Filed pursuant to Rule 424(b)(5)
Registration No. 333-230742
Prospectus Supplement No. 3
(to Prospectus dated April 24, 2019)
1,480,000 Shares of Common Stock
Pre-Funded Warrants to purchase 1,372,314 Shares of Common Stock
We are offering 1,480,000 shares of our common stock, $0.001 par value per share, and pre-funded warrants to purchase 1,372,314 shares of our common stock (and the shares of common stock underlying such pre-funded warrants) directly to an institutional investor pursuant to this prospectus supplement and the accompanying prospectus. The offering price of the shares is $0.75 and the offering price of the pre-funded warrants is $0.74 (each being coupled with a private placement warrant). The pre-funded warrants will have an exercise price of $0.01 per share and will be exercisable upon issuance until exercised in full. In a concurrent private placement, we are also selling to the investor warrants to purchase an aggregate of up to 2,852,314 shares of our common stock at an exercise price of $1.07 per share. The private placement warrants will be exercisable for a period of five years commencing six months from the closing date. The private placement warrants and the shares of common stock issuable upon the exercise of such warrants are not being registered under the Securities Act of 1933, as amended, or the Securities Act, and are not being offered pursuant to this prospectus supplement and the accompanying prospectus and are being offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.
Our common stock is listed on The NASDAQ Capital Market under the symbol “TTNP.” On August 6, 2019, the last reported sale price of our common stock on The Nasdaq Capital Market was $1.07 per share.
As of the date of this prospectus supplement, the aggregate market value of our outstanding common stock held by non-affiliates, or our public float, was approximately $21,812,195, based on 13,982,176 outstanding shares of common stock held by non-affiliates and a per share price of $1.56, the closing price of our common stock on June 18, 2019, which is the highest closing sale price of our common stock on The Nasdaq Capital Market within the prior 60 days. We have sold approximately $527,000 of securities pursuant to General Instruction I.B.6. of Form S-3 during the prior 12 calendar month period that ends on and includes the date of this prospectus supplement.
Investing in our common stock involves a high degree of risk. Before buying any of our securities, you should carefully read “Risk Factors” on page S-4 of this prospectus supplement, and under similar headings in the other documents that are incorporated by reference into this prospectus supplement and the accompanying prospectus.
We have engaged Maxim Group LLC to act as our exclusive placement agent in connection with this offering to use its reasonable best efforts to place the shares of common stock and pre-funded warrants offered by this prospectus supplement. We have agreed to pay the placement agent the fees set forth in the table below.
Per Share | Per Pre-Funded Warrant | Total | ||||||||||
Offering price | $ | 0.75 | $ | 0.74 | $ | 2,125,512.36 | ||||||
Placement agent’s fees (1) | $ | 0.0525 | $ | 0.0518 | $ | 148,785.87 | ||||||
Proceeds, before expenses, to us | $ | 0.6975 | $ | 0.6482 | $ | 1,976,726.49 |
(1) | In addition, we have agreed to reimburse the placement agent for certain offering-related expenses up to an aggregate of $45,000. See “Plan of Distribution.” |
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement and the accompanying prospectus are truthful or complete. Any representation to the contrary is a criminal offense.
Delivery of the shares of common stock and pre-funded warrants being offered pursuant to this prospectus supplement and the accompanying prospectus is expected to be made on or about August 9, 2019, subject to customary closing conditions.
MAXIM GROUP LLC
The date of this prospectus supplement is August 7, 2019
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus supplement or the accompanying prospectus. You must not rely on any unauthorized information or representations. This prospectus supplement and the accompanying prospectus are an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus supplement and the accompanying prospectus is current only as of their respective dates.
S-ii |
ABOUT THIS PROSPECTUS SUPPLEMENT
In April 2019, we filed with the SEC a registration statement on Form S-3 (File No. 333-230742) utilizing a shelf registration process relating to the securities described in this prospectus supplement, which registration statement was declared effective on April 24, 2019. Under this shelf registration process, we may, from time to time, sell up to $50 million in the aggregate of shares of common stock, shares of preferred stock, debt securities and warrants. On April 26, 2019, we filed with the SEC a prospectus supplement where we offered up to $8,600,000 of common stock pursuant to an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act (the “ATM”) and as of the date of this prospectus supplement have sold approximately $527,000 of common stock in such offering. The ATM is not currently active and the dollar amount of securities that may be issued thereunder will be reduced to reflect the offering contemplated by this prospectus supplement.
