UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549 FORM 10-Q (Mark One) xQuarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934for the Period Ended March 31, 2001. or  ̈Transition Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 for the Transition Period From _____________
to __________________. Commission file
number0-27436 Titan Pharmaceuticals, Inc.(Exact name of registrant as specified in
its charter) Delaware
  94-3171940(State or Other
  Jurisdiction of
  (I.R.S. EmployerIncorporation or
  Organization)
  Identification No.)
  400 Oyster Point
  Blvd., Suite 505, South San Francisco, California 94080(Address of Principal
  Executive Offices including zip code)(650) 244-4990(Registrant's
  Telephone Number, Including Area Code) Indicate by check mark whether the Registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. 
YesxNo ̈ There were 27,603,844 of the Registrants
Common Stock issued and outstanding on May 7, 2001.   Titan Pharmaceuticals, Inc.Index to Form 10-QPart I.
  Financial InformationItem 1.  Condensed Financial Statements (unaudited)Condensed Consolidated Balance
  Sheets March 31, 2001 and December 31, 2000Condensed Consolidated Statements
  of Operations Three months ended March 31, 2001 and 2000Condensed Consolidated Statements
  of Cash Flows Three months ended March 31, 2001 and 2000Notes to Condensed Consolidated
  FinancialStatementsItem
  2.  Managements Discussion and
  Analysis of Financial Condition and Results of OperationsItem 3.  Quantitative and Qualitative Disclosures About Market RiskPart II.
  Other InformationItem 1. 
  Legal ProceedingsItem 6.  Exhibits and Reports on Form 8-KSIGNATURESPart
I.  Financial Information

TITAN
PHARMACEUTICALS, INC.CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)

March 31,
  December 31,2001
  2000(unaudited)
  (Note A)AssetsCurrent assetsCash and cash equivalents
  $9,774
  $20,300Marketable securities
  104,647
  97,223Prepaid expenses, receivables, and other current assets
  854
  326Total current assets
  115,275
  117,849Furniture and equipment, net
  591
  593$115,866
  $118,442Liabilities and
  Stockholders' EquityCurrent liabilitiesAccounts payable
  $1,048
  $1,304Accrued clinical trials expenses
  934
  432Other accrued liabilities
  638
  727Total current liabilities
  2,620
  2,463Minority interest - Series B preferred
  stock of Ingenex, Inc.
  1,241
  1,241Stockholders' equityCommon stock, at amounts paid in
  191,385
  190,763Additional paid-in capital
  8,595
  8,744Deferred compensation
  (1,098)
  (1,254)Accumulated deficit
  (88,725)
  (84,206)Accumulated other comprehensive income
  1,848
  691Total stockholders' equity
  112,005
  114,738$115,866
  $118,442Note A: 
  The balance sheet has been derived from the audited financial
  statements at that date but does not include all of the information and
  footnotes required by generally accepted accounting principles in the United
  States for complete financial statements presentation.

See Notes to Condensed Consolidated
Financial Statements



TITAN
PHARMACEUTICALS, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)
(in thousands, except per share amount)



Three Months Ended
  March 31,2001
  2000Revenue:Contract revenue
  $321
  $280Grant revenue
  259
  55Total revenue
  580
  335Operating expenses:Research and development
  4,999
  4,045General and administrative
  1,584
  857Total operating expenses
  6,583
  4,902Loss from operations
  (6,003)
  (4,567)Other income (expense):Interest income, net
  1,535
  938Other expense
  (51)
  (19)Other income, net
  1,484
  919Net loss
  $(4,519)
  $(3,648)Basic and diluted net loss per share
  $(0.16)
  $(0.15)Weighted average shares used in
  computing basic and diluted net loss per share
  27,468
  23,873



See Notes to Condensed Consolidated
Financial Statements

TITAN
PHARMACEUTICALS, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)



