet Summary (in thousands) | Item | December 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------------ | :------------------ | | **Assets:** | | | | Cash and cash equivalents | $2,937 | $6,037 | | Total current assets | $3,603 | $7,229 | | Total assets | $4,058 | $7,994 | | **Liabilities and Stockholders' Equity:** | | | | Total current liabilities | $2,630 | $2,669 | | Total liabilities | $2,695 | $2,856 | | Total stockholders' equity | $1,363 | $5,138 | | Total liabilities and stockholders' equity | $4,058 | $7,994 | - Cash and cash equivalents decreased by over **50%** from **$6.037 million** in 2021 to **$2.937 million** in 2022[250](index=250&type=chunk) - Total stockholders' equity decreased by approximately **73%** from **$5.138 million** in 2021 to **$1.363 million** in 2022[250](index=250&type=chunk) [Statements of Operations](index=48&type=section&id=Statements%20of%20Operations) The statements of operations show a **net loss of $10.206 million** in 2022, an increase from **$8.776 million** in 2021, primarily due to decreased grant and product revenue Statements of Operations Summary (in thousands) | Item | 2022 | 2021 | | :---------------------------------------------------------- | :----- | :----- | | Total revenue | $557 | $1,526 | | Total operating expenses | $10,792 | $10,880 | | Loss from operations | $(10,235) | $(9,354) | | Other income, net | $29 | $578 | | **Net loss** | **$(10,206)** | **$(8,776)** | | Basic and diluted net loss per common share | $(0.76) | $(0.90) | | Weighted average shares used in computing basic and diluted net loss per common share | 13,434 | 9,730 | - Total revenue decreased by approximately **63.5%** from **$1.526 million** in 2021 to **$0.557 million** in 2022[252](index=252&type=chunk) - Net loss increased by approximately **16.3%** from **$8.776 million** in 2021 to **$10.206 million** in 2022[252](index=252&type=chunk) [Statements of Stockholders' Equity](index=49&type=section&id=Statements%20of%20Stockholders'%20Equity) The statements of stockholders' equity show a decrease in total equity from **$5.138 million** in 2021 to **$1.363 million** in 2022, primarily due to the **net loss of $10.206 million** Statements of Stockholders' Equity Summary (in thousands) | Item | December 31, 2022 | December 31, 2021 | | :-------------------------- | :------------------ | :------------------ | | Common Stock (shares) | 15,016 | 9,914 | | Common Stock (amount) | $15 | $10 | | Additional Paid-In Capital | $387,609 | $381,183 | | Accumulated Deficit | $(386,261) | $(376,055) | | **Total Stockholders' Equity** | **$1,363** | **$5,138** | - **Net loss of $10.206 million** significantly reduced accumulated deficit[255](index=255&type=chunk) - Issuance of common stock, net, contributed **$5.030 million** to additional paid-in capital in 2022[255](index=255&type=chunk) [Statements of Cash Flows](index=50&type=section&id=Statements%20of%20Cash%20Flows) The statements of cash flows indicate a net decrease in cash of **$3.199 million** in 2022, driven by **$8.183 million** in cash used in operating activities, partially offset by financing activities Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | 2022 | 2021 | | :-------------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(8,183) | $(7,899) | | Net cash used in investing activities | $- | $(23) | | Net cash provided by financing activities | $4,984 | $8,841 | | **Net change in cash, cash equivalents and restricted cash** | **$(3,199)** | **$919** | | Cash, cash equivalents and restricted cash at end of year | $3,133 | $6,332 | - Cash used in operating activities increased slightly from **$7.899 million** in 2021 to **$8.183 million** in 2022[258](index=258&type=chunk) - Cash provided by financing activities decreased from **$8.841 million** in 2021 to **$4.984 million** in 2022[258](index=258&type=chunk) [Notes to Financial Statements](index=51&type=section&id=Notes%20to%20Financial%20Statements) The notes detail the company's organization, accounting policies, and financial position, covering **going concern uncertainty**, development programs, equity, and a subsequent event regarding Silicon Valley Bank deposits [1. Organization and Summary of Significant Accounting Policies](index=51&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) [2. Property and Equipment](index=58&type=section&id=2.