A year ago, Titan Pharmaceuticals Inc.'s stock dropped dramatically when it announced, along with partner Novartis AG, that a potential filing for iloperidone in schizophrenia would be set back a year because of the need for additional trials.

On Monday, Titan said Novartis had completed a study evaluating the potential effect of iloperidone on the EKG profile of patients receiving the drug, noting that the "potential data to support any possible regulatory submission for iloperidone is not currently known. In addition," Titan said, "even if approvable, this may potentially limit the opportunity of iloperidone as a first-line therapy for schizophrenia."

That revelation caused the company's stock (AMEX:TTP) to fall 58.1 percent Monday, or $2.26, to close at $1.63.

"We are not in possession of all the data," Titan Chairman, President and CEO Louis Bucalo said in a conference call after the market closed Monday.

Bucalo said his company wants to look at the data and then meet with the FDA to determine the next steps. He emphasized that the company will spend the rest of the summer going over data with Novartis, although no specific meetings have been arranged, before Titan can even attempt to meet with the FDA.

"We want to emphasize again today that those discussions have not been set," Bucalo said.

The trial was a cardiac safety study, Bucalo said, to evaluate the change in the QTc interval from baseline to week six. The study compared iloperidone to ziprasidone, or Geodon, and one other undisclosed, approved drug.

The data seemed to indicate a trend toward an increase in QTc intervals at one level of dosing, he said, and in all, data that were "approximately similar to Geodon."

"We are not in a position to give the actual numbers," he said.

However, he noted that Geodon, despite its approval by the FDA, carries a warning regarding QTc intervals. Even so, he pointed out, the drug had sales of about $50 million in the second quarter.

Bucalo said Titan's goal remains approval, but, "We have no certainty of pursuing a regulatory path in the U.S."

Dennis Harp, an analyst with Deutsche Bank-North America, said, "Clearly, it is a setback for Titan." If Novartis does not move forward with iloperidone, its prospects would suffer, he said, and leave Titan in a position to complete trials at its own expense or find another partner.

Last July, Titan, of South San Francisco, and Novartis, of Basel, Switzerland, said they would have to initiate additional dose-related trials of the schizophrenia drug, thereby delaying regulatory filing. The news of the yearlong delay resulted in a 56 percent drop in Titan's stock, which fell $15.30 to close at $11.95. (See BioWorld Today, July 25, 2001.)

Legg Mason analyst Stefan Loren said at the time that the longer it took to get the drug, then called Zomaril, on the market, the tougher the competition would get. Zomaril would have to compete against other anti-psychotic medications such as Janssen Pharmaceutica Products LP's Risperdal, Eli Lilly and Co.'s Zyprexa and Pfizer Inc.'s Geodon - all medications for schizophrenia.

The possibility also exists, Bucalo said, that Titan could pursue development of iloperidone on its own; however, he cautioned that Titan could make no decisions until discussions with the FDA occur.

It is "probably more likely," Bucalo said, that Titan "would seek an additional partner to help us finish out the product" in the event that Novartis should decide to return rights to the drug.

"We want to make sure that we are not putting too much of our resources toward iloperidone," Bucalo said, although he noted that the company is not currently spending money on the program and therefore, the program does not have "any immediate impact" on the company's finances.

Bucalo said during the call - in response to an analyst's question - that it is possible that Titan would pursue approval outside the U.S.

"We would look to guidance from the FDA to make sure we are developing something that had a high safety profile," Bucalo said.

Titan acquired an exclusive worldwide license to iloperidone from Aventis SA, of Paris, in January 1997. In November 1997, Titan sublicensed the drug to Novartis, with rights except in Japan, giving Novartis rights to continue development of the drug on its own. Rights to the Japanese market were later added to the sublicense agreement.

A Titan 10-K filing from 2001 said the agreement with Novartis required Novartis to pay milestone payments to Aventis for Titan as long as the agreement was in place. Also, Novartis would pay to Aventis and Titan royalties on future net sales with a net royalty of 8 percent on the first $200 million of sales annually and 10 percent on all sales above $200 million on an annual basis.

As of March 31, Titan had about $96 million in cash and equivalents and 27.6 million shares outstanding. Its net loss for the first quarter was $4.9 million.