Item 1.01. Entry into a Material Definitive Agreement.
On November 27, 2017, Titan Pharmaceuticals, Inc. (“Titan”
or the “Company”) entered into a binding term sheet (the “Term Sheet”) with L. Molteni & C. dei F.lli
Alitti Società di Esercizio S.p.A. (“Molteni”), pursuant to which the parties agreed to the principal terms
upon which the Company will grant Molteni an exclusive right and license to commercialize Probuphine® in the European Union
(including the United Kingdom and Northern Ireland), Switzerland, Norway, Iceland, Liechtenstein, Bosnia, Serbia, Montenegro, Macedonia
and Albania (the “Territory”). Titan and Molteni expect to enter into the definitive license and distribution agreement
(the “License Agreement”) during the first quarter of 2018.
The Term Sheet provides that in consideration of the rights
to be granted to Molteni, Molteni will pay the Company an upfront, non-refundable license fee of € 2.0 million upon execution
of the License Agreement. Additionally, Titan will receive (i) a €1.0 million milestone payment upon release of a written
positive scientific advise by the Committee for Medicinal Products for Human Use (CHMP) on Probuphine for the treatment of opioid
addiction with the desired label, (ii) a €1.0 million milestone payment upon the issuance by the European Medical Authority
(“EMA”) of marketing authorization, and (ii) an aggregate of € 2.0 million of milestone payments upon approval
of the product reimbursement price in certain key countries, provided that the payments in (ii) and (iii) are subject to a 50%
reduction if the EMA marketing authorization is not received on or prior to September 30, 2019. Molteni will also pay the Company
tiered royalties on net sales of Probuphine ranging from the low-teens to the mid-twenties.
Titan is seeking EMA approval of a Probuphine label that will
permit the marketing of the product for use in a broad population of opioid use disorder patients starting with initial treatment
and continuing through maintenance treatment. Molteni will have the right to terminate the License Agreement if the broad label
is not approved by the EMA.
Molteni will have the right, exercisable on or prior to June
30, 2019, to expand the Territory to include one or both of the following groups: one, the Middle East and North Africa and two,
the Commonwealth of Independent States (comprised of 11 former Soviet Republics), upon the payment to Titan of €1.0 million
per group.
The Term Sheet provides that Titan will supply Molteni with
semi-finished product (i.e., the implant, the applicator and related technology) on an exclusive basis at a fixed price through
December 31, 2019, with subsequent price increases not to exceed annual cost increases to Titan for active pharmaceutical ingredient
and under its current manufacturing agreement.
Molteni will be prohibited from marketing a Competitor Product
(as defined in the Term Sheet) in the Territory for the five year period following execution of the License Agreement. Thereafter,
Molteni will be required to pay Titan a low single digit royalty on net sales of any Competitor Product.
The License Agreement will remain effective until the later
of (i) termination of any applicable data exclusivity period, (ii) expiration of the last valid claim of patent rights covering
the product in the Territory and (iii) fifteen (15) years from the execution of the License Agreement, provided that clause (iii)
will terminate when any third party substantially similar product enters the market. To the extent Molteni exercises its right
to expand the Territory as set forth above, the License Agreement will remain in effect for fifteen (15) years from the written
notice of such extension, provided that the term for the additional territories will terminate when any third party substantially
similar product enters the relevant market. The expansion into additional territories will not affect the term of the License Agreement
as to the original Territory. In addition to standard termination clauses and to the other termination clauses provided in the
Term Sheet, either party will be entitled to immediately terminate the License Agreement in the event the EMA marketing authorization
is not obtained on or prior to March 31, 2020 or upon withdrawal of the product from the market by any regulatory authorities within
the Territory.
The foregoing is a summary description of certain terms of the
Term Sheet and does not purport to be complete, and it is qualified in its entirety by reference to the full text of the Term Sheet,
a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
A copy of the press release issued in connection with the parties’
announcement of the Term Sheet is attached hereto as Exhibit 99.1 and is incorporated herein by reference.