%20Property%20and%20Equipment) Property and Equipment, Net (in thousands) | Category | December 31, 2022 | December 31, 2021 | | :-------------------------- | :------------------ | :------------------ | | Furniture and office equipment | $132 | $132 | | Laboratory equipment | $1,108 | $1,108 | | Computer equipment | $577 | $577 | | Less accumulated depreciation and amortization | $(1,593) | $(1,397) | | **Property and equipment, net** | **$224** | **$420** | [3. JT Pharmaceuticals Asset Purchase Agreement](index=59&type=section&id=3.%20JT%20Pharmaceuticals%20Asset%20Purchase%20Agreement) [4. Ocular Therapeutix License Agreement](index=59&type=section&id=4.%20Ocular%20Therapeutix%20License%20Agreement) [5. Commitments and Contingencies](index=59&type=section&id=5.%20Commitments%20and%20Contingencies) Minimum Operating Lease Payments (in thousands) | Year | Amount | | :--- | :----- | | 2023 | $130 | | 2024 | $66 | | **Total minimum lease payments (base rent)** | **$196** | | Less: imputed interest | $(9) | | **Total operating lease liabilities** | **$187** | [6. Debt Agreements](index=60&type=section&id=6.%20Debt%20Agreements) [7. Stockholders' Equity](index=60&type=section&id=7.%20Stockholders'%20Equity) - Common stock outstanding increased from **9,914,158 shares** at **December 31, 2021**, to **15,016,295 shares** at **December 31, 2022**[319](index=319&type=chunk) - Bylaws were amended in July 2022 to reduce the holdings required for stockholders to call a special meeting from a majority to **25%** and to enable stockholders to increase Board size and fill vacancies[320](index=320&type=chunk) - In February 2022, equity offerings generated approximately **$5.0 million** in net cash proceeds from the issuance of common stock and warrants[138](index=138&type=chunk)[322](index=322&type=chunk) Warrants Outstanding (as of December 31, 2022, in thousands) | Date Issued | Expiration Date | Exercise Price ($) | Outstanding | | :---------- | :-------------- | :----------------- | :---------- | | 07/27/2017 | 07/27/2024 | 45.00 | 12 | | 03/21/2018 | 03/21/2025 | 216.00 | 1 | | 03/21/2018 | 03/21/2025 | 216.00 | 3 | | 09/25/2018 | 09/25/2023 | 18.00 | 154 | | 09/25/2018 | 09/25/2023 | 50.40 | 8 | | 08/09/2019 | 02/09/2025 | 32.10 | 95 | | 10/18/2019 | 10/18/2024 | 1.14 | 230 | | 01/09/2020 | 07/09/2025 | 7.50 | 290 | | 10/30/2020 | 12/01/2025 | 3.00 | 1,644 | | 01/20/2021 | 07/26/2026 | 3.55 | 2,725 | | 02/04/2022 | 08/04/2027 | 1.14 | 4,664 | | **Total** | | | **9,826** | Shares Reserved for Future Issuance (as of December 31, 2022, in thousands) | Item | Shares | | :-------------------------- | :----- | | Stock options outstanding | 927 | | Shares issuable upon the exercise of warrants | 9,826 | | **Total** | **10,753** | [8. Stock Plans](index=62&type=section&id=8.%20Stock%20Plans) Stock-Based Compensation Expense (in thousands) | Category | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Research and development | $553 | $749 | | General and administrative | $394 | $756 | | **Total stock-based compensation expenses** | **$947** | **$1,505** | - A change of control on **August 15, 2022**, resulted in the immediate vesting of all unvested options granted under the 2015 Plan prior to that date, leading to approximately **$0.5 million** in recognized stock-based compensation[343](index=343&type=chunk) - As of **December 31, 2022**, approximately **$0.8 million** of unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted-average period of approximately **0.7 year**[341](index=341&type=chunk) [9. Income Taxes](index=64&type=section&id=9.%20Income%20Taxes) Deferred Tax Assets (in thousands) | Item | December 31, 2022 | December 31, 2021 | | :-------------------------- | :------------------ | :------------------ | | Net operating loss carryforwards | $57,895 | $62,097 | | Research credit carryforwards | $10,521 | $14,738 | | Other, net | $1,968 | $1,113 | | Total deferred tax assets | $70,384 | $77,948 | | Deferred tax liabilities: Other, net | $(46) | $(65) | | Valuation allowance | $(70,338) | $(77,883) | | **Net deferred tax assets** | **$-** | **$-** | - Federal net operating loss carryforwards of approximately **$237.4 million** and federal R&D tax credits of approximately **$6.8 million** were available as of **December 31, 2022**[55](index=55&type=chunk)[346](index=346&type=chunk) - State net operating loss carryforwards of approximately **$115.2 million** and state R&D tax credits of approximately **$9.2 million** were available as of **December 31, 2022**[55](index=55&type=chunk)[346](index=346&type=chunk) - A full valuation allowance has been provided against net deferred tax assets due to a history of operating losses, as realization of future tax benefits is not considered more likely than not[349](index=349&type=chunk) [10. Discontinued Operations](index=65&type=section&id=10.