PART I Business Overview Titan Pharmaceuticals develops chronic disease therapeutics using its ProNeura platform, discontinuing U.S. Probuphine commercialization to focus on development and strategic alternatives Overview ProNeura Continuous Drug Delivery Platform - 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 months2021 - The platform has demonstrated feasibility with small molecules, hormones, and bio-active peptides, working with both hydrophobic and hydrophilic molecules21 Development Programs - Development activities for current programs have been substantially curtailed due to the exploration of financing and strategic alternatives23 - 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-implantation2425 - 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 review26 - 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 contraceptive28 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-concept29 - Titan granted Knight Therapeutics Inc. an exclusive license to commercialize Probuphine in Canada, receiving low-teens to mid-thirties percentage royalty payments on net sales30 Intellectual Property - Titan aims to obtain, maintain, and enforce patent protection for its product candidates, formulations, processes, and methods, both domestically and internationally33 - A U.S. patent covering methods of using Probuphine for opiate addiction, owned by Titan, will expire in April 202436 - 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 countries3637 - Patents for a heterogeneous implant designed for structural integrity and enhanced drug delivery have been granted in multiple countries38 Competition - The pharmaceutical and biotechnology industries are characterized by rapidly evolving technology and intense competition, with many competitors having significantly greater resources40 Manufacturing - Ongoing formulation development and cGMP manufacturing are conducted at Southwest Research Institute (SwRI) in San Antonio, Texas, compliant with FDA and DEA requirements41 - Probuphine manufacturing was primarily at DPT Laboratories, Inc., with the facility transferred to Molteni in October 2020, retaining access for supply to Knight in Canada42 Government Regulation - 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 approval44 - 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 - The regulatory approval process involves extensive nonclinical and clinical testing, IND application, IRB approval, adherence to GLP and GCP, NDA submission, FDA inspections, and review464748 Employees - As of March 24, 2023, the company had four full-time employees50 Corporate Information - Titan Pharmaceuticals, Inc. was incorporated in Delaware in February 1992, with principal executive offices in South San Francisco, California51 - Titan Pharmaceuticals develops therapeutics using its proprietary long-term drug delivery platform, ProNeura, for chronic diseases17 - 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 development18 - 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 202219 - Cost reduction measures, including salary reductions and workforce reduction, were implemented in June and December 202219 Risk Factors 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 Risks Related to Our Business and Industry Risks Related to our Common Stock - 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 concern53 - Available cash and cash equivalents are estimated to fund operations only into Q2 2023, requiring substantial additional funds for product development programs54 - 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 uncertain575859 - 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 risks646971 - 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 requirements77808283 Unresolved Staff Comments There are no unresolved staff comments from the SEC Properties 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 202494 Legal Proceedings 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 slander96 - An independent investigation found the whistleblower retaliation allegations unsubstantiated96 - 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 position96 Mine Safety Disclosures This item is not applicable to the company PART II Market for Common Equity and Related Matters 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 Approximate Number of Equity Security Holders Dividends Equity Compensation Plan Information - Common stock is listed on the Nasdaq Capital Market under the symbol 'TTNP'100 - As of March 24, 2023, 15,016,295 shares of common stock were issued and outstanding, held by 94 record holders7101 - The company has never declared or paid cash dividends on its common stock and does not anticipate paying any in the foreseeable future92102 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 This item is reserved and contains no information Management's Discussion and Analysis 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 Critical Accounting Policies and the Use of Estimates - 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 satisfied110111118119120121122123124 - Grant revenue is recognized as services are performed and funding is committed, with associated expenses recognized as R&D expense113 - Inventories are recorded at the lower of cost or net realizable value, with regular review for impairment based on future demand and market conditions125 - Compensation expense for share-based awards is recognized at fair value over the vesting period, using the Black-Scholes option pricing model with subjective assumptions126127 - Accruals for estimated ongoing clinical trial costs are recorded as R&D expenses, based on trial progress, patient enrollment, and contracted costs131 - 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 value132 Liquidity and Capital Resources - Operations have been funded primarily through securities sales, debt, warrant/option exercises, licensing, royalty sales, and government grants135 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 items136 - Net cash provided by financing activities for 2022 was approximately $5.0 million, primarily from equity offerings137138 - 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 funding140 Results of Operations 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 Canada142 - Product revenue decreased to zero in 2022 as it consisted of Probuphine material sales in 2021, which were discontinued143 - Grant revenue decreased primarily due to reduced activities related to the NIDA grant for nalmefene implant development143 Operating Expenses 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 costs145 - General and administrative expenses increased by $1,045,000, primarily due to higher non-cash stock-based compensation, employee-related expenses, and legal/professional fees146 Other Expenses, Net 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 2022147 Net Loss and Net Loss per Share 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 - The company has not entered into any off-balance sheet financing arrangements, established special purpose entities, or guaranteed debt/commitments of other entities149 - The company is a pharmaceutical company developing therapeutics using its proprietary long-term drug delivery platform, ProNeura, for chronic diseases106 - U.S. commercialization of Probuphine was discontinued in Q4 2020 to focus limited resources on product development programs107 - Strategic alternatives are being explored, and cost reduction measures (salary reductions, operating expense scale-back, workforce reduction) were implemented in 202210819 - 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 ability53140263264269 Market Risk Disclosures This item is not applicable to the company Financial Statements and Supplementary Data