Three Months Ended
  March 31,2001
  2000Cash flows from
  operating activities:Net loss
  $(4,519)
  $(3,648)Adjustments to reconcile net loss to
  net cash provided by (used in) operating activities:Depreciation and amortization
  63
  84Non-cash compensation related to stock options
  6
  110Changes in operating assets and liabilities:Prepaid expenses, receivables, and other current assets
  (528)
  (983)Accounts payable and other accrued liabilities
  157
  115Unearned contract revenue
  -
  265Net cash used in operating activities
  (4,821)
  (4,057)Cash flows from
  investing activities:Purchases of furniture and equipment, net
  (60)
  (83)Purchases of marketable securities
  (26,467)
  (79,752)Proceeds from sales of marketable securities
  20,200
  2,000Net cash used in investing activities
  (6,327)
  (77,835)Cash flows from
  financing activities:Issuance of common stock, net
  622
  41,665Net cash provided by financing
  activities
  622
  41,665Net decrease in cash
  and cash equivalents
  (10,526)
  (40,227)Cash and cash equivalents at beginning
  of period
  20,300
  46,454Cash and cash equivalents at end of
  period
  9,774
  6,227Marketable securities at end of period
  104,647
  77,638Cash, cash equivalents
  and marketable securities at end of period
  $114,421
  $83,865

See Notes to Condensed Consolidated
Financial Statements

TITAN
PHARMACEUTICALS, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.Organization and Summary of Significant Accounting
Policies

The Company

We
are a biopharmaceutical company developing proprietary therapeutics for the
treatment of central nervous system disorders, cancer, and other serious and
life threatening diseases.  We conduct a
minor portion of our operations through our two subsidiaries:
Ingenex, Inc. and ProNeura, Inc.Ingenex is engaged in
the development of gene-based therapeutics for the treatment of cancer.  At March 31, 2001, we owned 81% of Ingenex,
assuming the conversion of all preferred stock to common stock.  ProNeura is engaged in the development of
cost effective, long-term treatment solutions to neurologic and psychiatric
disorders through an implantable drug delivery system.  At March 31, 2001, we owned 79% of ProNeura.
We operate in one business segment, the
development of biopharmaceutical products.

Basis of Presentation

The accompanying
unaudited condensed consolidated financial statements include the accounts of
Titan and its subsidiaries after elimination of all significant intercompany
accounts and transactions. These financial statements have been prepared in
accordance with generally accepted accounting principles in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. 
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included.  Operating results for the
three-month period ended March 31, 2001 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2001.

These unaudited
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and footnotes thereto included in
the Titan Pharmaceuticals, Inc. annual report on Form 10-K for the year ended
December 31, 2000.

Revenue Recognition

Revenue
under collaborative agreements is recorded when earned as defined under the
terms of the respective agreements and collectibility is reasonably
assured.  Payments for our research and
development efforts under contractual arrangements are recognized ratably over
the period in which the related work is performed.  Nonrefundable license fees, with respect to which we have no
future performance obligations, are recognized upon receipt.  Government grants, which support our
research efforts in specific projects, generally provide for reimbursement of
approved costs as defined in the grant documents.  Grant revenues are recognized when subsidized project costs are
incurred.

2.Net Loss Per Share

We calculate basic
net loss per share using the weighted average common shares outstanding for the
period.  Had we been in a net income
position, shares used in calculating diluted earnings per share for the periods
ended March 31, 2001 and 2000 would have included the effect of an additional
3,838,918 and 3,599,111 shares, respectively, related to our convertible
preferred stock, options and warrants.

3.Comprehensive Income (Loss)

Comprehensive income
(loss) is comprised of net income (loss) and other comprehensive income
(loss).  The only component of other
comprehensive income (loss) is unrealized gains and losses from our marketable
securities.  Comprehensive loss for the
three months ended March 31, 2001 and 2000 were $3.4 million and $3.8 million,
respectively.

4.Recent Accounting Pronouncement

In June 1998,
the Financial Accounting Standards Board issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities" (SFAS 133), which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities.  We adopted SFAS 133
on January 1, 2001.  Because we do
not hold any derivative instruments and do not engage in hedging activities,
the adoption of SFAS 133 did not have an impact on our financial position or
results of operations.