%20Discontinued%20Operations) Discontinued Operations Assets and Liabilities (in thousands) | Item | December 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------------ | :------------------ | | Prepaid expenses and other current assets | $14 | $12 | | **Discontinued operations – current assets** | **$14** | **$12** | | Accounts payable | $129 | $782 | | Other accrued liabilities | $- | $362 | | **Discontinued operations – current liabilities** | **$129** | **$1,144** | [11. Related Party Transactions](index=65&type=section&id=11.%20Related%20Party%20Transactions) [12. Subsequent Events](index=65&type=section&id=12.%20Subsequent%20Events) - The company's financial statements are prepared assuming it will continue as a going concern, but recurring losses and insufficient cash raise **substantial doubt about this ability**[263](index=263&type=chunk)[264](index=264&type=chunk)[269](index=269&type=chunk) - In December 2022, the company licensed exclusive rights to certain patent applications for ophthalmic uses to Ocular Therapeutix, Inc. for a one-time fee of **$50,000** and future milestone payments[313](index=313&type=chunk) - The entire balance of the Paycheck Protection Program (PPP) loan, approximately **$0.7 million**, was forgiven in May 2021, resulting in a non-cash gain on debt extinguishment[318](index=318&type=chunk) - In February 2022, the company completed equity offerings, issuing common stock and warrants, generating approximately **$5.0 million** in net cash proceeds[138](index=138&type=chunk)[322](index=322&type=chunk) - As of **December 31, 2022**, the company had federal net operating loss carryforwards of approximately **$237.4 million** and federal research and development tax credits of approximately **$6.8 million**, fully offset by a valuation allowance[55](index=55&type=chunk)[346](index=346&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk) - In March 2023, the company's deposits with Silicon Valley Bank were fully restored following the bank's closure and FDIC intervention[356](index=356&type=chunk) Exhibits This section provides a comprehensive list of exhibits filed with the 10-K report, including corporate documents and material contracts [Exhibits List](index=66&type=section&id=Exhibits%20List) SIGNATURES This section contains the required signatures of the company's executive officers and directors, certifying the accuracy of the report [Signatures of Officers and Directors](index=68&type=section&id=Signatures%20of%20Officers%20and%20Directors) The report is signed by David E. Lazar as CEO and Chairman, Katherine Beebe DeVarney as President and COO, and other directors and the Principal Accounting Officer as of **March 31, 2023**

Part I. Financial Information This section presents unaudited financial statements, management's discussion and analysis, market risk, and internal controls [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed financial statements for Titan Pharmaceuticals, Inc., including the balance sheets, statements of operations and comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial instrument details, and recent corporate events [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) This section summarizes the company's financial position, including assets, liabilities, and equity, for the reported periods Condensed Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2022 (unaudited) | Dec 31, 2021 (Note 1) | Change (2022 vs 2021) | Percentage Change | | :-------------------------------- | :----------------------- | :-------------------- | :-------------------- | :------------------ | | Cash and cash equivalents | $4,450 | $6,037 | $(1,587) | -26.29% | | Total current assets | $5,747 | $7,229 | $(1,482) | -20.50% | | Total assets | $6,276 | $7,994 | $(1,718) | -21.49% | | Total current liabilities | $2,630 | $2,669 | $(39) | -1.46% | | Total liabilities | $2,726 | $2,856 | $(130) | -4.55% | | Total stockholders' equity | $3,550 | $5,138 | $(1,588) | -30.91% | [Condensed Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's revenues, operating expenses, and net loss for the three and nine months ended September 30 Condensed Statements of Operations Highlights (in thousands, except per share) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $95 | $264 | $436 | $1,391 | | Research and development expenses | $932 | $1,193 | $3,315 | $4,716 | | General and administrative expenses | $1,806 | $979 | $4,745 | $3,341 | | Total operating expenses | $2,738 | $2,172 | $8,060 | $8,256 | | Loss from operations | $(2,643) | $(1,908) | $(7,624) | $(6,865) | | Net loss | $(2,638) | $(1,915) | $(7,640) | $(6,236) | | Basic and diluted net loss per common share | $(0.18) | $(0.19) | $(0.59) | $(0.64) | | Weighted average shares (thousands) | 14,629 | 9,864 | 13,031 | 9,675 | [Condensed Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, including net loss, stock issuance, and compensation Stockholders' Equity Changes (in thousands) | Item | Dec 31, 2021 | Mar 31, 2022 | Jun 30, 2022 | Sep 30, 2022 | | :---------------------------------- | :----------- | :----------- | :----------- | :----------- | | Total Stockholders' Equity | $5,138 | $7,882 | $5,667 | $3,550 | | Net loss (Q1 2022) | - | $(2,540) | - | - | | Net loss (Q2 2022) | - | - | $(2,462) | - | | Net loss (Q3 2022) | - | - | - | $(2,638) | | Issuance of common stock, net | - | $5,030 | - | - | | Issuance of common stock upon warrant exercises | - | $1 | $3 | - | | Stock-based compensation | - | $226 | $217 | $503 | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section summarizes cash flows from operating, investing, and financing activities for the nine months ended September 30 Condensed Statements of Cash Flows (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :---------------------------------- | :----- | :----- | | Net cash used in operating activities | $(6,604) | $(6,818) | | Net cash used in investing activities | $0 | $(18) | | Net cash provided by financing activities | $4,984 | $8,841 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(1,620) | $2,005 | | Cash, cash equivalents and restricted cash at end of period | $4,712 | $7,418 | [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed financial statements [1. Organization and Summary of Significant Accounting Policies](index=8&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note details the company's business, its proprietary ProNeura drug delivery platform, and the strategic decision to discontinue U.S. commercialization of Probuphine to focus on product development. It also outlines the exploration of strategic alternatives, recent management changes, and the company's going concern uncertainty due to insufficient cash to fund operations for the next 12 months - Titan Pharmaceuticals is a pharmaceutical company developing therapeutics using its proprietary long-term drug delivery platform, ProNeura, for chronic diseases[15](index=15&type=chunk) - The company discontinued U.S. commercialization of Probuphine in Q4 2020 to focus resources on product development programs, while Probuphine continues to be commercialized in Canada and the EU by other companies[16](index=16&type=chunk)[22](index=22&type=chunk) - In December 2021, the company announced an exploration of strategic alternatives, including acquisition, merger, or asset sales. In June 2022, expense reduction measures were implemented, including salary reductions[17](index=17&type=chunk) - In July 2022, Activist Investing LLC acquired a **25% ownership interest**, leading to the election of six new directors and David Lazar assuming the role of CEO[17](index=17&type=chunk) - As of September 30, 2022, the company had approximately **$4.5 million** in cash and cash equivalents, sufficient to fund operations only into Q1 2023, raising substantial doubt about its ability to continue as a going concern[21](index=21&type=chunk)[25](index=25&type=chunk) Inventory Composition (in thousands) | Category | Sep 30, 2022 | Dec 31, 2021 | | :---------------------- | :----------- | :----------- | | Raw materials and supplies | $394 | $227 | | Finished goods | $66 | $66 | | Total inventories | $460 | $293 | [2. Stock Plans](index=15&type=section&id=2.