DURECT Corporation Announces Second Quarter 2008 Financial Results

Download PDF:

CUPERTINO, Calif., Aug. 5 /PRNewswire-FirstCall/ — DURECT Corporation
(Nasdaq: DRRX) announced today financial results for the three months ended
June 30, 2008. Total revenues were $6.3 million for the three months ended
June 30, 2008, compared to $13.4 million for the same period in 2007. Net
loss for the three months ended June 30, 2008 was $8.6 million, compared to a
net loss of $0.5 million for the same period in 2007. Revenues and net loss
were favorably impacted in the second quarter of 2007 by the achievement of an
$8.0 million milestone under our Nycomed collaboration related to the clinical
development of POSIDUR(TM).

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

At June 30, 2008, DURECT had cash and investments of $47.6 million,
compared to cash and investments of $62.0 million at December 31, 2007; these
figures include restricted investments of $1.0 million at June 30, 2008 and at
December 31, 2007.

“The major event for us since the end of the first quarter was the filing
of the New Drug Application (NDA) for Remoxy(TM), which represents the first
NDA filing for a product candidate based on one of DURECT’s platform
technologies,” stated James E. Brown, D.V.M., President and CEO of DURECT.
“We also continued to make progress in our dialogue with the FDA with respect
to POSIDUR(TM) and, relevant to ELADUR(TM), received orphan drug designation
for bupivacaine for post-herpetic neuralgia. In addition, our balance sheet
has been strengthened by the elimination of all of our $23.6 million of
convertible debt which was exchanged into common stock per the original terms
of our indenture.”

Recent Highlights:

— Remoxy and other Abuse-Resistant Opioids. In June 2008, an NDA for
Remoxy (ORADUR(TM)-based oxycodone) was submitted to the U.S. Food and Drug
Administration (FDA). Pursuant to Prescription Drug User Fee Act (PDUFA)
guidelines, the FDA is expected to determine whether to accept the NDA for
filing within 90 days. At that time Pain Therapeutics (the NDA sponsor) will
also learn if the NDA filing was granted priority review. A priority review
designation is given to drugs that offer real advances in treatment, or
provide a treatment where no adequate therapy exists. A Priority Review means
that the time it takes the FDA to review a NDA is reduced from 12 months to
approximately 6 months. In addition, during the second quarter of 2008 DURECT
made its first shipment of certain key components that are included in Remoxy
to meet the production requirements of King Pharmaceuticals, which has rights
to commercialize Remoxy upon approval.

Remoxy, an investigational drug, is a long acting oral formulation of
oxycodone intended to treat moderate to severe pain. Based on DURECT’s ORADUR
technology, which is covered by issued and pending patent applications owned
by DURECT, Remoxy is designed to resist common methods of prescription drug
misuse and abuse.

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 they have stated that they expect
to file an Investigational New Drug application (IND) for a new
abuse-resistant opioid in 2008.

— POSIDUR (SABER(TM)-Bupivacaine) Post-Operative Pain Relief Depot. We
continue to be in dialogue with the FDA regarding the Phase III program and
believe we are making progress in defining our plans.

POSIDUR is our post-operative pain relief depot that utilizes our patented
SABER 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). The FDA recently granted to DURECT
orphan drug designation for bupivacaine for relief of persistent pain
associated with post-herpetic neuralgia (PHN). Bupivacaine is the active
pharmaceutical ingredient in ELADUR, DURECT’s investigational transdermal drug
patch. If ELADUR is the first bupivacaine product approved for PHN, under the
1983 Orphan Drug Act, ELADUR will receive seven years of market exclusivity
following its approval by the FDA. In the second quarter of 2008, we
continued to develop our clinical and regulatory strategy, and to conduct
manufacturing scale-up and processing activities to secure Phase II and Phase
III supplies.

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

— TRANSDUR-Sufentanil. Endo Pharmaceuticals, our licensee for
commercialization of TRANSDUR-Sufentanil in the US and Canada, has stated that
they expect to have data from a Phase II study by the end of 2008 and expect
to hold an End-of-Phase II meeting with the FDA in late 2008 or early 2009.

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 in business
development 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.

— Elimination of Convertible Notes. In June 2008, the remaining $23.6
million in 6.25% Convertible Notes were exchanged at their maturity date into
approximately 7.5 million shares of common stock, per the original terms of
the indenture.

Earnings Conference Call

A live audio webcast of a conference call to discuss second quarter 2008
results will be broadcast live over the internet at 9:00 a.m. Eastern Time on
August 6 and is available by accessing DURECT’s homepage at
http://www.www.durect.com and clicking “Investor Relations.” If you are unable to
participate during the live webcast, the call will be archived on DURECT’s
website under Audio Archive in the “Investor Relations” section.