This item refers to the separate section of the report containing the audited financial statements and supplementary data Changes in Accountants and Disclosures There have been no changes in or disagreements with accountants on accounting and financial disclosure Controls and Procedures 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 Management's Annual Report on Internal Control Over Financial Reporting Changes in Internal Control Over Financial Reporting - Disclosure controls and procedures were evaluated as effective as of December 31, 2022153 - Management concluded that internal control over financial reporting was effective as of December 31, 2022, based on the COSO (2013 framework)157 - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter158 Other Information There is no other information to disclose under this item Foreign Jurisdictions Inspection Disclosure This item is not applicable to the company PART III Directors, Executive Officers and Governance 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 Board Leadership Structure Code of Ethics Changes in Director Nomination Process for Stockholders - 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 interest19163176 - Katherine Beebe DeVarney, Ph.D., serves as President and Chief Operating Officer, with 26 years of experience in the pharmaceutical industry165 - 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 directors163214 - The company has a Code of Business Conduct and Ethics applicable to all directors, officers, and employees177 - The Board has established Audit, Compensation, and Nominating and Governance Committees, with specific responsibilities including overseeing financial reporting, executive compensation, and director nominations215216217218 Executive Compensation 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 Employee Benefits Plans - 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, 2022190335 - The 2014 Incentive Plan had 1,189 options outstanding as of December 31, 2022, and the 2002 Stock Incentive Plan had no options outstanding188187336337 Outstanding Equity Awards at Fiscal Year-End Pension Benefits - The company does not sponsor any qualified or non-qualified defined benefit plans196 Nonqualified Deferred Compensation - The company does not maintain any non-qualified defined contribution or deferred compensation plans but sponsors a tax-qualified 401(k) plan197 Employment Agreements 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, 202219183 - 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 months184 - David Lazar's employment agreement, effective August 16, 2022, provides for an annual base salary of $406,000, eligibility for annual and performance bonuses, and a change of control bonus185202 - A change of control on August 15, 2022, due to the election of new directors, resulted in the immediate vesting of all unvested options granted under the 2015 Plan prior to that date193343 Outstanding Equity Awards at Fiscal Year-End (December 31, 2022) | Name | Number of Securities Underlying Unexercised Awards () Exercisable | Exercise Price ($) | 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 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 affairs91211 Related Transactions and Director Independence 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 Independence of Directors Board Committees Role of the Board in Risk Oversight Board Meetings - 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 milestone212354 - Approximately $75,000 in legal fees were paid to a law firm operated by one of the Board members during 2022213355 - 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 requirements214 - The Board has Audit, Compensation, and Nominating and Governance committees, with the Audit Committee overseeing risk management processes215216217218220 - The Board met 32 times during 2022, with most directors attending at least 75% of meetings221 Principal Accounting Fees and Services 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 Pre-Approval Policies and Procedures 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 filings222 - 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 services224226227228229230231 PART IV Exhibits and Financial Statement Schedules 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)232236 - All financial statement schedules are omitted as they are not applicable or the information is provided in the financial statements or notes233 Form 10-K Summary 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 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 2021238 - 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 concern239 - Accounting for warrants was identified as a critical audit matter due to complex provisions affecting classification and requiring extensive audit effort246 Balance Sheets 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 2022250 - Total stockholders' equity decreased by approximately 73% from $5.138 million in 2021 to $1.363 million in 2022250 Statements of Operations 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 2022252 - Net loss increased by approximately 16.3% from $8.776 million in 2021 to $10.206 million in 2022252 Statements of Stockholders' Equity 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 deficit255 - Issuance of common stock, net, contributed $5.030 million to additional paid-in capital in 2022255 Statements of Cash Flows 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 2022258 - Cash provided by financing activities decreased from $8.841 million in 2021 to $4.984 million in 2022258 Notes to Financial Statements 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 2. Property and Equipment 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 4. Ocular Therapeutix License Agreement 5. Commitments and Contingencies 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 7. Stockholders' Equity - Common stock outstanding increased from 9,914,158 shares at December 31, 2021, to 15,016,295 shares at December 31, 2022319 - 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 vacancies320 - In February 2022, equity offerings generated approximately $5.0 million in net cash proceeds from the issuance of common stock and warrants138322 Warrants Outstanding (as of December 31, 2022, in thousands) | Date Issued | Expiration Date | Exercise Price ($) | 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 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 compensation343 - 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 year341 9. Income Taxes 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, 202255346 - 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, 202255346 - 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 not349 10. Discontinued Operations 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 12. Subsequent Events - 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 ability263264269 - 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 payments313 - 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 extinguishment318 - In February 2022, the company completed equity offerings, issuing common stock and warrants, generating approximately $5.0 million in net cash proceeds138322 - 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 allowance55346348349 - In March 2023, the company's deposits with Silicon Valley Bank were fully restored following the bank's closure and FDIC intervention356 Exhibits This section provides a comprehensive list of exhibits filed with the 10-K report, including corporate documents and material contracts Exhibits List 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 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
Titan Pharmaceuticals(TTNP) - 2022 Q4 - Annual Report