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Edited Transcript of TTNP earnings conference call or presentation 2-Apr-19 12:30pm GMT

Q4 2018 Titan Pharmaceuticals Inc Earnings Call

SOUTH SAN FRANCISCO May 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Titan Pharmaceuticals Inc earnings conference call or presentation Tuesday, April 2, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brian E. Crowley

Titan Pharmaceuticals, Inc. - Former VP of Finance

* Dane D. Hallberg

Titan Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer

* Jennifer Kiernan

* Katherine L. Beebe-DeVarney

Titan Pharmaceuticals, Inc. - Executive VP & Chief Scientific Officer

* Marc Rubin

Titan Pharmaceuticals, Inc. - Executive Chairman of the Board

* Sunil Bhonsle

Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director

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Conference Call Participants

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* Benjamin Charles Haynor

Alliance Global Partners, Research Division - Analyst

* Jason Wesly McCarthy

Maxim Group LLC, Research Division - Senior MD

* John D. Vandermosten

Zacks Investment Research, Inc. - Senior Biotechnology Research Analyst

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Presentation

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Operator [1]

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Thank you for holding, and welcome to the Titan Pharmaceuticals Fourth Quarter and Full Year 2018 Financial Results Conference Call. (Operator Instructions). Please be advised that this call is being taped at company's request and will be archived on the company's website starting later today. At this time, I would like to turn the call over to Sunil Bhonsle, President and CEO of Titan Pharmaceuticals. Please go ahead.

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [2]

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Thank you, Anita, and thank you all for joining us. Welcome to the Titan Pharmaceuticals call to review financial and operational results for the fourth quarter and year ended December 31, 2018, and we'll provide an update on our business.

Before we begin, I wanted to inform you that we filed our 2018 annual report on Form 10-K yesterday with the SEC and amended it with a correction this morning, and the press release issued provides a summary of the results and can be found on our website at titanpharm.com.

Joining me on the call today from Titan are Dr. Marc Rubin, our Executive Chairman; Dr. Kate DeVarney, Executive Vice President and Chief Scientific Officer; Dane Hallberg, Executive Vice President and Chief Commercial Officer; and Brian Crowley, Vice President of Finance.

Before we get into the details of the financial results and provide an update on the company, Jennifer Kiernan will review the required cautions regarding forward-looking statements.

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Jennifer Kiernan, [3]

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Thank you, Sunil. I want to remind everyone that certain matters that will be discussed today, other than historical information, may contain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include, but are not limited to, any statements relating to our product commercialization and development programs and any other statements that are not historical facts. Such statements involve risks and uncertainties that could negatively affect our business, operating results, financial conditions and stock price.

Factors that could cause actual results to differ materially from management's current expectations include those risks and uncertainties relating to the commercialization of Probuphine; the regulatory approval process; the development, testing, production and marketing of our drug candidates; patent and intellectual property matters; and strategic agreements and relationships. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as required by law.

And now back to you, Sunil.

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [4]

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Thank you, Jennifer. Today, we will start the call with an overview from our Executive Chairman Dr. Marc Rubin; followed by commercial updates from Dane Hallberg; and regulary updates from Dr. Kate DeVarney. Brian Crowley will then summarize the financial results; and I will close with a brief recap before opening the call for your questions. So we can get started. Marc?

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Marc Rubin, Titan Pharmaceuticals, Inc. - Executive Chairman of the Board [5]

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Thank you, Sunil and hello, everyone. Thank you for joining us today. 2018 was truly a transformative year for Titan, so let me briefly summarize our key accomplishments, which I believe have laid the foundation for progress and growth in the coming months.

In March, we concluded an important transaction with Molteni pharmaceuticals, whereby Molteni acquired the European intellectual property for Probuphine and became our partner for the commercialization of Probuphine in the European Union and certain other countries in the Middle East, Africa and Eastern Europe.

