SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act 1934
Date of Report: November 20, 1997
Titan Pharmaceuticals, Inc.
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation)
0-27436 94-3171940
(Commission File Number) (IRS Employer Identification No.)
400 Oyster Point Blvd., Suite 505, 94080
South San Francisco, California (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 244-4990
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Item 5. Other Events
On November 20, 1997, the Registrant entered into an agreement (the"
Sublicense Agreement") with Novartis Pharma AG ("Novartis") pursuant to which
the Registrant granted Novartis a sublicense for the worldwide (with the
exception of Japan) development, manufacturing and marketing of the
antipsychotic agent Iloperidone. The Registrant holds an exclusive license to
Iloperidone pursuant to an agreement with Hoechst Marion Roussel, Inc.
The Sublicense Agreement requires Novartis to pay the Registrant an upfront
license fee of $20 million, of which $5 million in cash was paid on November 4,
1997 and $15 million in cash was paid on November 20, 1997 which included a $5
million equity investment in the Registrant's newly authorized Series D
Convertible Preferred Stock (the "Preferred Shares"). An additional
approximately $3 million in cash will be paid by Novartis as reimbursement of
research and development costs incurred by the Registrant. The Sublicense
Agreement provides for future payments by Novartis contingent upon the
achievement of regulatory milestones as well as a royalty on net sales of the
product. Novartis has assumed the clinical development, registration and
marketing costs of Iloperidone.
The Preferred Shares were issued pursuant to an agreement (the "Stock
Purchase Agreement") which provides for conversion of such shares into the
Registrant's Common Stock at the option of Novartis at any time after January
29, 1999. The conversion price will be equal to the market price (as defined)
during a period to be specified within the first two fiscal quarters of 1999 and
is subject to a floor of $7.50 and a ceiling of $9.00. Accordingly, upon
conversion of the Preferred Shares, the Registrant will issue a minimum of
555,555 and a maximum of 666,666 shares of Common Stock. The Stock Purchase
Agreement provides that such shares may not be sold, transferred or assigned
prior to November 19, 1999.
Reference is made to the related press release filed as Exhibit 20.1
hereto, which is incorporated by reference herein.
The following sets forth the condensed consolidated balance sheet of the
Registrant at September 30, 1997 giving pro forma effect to the consummation of
the Novartis transaction:
Pro Forma
At September 30, at September 30,
1997(1) Adjustments 1997
------------ ----------- ------------
(unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 5,504,797 $23,000,000 $28,504,797
Short-term investments 500,000 500,000
Prepaid expenses and
other current assets 332,956 332,956
Receivable from Ansan
Pharmaceuticals, Inc. 232,004 232,004
Note receivable from
Ansan Pharmaceuticals, Inc. 1,000,000 1,000,000
------------ -------------
Total current assets 7,569,757 30,569,757
Furniture and equipment, net 284,378 284,378
Deferred financing costs 50,000 50,000
Other assets 18,350 18,350
------------ -------------
$ 7,922,485 $ 30,922,485
============ =============
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Pro Forma
At September 30, at September 30,
1997(1) Adjustments 1997
------------ ----------- ------------
(unaudited) (unaudited)
Liabilities and
Stockholders' Equity
Current liabilities:
Accounts payable $ 1,556,605 $ 1,556,605
Accrued legal fees 147,951 147,951
Accrued sponsored research 115,009 115,009
Other accrued liabilities 592,591 592,591
------------ -------------
Total current liabilities 2,411,256 2,411,256
Commitments
Minority interest - Series B
preferred stock of Ingenex, Inc. 1,241,032 1,241,032
Guaranteed security value 5,500,000 5,500,000
Stockholders' equity
(net capital deficiency):
Common stock, at amounts paid 49,622,782 49,622,782
in Series C preferred stock
to be issued -- --
Series D preferred stock -- 5,000,000 5,000,000
Additional paid-in capital 6,521,353 6,521,353
Deferred compensation (501,280) (501,280)
Deficit accumulated during
the development stage (56,872,658) 18,000,000 (38,872,658)
------------ -------------
Total stockholders' equity
(net capital deficiency) (1,229,803) 21,770,197
------------- -------------
$ 7,922,485 $ 30,922,485
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(1) Reference is made to the Company's Quarterly Report on Form 10-QSB for the
period ended September 30, 1997.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
20.1 Press Release dated November 20, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TITAN PHARMACEUTICALS, INC.
By: /s/ Louis R. Bucalo
-------------------------------------
Louis R. Bucalo, M.D.