This document consists of two parts. The first part is the prospectus supplement, including the documents incorporated by reference herein, which describes the specific terms of this offering. The second part, the accompanying prospectus, including the documents incorporated by reference therein, provides more general information. In general, when we refer only to the prospectus, we are referring to both parts of this document combined. Before you invest, you should carefully read this prospectus supplement, the accompanying prospectus, all information incorporated by reference herein and therein, as well as the additional information described under the heading “Where You Can Find More Information.” These documents contain information you should carefully consider when deciding whether to invest in our securities.
This prospectus supplement may add, update or change information contained in the accompanying prospectus. To the extent there is a conflict between the information contained in this prospectus supplement and the accompanying prospectus, you should rely on information contained in this prospectus supplement, provided that if any statement in, or incorporated by reference into, one of these documents is inconsistent with a statement in another document having a later date, the statement in the document having the later date modifies or supersedes the earlier statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded will be deemed not to constitute a part of this prospectus.
You should rely only on the information contained in this prospectus supplement, the accompanying prospectus, any document incorporated by reference herein or therein, or any free writing prospectuses we may provide to you in connection with this offering. Neither we nor the sales agent has authorized anyone to provide you with any different information. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may provide to you. The information contained in this prospectus supplement, the accompanying prospectus, and in the documents incorporated by reference herein or therein is accurate only as of the date such information is presented. Our business, financial condition, results of operations and prospects may have changed since that date.
This prospectus supplement and the accompanying prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the shares of common stock to which it relates, nor do this prospectus supplement and the accompanying prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
Securities offered pursuant to the registration statement to which this prospectus supplement relates may only be offered and sold if not more than three years have elapsed since April 24, 2019, the initial effective date of the registration statement, subject to the extension of this period in compliance with applicable SEC rules.
We note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference herein were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreement, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.
Unless the context indicates otherwise, as used in this prospectus supplement, the terms “Titan,” “Company,” “we,” “us” and “our” refer to Titan Pharmaceuticals, Inc. The Titan design logo and the marks “Titan,” “Titan Pharmaceuticals,” Probuphine® and “ProNeura™” are the property of Titan. This prospectus supplement contains additional trade names, trademarks and service marks of ours and of other companies. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.
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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This prospectus supplement contains “forward-looking statements” that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this prospectus supplement, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Although we do not make forward looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements included or incorporated by reference in this prospectus supplement or our other filings with the Securities and Exchange Commission, or the SEC, include, but are not necessarily limited to, those relating to uncertainties relating to:
· | the commercialization of Probuphine®, |
· | financing and strategic agreements and relationships; |
· | difficulties or delays in the regulatory approval process; |
· | uncertainties relating to manufacturing, sales, marketing and distribution of our drug candidates that may be successfully developed and approved for commercialization; |
· | adverse side effects or inadequate therapeutic efficacy of our drug candidates that could slow or prevent product development or commercialization; |
· | dependence on third party suppliers; |
· | the uncertainty of protection for our patents and other intellectual property or trade secrets; and |
· | competition. |
These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” or elsewhere in this prospectus supplement, which may cause our or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from what is expressed in or suggested by the forward-looking statements.
Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
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This summary highlights selected information about our company, this offering and information appearing elsewhere in this prospectus supplement, in the accompanying prospectus, and in the documents we incorporate by reference. This summary is not complete and does not contain all the information that you should consider before investing in our common stock. You should read this entire prospectus supplement and the accompanying prospectus carefully, including the “Risk Factors” contained in this prospectus supplement beginning on page S-3, and the risk factors, financial statements and notes incorporated by reference herein, before making an investment decision. This prospectus supplement may add to, update or change information in the accompanying prospectus.