We've been working very closely with Molteni to support the Probuphine Marketing Authorization Application review that is in process with the European Medicines Agency, and we expect it will be completed during this quarter. Kate will provide more information on that in just a few minutes.

In the process, we came to know and respect Federico Seghi Recli, and we were very pleased when he agreed to join our board as our Lead Independent Director. As you probably know Federico is part of the family that owns Molteni and he's been instrumental in making Molteni a leading specialty pharmaceutical company in Europe, one that is focused on pain and addiction treatment.

Following our reacquisition of the U.S. and Canadian rights for Probuphine in May of last year, we have made rapid and substantial progress in our transformation into a commercial stage company. Since assuming full responsibility for the U.S. commercialization in June, we've been focused on building a strong foundation for commercial success, expanding our infrastructure to include sales, marketing, medical market access, medical affairs and drug safety compliance teams. Based on our analysis of the original launch of Probuphine in late 2016 and the performance in 2017, we identified key target market segments that we believe will benefit, especially from treatment with Probuphine. So accordingly, we begun to relaunch the product in a very strategic matter.

Following the financing in late September of 2018, we were, as you know, fortunate to be able to hire Dane Hallberg and bring him onboard as our Chief Commercial Officer. During the fourth quarter, Dane built on our momentum by engaging the right professional groups to provide a range of key services, starting with establishing a promotional review committee, which, as you know, is a requirement prior to commencing commercial promotional activities, followed by bringing on board a small focused and experienced sales and marketing team to implement the market segmentation strategy.

Similarly, Kate has been able to rapidly establish Medical Affairs and REMS program management capabilities that are of paramount importance in order to provide support of the Probuphine relaunch efforts.

In addition, we identified the need to improve Probuphine's product supply chain and also to expand our specialty pharmacy network. In sum, during the quarter, we've worked hard and I think successfully to lay the groundwork for increased utilization and commercial success of Probuphine and for growth of Titan in the coming months.

And with that, I will now turn the call over to Dane to elaborate on progress with commercial activity. Dane?

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Dane D. Hallberg, Titan Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [6]

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Thank you very much, Marc. Expanding on Marc's comments, we achieved multiple accomplishments relating to establishing the foundation for Probuphine's commercialization, including reengaging with previous Probuphine prescribers, making sure retraining was provided as needed and new health care providers were also trained, initiating product rebranding and engaging a well-known government relations firm to broaden awareness of Probuphine in government circle. We also retained highly qualified commercial and medical access personnel and assembled a small sales and marketing team whose responsibility include, regional sales oversight and strategic product and brand recognition development. All of these initiatives were undertaken without disrupting continuity of delivery of Probuphine to certified health care professionals and their patient.

During the fourth quarter, Titan focused on optimizing patient services, hub and Probuphine's product supply chain, the analysis of data from the prior launch indicated that the biggest bottleneck in the supply chain was the length of time it took between the health care provider placing an order with the hub and the delivery of Probuphine to the doctor's office. At times this could be several weeks to months. Clearly, this is not acceptable, and digging into it further identified some weaknesses in the system. Obtaining preapproval from third-party payers was taking too long and this was not acceptable. We expect the majority of Probuphine sales in the U.S. will be through the specialty pharmacy distribution model, and it was clear that we needed to engage the top-tier specialty pharmacies to manage the third-party payer preapproval process and distribute Probuphine. We also identified the need for a better centralized logistics service or hub to more efficiently manage both product ordering and payer preapproval.

My team has been working on implementing the necessary changes, and as you've seen from the recent announcement, we have been successful in both areas.

We are very pleased to engage AllianceRx Walgreens Specialty Pharmacy to support the supply chain process for Probuphine, where the pharmacy carries inventory, directly handles patient's insurance billing and payment processes and ships product to the health care provider. As prescribed, following the execution of the agreement, they have rapidly commenced the process of adding Probuphine to their system. With the established relationships that Walgreens has with the third-party payers, we hope this will speed up the preapproval process as well. This facilitates patient access to treatment by streamlining the product ordering and fulfillment process. We are looking to expand the network with additional well-established specialty pharmacies as needed.