%20Stock%20Plans) This note details the company's stock option activity, including grants, forfeitures, and the impact of a change in control on vesting. It also provides the stock-based compensation expense recognized and the assumptions used in the Black-Scholes-Merton model Stock Option Activity Summary | Metric | Options (in thousands) | Weighted Average Exercise Price per share | | :----------------------------- | :--------------------- | :---------------------------------------- | | Outstanding at Dec 31, 2021 | 682 | $12.53 | | Granted | 310 | $1.18 | | Forfeited or expired | (53) | $18.01 | | Outstanding at Sep 30, 2022 | 939 | $8.48 | | Exercisable at Sep 30, 2022 | 939 | $8.48 | - Due to a change in control on August 15, 2022, all unvested options granted under the 2015 Plan prior to this date immediately vested, resulting in approximately **$0.5 million** of stock-based compensation recognized during the three months ended September 30, 2022[58](index=58&type=chunk) Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $306 | $325 | $553 | $659 | | Selling, general and administrative | $217 | $330 | $414 | $691 | | Total stock-based compensation | $523 | $655 | $967 | $1,350 | [3. Net Loss Per Share](index=17&type=section&id=3.%20Net%20Loss%20Per%20Share) This note provides the number of common shares underlying stock options and warrants that were excluded from the diluted net loss per common share calculation due to their anti-dilutive effect Anti-Dilutive Common Shares (in thousands) | Source | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Weighted-average anti-dilutive common shares resulting from options | 932 | 692 | 975 | 596 | | Weighted-average anti-dilutive common shares resulting from warrants | 4,933 | 2,949 | 5,586 | 1,651 | | Total anti-dilutive common shares | 5,865 | 3,641 | 6,561 | 2,247 | [4. JT Pharmaceuticals Asset Purchase Agreement](index=17&type=section&id=4.%20JT%20Pharmaceuticals%20Asset%20Purchase%20Agreement) This note describes the agreement with JT Pharmaceuticals to acquire TP-2021 for use with the ProNeura platform, including the initial payment and a recent milestone payment made in cash and common stock - In October 2020, Titan acquired JT Pharma's kappa opioid agonist peptide, TP-2021, for use with its ProNeura technology for chronic pruritus and other conditions[64](index=64&type=chunk) - In January 2022, a proof-of-concept milestone was achieved, resulting in a payment of **$100,000** and the issuance of **51,021 shares** of common stock to JT Pharma[64](index=64&type=chunk)[73](index=73&type=chunk) [5. Commitments and Contingencies](index=17&type=section&id=5.%20Commitments%20and%20Contingencies) This note outlines the company's lease commitments for its office facility and discloses a legal proceeding initiated by a former employee alleging wrongful termination and other claims, which the company intends to vigorously defend - The company leases its office facility under an operating lease expiring in June 2024, with rent expense of approximately **$32,000** and **$96,000** for the three and nine months ended September 30, 2022, respectively[66](index=66&type=chunk) - A former employee has initiated a legal proceeding alleging wrongful termination, retaliation, and other claims. The company intends to vigorously defend the lawsuit, which has been compelled into arbitration[67](index=67&type=chunk)[118](index=118&type=chunk) [6. Stockholders' Equity](index=19&type=section&id=6.%20Stockholders'%20Equity) This note details changes in common stock outstanding, amendments to the company's bylaws to enhance stockholder rights, the impact of Activist Investing LLC's actions, and proceeds from recent equity offerings and warrant exercises Common Stock Outstanding | Date | Shares Outstanding | | :---------------- | :----------------- | | September 30, 2022 | 14,629,217 | | December 31, 2021 | 9,914,158 | - In July 2022, the Board amended bylaws to reduce the holdings required for stockholders to call a special meeting from a majority to **25%** and to enable stockholders to effect Board size increases and fill vacancies[69](index=69&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 from the issuance of common stock and warrants[71](index=71&type=chunk)[107](index=107&type=chunk) - During March, April, and May 2022, the company received approximately **$1,000, $1,300, and $1,290 (in thousands)** respectively, from the exercise of pre-funded warrants issued in the February 2022 offerings[72](index=72&type=chunk) [7. Discontinued Operations](index=21&type=section&id=7.