Our Company
We are a pharmaceutical company developing therapeutics utilizing our proprietary long-term drug delivery platform, ProNeura, for the treatment of select chronic diseases for which steady state delivery of a drug provides an efficacy and/or safety benefit. We have been transitioning to a commercial stage enterprise following the reacquisition of Probuphine® (buprenorphine) implant, or Probuphine, on May 25, 2018 from our former licensee. Probuphine is the first product based on our ProNeura technology approved in the U.S., Canada and the European Union for the maintenance treatment of opioid use disorder, or OUD, in eligible patients. Since the reacquisition, we have been implementing a strategic plan aimed at building the foundation to support an effective U.S. product relaunch targeted at select OUD market segments best suited for Probuphine, including the establishment of a small experienced commercial team and the engagement of new strategic partners in the product order and distribution process.
ProNeura consists of a small, solid rod made from a mixture of ethylene-vinyl acetate, or EVA, and a drug substance. The resulting product is a solid matrix that is placed subdermally, normally in the inside part of the upper arm in a short physician office based outpatient procedure, and is removed in a similar manner at the end of the treatment period. The drug substance is released continuously through the process of diffusion-controlled dissolution, resulting in a steady rate of release generally similar to intravenous administration thereby avoiding the fluctuating peak and trough levels of oral dosing that often pose problems in many disease settings. We believe that our ProNeura long term drug delivery platform has the potential to be used in the treatment of other chronic conditions where maintaining stable, around the clock blood levels of a medication may benefit the patient and improve medical outcomes. While our primary focus is on the commercialization of Probuphine, we are also engaged in early stage research and development efforts on a product pipeline based on this platform technology.
Corporate Information
We were incorporated under the laws of the State of Delaware in February 1992. Our principal executive offices are located at 400 Oyster Point Blvd., Suite 505, South San Francisco, CA 94080. Our telephone number is (650) 244-4990.We make our SEC filings available on the Investor Relations page of our website, http://titanpharm.com/. Information contained on our website is not part of this prospectus.
S-3 |
Common stock offered by us in this offering | 1,480,000 shares | |
Pre-funded warrants offered by us in this offering | Pre-funded warrants to purchase 1,372,314 shares of common stock at an exercise price $0.01 per share. Each pre-funded warrant will be exercisable immediately upon issuance and will not expire. This prospectus supplement also relates to the offering of the shares of common stock issuable upon exercise of such pre-funded warrants. See “Description of Pre-Funded Warrants” for a discussion on the terms of the pre-funded warrants.
| |
Offering price per share | $0.75 | |
Offering price per pre-funded warrant | $0.74 | |
Common stock outstanding immediately before this offering | 14,261,571 shares | |
Common stock outstanding immediately after this offering (including the shares underlying the pre-funded warrants but excluding the shares underlying the private placement warrants) | 17,113,885 shares | |
Use of proceeds | Working capital | |
Risk factors | An investment in our common stock involves substantial risks. You should read carefully the “Risk Factors” included and incorporated by reference in this prospectus, including the risk factors incorporated by reference from our filings with the SEC. | |
Nasdaq Capital Market symbol for common stock | “TTNP” | |
Concurrent private placement | In a concurrent private placement, we are selling to the purchaser of shares of our common stock and pre-funded warrants in this offering five-year warrants to purchase 2,852,314 shares of our common stock at an exercise price of $1.07 per share. We will receive gross proceeds from the concurrent private placement transaction solely to the extent such warrants are exercised for cash. The warrants and the shares of our common stock issuable upon the exercise of the warrants are not being offered pursuant to this prospectus supplement and the accompanying prospectus and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder. See “Private Placement Transaction.” |
The number of shares of our common stock that will be outstanding immediately after this offering as shown above is based on 14,261,571 shares outstanding as of July 31, 2019 and excludes:
· | 1,301,299 shares of our common stock issuable upon the exercise of outstanding options with a weighted average exercise price of $5.83 per share; |
· | 5,489,445 shares of our common stock issuable upon the exercise of outstanding warrants with a weighted average exercise price of $1.45 per share (assuming an adjustment to the exercise price of our public warrants as a result of this offering to $0.75); |
S-4 |
· | 333,333 shares of our common stock issuable upon the conversion of outstanding debt; |
· | 2,852,314 shares of common stock issuable upon exercise of the warrants being issued in the concurrent private placement; and |
· | 468,303 additional shares of our common stock reserved for future issuance under our 2015 equity incentive plan. |
In addition, all information in this prospectus supplement reflects a one-for-six reverse stock split of our issued and outstanding shares of common stock, options and warrants effected on January 24, 2019 and the corresponding adjustment of all common stock prices per share and stock option and warrant exercise prices per share and conversion ratios.