Just last week, we announced that we have selected AppianRx to be the new hub for Probuphine, and it will be integrated into the Probuphine ordering process during this quarter. AppianRx will enable more efficient interaction between physicians, payers and specialty pharmacies by managing elements such as benefits verification, prior authorization and appeals and copay and patient assistance programs. We believe that the engagement of AppianRx will lead to significant improvements in the automation and streamlining of the product supply chain prospects, benefiting all those involved.

In summary, we have made good progress, establishing a strong foundation for our commercial activities and hope to expand on this with a few additional large specialty pharmacies in the network.

We have also continued efforts to reengage the medical community to consider Probuphine as an option for the long-term maintenance treatment of opioid use disorder, which will support additional uptake throughout 2019. All of our efforts have led to the bolstered confidence in Titan, and recently, I am very proud to say our first significant bulk order of Probuphine.

I will turn the call over to our Chief Scientific Officer, Dr. Kate DeVarney, who will discuss Titan's progress on our medical affairs, drug safety and compliance functions as well as our product development and regulatory activities. Kate?

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Katherine L. Beebe-DeVarney, Titan Pharmaceuticals, Inc. - Executive VP & Chief Scientific Officer [7]

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Thank you, Dane. As Marc mentioned, an important regulatory development during the fourth quarter was the establishment of both a promotional review committee or PRC and a medical legal review or MLR committee. Having these regulatory compliance functions in place is required prior to commencing commercial, promotional and medical education activities as the processes ensure that all materials are in compliance with FDA regulation. The PRC also supports submissions to the FDA's Office of Prescription Drug Promotion, which ensures the prescription drug information is truthful, balanced and accurately communicated.

And as part of becoming a commercial stage company, we have also established pharmaceutical best practices in regulatory compliance training and certification. And that includes the drafting and implementation of company-wide standard operating procedures, federal and state licensing procedures, sales and promotional materials, creation and review and Sunshine Act reporting, which increases transparency of financial relationships between physicians and drug manufacturers.

The medical affairs and drug safety compliance teams continue to provide Probuphine training and certification to health care providers across the country. In fact, this week we will be attending the upcoming American Society of Addiction Medicine or ASAM meeting, at their annual conference held in Orlando, Florida from April 4 to 7, where we will conduct meetings with key stakeholders, participate as an exhibitor, hold interviews with the news media and provide a REMS training and certification course on April 7.

In the fourth quarter, we received feedback from the FDA on the design of a second required Phase IV Probuphine implant safety trial, which we are currently finalizing. This study will assess implant procedure safety in an observational cohort design. Another Phase IV study will evaluate the safety and pharmacokinetics of reimplantation of Probuphine entry previously used site on a patient's inner-upper arm as well as implantation into an alternate location in the lower abdomen. We expect to initiate this Phase IV study in the second quarter of 2019 followed by the Phase IV study that I mentioned earlier later this year.

During the fourth quarter, our commercialization partner Knight Therapeutics announced the Canadian launch of Probuphine in late October. In addition to targeting urban markets where opioid use disorder is most prevalent, NIDA is marketing Probuphine in rural communities where access to a treatment clinic for frequent visits to fill prescriptions is difficult and often not possible. Knight's launch is still in its early stages, however, we understand Probuphine has so far been very well received by physicians in Canada.

The Probuphine Marketing Authorization Application or MAA is currently in the final stages of review with the European Medicines Authority.

In March of 2019, we participated together with our Molteni colleagues in a hearing with the EMA to answer their remaining questions on submission. We expect to receive the opinion from the EMA in the second quarter of this year.