%20Discontinued%20Operations) This note provides a summary of assets and liabilities related to the company's discontinued U.S. commercialization activities for Probuphine Discontinued Operations - Assets and Liabilities (in thousands) | Category | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Discontinued operations – current assets | $14 | $12 | | Discontinued operations – current liabilities | $870 | $1,144 | [8. Related Party Transactions](index=21&type=section&id=8.%20Related%20Party%20Transactions) This note discloses payments made to a law firm operated by one of the company's Board members - During the three months ended September 30, 2022, the company made approximately **$50,000** in legal fee payments to a law firm operated by a Board member[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting the strategic shift to focus on the ProNeura platform, recent corporate governance changes, and the financial performance for the three and nine months ended September 30, 2022, compared to 2021. It also addresses the company's liquidity and going concern status [Overview](index=22&type=section&id=Overview) This section summarizes the company's strategic focus, corporate actions, and exploration of strategic alternatives - Titan Pharmaceuticals is focused on developing therapeutics using its ProNeura long-term drug delivery platform for chronic diseases[87](index=87&type=chunk) - The company discontinued U.S. commercialization of Probuphine in late 2020 to reallocate resources to product development[88](index=88&type=chunk) - Strategic alternatives are being explored, and expense reduction measures were implemented in June 2022. A significant ownership interest by Activist Investing LLC led to a change in the Board of Directors in August 2022[89](index=89&type=chunk)[91](index=91&type=chunk) [ProNeura Continuous Drug Delivery Platform](index=24&type=section&id=ProNeura%20Continuous%20Drug%20Delivery%20Platform) This section describes the ProNeura system for continuous drug release, highlighting its feasibility and regulatory affirmations - The ProNeura system is a subdermal implant designed for continuous, steady drug release, avoiding peak and trough drug levels associated with oral dosing[92](index=92&type=chunk) - The platform has demonstrated feasibility with small molecules, hormones, and bio-active peptides, and its development and regulatory process have been affirmed by FDA, EMA, and Health Canada approvals for Probuphine[93](index=93&type=chunk) [Development Programs](index=24&type=section&id=Development%20Programs) This section outlines current development programs, including TP-2021, Nalmefene, and a Gates Foundation grant - Development activities for current programs are substantially curtailed while the company explores financing and strategic alternatives[94](index=94&type=chunk) - **TP-2021:** A ProNeura implant for chronic pruritus, requiring IND-enabling non-clinical studies - **Nalmefene:** A ProNeura implant for opioid relapse prevention, with an FDA-cleared IND in July 2022. Partially supported by a NIDA grant, with potential for additional funding - **Gates Foundation Grant:** Received approximately **$500,000** in October 2021 to develop a combined HIV preventative therapeutic and contraceptive ProNeura implant[98](index=98&type=chunk) [Results of Operations for the Three and Nine Months ended September 30, 2022 and 2021](index=24&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Nine%20Months%20ended%20September%2030%2C%202022%20and%202021) This section analyzes the company's financial performance, including revenue, operating expenses, and net loss for the reported periods Revenue Comparison (in thousands) | Revenue Type | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change (3M) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change (9M) | | :------------- | :-------------------------- | :-------------------------- | :---------- | :-------------------------- | :-------------------------- | :---------- | | License revenue | $4 | $4 | $0 | $9 | $9 | $0 | | Product revenue | $0 | $36 | $(36) | $0 | $236 | $(236) | | Grant revenue | $91 | $224 | $(133) | $427 | $1,146 | $(719) | | Total revenues | $95 | $264 | $(169) | $436 | $1,391 | $(955) | Operating Expenses Comparison (in thousands) | Expense