Titan Pharmaceuticals(TTNP) - 2019 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements The unaudited statements show a significant decrease in cash, a wider net loss, and substantial doubt about the company's ability to continue as a going concern Condensed Balance Sheets Total assets decreased to $6.8 million from $14.1 million, while stockholders' equity shifted from a positive $6.8 million to a deficit of $0.6 million Condensed Balance Sheet Highlights (in thousands) | Account | June 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,292 | $9,295 | | Total current assets | $5,493 | $13,301 | | Total assets | $6,761 | $14,095 | | Total current liabilities | $4,342 | $3,452 | | Total liabilities | $7,332 | $7,264 | | Total stockholders' (deficit) equity | $(571) | $6,831 | Condensed Statements of Operations and Comprehensive Loss Revenues fell to $1.4 million while operating expenses increased to $10.6 million, resulting in a substantially wider net loss of $9.7 million for the period Financial Performance for the Six Months Ended June 30 (in thousands, except per share data) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Total revenues | $1,447 | $3,732 | | Total operating expenses | $10,614 | $6,778 | | Loss from operations | $(9,167) | $(3,046) | | Net loss | $(9,714) | $(3,474) | | Basic and diluted net loss per common share | $(0.73) | $(0.98) | Condensed Statements of Stockholders' Equity (Deficit) Stockholders' equity turned into a $0.6 million deficit, driven primarily by a $9.7 million net loss for the six-month period - Stockholders' equity decreased from $6,831 thousand at Dec 31, 2018 to a deficit of $(571) thousand at June 30, 2019[12] - The primary driver for the decrease in equity was the net loss of $9,714 thousand for the six months ended June 30, 2019[10][12] Condensed Statements of Cash Flows Net cash used in operations increased significantly to $8.5 million, contributing to a $7.4 million net decrease in cash and cash equivalents Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,457) | $(2,855) | | Net cash used in investing activities | $(83) | $(53) | | Net cash provided by (used in) financing activities | $1,176 | $(3,000) | | Net decrease in cash, cash equivalents and restricted cash | $(7,364) | $(5,908) | Notes to Condensed Financial Statements Key notes highlight substantial doubt about the company's ability to continue as a going concern, with cash sufficient only through October 2019 - The company concluded there is substantial doubt about its ability to continue as a going concern, as available cash is only sufficient to fund operations through October 2019[21][24] - In August 2019, the company raised net proceeds of approximately $1.8 million through a registered direct offering and private placement of common stock and warrants[77][78] - In June 2019, the Molteni Convertible Loan was converted into 448,287 shares of common stock upon EMA approval of Sixmo, resulting in a loss on debt extinguishment of approximately $0.1 million[75] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses decreased revenue due to non-recurring license payments, increased SG&A expenses from commercialization efforts, and critical liquidity issues Overview The company is transitioning to a commercial-stage enterprise focused on its ProNeura drug delivery platform and the U.S. relaunch of Probuphine® - The company's core technology is the ProNeura long-term drug delivery platform, which involves a small, solid rod implanted subdermally for continuous drug release[83] - Primary focus is on the commercialization of Probuphine® for opioid use disorder in the U.S., Canada, and the European Union following its reacquisition in May 2018[82] Results of Operations A $2.3 million revenue decrease and a $3.8 million operating expense increase widened the net loss for the six-month period to $9.7 million from $3.5 million Revenues for the Six Months Ended June 30 (in thousands) | Revenue Type | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | License revenue | $313 | $3,657 | $(3,344) | | Product revenue | $621 | $75 | $546 | | Grant revenue | $513 | $— | $513 | | Total revenues | $1,447 | $3,732 | $(2,285) | Operating Expenses for the Six Months Ended June 30 (in thousands) | Expense Type | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Cost of goods sold | $550 | $70 | $480 | | Research and development | $3,751 | $3,713 | $38 | | Selling, general and administrative | $6,313 | $2,995 | $3,318 | | Total operating expenses | $10,614 | $6,778 | $3,836 | - The substantial increase in SG&A expenses was primarily due to costs associated with the commercialization of Probuphine, including higher employee-related expenses, consulting fees, and marketing services[90] Liquidity and Capital Resources The company's financial position is precarious, with existing funds projected to sustain operations only through October 2019, necessitating immediate funding - Working capital decreased from approximately $9.8 million at December 31, 2018, to approximately $1.0 million at June 30, 2019[94] - The company raised approximately $0.5 million through an At-the-Market (ATM) offering during Q2 2019 and an additional $1.8 million in net proceeds from a financing in August 2019[95][97] - Management states that existing cash, including the August 2019 financing proceeds, is only sufficient to fund planned operations through October 2019, and additional funds are required to continue operations[98] Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the market risk disclosures from the company's 2018 Annual Report on Form 10-K/A - Market risk disclosures have not materially changed from the company's 2018 Annual Report on Form 10-K/A[103] Item 4. Controls and Procedures Disclosure controls and procedures were deemed effective as of June 30, 2019, with no material changes in internal control over financial reporting - The CEO concluded that disclosure controls and procedures were effective as of the end of the reporting period[104] - No changes in internal control over financial reporting occurred during the six months ended June 30, 2019, that materially affected, or were reasonably likely to materially affect, internal controls[105] Part II. Other Information Item 1A. Risk Factors This section directs investors to the risk factors discussed in the company's Annual Report on Form 10-K/A for the year ended December 31, 2018 - The company refers to the risk factors detailed in its Annual Report on Form 10-K/A for the year ended December 31, 2018, for a comprehensive understanding of potential risks[107] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements, corporate documents, and officer certifications - A comprehensive list of exhibits is provided, including various agreements, corporate documents, and certifications required by the SEC[108][110]