Yesterday the share price of Titan Pharmaceuticals, Inc. (OTC:TTNP) tanked to a new bottom after the company announced a common stock sale under an effective registration statement filed to the SEC. The proceeds will be used mostly for the company’s New Drug Application, however, as TTNP has large debts shareholders fear further dilution. 
TTNP closed at $0.679 the last trading session, losing thus more than 32% from the previous close. The stock price reached a new 52-week low during the day, but even more shocking was the number of traded shares – over 4.4 million – given that TTNP average daily trading volume is only around 144,000.
The announcement about the issuance of new shares came out just before market open and TTNP opened then the session with a gap down. According to the company’s statement, it has entered into an agreement with certain institutional investors to sell around $5.5 million of shares of its common stock and warrants. The total number of issued shares will be 6.5 million and they will come together with warrants to purchase additional 13 million shares of TTNP common stock.
Apparently, TTNP current shareholders will suffer significant dilution after this new offering, and the fact that the company stated it would use the proceeds to fund its New Drug Application for Probuphine did not prevent the negative reaction.
A good reason for that is found in TTNP financial statements. At the end of December 2011, the company had liquid assets of $9.9 million and total assets of $10.2 million. At the same time, total liabilities of the company exceed $30 million, and its reported revenue are by far insufficient to cover the expenses.