And now I'd like to update you on some of our other development programs. In September of 2018, we were awarded a grant of approximately $6.7 million from the National Institute of Drug Abuse or NIDA in support of a comprehensive development program for a 6-month nalmefene implant treatment for the prevention of opioid relapse following detoxification. This grant is currently funded through year 2 of the 5-year funding opportunity. And funding for years 3 to 5 is contingent on meeting certain milestones and on the availability of NIDA funding. Now we're nearing completion of the necessary formulation work and will soon commence testing the implant in the required IND-enabling nonclinical studies. At this stage, we are in track to meet our milestone through the end of funding year 2 in September 2020, and specifically, that would mean completing all of the IND-related nonclinical product development and preparing to file the IND.

And finally we have completed enrollment and treatment of the first cohort of subjects in our Phase I/II ropinirole implant trial for Parkinson's disease. However, we are delaying enrollment of subsequent cohorts while we focus our attention and available resources on Probuphine.

That concludes my remarks for today, and I look forward to keeping you updated on our progress over the next several months. Now I'll turn the call to Brian to discuss the Titan's financial results. Brian?

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Brian E. Crowley, Titan Pharmaceuticals, Inc. - Former VP of Finance [8]

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Thanks, Kate. The summary of finance results are provided in our press release and the details are available in the amended Form 10-K filed with the SEC. At this time, I would just highlight a few items. Please note that all numbers I'm about to provide have been rounded and are, therefore, approximate and have been adjusted to reflect the January 2019 reverse split of our common stock.

In the fourth quarter of 2018, we reported $1.2 million in revenue, this included $0.2 million from product sales, $0.3 million related to the amortization of deferred revenue from the sale to Molteni of the European intellectual property rights to Probuphine and $0.7 million related to our NIDA grant. This was compared to $58,000 related to royalties on net sales of Probuphine during the same period a year ago.

Total revenues for the full year ended December 31, 2018 were $6.6 million, which includes $5.4 million in license revenues, $0.5 million from sales of Probuphine after reacquiring the product in late May of 2018 and $0.7 million related to our NIDA grant. This compares to $0.2 million related to royalties on net sales of Probuphine in 2017.

For the fourth quarter, total operating expenses, consisting primarily of R&D and SG&A expense and cost of goods sold, were $4.5 million compared with $3.4 million in the same quarter of 2017.

Total operating expenses for the full year were $14.9 million in the 2018 compared with $14.7 million in 2017.

Net loss attributable to common shareholders in the fourth quarter of 2018 was $3.5 million or $0.29 per share compared with the net loss of $3.7 million or $1.04 per share in the same quarter of 2017.

For the full year the 2018 net loss was $9.3 million or $1.64 per share compared with the net loss of $14.3 million or $4.05 per share for 2017.

At December 31, 2018, we had cash and cash equivalents of $9.3 million, which we believe, along with the $0.6 million received from the subsequent exercise of warrants, is sufficient to fund our planned operations through the third quarter of 2019.

I'll now pass the call back to Sunil. Sunil?

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [9]

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Thanks, Brian. As you can see 2018 was an eventful year, and I'm pleased with the team's significant accomplishments, including the partnership with Molteni in the first half of the year and a successful start of the relaunch of Probuphine in the U.S. during the second half of the year. Our recent partnerships with Alliance Walgreens Specialty Pharmacy and AppianRx are key to our commercialization strategy and represent both significant milestones and opportunities for Titan.

In 2019, we will pursue further expansion of our specialty pharmacy network as needed while we work with AppianRx to achieve a fully operational and more efficient new hub in the next couple of months.

From a regulatory and product development perspective, Titan and our partner Molteni are looking forward to receiving the EMA's final recommendation and Probuphine's Marketing Authorization Application during the second quarter of this year. And as Kate mentioned, we are on track to initiate 2 postmarket Probuphine studies in 2019, the first of which we expect to start in the second quarter while our early stage programs like the nalmefene implant are progressing on schedule.

