DURECT Corporation Announces First Quarter 2008 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, 2008. Total revenues were $6.4 million for the three months ended
March 31, 2008, compared to $5.7 million for the same period in 2007. Net
loss for the three months ended March 31, 2008 was $7.8 million, compared to a
net loss of $8.8 million for the same period in 2007.

At March 31, 2008, DURECT had cash and investments of $53.4 million,
compared to cash and investments of $62.0 million at December 31, 2007; these
figures include restricted investments of $1.0 million at March 31, 2008 and
at December 31, 2007.

“We continued to make progress towards our product development and
corporate objectives during the first quarter,” stated James E. Brown, D.V.M.,
President and CEO of DURECT. “We continued to advance our POSIDUR(TM),
ELADUR(TM), TRANSDUR(TM)-Sufentanil and Remoxy(TM) programs, including support
of Pain Therapeutics and King Pharmaceuticals in their preparation of the New
Drug Application (NDA) filing for Remoxy(TM) as well as starting commercial
production of certain key components that are integral to Remoxy. We also
continued to be active in business development and strengthened our
intellectual property position by acquiring additional patents that may be
strategic to our business.”

Recent Highlights:

— Remoxy and other Abuse-Resistant Opioids. In the first quarter of
2008, DURECT continued to execute on its activities supporting the
filing of the Remoxy NDA, and we began to manufacture commercial lots
of certain key components that are included in Remoxy to meet the
anticipated production requirements of King Pharmaceuticals. Our
collaborator, Pain Therapeutics, has stated that they expect to file
the NDA for Remoxy in the second quarter of 2008. In 2007, our
collaborators King Pharmaceuticals and Pain Therapeutics announced that
the pivotal Phase III trial for Remoxy successfully met its primary
endpoint (p<0.01) that was prospectively defined by the U.S. Food and
Drug Administration (FDA) during the Special Protocol Assessment (SPA)
process. In addition, the study achieved statistically significant
results in secondary endpoints such as Quality of Analgesia (p<0.01)
and Global Assessment (p<0.01). No drug related safety issues were
noted in the study.

Remoxy is an abuse-resistant, long-acting form of oxycodone based on
our ORADUR(TM) technology intended for the treatment of chronic pain.

In addition to Remoxy, there are three other ORADUR-based
abuse-resistant opioids covered in our collaboration with Pain
Therapeutics. Pain Therapeutics has previously announced positive
results from a Phase I clinical trial for one of these drug candidates,
and Pain Therapeutics has stated that it expects to file an
Investigational New Drug application (IND) for a new abuse-resistant
opioid in 2008.

— POSIDUR (SABER-Bupivacaine) Post-Operative Pain Relief Depot. We
continue to be in dialogue with the FDA regarding the Phase III
program. Upon completion of our discussions with the FDA, we plan to
commence that program. As preparation for our Phase III program, we
held an investigators meeting on April 25, 2008 with physicians
attending the Arthroscopy Association of North America 2008 Annual
Meeting in Washington. We have also recently conducted a survey, using
independent consultants, among providers and insurers/payers to explore
coverage and pricing for POSIDUR. In 2007, we announced positive
results from a 122 patient Phase IIb clinical trial in which POSIDUR at
a dose of 5 mL demonstrated statistically significant reductions in
post-operative pain (by approximately 30% versus placebo) and in total
consumption of supplemental opioid analgesic medications (approximately
3x less versus placebo) in patients undergoing inguinal hernia repair.
A poster (http://www.www.durect.com/pdf/Posidur_AHS_2008_Poster.pdf)
describing this study was presented at a meeting of the American Hernia
Society on March 25, 2008.

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. 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.

— ELADUR (TRANSDUR(TM)-Bupivacaine). In the first quarter of 2008, we
continued to conduct manufacturing scale-up and processing to secure
Phase II and Phase III supplies, and to develop our clinical and
regulatory strategy. We have previously announced positive results
from a 60 patient Phase IIa clinical trial of patients suffering from
post-herpetic neuralgia. In this study, ELADUR showed improved pain
control versus placebo during the 3-day continuous treatment period.
In addition, ELADUR appeared to be well tolerated overall, and patients
treated with ELADUR and placebo exhibited similar safety profiles. A
poster describing this study is being presented at the 27th Annual
Scientific Meeting of the American Pain Society on May 8, 2008 and will
be accessible shortly thereafter on our website

ELADUR is our proprietary transdermal patch intended to provide
bupivacaine for a period of up to three days from a single application.
We retain full commercial rights to this drug candidate.

— TRANSDUR-Sufentanil. Endo Pharmaceuticals, our licensee for
commercialization in the US and Canada, is continuing to conduct Phase
II studies with TRANSDUR-Sufentanil designed to evaluate the conversion
of patients on oral opioids to TRANSDUR-Sufentanil.