About DURECT Corporation

DURECT is an emerging specialty pharmaceutical company developing
innovative drugs for pain and other chronic diseases, with late-stage
development programs including Remoxy(TM), POSIDUR(TM), ELADUR(TM), and
TRANSDUR(TM)-Sufentanil. DURECT’s proprietary oral, transdermal and
injectable depot delivery technologies enable new indications and superior
clinical/commercial attributes such as abuse deterrence, improved convenience,
compliance, efficacy and safety for small molecule and biologic drugs. For
more information, please visit http://www.www.durect.com.

trademarks of DURECT Corporation. Other referenced trademarks belong to their
respective owners. Remoxy, POSIDUR, ELADUR and TRANSDUR-Sufentanil are drug
candidates under development and have not been approved for commercialization
by the US Food and Drug Administration or other health authorities.

DURECT Forward-Looking Statement

The statements in this press release regarding the anticipated acceptance
by the FDA of the NDA for Remoxy, the possibility of a priority review
designation for the Remoxy NDA, the potential FDA approval or benefits of
Remoxy, the anticipated Phase II trial data and End-of-Phase II meeting for
TRANSDUR-Sufentanil, the potential of ELADUR to receive seven years of market
exclusivity as an orphan drug, our possible entry into future collaborative
agreements as well as other statements regarding DURECT’s products in
development, product development plans, product designs and benefits,
anticipated regulatory, clinical and development milestones and timing
thereof, future clinical trial results, our business development intentions,
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, avoid infringing patents held
by other parties and securing and defending patents of our own, 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-Q
on May 8, 2008 under the heading “Risk Factors.”

                              DURECT CORPORATION
                   (in thousands, except per share amounts)

                                         Three months ended Six months ended
                                              June 30,          June 30,
                                           2008     2007      2008     2007

    Collaborative research and
     development and other revenue         $3,867  $11,408    $8,136  $14,866
    Product revenue, net                    2,436    2,024     4,605    4,292
        Total revenues                      6,303   13,432    12,741   19,158

    Operating expenses:
        Cost of revenues (1)                  982      778     1,804    1,638
        Research and development (1)        9,898    9,630    19,532   19,982
        Selling, general and
         administrative (1)                 4,074    3,683     7,953    7,221
        Amortization of intangible assets      12        8        23       15
        Total operating expenses           14,966   14,099    29,312   28,856

    Loss from operations                   (8,663)    (667)  (16,571)  (9,698)

    Other income (expense):
        Interest and other income             368      908       936    1,886
        Interest and other expense           (304)    (720)     (759)  (1,434)
    Net other income (expense)                 64      188       177      452

    Net loss                              $(8,599)   $(479) $(16,394) $(9,246)

    Net loss per share, basic and diluted  $(0.11)  $(0.01)   $(0.22)  $(0.13)

    Shares used in computing basic and
     diluted net loss per share            75,430   69,364    74,772   69,298

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

    Cost of revenues                          $31      $33       $66      $67
    Research and development                1,360    1,097     2,967    2,253
    Selling, general and administrative       674      555     1,449    1,223
        Total stock-based compensation     $2,065   $1,685    $4,482   $3,543

                              DURECT CORPORATION
                           CONDENSED BALANCE SHEETS
                                (in thousands)

                                                      As of          As of
                                                     June 30,     December 31,
                                                       2008           2007 (1)
    Current assets:
      Cash and cash equivalents                      $31,445        $37,589
      Short-term investments                          10,859         19,710
      Accounts receivable (net of
       allowances of $47 and $49, respectively)        3,080          3,622
      Inventories                                      2,653          1,963
      Prepaid expenses and other current assets        1,723          1,904
    Total current assets                              49,760         64,788

    Property and equipment, net                        6,988          7,658
    Goodwill                                           6,399          6,399
    Intangible assets, net                               182            180
    Long-term investments                              4,259          3,697
    Restricted Investments                             1,018          1,020
    Other long-term assets                               274            278
    Total assets                                     $68,880        $84,020

    Current liabilities:
      Accounts payable                                  $749         $1,834
      Accrued liabilities                              6,812          5,499
      Contract research liability                        678          1,946
      Deferred revenue, current portion                5,768          5,728
      Convertible subordinated notes                       -         23,599
      Other short-term liabilities                       425            482
    Total current liabilities                         14,432         39,088

    Deferred revenue, non-current portion              6,649          9,268
    Other long-term liabilities                          982          1,083

    Stockholders' equity                              46,817         34,581
    Total liabilities and stockholders' equity       $68,880        $84,020

    (1)  Derived from audited financial statements.

CONTACT: Matthew J. Hogan, Chief Financial Officer, +1-408-777-4936,
fax, +1-408-777-3577, matt.hogan@durect.com, or Elizabeth Muto, Executive
Assistant, +1-408-777-1417, fax, +1-408-252-4652, both of DURECT Corporation
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

Scroll to Top