While 2018 was the year of substantial change for Titan, I'm very proud of our team's accomplishments in transitioning to a commercial stage company. Our focus for the remainder of 2019 will be on expanding patient access to Probuphine in the U.S., supporting our commercialization partners for the product in Canada and Europe and initiating Probuphine postmarket studies. This concludes our prepared remarks for today. Before I open up the call to questions, I'd like to thank Titan's board, executive management and staff for their continued hard work and dedication. Anita, we are ready to take questions from the call participants.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question today comes from Ben Haynor with Alliance Global Partners.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [2]

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First off from me, you mentioned, Dane, it could take several weeks or even months to -- for the patients and the facility to actually get the implant under the former scheme. Can you kind of walk us through the changes in the "patient journey" so to speak on the supply chain and reimbursement? And how that's going to change with Walgreens Specialty Pharmacy and AppianRx? Does that change it into 1 week, 2 weeks, faster, slower, how does that look ultimately?

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Dane D. Hallberg, Titan Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [3]

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Well, thanks, Ben. Great question. Yes, so when we selected AppianRx, we were really impressed with their artificial intelligence capabilities as well as their technology platform. We looked at the success they've had in the marketplace and we look at how they actually have automated a great deal of the forms required in terms of the patient enrollment forms, the doctors will populate right on through till how they interact with the specialty pharmacies and the payers. So that process is no longer a manual process, it's fully automated, it checks for errors and omissions, which usually lead to a significant hold up with the specialty pharmacy as well as the payer. Any mistakes will come back as a denied prescription with the payers as well as with the specialty pharmacies. Now adding a specialty pharmacy like Walgreens to our network expands our reach, expands the contracts they have with payers throughout the country. Our -- we have 2 legacy specialty pharmacies that have limited capabilities or limited contracts with payers, and we feel that this will expand our reach, expand the contracts with those payers where we can facilitate the approvals in a -- at a greater level. So we expect that once we go live with Appian and Appian's interaction with Walgreens and other specialty pharmacies in our network, we expect that the timeframe from physician order to delivery of the Probuphine kit to the physician's office, that timeframe will be greatly reduced. So we expect great things from this quarter.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [4]

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Okay, that's very helpful. And then looking at, kind of, one of your competitors that has the 1-month depot injections. It appears based upon the -- some of the data that they've thrown out there that maybe only 1/3 or so of patients continue treatments through 6 months, it looks like, I mean, is that something you'd plan on marketing against the patient compliance versus the statistics that they've thrown out there? Or do the product characteristics of Probuphine on this front just kind of do the marketing themselves? People are able to figure it out that the compliance is almost certainly several times better?

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Dane D. Hallberg, Titan Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [5]

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Ben. Another great question. As you can imagine compliance is of the utmost concern for physician and also with the patients. The patients need to be confident in the product they choose. They don't want to go through withdrawal, they want to be stabilized. So we really don't have to market against those types of, I guess, you call it, dismal returns, when you put a patient on and 1/3 or greater don't come back for a second injection and it continually spirals downward. We're really don't have to market towards that. The physicians know. They want patient stabilized. They want a patient that feels confident in the product that they have chosen from their health care provider that they're not going through withdrawal. They're not going to go out and seek out a list of drugs to feed their habits. So this is something where we just market Probuphine, we market the benefit. We help the physicians find the right patient type to go on Probuphine but really, this is something that just markets itself. And the health care providers that really want to treat patients and get them stabilized, they know that they have to re-evaluate how they've been selecting their medications.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [6]

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Okay, great. And then, I know this is not necessarily a major focus, but just thinking about the pipeline, I noticed in the filing at Walter Reed and SwRI on malaria prophylaxis, it sounds like they, at least, Walter Reed may have received some additional funding and may be seeking some even more additional funding to look at other formulations and the same indication, is there anything we should expect on that this year on those potential program -- and maybe potential program?

