Notes to Consolidated Financial Statements 1. Organization and Summary of Significant  Accounting Policies Twenty-Two The Company and its Subsidiaries We are a biopharmaceutical company developing proprietary therapeutics for the treatment of central nervous system disor- ders, cancer, and other serious and life threatening diseases. Our product development programs focus on large pharma- ceutical markets with significant unmet medical needs and commercial potential. We conduct a portion of our operations through our two subsidiaries: Ingenex, Inc. and ProNeura, Inc. Another majority owned subsidiary, Theracell, Inc., was merged with and into Titan in March 1999 (the Theracell Merger). Pursuant to the Theracell Merger, we issued 33,000 shares of our common stock to the minority stockholders of Theracell and recorded an in-process research and devel- opment expense of $136,000, which equals the value of the common stock issued. In the third quarter of 2000 and in con- nection with the acquisition of worldwide rights to gallium maltolate, a novel and proprietary agent for the potential treatment of cancer and other conditions, including HIV infec- tion, we acquired GeoMed, Inc., a privately held California  corporation (See Note 8). We operate in one business segment, the development of pharmaceutical products. Ingenex is engaged in the development of gene-based thera- peutics for the treatment of cancer. In September 1994, Ingenex issued shares of its Series B convertible preferred stock to a third party for $1.2 million, net of issuance costs. At December 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 December 31, 2001, we owned 79% of ProNeura. The accompanying consolidated financial statements include the accounts of Titan and our wholly and majority owned  subsidiaries. All significant intercompany balances and trans- actions are eliminated. The consolidated financial statements are reformatted to present dollars in thousands. Certain prior year balances have been reclassified to conform to the current year presentation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States Use of Estimates Basis of Presentation and Consolidation ProNeura, Inc. Ingenex, Inc. requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Our cash and investment policy emphasizes liquidity and preservation of principal over other portfolio considerations. We select investments that maximize interest income to  the extent possible given these two constraints. We satisfy  liquidity requirements by investing excess cash in securities with different maturities to match projected cash needs and limit concentration of credit risk by diversifying our invest- ments among a variety of high credit-quality issuers and  limit the amount of credit exposure to any one issuer. The  estimated fair values have been determined using available market information and commonly used valuation method- ologies. We do not use derivative financial instruments in  our investment portfolio. All investments with original maturities of three months or  less are considered to be cash equivalents. Our marketable securities, consisting primarily of high-grade debt securities including money market funds, U.S. government corporate notes and bonds, and commercial paper, are classified as  available-for-sale at time of purchase and carried at fair value. Amortization of premiums and discounts, and realized gains and losses are included as interest income. Unrealized gains and losses are included as accumulated other comprehensive income, a separate component of stockholders’ equity. Cost  of securities sold is based on specific identification method. Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets ranging from three to five years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the assets. We have invested in equity instruments of privately-held com- panies for business and strategic purposes. These investments are classified as long-term assets and are accounted for under the cost method as we do not have the ability to exercise  significant influence over their operations. We monitor our investments for impairment and record reductions in carrying value when events or changes in circumstances indicate that the carrying value may not be recoverable. In July 2001, we made a $300,000 equity investment in CSS Acquisition Corporation for 300 shares of Series D Preferred stock, representing 2.5% of total equity in the company. In December 2001, we made a $300,000 equity investment  Property and Equipment Investment in Other Companies Cash, Cash Equivalents and Marketable Securities