TRANSDUR-Sufentanil is our proprietary transdermal patch intended to
provide sufentanil to chronic pain sufferers for a period of up to
seven days from a single application.

— Business Development Activities. We continue to be active on the
business development front and have multiple late stage programs that
are the subject of partnering discussions with third parties. These
include ELADUR (worldwide), TRANSDUR-Sufentanil (ex-US and Canada),
POSIDUR (Asia), as well as various other programs, some of which are
internally funded and some of which are funded by third parties under
feasibility agreements.

— Expansion of patent portfolio. In the first quarter of 2008, we
acquired from a third party a portfolio of worldwide patents relating
to drug delivery technologies. This portfolio consists of
approximately 49 issued and pending U.S. patents and patent
applications as well as their international counterparts. Taken
together with a similar portfolio acquisition in the fourth quarter of
2007, we have significantly increased our patent estate, which we
believe will benefit our business by broadening our drug delivery
technology base and strengthening our intellectual property position.

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 the anticipated filing of
an NDA for Remoxy, our anticipated commencement of the Phase III program for
POSIDUR, commercial production of Remoxy, our possible entry into future
collaborative agreements as well as other statements regarding DURECT’s
products in development, product development plans, anticipated regulatory,
clinical and development milestones and timing thereof, future clinical trial
results, our business development intentions, the potential benefits to our
business from our above referenced acquisition of patents 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 obtain approvals from
regulatory agencies with respect to its development activities and products,
design, enroll, conduct and complete clinical trials, complete the design,
development, and manufacturing process development of the referenced product
candidates, consummate collaborative agreements relating to our product
candidates and technologies, manufacture and commercialize the referenced
product candidates, obtain marketplace acceptance of the referenced product
candidates and manage and obtain capital to fund its growth, operations and
expenses and the breadth, validity and enforceability of the acquired patents
referenced above. Further information regarding these and other risks is
included in DURECT’s Form 10-K on March 13, 2008 under the heading “Risk

                              DURECT CORPORATION
                   (in thousands, except per share amounts)

                                                  Three Months Ended March 31,
                                                       2008           2007

    Collaborative research and development
     and other revenue                                $4,269         $3,458
    Product revenue, net                               2,169          2,268
        Total revenues                                 6,438          5,726

    Operating expenses:
        Cost of revenues (1)                             822            860
        Research and development (1)                   9,634         10,352
        Selling, general and administrative (1)        3,879          3,538
        Amortization of intangible assets                 11              7
    Total operating expenses                          14,346         14,757

    Loss from operations                              (7,908)        (9,031)

    Other income (expense):
        Interest and other income                        568            978
        Interest expense                                (455)          (714)
    Net other income                                     113            264

    Net loss                                         $(7,795)       $(8,767)

    Net loss per share, basic and diluted             $(0.11)        $(0.13)

    Shares used in computing basic and
     diluted net loss per share                       74,113         69,231

    (1) Stock-based compensation related to the following:

    Cost of revenues                                     $35            $34
    Research and development                           1,607          1,156
    Selling, general and administrative                  775            668
    Total stock-based compensation                    $2,417         $1,858

                              DURECT CORPORATION
                           CONDENSED BALANCE SHEET
                                (in thousands)

                                                      As of          As of
                                                     March 31,    December 31,
                                                       2008          2007 (1)
    Current assets:
      Cash and cash equivalents                      $33,913        $37,589
      Short-term investments                          12,979         19,710
      Accounts receivable (net of allowances of
       $60 and $49, respectively)                      3,434          3,622
      Inventories                                      2,437          1,963
      Prepaid expenses and other current assets        1,824          1,904
    Total current assets                              54,587         64,788

    Property and equipment, net                        7,323          7,658
    Goodwill                                           6,399          6,399
    Intangible assets, net                               194            180
    Long-term investments                              5,473          3,697
    Restricted Investments                             1,018          1,020
    Other long-term assets                               277            278
    Total assets                                     $75,271        $84,020

    Current liabilities:
      Accounts payable                                $1,210         $1,834
      Accrued liabilities                              4,946          5,499
      Contract research liability                        989          1,946
      Deferred revenue, current portion                5,330          5,728
      Convertible subordinated notes                  23,599         23,599
      Other short-term liabilities                       841            482
    Total current liabilities                         36,915         39,088

    Deferred revenue, non-current portion              7,958          9,268
    Other long-term liabilities                        1,044          1,083

    Stockholders' equity                              29,354         34,581
    Total liabilities and stockholders' equity       $75,271        $84,020

    (1)  Derived from audited financial statements.

CONTACT: Matthew J. Hogan, Chief Financial Officer of DURECT
Corporation, +1-408-777-4936
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020717/DRRXLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
Web site: http://www.www.durect.com

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