S-5 |
Investing in our securities involves a high degree of risk. You should carefully consider the risks described below and all of the information contained or incorporated by reference in this prospectus, including the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2018, any subsequent Quarterly Reports on Form 10-Q, and all other information contained or incorporated by reference into this prospectus supplement and the accompanying base prospectus before deciding whether to purchase the securities offered hereby. Our business, financial condition, results of operations and prospects could be materially and adversely affected by these risks.
Risks Related to This Offering
The proceeds of this offering will only be sufficient to fund our operations for a few months and we will need to raise additional capital shortly, which may not be available on acceptable terms.
The net proceeds of this offering will only be sufficient to fund our operations through October 2019 and we will need to raise additional capital shortly following completion of this offering in order to expand our commercial infrastructure. There can be no assurance that we will be able to raise the necessary funds on acceptable terms, if at all, or that any alternatives will be available to us to enable operations to continue beyond such time.
Management will have broad discretion as to the use of the proceeds from this offering, and we may not use the proceeds effectively.
We intend to use the net proceeds from this offering for working capital. Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. Our failure to apply these funds effectively could have a material adverse effect on our business and cause the price of our common stock to decline.
You will experience immediate and substantial dilution in the net tangible book value per share of the common stock you purchase.
Since the price per share of our common stock being offered is substantially higher than the net tangible book value per share of our common stock, you will suffer immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering. Based on an offering price of $0.75 per share, if you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of $0.45 per share with respect to the net tangible book value of the common stock. See the section entitled “Dilution” below for a more detailed discussion of the dilution you will incur if you invest in this offering.
The exercise price of our outstanding public warrants will be reduced as a result of this offering.
We currently have outstanding warrants to purchase an aggregate of 4,631,517 shares of our common stock at an exercise price of $1.50 per share that were issued in connection with our 2018 public offering. These warrants contain price protection provisions that will result in the exercise price being reduced to the lower of $0.75 or the four day volume weighted average price of our common stock for the next four days.
You may experience future dilution as a result of future equity offerings and other issuances of our common stock or other securities. In addition, this offering and future equity offerings and other issuances of our common stock or other securities may adversely affect our common stock price.
In order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per share in this offering. We may not be able to sell shares or other securities in any other offering at a price per share that is equal to or greater than the price per share paid by the investor in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our common stock or securities convertible into common stock in future transactions may be higher or lower than the price per share in this offering. In addition, we are issuing warrants to purchase 2,852,134 shares of common stock in a concurrent private placement. You will incur dilution upon exercise of any outstanding stock options, warrants or upon the issuance of shares of common stock under our stock incentive programs. In addition, the sale of shares in this offering and any future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could adversely affect the price of our common stock. We cannot predict the effect, if any, that market sales of those shares of common stock or the availability of those shares for sale will have on the market price of our common stock.
S-6 |
There is no public market for the pre-funded warrants being offered in this offering.
There is no established public trading market for the pre-funded warrants being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the pre-funded warrants on any securities exchange or nationally recognized trading system, including The Nasdaq Capital Market. Without an active market, the liquidity of the pre-funded warrants will be limited.
Holders of pre-funded warrants purchased in this offering will have no rights as common stockholders until such holders exercise their pre-funded warrants and acquire our common stock.
Until holders of pre-funded warrants acquire shares of our common stock upon exercise of the pre-funded warrants, holders of pre-funded warrants will have no rights with respect to the shares of our common stock underlying such pre-funded warrants. Upon exercise of the pre-funded warrants, the holders will be entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.
We estimate that the net proceeds from this offering will be approximately $1.83 million, after deducting the placement agent fees and the estimated offering expenses payable by us.
The proceeds from this offering are expected to be sufficient to enable us to continue operations for only a short period of time. We expect that we will have to raise such additional funds through the sale of additional equity or equity backed securities. Any future equity or equity linked financing that we may need may not be available on terms favorable to us or at all.
