For the last couple of days Titan Pharmaceuticals Inc. (OTCQB:TTNP) has been rebounding from its detrimental drop on May, 1st. On this day TTNP stock got pummeled after an FDA rejection to the company’s new drug application provoked a panic sale out of the stock.

That was a mere “black Wednesday” for TTNP as the stock lost a whopping 73% of its value on a volume more than ten times higher than the three-month average. Initially TTNP opened with a huge gap down at $0.40, dropped as low as $0.32 before closing at $0.43 per share, while the previous day it traded at $1.6 per share.

At the same time, the bearish scenario was welcomed by many short sellers, who had been betting against the stock before the FDA decision. As we can see from the short sale data there has been consistently more than 2 million shares of TTNP common stock sold short each month since the start of the year.

Eventually the long awaited answer from the FDA was in favor of short sellers. On Wednesday, the company filed an 8-K form announcing that the FDA did not approve the new drug application (NDA) for Probuphine, a drug designed to treat opioid dependence.

TTNP, which is a biopharmaceutical company developing products for the treatment of central nervous system diseases, defines Probuphine as it principal asset. The company submitted an NDA for the drug to the FDA on October 2012.

In December 2012, TTNP entered into a license agreement with Braeburn Prarmaceuticals granting the latter exclusive commercialization rights to Probuphine in the US and Canada in exchange for an up-front license fee of $15.75 million and another $50 million payment contingent on the FDA approval.

What is most import for the company and its investors now that the FDA denied approval and issued complete response letter requiring additional clinical development, is the way Braeburn will react to this event.

According to the agreement between the two companies, in case of a negative scenario Breaburn will have the right to either terminate or, if the FDA eventually approves Probuphine for sale, reduce the amount of the stipulated $50 million payment.

TTNP admits that if Braeburn decides to terminate the agreement, the company would not have sufficient funds to complete the FDA approval process and their “business prospects would be materially adversely impacted”.

Judging from TTNP stock chart, there might still be some positivism left in investors as the last three trading sessions have been markedly dominated by buyers. Thus, since Friday, when TTNP opened at $0.43, the stock price has risen almost 50% and is currently trading at $0.6 with an intraday high at $0.67 per share.

Market speculators may see this as a good entry point to profit by the bounce of the crashed stock and load some TTNP shares at a cheaper price. However, at this point there is much uncertainty about the company’s future and there is no guarantee that its stock will not devaluate even more. Alas, such is the game of bio-pharm stocks where much depends on a single FDA decision and we are yet to see if TTNP will find a way to continue and bring to a good end its Odyssey towards an FDA approval.