DURECT Corporation and NeuroSystec Corporation Announce Exclusive Agreement to Develop Treatments for Certain Inner Ear Disorders Including Tinnitus

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CUPERTINO, Calif., and VALENCIA, Calif., June 21 /PRNewswire-FirstCall/ —
DURECT Corporation (Nasdaq: DRRX) and NeuroSystec Corporation (“NeuroSystec”),
a privately held company located in Valencia, CA, announced today that they
have signed an exclusive agreement to develop, market and sell products for
the treatment of certain inner ear disorders including chronic tinnitus
(ringing in the ears). Under the agreement, DURECT granted to NeuroSystec
exclusive worldwide rights to develop and commercialize products designed for
the treatment of tinnitus and to improve post-operative recovery and tolerance
of surgical implantation of cochlear devices using specified DURECT
proprietary drug treatment methods and drug delivery technologies to deliver
precise doses of appropriate medications directly to the middle or inner ear.

“DURECT’s portfolio of innovative otologic drug treatment methods and drug
delivery technologies and the groundbreaking tinnitus research already
conducted by DURECT and its collaborators provide a compelling reason to
believe that we will one day be able to offer an effective treatment for the
millions of patients in the US and abroad who suffer constantly with this
debilitating disease,” stated Alfred E. Mann, Chairman of NeuroSystec.
“Tinnitus is truly an unmet medical need affecting millions of people. We are
very excited to work with DURECT to develop the first promising therapy under
this agreement,” added Dr. Stephen McCormack, President and CEO of

“Alfred Mann brings to this collaboration his impressive track record of
vision and success at other companies he has founded such as Advanced Bionics,
Minimed, Pacesetter, and Mannkind. We are delighted to have the opportunity to
collaborate on such an innovative and meaningful venture with Mr. Mann, Dr.
McCormack and their team at NeuroSystec,” stated Felix Theeuwes, Chairman and
Chief Scientific Officer of DURECT. “This collaboration demonstrates the
strengths of DURECT’s pharmacological research capabilities, as well as the
breadth of applications for DURECT’s drug delivery technologies, and we
anticipate will create products that will offer hope to millions of tinnitus
sufferers around the world,” added James E. Brown, DVM, President and CEO of

NeuroSystec paid to DURECT an undisclosed upfront fee and will make
additional payments to DURECT based on the achievement of specific milestones
and specific research and development activities. NeuroSystec will also pay
royalties on sales of products developed under this agreement. In connection
with the agreement, DURECT has received a minority ownership stake in

About Tinnitus

Over eight million people in the U.S. suffer from chronic ringing,
hissing, buzzing or other noises in one or both ears, a condition known as
tinnitus. Two million Americans are seriously debilitated by their tinnitus to
the point that it severely impacts their quality of life. For most sufferers
the cause of their tinnitus is unknown and there is currently no accepted
therapy available. Physicians tell most tinnitus sufferers that there is no
effective treatment for tinnitus so they must learn to live with it.

About DURECT Corporation

DURECT Corporation (www.www.durect.com) is pioneering the development and
commercialization of pharmaceutical systems for the treatment of chronic
debilitating diseases and enabling biotechnology-based pharmaceutical
products. DURECT’s goal is to deliver the right drug to the right site in the
right amount at the right time. DURECT’s lead product in development is
CHRONOGESIC(R), a 3-month product for the treatment of chronic pain. DURECT
also owns three proprietary drug delivery platform technologies, including the
SABER(TM) Delivery System (a patented and versatile depot injectable useful
for protein and small molecule delivery), the MICRODUR(TM) Biodegradable
Microparticulates (microspheres injectable system) and the DURIN(TM)
Biodegradable Implant (drug-loaded implant system) upon which DURECT is
developing a pipeline of other products.

About NeuroSystec Corporation

NeuroSystec Corporation (www.neurosystec.com) is a privately held
corporation based in Valencia, California. NeuroSystec was founded by Al Mann
and Stephen J. McCormack to relieve the suffering of patients with
neurological diseases by combining therapeutics and delivery devices to reach
and treat under served markets. This combination of modern device
technologies with potent neurologically active therapeutics will be utilized
to treat diseases of the head, brain, hearing and nervous system in general.

Since 1993, Alfred E. Mann has served as Chairman and a Co-Chief Executive
Officer of Advanced Bionics Corporation, the technology leader and the only
American manufacturer of cochlear implants. In June 2004, Boston Scientific
announced the acquisition of Advanced Bionics for an initial payment of
approximately $740 million in cash, plus earn out payments tied to future
performance milestones. Mr. Mann is also Chairman and Chief Executive Officer
of Mannkind Corporation. In 1983, Mr. Mann founded MiniMed, the world leader
in insulin pump therapy products for the treatment of diabetes. In August
2001, Medtronic, Inc. acquired MiniMed and MRG, an affiliate, for over $4
billion in cash. Mr. Mann also founded and, from 1972 through 1992, served as
Chief Executive Officer of Pacesetter Systems and its successor, Siemens
Pacesetter, a manufacturer of cardiac pacemakers.


DURECT Corporation.

The statements in this press release regarding DURECT and NeuroSystec’s
products in development, product development plans, clinical trials and
projected financial results are forward-looking statements involving risks and
uncertainties that can cause actual results to differ materially from those in
such forward-looking statements. Potential risks and uncertainties include,
but are not limited to, DURECT and NeuroSystec’s abilities to complete the
design, development, and manufacturing process development of its products,
manufacture and commercialize its products, obtain product and manufacturing
approvals from regulatory agencies, manage its growth and expenses, manage
relationships with third parties, finance its activities and operations, as
well as marketplace acceptance of these products. Further information
regarding these and other risks is included in DURECT’s Annual Report on Form
10-K for the fiscal year ended December 31, 2003 filed with the SEC on March
11, 2004, DURECT’s Quarterly Report on Form 10Q and other periodic reports
filed with the SEC under the heading “Factors that may affect future results.”

CHRONOGESIC and other products mentioned above are under development and
have not been submitted or approved for commercialization by the US Food and
Drug Administration or other health authorities.


/CONTACT: Schond L. Greenway, Executive Director, IR and Strategic
Planning of DURECT Corporation, +1-408-777-1417; or Dr. Stephen J. McCormack,
President and CEO of NeuroSystec Corporation, +1-661-702-6880/
/Web site: http://www.www.durect.com /

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