DURECT Corporation Announces First Quarter 2007 Financial Results

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CUPERTINO, Calif., May 7 /PRNewswire-FirstCall/ — DURECT Corporation
(Nasdaq: DRRX) announced today financial results for the three months ended
March 31, 2007. Total revenues were $5.7 million for the three months ended
March 31, 2007, compared to $5.2 million for the same period in 2006. Net
loss for the three months ended March 31, 2007 was $8.8 million, compared to a
net loss of $6.3 million for the same period in 2006.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020717/DRRXLOGO )

At March 31, 2007, DURECT had cash and investments of $72.4 million,
including $1.3 million in restricted investments, compared with cash and
investments of $81.6 million at December 31, 2006.

“Our development programs continued to progress in the first quarter of
this year, several of which should report clinical results during the course
of 2007,” stated James E. Brown, D.V.M., President and CEO of DURECT. “In
addition, with our entry into global supply agreements with Hospira Worldwide
for POSIDUR(TM) and Corium International for ELADUR(TM) (TRANSDUR-
Bupivacaine), we have secured product supply for late stage clinical trials
and launch of these drug candidates.”

Recent Pipeline Highlights:

  • POSIDUR. POSIDUR is our post-operative pain relief depot that
    utilizes our patented SABER(TM) technology to deliver bupivacaine to
    provide up to three days of pain relief after surgery. At this
    point, we have completed enrollment in the majority of studies in
    our multiple-trial Phase II program in the U.S. and in other
    countries. For the trials that have completed enrollment, the
    treatment phases have been completed, and data collection is
    underway. These studies were carried out in a variety of soft-
    tissue and orthopedic surgeries for the purpose of selecting the
    optimal dosing and the surgical procedures for our pivotal Phase III
    trials. We anticipate reporting on these Phase II trials later in
    the year and continue to target initiation of Phase III trials in
    2007. Hospira, our worldwide supplier for POSIDUR, conducted
    manufacturing runs during the first quarter. POSIDUR is licensed to
    Nycomed for commercialization in Europe and select other countries,
    and DURECT has retained commercialization rights in the US, Canada
    and Asia.
  • Remoxy(TM). Remoxy, an abuse-resistant long-acting form of
    oxycodone based on our ORADUR(TM) technology intended for the
    treatment of chronic pain, is currently in a pivotal Phase III trial
    in accordance with a Special Protocol Assessment (SPA) with the
    United States Food and Drug Administration (FDA). Remoxy is
    licensed to Pain Therapeutics, which has in turn sublicensed
    commercialization rights to King Pharmaceuticals. According to Pain
    Therapeutics, the Remoxy(TM) Phase III pivotal study is now over 80%
  • TRANSDUR(TM)-Sufentanil. TRANSDUR-Sufentanil is our proprietary
    transdermal patch intended to provide sufentanil for a period of up
    to seven days from a single application for chronic pain sufferers.
    Based on its public disclosures, Endo Pharmaceuticals expects to
    commence additional Phase II studies in the first half of 2007 using
    patches manufactured by 3M Company. TRANSDUR-Sufentanil is licensed
    to Endo for commercialization in the US and Canada, and DURECT has
    retained commercialization rights to the rest of the world.
  • ELADUR (TRANSDUR-Bupivacaine). ELADUR is our proprietary
    transdermal patch intended to provide bupivacaine for a period of up
    to three days from a single application. During the first quarter
    of 2007, we announced that we had begun a Phase II program for
    ELADUR in the US under an FDA-accepted Investigational New Drug
    (IND) application with a randomized, multi-center, double blind,
    placebo controlled, two-way cross-over trial in approximately 50
    patients with Post-Herpetic Neuralgia (PHN) to assess safety as well
    as the magnitude, duration and characteristics of analgesic activity
    of ELADUR. We expect to report data from this Phase II study in
    2007. Corium, our worldwide supplier for ELADUR, conducted
    manufacturing development activities during the first quarter of
    2007. DURECT retains full commercial rights to this drug candidate.
  • Memryte(TM). Memryte is a drug candidate for the treatment of
    Alzheimer’s Disease based on our proprietary DURIN(TM) implant
    technology and Voyager Pharmaceutical’s patented method of treatment
    of Alzheimer’s Disease. Voyager informed DURECT in the fourth
    quarter of 2006 that Voyager had truncated its Phase III clinical
    trial for Memryte in order to get an early look at potential
    efficacy. According to Voyager, data analysis is underway and data
    from this truncated trial is expected to be available in the first
    half of 2007.