5.Loan to
Officer

In February 2001, we
provided a loan of approximately $0.4 million to a vice president executive
officer to finance certain federal and state income tax liabilities incurred by
the executive in connection with the exercise of stock options.  The loan bears a fixed interest rate of
8.50% per year and is due and payable in August 2001.As of March 31, 2001, the amount outstanding on the loan was
$0.4 million.

6.Subsequent Event

In April 2001, we
entered into an agreement with Novartis Pharma AG for the development and
commercialization of ZomarilÔin Japan.  ZomarilÔis a novel antipsychotic
agent that is currently completing a world-wide Phase III development
program.  This new agreement expands
upon Titan and Novartis previously executed and ongoing agreement for
world-wide development, manufacturing, and marketing of ZomarilÔoutside Japan.  Under the new agreement, in exchange for
rights to ZomarilÔin Japan, Titan received a $2.5 million license fee in May 2001, and will
receive future payments contingent upon the achievement of certain regulatory
milestones as well as royalties on product sales in Japan consistent with the
previous agreement.

Item 2.Managements Discussion and Analysis of Financial
Condition and Results of Operations

The
following discussion contains certain forward–looking statements, within
the meaning of the "safe harbor" provisions of the Private Securities
Reform Act of 1995, the attainment of which involves various risks and
uncertainties. Forward–looking statements may be identified by the use of
forward–looking terminology such as "may," "will,"
"expect," "believe," "estimate,"
"anticipate," "continue," or similar terms, variations of
those terms or the negative of those terms. Our actual results may differ
materially from those described in these forward–looking statements due
to, among other factors, the results of ongoing research and development
activities and pre–clinical testing, the results of clinical trials and
the availability of additional financing through corporate partnering
arrangements or otherwise.  Additional
factors include our ability to protect our patents and proprietary rights,
ability to comply with extensive government regulations, and other factors and
risks detailed under the caption "Risk Factors" in the Company's 2000
Annual Report on Form 10-K and other filings with the U.S. Securities and
Exchange Commission.  Stockholders and
prospective investors in the Company should carefully consider these risk
factors. The Company disclaims any obligation to update these statements for
subsequent events.

Spheramine®,
CeaVac®, TriAb®, TriGem®, Pivanex® and CCM are trademarks of Titan
Pharmaceuticals, Inc. Zomaril is a trademark of Novartis Pharma AG.

Overview

We are a biopharmaceutical company developing proprietary therapeutics for the
treatment of central nervous system disorders, cancer, and other serious and
life threatening diseases.  Our product
development programs focus on large pharmaceutical markets with significant
unmet medical needs and commercial potential. 
We currently have nine products in development, seven of which are in clinical
development, with two products in late stage human trials for safety and
efficacy, known as Phase III clinical trials. 
We have five products in preliminary trials for human safety and
efficacy, known as Phase I/II and Phase II clinical trials.  In addition to these programs, we have two
products in preclinical development.  We
are independently developing our product candidates and also utilizing
strategic partnerships, including collaborations with Novartis Pharma AG and
Schering AG, as well as collaborations with several government-sponsored
clinical cooperative groups.  These
collaborations help fund product development and enable us to retain
significant economic interest in our products.

Our Clinical Development Programs

The following table
sets forth our products in clinical development:

Product
  Indication(s)
  Status
  Marketing
  RightsZomaril
  Schizophrenia,
  psychosis
  Phase
  III
  Novartis
  Pharma AGSpheramine
  Parkinsons
  disease
  Phase
  I/II
  Schering
  AGCeaVac
  Colorectal,
  gastrointestinal and pancreatic cancer
  Phase
  III (colorectal cancer)
  Titan
  PharmaceuticalsTriAb
  Breast
  and ovarian cancer
  Phase
  II (breast cancer)
  Titan
  PharmaceuticalsTriGem
  Small
  cell lung cancer, melanoma
  Phase
  II (melanoma)
  Titan
  PharmaceuticalsPivanex
  Non-small
  cell lung cancer
  Phase
  II
  Titan
  PharmaceuticalsGallium
  Maltolate
  Myeloma,
  prostate and bladder cancer, lymphoma, HIV
  Phase
  I/II (prostate cancer and multiple myeloma)
  Titan
  Pharmaceuticals



Results of Operations

Revenues
forthe first quarter 2001 were approximately $600,000 compared to $300,000
for the same quarter in 2000, an increase of approximately $300,000.  The increase in revenue was primarily due to
an SBIR grant from the National Institutes of Health in support of the
development of Spheramine, our novel treatment for Parkinson's disease.