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [7]

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Ben. This is Sunil. The work that we're doing with SwRI and Walter Reed is looking to identify the right drug combination that Walter Reed would like to eventually test clinically, using a 6-month implant formulation. So Walter Reed has received additional funding to explore a couple of additional ways to treat in the sense of different compounds that they have been working with. And there are another 2 applications for grants in all of which we would work with these partners, Walter Reed and some of their other clinical setting partners, and when I say clinical in this setting, it is more of the non-clinical testing that they're doing. So we do expect to continue working with Walter Reed and receive additional funding based on what they've indicated so far. And I believe it's a very promising program. So we look forward to that.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [8]

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Excellent. And then 1 last quick one from me and then I'll jump back in queue. You mentioned earlier that there was the first significant bulk order of Probuphine. I guess, what constitutes significant there?

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Dane D. Hallberg, Titan Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [9]

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Yes, actually -- yes, so in terms of the bulk order, this was a -- we obviously we're not going to talk about the dollar amount, but the order was significant in terms of the meaningful order. This was a partner that ordered from us and they were able to fully stock their pharmacies and were able to facilitate when a prescription comes in, it will be able to be delivered to the physicians. So we're talking about a fully stocked network. So it is significant.

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Operator [10]

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The next question comes from John Vandermosten with Zacks SCR.

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John D. Vandermosten, Zacks Investment Research, Inc. - Senior Biotechnology Research Analyst [11]

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Wanted to ask about the Veterans Administration to your list of targets? And I was wondering if you've had a chance to interact with anyone there and how that has gone and then what the potential opportunity might be in that area?

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Dane D. Hallberg, Titan Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [12]

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Absolutely. We've actually had some fantastic discussions with the VA. We've talked with them in D.C., we've talked with them in multiple areas without -- through the country. We have a meeting coming up. Kate and I will be meeting with the VA to talk about REMS training, to talk about the benefit of Probuphine, and also to get the VA physicians and clinicians trained so they'll be able to order Probuphine and start providing Probuphine to the veterans of this country that need it. So we're excited about our discussions with the VA, and we expect some traction this year with the VA.

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John D. Vandermosten, Zacks Investment Research, Inc. - Senior Biotechnology Research Analyst [13]

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Okay. And looking at the Nevada correctional efforts, it seems like in the last call, perhaps, that there might've been other states in the works there, and I was just wondering how progress been advancing on that front.

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Katherine L. Beebe-DeVarney, Titan Pharmaceuticals, Inc. - Executive VP & Chief Scientific Officer [14]

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John, this is Kate. Yes, we are in discussions with other states. They are earlier on in terms of getting things set up in doing REM's training, but clearly there's a lot of interest now and recognition that medication-assisted therapy is really needed within the prison system, within the jails, throughout the criminal justice system. We are starting to get more traction with the Nevada pilot program, and on the next call, we hope to able to update with some more data around that. But things are really progressing. Just as a reminder, medication-assisted treatment within the criminal justice system is very spotty across the country, most places do not provide it, so we are having to do a lot of education and outreach and training with the medical professionals to make the decisions about how their patients get treated. That's really part of the foundation that we are laying together with Dane's team to prepare for the future.

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John D. Vandermosten, Zacks Investment Research, Inc. - Senior Biotechnology Research Analyst [15]

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Okay. And then looking up north again. Have you received any revenues at all from Knight as of yet?

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [16]

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In -- Knight, as you know, started launching the product back in October, John, of last year, and we have received very minimal revenues in terms of royalty, of course, they acquired product from Titan and so there has been revenues from Knight related to that.

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John D. Vandermosten, Zacks Investment Research, Inc. - Senior Biotechnology Research Analyst [17]

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Okay, very good. And also was wondering about gross margins and how we should think of those going forward. Obviously, the sales are at the low end of anticipated future range right now. But how should those change as we move into 2019 and 2020?

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [18]

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As we have indicated in the past, the cost of the product is in the 10% or lower range when you look at the gross -- the list price of $4,950. So it has a large margin potential. Now of course, as we expand our outreach and get involved with, let's say, additional product sales into the Veterans Administration and the criminal justice system, those are at substantial discounts to the price -- to the list price as we would expect. And so it's likely to change the gross margins. However, I expect the gross margins to remain really substantial as we continue to increase our sales through this -- through any of these channels. It's something that obviously over the next 2, 3 quarters we'll give you a much clearer picture.

