Staff Writer

Wall Street's high hopes for Titan Pharmaceutical Inc.'s Spheramine for Parkinson's disease were dashed Wednesday when the South San Francisco-based company reported disappointing results from a Phase IIb trial of the drug.

Spheramine injections did not perform any better than sham surgery in the study of patients with moderate-to-advanced Parkinson's disease. The news sent shares in the company tumbling 43.7 percent.

But according to Rodman & Renshaw analyst Raghuram Selvaraju, the steep decline was "unwarranted" and an "overreaction" to the failed Spheramine trial, given that this was the company's riskiest mid-to-late stage program. The target population for Spheramine was a difficult one to study, and potential revenues were unlikely to be near term, he told BioWorld Today.

So despite the heightened expectations for Spheramine, investors should not have expected a slam dunk, said Selvaraju, who does not own any securities in Titan nor does his firm make a market in the company.

Titan's partner, Bayer Schering Pharma, is not expected to continue development, Marc Rubin, president and CEO of Titan, said in a statement.

However, he said, Titan "will continue to analyze and assess these data to better understand the study findings and determine our next steps."

Selvaraju wrote in a research note that the negative study results for Spheramine are "likely to spell the end" of the product's clinical development.

Robert Farrell, executive vice president and chief financial officer at Titan, told BioWorld Today, "We remain very optimistic with regard to the company's prospects going forward."

Titan said it has two later-stage drugs in development - Iloperidone, partnered with Rockville, Md.-based Vanda Pharmaceuticals Inc., for the potential treatment of schizophrenia; and Probuphine, an unpartnered product in Phase III for opioid addiction, with initial results expected to be reported in the third quarter.

A Phase II trial of Probuphine also is being planned for the potential treatment of chronic pain, a spokeswoman noted.

Selvaraju said he sees few options available for opioid addiction, and said Probuphine is "the main reason why someone would want to own Titan's shares." The product, which would provide addiction control over a six-month period, is owned entirely by Titan, he said.

Titan's other later-stage product, Iloperidone, is an atypical antipsychotic that would be entering a crowded space as the eighth or ninth drug in its class, Selvaraju said. In addition, he said, this product would only see 8 percent to 10 percent royalties on net sales.

Given FDA's tendency recently to let its action dates lapse, the agency could let the July action date for Iloperidone slip by, Selvaraju said. That would be a less negative outcome than an approvable letter requesting additional clinical studies, which Titan doesn't have the money to do, he said.

Shares in Titan (NASDAQ:TTP) were down 57 cents, closing at 74 cents.