We intend to use the proceeds for working capital. We may temporarily invest the net proceeds in short-term, interest-bearing instruments or other investment-grade securities.
We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant.
S-7 |
Purchasers of shares of our common stock in this offering will experience an immediate dilution of the net tangible book value per share of our common stock. Our net tangible book value as of March 31, 2019 was approximately $3,055,000, or $0.23 per share of our common stock. Net tangible book value per share is equal to our total tangible assets less our total liabilities, divided by the number of shares of our outstanding common stock.
Dilution per share of common stock equals the difference between the amount paid by purchasers of common stock in this offering (ascribing no value to the warrants issued in the concurrent private placement) and the net tangible book value per share of our common stock immediately after this offering.
Based on the sale by us in this offering of 1,480,000 shares of common stock at an offering price of $0.75 per share and 1,372,314 pre-funded warrants at an offering price of $0.74 per warrant (assuming no exercise of the warrants issued in the concurrent private placement), after deducting estimated offering expenses and placement agent fees and expenses payable by us, our pro forma net tangible book value as of March 31, 2019 would have been approximately $4,882,000, or $0.30 per share of our common stock. This represents an immediate increase in pro forma net tangible book value to existing stockholders of $0.07 per share of our common stock and an immediate dilution to purchasers in this offering of $0.45 per share of our common stock.
The following table illustrates this per-share of our common stock dilution:
Offering price per share of common stock | $0.75 | |
Net tangible book value per share as of March 31, 2019 | $0.23 | |
Increase in net tangible book value per share attributable to this offering | $0.07 | |
Pro forma net tangible book value per share as of March 31, 2019 after giving effect to this offering | $0.30 | |
Dilution per share to the new investor in this offering | $0.45 | |
The information above is as of March 31, 2019 and excludes, as of that date:
· | 661,644 shares of our common stock issuable upon exercise of outstanding options with a weighted average exercise price of $11.92 per share; |
· | 5,559,445 shares of our common stock issuable upon exercise of outstanding warrants with a weighted average exercise price of $2.07 per share (without giving effect to any price adjustment resulting from this offering) |
· | 2,852,314 shares of common stock issuable upon exercise of the warrants being issued in the concurrent private placement; and |
· | 781,620 shares of our common stock issuable upon conversion of outstanding debt, a portion of which was subsequently converted in June 2019. |
S-8 |
DESCRIPTION OF PRE-FUNDED WARRANTS
The following summary of certain terms and provisions of the pre-funded warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety by the provisions of, the pre-funded warrant. You should carefully review the terms and provisions of the form of pre-funded warrant for a complete description of the terms and conditions of the pre-funded warrants.
The term “pre-funded” refers to the fact that the purchase price of our common stock in this offering includes almost the entire exercise price that will be paid under the pre-funded warrants, except for a nominal remaining exercise price of $0.01. The purpose of the pre-funded warrants is to enable the investors that may have restrictions on its ability to beneficially own more than 4.99% (or, upon election of the holder, 9.99%) of our outstanding common stock following the consummation of this offering the opportunity to invest capital into our company without triggering their ownership restrictions, by receiving pre-funded warrants in lieu of our common stock which would result in such ownership of more than 4.99% (or 9.99%), and receive the ability to exercise their option to purchase the shares underlying the pre-funded warrants at such nominal price at a later date.
Duration and Exercise Price. The pre-funded warrants offered hereby will entitle the holder thereof to purchase up to an aggregate of 1,372,314 shares of our common stock at a nominal exercise price of $0.01 per share, commencing immediately on the date of issuance, expected to be August 9, 2019. The pre-funded warrants will be issued separately from the common stock, and may be transferred separately immediately thereafter.
Exercise Limitation. The holder will not have the right to exercise any portion of the pre-funded warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% (or, upon election of the holder, 9.99%) of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded warrants. However, the holder may increase or decrease such percentage, provided that any increase will not be effective until the 61st day after such election.
Exercise Price Adjustment. The exercise price of the pre-funded warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders.
Transferability. Subject to applicable laws, the pre-funded warrants may be offered for sale, sold, transferred or assigned without our consent.