Type | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change (3M) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change (9M) | | :-------------------------- | :-------------------------- | :-------------------------- | :---------- | :-------------------------- | :-------------------------- | :---------- | | Cost of goods sold | $0 | $0 | $0 | $0 | $199 | $(199) | | Research and development | $932 | $1,193 | $(261) | $3,315 | $4,716 | $(1,401) | | Selling, general and administrative | $1,806 | $979 | $827 | $4,745 | $3,341 | $1,404 | | Total operating expenses | $2,738 | $2,172 | $566 | $8,060 | $8,256 | $(196) | - Research and development costs decreased due to reduced activities for the nalmefene implant IND submission, initial TP-2021 proof-of-concept studies, and personnel-related costs[102](index=102&type=chunk) - General and administrative expenses increased primarily due to higher legal and professional fees, non-cash stock-based compensation, and employee severance[103](index=103&type=chunk) Other Income (Expense), Net Comparison (in thousands) | Item | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change (3M) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change (9M) | | :-------------------------- | :-------------------------- | :-------------------------- | :---------- | :-------------------------- | :-------------------------- | :---------- | | Interest income (expense), net | $21 | $0 | $21 | $26 | $(2) | $28 | | Gain on debt extinguishment | $0 | $0 | $0 | $0 | $661 | $(661) | | Other expense, net | $(16) | $(7) | $(9) | $(42) | $(30) | $(12) | | Other income (expense), net | $5 | $(7) | $12 | $(16) | $629 | $(645) | - The decrease in other income (expense), net for the nine months ended September 30, 2022, was primarily due to a **$661,000** gain on debt extinguishment in 2021 from the forgiveness of a PPP Loan[104](index=104&type=chunk) Net Loss and Net Loss Per Share | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss from operations (in thousands) | $(2,600) | $(1,900) | $(7,600) | $(6,200) | | Net loss per share | $(0.18) | $(0.19) | $(0.59) | $(0.64) | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses funding sources, working capital, and cash flow, emphasizing going concern uncertainty due to limited cash - The company's operations have been funded primarily through securities sales, debt issuance, warrant/option exercises, licensing, and government grants[106](index=106&type=chunk) Working Capital (in thousands) | Date | Working Capital | | :---------------- | :-------------- | | September 30, 2022 | $3,100 | | December 31, 2021 | $4,600 | - As of September 30, 2022, cash and cash equivalents were approximately **$4.5 million**, projected to fund operations only into the first quarter of 2023, indicating substantial doubt about the company's ability to continue as a going concern without additional funding[109](index=109&type=chunk) Sources and Uses of Cash (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :---------------------------------- | :----- | :----- | | Net cash used in operating activities | $(6,604) | $(6,818) | | Net cash used in investing activities | $0 | $(18) | | Net cash provided by financing activities | $4,984 | $8,841 | | Net increase (decrease) in cash and cash equivalents | $(1,620) | $2,005 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its market risk disclosures have not materially changed from those reported in its Annual Report on Form 10-K for the year ended December 31, 2021 - Market risk disclosures have not materially changed from the 2021 Form 10-K[112](index=112&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) The Chief Executive Officer has evaluated the effectiveness of the company's disclosure controls and procedures as of September 30, 2022, concluding they were effective. There were no material changes in internal control over financial reporting during the period - The Chief Executive Officer concluded that disclosure controls and procedures were effective as of September 30, 2022[113](index=113&type=chunk)[114](index=114&type=chunk) - There were no material changes in internal control over financial reporting during the three and nine months ended September 30, 2022[115](index=115&type=chunk) Part II. Other Information This section provides additional information including legal proceedings, risk factors, equity