Research and development expenses
for the first quarter 2001 were $5.0 million, compared to $4.0 million for the
same quarter in 2000. The increase in research and development expenditures
resulted primarily from ongoing accrual of patients in the randomized,
placebo-controlled Phase III clinical study of CeaVac in Dukes D colorectal
cancer, expenses associated with the Phase I/II clinical trial with Spheramine,
and increased development activities to advance our newly acquired product
candidate, Gallium Maltolate, as well as our other product candidates.

General and administrative expenses
for the first quarter 2001 were $1.6 million compared to $0.9 million for the
same quarter in 2000.  The increase was
in support of our expanded clinical operations, infrastructure development and
certain stock option related non-cash compensation charges.

Other income, net, for the first
quarter 2001 was $1.5 million compared to $0.9 million in the first quarter
2000.  The increase, primarily in
interest income, was a result of our significantly larger cash and marketable
securities position.

As a result of the foregoing, we
had a net loss for the first quarter 2001 of $4.5 million, or $0.16 per share,
compared to $3.6 million, or $0.15 per share, for the same quarter in 2000.

Liquidity and Capital Resources

We have funded our operations since
inception primarily through our initial public offering and private placements
of our securities, as well as proceeds from warrant and option exercises,
corporate licensing and collaborative agreements, and government sponsored
research grants.  At March 31, 2001, we
had $114.4 million of cash, cash equivalents, and marketable securities.

In
November 2000, we completed a private placement of 1.2 million shares of our
common stock for net proceeds of approximately $40.9 million, after deducting
fees and commissions and other expenses of the offering.

In
March 2000, we completed a private placement of 1.2 million shares of
our common stock for net proceeds of approximately $38.8 million, after
deducting fees and commissions and other expenses of the offering.

Our
operating activities used $4.8 million and $4.1 million of cash in the first
quarter 2001 and 2000, respectively. 
Uses of cash in operating activities were primarily to fund product
development programs and administrative expenses.  We have entered into various agreements with research
institutions, universities, and other entities for the performance of research
and development activities and for the acquisition of licenses related to those
activities.  The aggregate commitments
we have under these agreements, including minimum license payments, for the
next 12 months is approximately $0.8 million.  Certain of the licenses require us to pay
royalties on future product sales, if any. 
In addition, in order to maintain license and other rights while
products are under development, we must comply with customary licensee
obligations, including the payment of patent related costs and diligent efforts
in product development.

We
expect to continue to incur substantial additional operating losses from costs
related to continuation and expansion of product and technology development,
clinical trials, and administrative activities.  We believe that we currently have sufficient working capital to
sustain our planned operations through 2005.

Item 3.Quantitative and Qualitative Disclosures About Market
Risk



Our
market risk disclosures set forth in our Form 10-K for the period ended December
31, 2000, have not changed significantly.



PART II

Item 1.Legal Proceedings



In
March 2000, a former investor relations consultant commenced an action in the
Supreme Court of the State of New York, New York County, alleging that Titan
purportedly breached an agreement dated February 24, 1997, by failing to
deliver certain warrants to the plaintiffs. 
We are vigorously defending the pending action.

Item 6.Exhibits and Reports on Form 8-K



(b)        Reports
on Form 8-K

There were no current
reports on Form 8-K filed for the quarter ended March 31, 2001.

SIGNATURES

In accordance with the requirements
of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

TITAN PHARMACEUTICALS, INC.May 15, 2001
  By:    
  /s/ Louis R. BucaloLouis R. Bucalo, M.D.Chairman, President and Chief Executive
  OfficerMay 15, 2001
  By:    
  /s/ Robert E. FarrellRobert E. FarrellExecutive Vice President and Chief
  Financial Officer