Exchange Listing. There is no established trading market for the pre-funded warrants and we do not expect a market to develop. in addition, we do not intend to apply for the listing of the pre-funded warrants on any national securities exchange or other trading market. Without an active trading market, the liquidity of the pre-funded warrants will be limited.
Fundamental Transactions. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and power that we may exercise and will assume all of our obligations under the pre-funded warrants with the same effect as if such successor entity had been named in the pre-funded warrant itself. If holders of our common stock are given a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given the same choice as to the consideration it receives upon any exercise of the pre-funded warrant following such fundamental transaction.
Rights as a Stockholder. Except as otherwise provided in the pre-funded warrants or by virtue of such holder’s ownership of shares of our common stock, the holder of a pre-funded warrants does not have the rights or privileges of a holder of our common stock, including any voting rights, until the holder exercises the pre-funded warrant.
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Concurrently with the sale of common stock and pre-funded warrants in this offering, we will issue and sell to the investor in this offering warrants to purchase up to an aggregate of 2,852,314 shares of common stock at an exercise price equal to $1.07 per share.
The private placement warrants and the shares of common stock issuable upon the exercise of such warrants are not being registered under the Securities Act, are not being offered pursuant to this prospectus supplement and the accompanying prospectus and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder. Accordingly, purchasers may only sell shares of common stock issued upon exercise of the private placement warrants pursuant to an effective registration statement under the Securities Act covering the resale of those shares, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act.
Exercisability. The private placement warrants are exercisable for a period of five years commencing February 9, 2020 and expiring February 9, 2025. The warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and, at any time a registration statement registering the issuance of the shares of common stock underlying the warrants under the Securities Act is effective and available for the issuance of such shares, or an exemption from registration under the Securities Act is available for the issuance of such shares, by payment in full in immediately available funds for the number of shares of common stock purchased upon such exercise. If a registration statement registering the issuance of the shares of common stock underlying the private placement warrants under the Securities Act is not effective or available, the holder may, in its sole discretion, elect to exercise the private placement warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the warrant.
Exercise Limitation. A holder will not have the right to exercise any portion of the private placement warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% (or, upon election of the holder, 9.99%) of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants. However, any holder may increase or decrease such percentage, provided that any increase will not be effective until the 61st day after such election.
Exercise Price Adjustment. The exercise price of the private placement warrants is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders.
Exchange Listing. There is no established trading market for the private placement warrants and we do not expect a market to develop. In addition, we do not intend to apply for the listing of the private placement warrants on any national securities exchange or other trading market.
Fundamental Transactions. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us, and may exercise every right and power that we may exercise and will assume all of our obligations under the private placement warrants with the same effect as if such successor entity had been named in the warrant itself. If holders of our common stock are given a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given the same choice as to the consideration it receives upon any exercise of the private placement warrant following such fundamental transaction. In addition, the successor entity, at the request of warrant holders, will be obligated to purchase any unexercised portion of the private placement warrants in accordance with the terms of such warrants.
Rights as a Stockholder. Except as otherwise provided in the private placement warrants or by virtue of such holder’s ownership of shares of our common stock, the holder of a private placement warrant will not have the rights or privileges of a holder of our common stock, including any voting rights, until the holder exercises the warrant.
Resale/Registration Rights. We are required within 120 days of the offering to file a registration statement providing for the resale of the shares of common stock issued and issuable upon the exercise of the private placement warrants. We are required to use commercially reasonable efforts to cause such registration to become effective within 181 days of the date of issuance, subject to certain exceptions, and to keep such registration statement effective at all times until no investor owns any warrants or shares issuable upon exercise thereof.
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Maxim Group LLC has agreed to act as the exclusive lead placement agent in connection with this offering subject to the terms and conditions of the placement agency agreement dated August 7, 2019. We refer to Maxim Group LLC as the placement agent. The placement agent is not purchasing or selling any of the shares of our common stock or pre-funded warrants offered by this prospectus supplement, nor is it required to arrange the purchase or sale of any specific number or dollar amount of shares of our common stock or pre-funded warrants, but have agreed to use its reasonable best efforts to arrange for the sale of all of the shares of our common stock (or pre-funded warrants in lieu thereof) offered hereby. Therefore, we will enter into a securities purchase agreement directly with investor in connection with this offering and we may not sell the entire amount of shares of our common stock or pre-funded warrants offered pursuant to this prospectus supplement. We will make offers only to a limited number institutional accredited investors. Maxim Group LLC is also acting as the placement agent for the private placement transaction and is being paid a fee related to the placement of the private placement warrants.