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Operator [19]

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The next question comes from Jason McCarthy with Maxim Group.

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Jason Wesly McCarthy, Maxim Group LLC, Research Division - Senior MD [20]

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So first off, with the relaunch underway, to see if you give us an idea of the market dynamics in opioid use disorder. Specifically what competing products are out there and the size of the market for buprenorphine? And then also do you expect more of your initial sales to come from established markets where you offer an improvement over current offerings or from newer ones where patients don't currently have access, such as rural areas where you see significant rate of OUD in correctional facilities?

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [21]

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Sure. Good question, Jason. In terms of competition and other products out there, obviously, you're familiar with the daily dosed products and the huge competition. At that stage we don't compete in that market, that's not -- our product is used. Our product clearly is for patients who are stable and further along in their recovery process. And as a 6-month implant, and obviously, there is no other product available like that today, the closest that it comes to is the 1-month depot injection that Dane talked about from Indivior. And, as you know, the dropout rate is quite significant. Patients don't really continue treatment with that. Obviously, with a 6-month implant, compliance is guaranteed, and as a benefit that is really recognized by the treating physicians as well and the patient. The experience of patients has been one which makes them truly get back into a more normal mode of life where they don't have to think about taking a pill each day or worry about how their medication will provide relief. They know what it will do and they are very pleased with that. So it's a very unique product in that way, good product, but at the same time, the market for that is limited in the sense that it is not for every patient. The last statistic I can give you, sort of, to get a sense of the market, there's about 600,000 patients who are treated with buprenorphine product in the U.S. And about 25% of those are in, what one would consider is, stable treatment pattern where they're getting 8 milligrams or less of buprenorphine daily, and that's the patient population that our product addresses. So it's 150,000 patients when you look at it that way and it's sizable market. We are just starting to enter this and the market itself is in multiple places. Obviously, we are looking at what we believe to be our best shot at, say the criminal justice system or the residential treatment facilities, VA facilities and doctors who today treat patients for maintenance therapy. So those segments of the markets that we're looking at there is substantial numbers of patients, and I certainly hope we will get to the 15%, 20% of that 150,000-patient market and that is a substantial revenue generating product in the getting close to $100 million or more. So that sort of an overview on the market, how we see it and what we want to look at. Okay?

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Jason Wesly McCarthy, Maxim Group LLC, Research Division - Senior MD [22]

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Yes. And then just one more follow-up. I was wondering if -- do you guys view the familiarity with the active compound as a competitive advantage for prescribing (inaudible) physicians.

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [23]

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You mean the familiarity with buprenorphine in the market in that setting? Is that what you were asking?

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Jason Wesly McCarthy, Maxim Group LLC, Research Division - Senior MD [24]

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Yes, exactly. (inaudible).

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [25]

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No. Absolutely. Buprenorphine is considered the best medication today, especially in the U.S., and it's sort of the gold standard, so recognizing that people will be treated with buprenorphine in their earlier stages and as they get to the maintenance stage where our product fits in, having that same compound and showing that we can maintain a very steady level without any of the fluctuating blood levels that they see during their daily dose of pattern is a benefit for the patients. It's an advantage for us. We can show that to the physicians they understand the value of that and having sort of continuous 24-hour medication on board is both from a medical standpoint as well as patient satisfaction standpoint, very important, and that's what we offer.

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Operator [26]

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This concludes our question-and-answer session. I would now like to turn the conference back over to Sunil Bhonsle for any closing remarks.

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Sunil Bhonsle, Titan Pharmaceuticals, Inc. - President, CEO, Principal Financial Officer & Director [27]

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Thank you, Anita, and thank you all for participating in this call. As always, we appreciate your ongoing support and we look forward to reporting continued progress in our Probuphine and ProNeura-based product program as we move forward. Thank you, and have a great day.

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Operator [28]

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This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.