Shares of Titan Pharmaceuticals (TTNP) jumped by over twenty percent on Tuesday with volume nearly four times the daily norm. After hours action brought another three percent rise in the price, bringing the daily gain to about twenty five percent. Not bad for this stock that has been heavily beaten down since reaching highs of over two dollars last year.
I discussed this stock a on a couple of occasions last month when it became apparent that it was a good company to keep an eye on leading into the upcoming earnings report and it looks like some past event and future catalysts have drawn additional eyes onto Titan - it has also attracted the eyes of the swing, momentum and day traders, which means there will be plenty of volatility along with any upwards trend that may materialize.
Titan is a very speculative small cap company - market cap is still under thirty million even after yesterday's spike - but has a solid foundation of an approved product which treats a huge need in today's global environment. That product is Probuphine.
Probuphine is a small, soft and slow-releasing implant that releases a steady, but safe dose of buprenorphine over a period of six months time into a patient being treated for opioid addiction. The implant is based on Titan's proprietary drug delivery technology, Pro-Neura. Given the high chances of relapse for opium-addicted patients and the ease of overdosing with a daily intake of pills, Probuphine meets a huge regulatory need and makes the steady-releasing Pro-Neura implant a huge asset in our global battle against opioid addiction.
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Since reacquiring the rights to Probuphine, Titan has been building the sales network necessary to bring the product into the mainstream market of drug addiction. The company is working with approvals in the USA, Canada and Europe and brought it about $200,000 in sales last year, according to the latest annual report. Doesn't sound like much to justify the $28 million market cap, but as we know - share prices trade on the future, not the past. The building blocks have been put into place to give the company a bright future and to justify the first legs of what could be even more of a significant run.
In the US, partnerships have been forged with AllianceRx and CVS, among some other drug and insurance providers, and Probuphine was added to the Federal Supply Schedule, which enables the Veterans Administration to treat our combat heroes who return home and become addicted to the opioids used to treat their heavy combat injuries. Demand in Canada and Europe seems to be growing, which could (or not) be confirmed in the upcoming quarterly report, which is guesstimated to be in the next week or two.
The demand for such a treatment as Probuphine in key. The world finally looks ready to take this drug addiction pandemic seriously. There are many methods being employed by various countries, states and communities around the globe and the reliability of Probuphine fits into the global treatment strategy - steady rehabilitation with less likelihood of abuse and overdose. Portugal could be a great example of a new trend in treatment. That country pretty much legalized everything for personal use and is concentrating on treatment instead of prosecution. Sound like a fit for Probuphine? Seems like it.
Judging by this week's price action, it looks like others are ready to make a play on a Titan rebound after being run into the ground for the past year. The upcoming earnings report will be key, not just for numbers, but also for projections and progress. Solid, confident projections could give TTNP the sustained legs to reach the one dollar price target (possibly more), but any so-so results or projections could hand the ball back to the traders until the next report.
That said, many of the swing traders are rolling in these days solely based on the volume and price action and have no interest in sticking around for future catalysts. This is America, make a quick buck and move on. That's the strategy many traders and algorithms employ in the exciting stock market trading game. There's nothing wrong with that. There is room for longs, shorts, and traders to all play the game.
That's why it's up to the individual investor to devise his or her own investment strategy, come up with a game plan and stick to it. No trading on emotion, trade on solid DD and analysis. Nothing wrong with banking profits during any price run, as a gain is not a gain until it is a realized gain, sitting as cash in your account.
A couple of items to watch:
- Reverse Split should not be an issue since shareholders voted it down. The company received an extension letter and has up to six months to have the share price up over a dollar again to stave off relisting. While the reverse split does not look like an imminent possibility, that would not be good for the short term of the stock.
- "Buy the rumor, sell the news." Many traders will likely be gone from TTNP by the time the quarterly report hits, even if it is next week. Volatility should be expected, regardless of what news and projections are released. If the earnings are pretty positive, then this could be a non factor, but the volatility will be there along the way up.
- Revenue, of course. Operating expenses, profits, how much money is in the bank - all items investors will naturally be looking for, in part to ascertain when the next cash-raising event might be that could put a damper on any price runup.
- New markets, Probuphine supply, new partnerships - things could get exciting if the Titan sales force in operating in full effect.
Keep an eye on the wires for the earnings report. I'm always a fan of taking some money off the table during a runup to leave a core position of "house money" out there for the future story, and it looks like Titan has enough potential to be worth playing this one with a core position for the mid-to-long term, rather than just as a quick trade.
Disclosure: VFC is long TTNP.