President and Chief Executive Officer
Dated: November 20, 1997
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Exhibit 20.1
Company Contact: Investor Contact:
- ---------------- -----------------
Louis R. Bucalo, M.D. Keith L. Lippert, Bruce Voss
President & CEO Lippert/Heilshorn & Associates, Inc.
Titan Pharmaceuticals, Inc. 212-838-3777
650-244-4990 [email protected]
[email protected]
TITAN PHARMACEUTICALS SIGNS GLOBAL AGREEMENT WITH NOVARTIS
FOR DEVELOPMENT AND MARKETING OF THE
ANTIPSYCHOTIC PRODUCT ILOPERIDONE
- Upfront $23 million payment includes $18 million in license fees and
reimbursement of R & D costs, and $5 million equity investment -
- Phase III clinical studies to commence by year end -
SOUTH SAN FRANCISCO, California (November 20, 1997) - TITAN PHARMACEUTICALS,
INC. (Nasdaq: TTNP, TTNPU and TTNPW) today announced the signing of an agreement
with Novartis Pharma AG (Nasdaq: NVTSY) for the worldwide development,
manufacturing and marketing, excluding Japan, of Titan's proprietary product
Iloperidone, an antipsychotic agent in development for the treatment of
schizophrenia and related disorders.
Titan will receive an upfront payment of $18 million in license fees and
reimbursement of research and development costs, and a $5 million equity
investment. In addition, Novartis will make milestone payments of $5 million
upon the first submission of a New Drug Application ("NDA") to the U.S. Food and
Drug Administration ("FDA") or European equivalent, and $10 million upon product
approval. Novartis will fund Phase III clinical studies and registration costs
for Iloperidone on a global basis (except Japan), and Titan will receive
royalties on net sales of the product.
"The resources, development expertise and marketing strengths of Novartis
represent an exceptional alliance opportunity for Iloperidone," says Louis R.
Bucalo, M.D., Titan's President and CEO. "Phase III clinical studies are
scheduled to begin by the end of 1997. Phase II data has shown excellent safety
and efficacy, with limited side effects compared with alternative treatments
currently being marketed."
In January 1997, Titan acquired an exclusive worldwide license to Iloperidone
from Hoechst Marion Roussel, which originally developed the product.
Approximately 13 million people in the U.S. and Europe suffer from some form of
schizophrenia, one of the most chronic and debilitating of all mental illnesses.
For the vast
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majority of sufferers, schizophrenia is a chronic condition with symptoms that
persist for years or for an entire lifetime. These symptoms generally include
visual and auditory hallucinations, delusions and emotional withdrawal. It is
estimated that between 40% - 50% of schizophrenia patients are not sufficiently
treated with conventional medication. Published reports estimate that the
worldwide market for antipsychotic agents will exceed $4 billion by the year
2000.
"We are pleased to enter into this agreement with Titan," commented William
Jenkins, M.D., Head of Novartis Clinical Development "and we are enthusiastic
about the prospects for this potential new treatment for schizophrenia.
Iloperidone complements our portfolio of marketed products and underlines our
commitment to psychiatric therapies."
Novartis is a world leader in Life Sciences with its core businesses in
Healthcare, Agribusiness and Nutrition. In 1996, Novartis Group sales in Life
Sciences were 27.6 billion Swiss francs, of which 16.3 billion were in
Healthcare, 7.6 billion in Agribusiness and 3.7 billion in Nutrition. The
company annually invests more than 3 billion Swiss francs in research and
development. Headquartered in Basel, Switzerland, Novartis employs 88,000 people
in more than 100 countries around the world.
Titan Pharmaceuticals, Inc. is a biopharmaceutical company developing
proprietary therapeutics for the treatment of nervous system disorders, cancer
and other serious and life-threatening diseases. In addition to Iloperidone, the
company has several other novel products in various stages of clinical and
preclinical testing.
# # #
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995. The statements which are not historical facts contained in this release
are forward-looking statements that involve risks and uncertainties including,
but not limited to, the results of research and development efforts, the results
of pre-clinical and clinical testing, the effect of regulation by the FDA and
other agencies, the impact of competitive products, product development,
commercialization and technological difficulties, and other risks detailed in
the Company's Securities and Exchange Commission filings.
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