About DURECT Corporation

DURECT Corporation is an emerging specialty pharmaceutical company
developing pharmaceutical systems based on its proprietary drug delivery
platform technologies. The Company currently has a number of late-stage
pharmaceutical products in development addressing large markets in pain
management, with a number of research programs underway targeting chronic
disease and other therapeutic areas. For more information, please visit

ELADUR(TM) are trademarks of DURECT Corporation. Other referenced trademarks
belong to their respective owners.

DURECT Forward-Looking Statement

The statements in this press release regarding DURECT’s products in
development, product development plans, anticipated regulatory, clinical and
development milestones and timing thereof, future clinical trial results and
DURECT’s emergence as a specialty pharmaceutical company 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’s (and that of
its third party collaborators where applicable) abilities to design, enroll,
conduct and complete clinical trials, complete the design, development, and
manufacturing process development of the product candidate, obtain product and
manufacturing approvals from regulatory agencies, manufacture and
commercialize the product candidate and manage and obtain capital to fund its
growth, operations and expenses. Further information regarding these and other
risks is included in DURECT’s Form 10-K filed on March 15, 2007 under the
heading “Risk Factors.”

                              DURECT CORPORATION
                   (in thousands, except per share amounts)

                                                      Three months ended
                                                            March 31,
                                                     2007               2006
    Collaborative research and
     development and other revenue                  $3,458             $3,058
    Product revenue, net                             2,268              2,153
       Total revenues                                5,726              5,211

    Operating expenses:
       Cost of revenues (1)                            860                829
       Research and development (1)                 10,352              7,164
       Selling, general and
        administrative (1)                           3,538              3,005
       Amortization of intangible assets                 7                300

    Total operating expenses                        14,757             11,298

    Loss from operations                            (9,031)            (6,087)

    Other income (expense):
       Interest and other income                       978                906
       Interest expense                               (714)            (1,077)
    Net other income (expense)                         264               (171)

    Net loss                                        (8,767)            (6,258)

    Net loss per common share, basic and
     diluted                                        $(0.13)            $(0.10)

    Shares used in computing basic and
     diluted net loss per share                     69,231             61,837

    (1) Includes stock-based compensation related
        to the following:

    Cost of revenues                                   $34                 $8
    Research and development                         1,156                614
    Selling, general and administrative                668                321
                                                    $1,858               $943

                              DURECT CORPORATION
                           CONDENSED BALANCE SHEETS
                                (in thousands)

                                                    As of            As of
                                                   March 31,      December 31,
                                                     2007             2006
                                                 (unaudited)           (1)
    Current assets:
       Cash and cash equivalents                   $33,386            $41,554
       Short-term investments                       34,800             28,297
       Accounts receivable, net                      4,674              2,152
       Inventories                                   2,042              2,052
       Prepaid expenses and  other current assets    1,565              1,744
    Total current assets                            76,467             75,799

    Property and equipment, net                      7,429              7,451
    Goodwill                                         6,399              6,399
    Intangible assets, net                             104                111
    Long-term investments                            2,948             10,472
    Restricted investments                           1,284              1,284
    Other non-current assets                           855                969
    Total assets                                   $95,486           $102,485

    Current liabilities:
    Accounts payable                                  $922               $864
       Accrued liabilities                           3,586              4,522
       Contract research liability                   3,125              1,624
       Interest payable on convertible notes           681                 97
       Deferred revenue, current portion             5,254              5,348
       Equipment financing obligations,
        current portion                                 35                 34
       Bonds payable, current portion                  210                210
    Total current liabilities                       13,813             12,699

    Bonds payable and equipment financing
     obligations, noncurrent portion                   597                606
    Convertible subordinated notes                  37,337             37,337
    Deferred revenue, noncurrent portion            13,197             14,507
    Other long-term liabilities                        273                304

    Stockholders' equity                            30,269             37,032
    Total liabilities and stockholders' equity     $95,486           $102,485

    (1) Derived from audited financial statements.

CONTACT: Matthew J. Hogan, Chief Financial Officer of DURECT
Corporation, +1-408-777-4936; or Jeremiah Hall, Senior Vice President of
Feinstein Kean Healthcare, +1-415-677-2700, jeremiah.hall@fkhealth.com
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020717/DRRXLOGO
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PRN Photo Desk, photodesk@prnewswire.com
Web site: http://www.www.durect.com

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