We have agreed to indemnify Maxim Group LLC against specified liabilities, including liabilities under the Securities Act, and to contribute to payments Maxim Group LLC may be required to make in respect thereof.
Pursuant to the terms of the securities purchase agreement, from the date hereof until 30 days after the closing date of this offering, we may not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents, subject to certain exceptions set forth in the securities purchase agreement.
In addition, we have also agreed with the purchaser of our common stock, pre-funded warrants and the private placement warrants from the date of this prospectus supplement until such time as no purchaser holds any of the warrants in the private placement, and subject to certain additional restrictions thereafter, that we will not effect or enter into an agreement to effect a “Variable Rate Transaction” as defined in the securities purchase agreement to be entered into with each purchaser.
Fees and Expenses
We have agreed to pay the placement agent a placement agent fee equal to 7.0% of the aggregate purchase price of the shares of our common stock and pre-funded warrants sold in this offering. The following table shows the per share and total cash placement agent’s fees we will pay to the placement agent in connection with the sale of the shares of our common stock and pre-funded warrants offered pursuant to this prospectus supplement and the accompanying prospectus, assuming the purchase of all of the shares (or pre-funded warrants in lieu thereof) offered hereby.
Per Share | Per Pre-Funded Warrant | Total | ||||||||||
Offering price | $ | 0.75 | $ | 0.74 | $ | 2,125,512.36 | ||||||
Placement agent’s fees (1) | $ | 0.0525 | $ | 0.0518 | $ | 148,785.87 | ||||||
Proceeds, before expenses, to us | $ | 0.6975 | $ | 0.6482 | $ | 1,976,726.49 |
In addition, we have agreed to reimburse Maxim Group LLC’s actual out-of-pocket expenses up to $45,000.
We estimate that the total expenses of the offering payable by us, excluding the placement agent’s fees, will be approximately $150,000.
The placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it and any profit realized on the resale of the shares sold by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. As underwriter, the placement agent would be required to comply with the requirements of the Securities Act and the Securities Exchange Act of 1934, as amended, or the Exchange Act, including, without limitation, Rule 415(a)(4) under the Securities Act and Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of shares by the placement agent acting as principal. Under these rules and regulations, the placement agent:
• | may not engage in any stabilization activity in connection with our securities; and |
• | may not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution. |
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This prospectus supplement and the accompanying prospectus may be made available in electronic format on websites or through other online services maintained by the placement agent or by an affiliate. Other than this prospectus supplement and the accompanying prospectus, the information on the placement agent’s website and any information contained in any other website maintained by the placement agent is not part of this prospectus supplement and the accompanying prospectus or the registration statement of which this prospectus supplement and the accompanying prospectus form a part, has not been approved and/or endorsed by us or the placement agent, and should not be relied upon by investors.
The foregoing does not purport to be a complete statement of the terms and conditions of the placement agency agreement and the securities purchase agreement. A copy of the securities purchase agreement with the purchasers will be included as an exhibit to our Current Report on Form 8-K to be filed with the SEC and incorporated by reference into the registration statement of which this prospectus supplement and the accompanying prospectus form a part. See “Information Incorporated by Reference” and “Where You Can Find More Information.”
No action has been or will be taken in any jurisdiction (except in the United States) that would permit a public offering of the securities offered by this prospectus supplement and accompanying prospectus, or the possession, circulation or distribution of this prospectus supplement and accompanying prospectus or any other material relating to us or the securities offered hereby in any jurisdiction where action for that purpose is required. Accordingly, the securities offered hereby may not be offered or sold, directly or indirectly, and neither of this prospectus supplement and accompanying prospectus nor any other offering material or advertisements in connection with the securities offered hereby may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction. The placement agent may arrange to sell securities offered by this prospectus supplement and accompanying prospectus in certain jurisdictions outside the United States, either directly or through affiliates, where they are permitted to do so.