sales, and a list of exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section reiterates the disclosure regarding a legal proceeding initiated by a former employee, alleging wrongful termination and other claims. The company intends to vigorously defend the lawsuit, which has been compelled into arbitration, acknowledging potential material adverse impact due to its cash position - A former employee has initiated a legal proceeding alleging wrongful termination, retaliation, infliction of emotional distress, negligent supervision, hiring and retention, and slander[118](index=118&type=chunk) - An independent investigation found the whistleblower retaliation allegations unsubstantiated. The company intends to vigorously defend the lawsuit, which is in arbitration[118](index=118&type=chunk) - Given the company's cash position, there is no assurance that the defense or settlement of this matter will not have a material adverse impact on the business[118](index=118&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors discussed in the company's 2021 10-K, noting no material changes except for an added emphasis on the risk of not maintaining Nasdaq Capital Market listing standards, particularly regarding minimum stockholders' equity and bid price - The company's risk factors are primarily those discussed in its 2021 Form 10-K, with no material changes noted, except for the specific risk of failing to maintain Nasdaq Capital Market listing standards[119](index=119&type=chunk) - Failure to maintain Nasdaq listing standards, including minimum stockholders' equity (**$2.5 million**) and minimum bid price (**$1.00 per share**), could lead to delisting, harming the business, stock price, and ability to raise capital[120](index=120&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities and use of proceeds were reported[122](index=122&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including stock option agreements, the amended equity incentive plan, certifications, and XBRL interactive data files - Form of Stock Option Agreement (10.1) - Fifth Amended and Restated 2015 Omnibus Equity Incentive Plan (subject to stockholder approval) (10.2) - Certifications of the Principal Executive and Financial Officer (31.1, 32.1) - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE) - Cover Page Interactive Data File (104)[124](index=124&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) The report is duly signed on behalf of Titan Pharmaceuticals, Inc. by David Lazar, Chief Executive Officer, on November 14, 2022 - The report was signed by David Lazar, Chief Executive Officer, on November 14, 2022[128](index=128&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q 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 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) | 400 Oyster Point Blvd., Suite 505, South San Francisco, California 94080 (Address of principal execu ...

Table of Contents 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, 2022. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | Delaware | 94-3171940 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) | 400 Oyster Point Blvd., Suite ...

Table of Contents Table of Contents Titan Pharmaceuticals, Inc. Annual Report on Form 10-K For the Fiscal Year Ended December 31, 2021 Table of Contents | | | Page # | | --- | --- | --- | | PART I | | 3 | | Item 1. | Business | 4 | | Item 1A. | Risk Factors | 10 | | Item 1B. | Unresolved Staff Comments | 17 | | Item 2. | Properties | 17 | | Item 3. | Legal Proceedings | 17 | | Item 4. | Mine Safety Disclosures | 17 | | PART II | | 18 | | | Market for Registrant's Common Equity, Related Stockholder Matters a ...

Table of Contents 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 September 30, 2021. 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 94-31719 ...

Table of Contents 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 June 30, 2021. 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 (S ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021. 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 (State or other jur ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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 (State or other jurisd ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020. 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 (State or other ...