Relationships
The placement agent and its affiliates may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us in the ordinary course of their business, for which they may receive customary fees and commissions. In addition, from time to time, the placement agent and its affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future. However, except as disclosed in this prospectus supplement, we have no present arrangements with the placement agent for any further services.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is Continental Stock Transfer & Trust Company. Its address is 17 Battery Place, 8th Floor, New York, New York 10004 and its telephone number is (212) 509-4000.
Listing
Our common stock is traded on the Nasdaq Capital Market under the symbol “TTNP.”
The validity of the shares of common stock being offered by this prospectus supplement will be passed upon for us by Loeb & Loeb LLP, New York, New York. Ellenoff Grossman & Schole LLP, New York, New York, is acting as counsel for the placement agent in connection with the securities offered hereby.
The financial statements as of and for the years ended December 31, 2018 and 2017 incorporated by reference in this prospectus supplement constituting a part of the registration statement on Form S-3 have been so incorporated in reliance on the report of OUM & Co. LLP, an independent registered public accounting firm, incorporated herein by reference, given on the authority of said firm as experts in auditing and accounting.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 under the Securities Act with respect to the securities offered by this prospectus supplement. This prospectus supplement and the accompanying prospectus, which are part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the registration statement, as permitted by the SEC. For further information pertaining to us and the securities offered in this prospectus supplement, reference is made to that registration statement and the exhibits and schedules to the registration statement. Statements contained in this prospectus supplement and the accompanying prospectus as to the contents or provisions of any documents referred to in this prospectus are not necessarily complete, and in each instance where a copy of the document has been filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of the matters involved.
We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings can be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including us.
General information about our company, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website at www.titanpharm.com as soon as reasonably practicable after we file them with, or furnish them to, the SEC. Information on, or than can be accessed through, our website is not incorporated into this prospectus supplement or other securities filings and is not a part of these filings.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference” into this prospectus supplement the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information we incorporate by reference is an important part of this prospectus supplement, and later information that we file with the SEC will automatically update and supersede some of this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, including filings made after the date of the initial registration statement, until we sell all of the shares covered by this prospectus supplement or the sale of shares by us pursuant to this prospectus supplement is terminated. In no event, however, will any of the information that we furnish to, pursuant to Item 2.02 or Item 7.01 of any Current Report on Form 8-K (including exhibits related thereto) or other applicable SEC rules, rather than file with, the SEC be incorporated by reference or otherwise be included herein, unless such information is expressly incorporated herein by a reference in such furnished Current Report on Form 8-K or other furnished document. The documents we incorporate by reference are:
· | our Annual Report on Form 10-K/A for the year ended December 31, 2018, filed with the SEC on April 2, 2019; |
· | our Quarterly Reports on Form 10-Q for the period ended March 31, 2019, filed with the SEC on May 15, 2019; |
· | our Current Reports on Form 8-K filed with the SEC on January 25, 2019, February 14, 2019, February 25, 2019, April 3, 2019, April 26, 2019 and June 27, 2019; and |
· | the description of our common stock contained in our registration statement on Form 8-A (File No. 001-13341) filed under the Exchange Act on October 8, 2015, including any amendment or reports filed for the purpose of updating such descriptions. |
Any statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus supplement will be deemed to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus supplement modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement.
We will provide each person to whom a prospectus supplement is delivered a copy of all of the information that has been incorporated by reference in this prospectus supplement but not delivered with the prospectus supplement. You may obtain copies of these filings, at no cost, through the “Investor Relations” section of our website (www.titanpharm.com) and you may request a copy of these filings (other than an exhibit to any filing unless we have specifically incorporated that exhibit by reference into the filing), at no cost, by writing or telephoning us at the following address:
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400 Oyster Point Boulevard, Suite 505
South San Francisco, CA 94080
(650) 244-4990
Information on, or that can be accessed through, our website is not incorporated into this prospectus supplement or other securities filings and is not a part of these filings.
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Common Stock
Preferred Stock
Debt Securities
Warrants
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INDEMNIFICATION FOR SECURITIES ACT LIABILITIES