DURECT Corporation Announces Second Quarter 2009 Financial

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CUPERTINO, Calif., Aug 03, 2009 /PRNewswire-FirstCall via COMTEX/ —
DURECT Corporation (Nasdaq: DRRX) announced today financial results for the three months ended June 30, 2009. Total revenues were $4.9 million for the three months ended June 30, 2009, compared to $6.3 million for the same period in 2008. Net loss for the three months ended June 30, 2009 was $7.5 million, compared to a net loss of $8.6 million for the same period in 2008.

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At June 30, 2009, DURECT had cash and investments of $41.9 million, compared to cash and investments of $52.7 million at December 31, 2008; these figures include restricted investments of $0.8 million at June 30, 2009 and $1.0 million at December 31, 2008.

“Our senior management team was strengthened during the second quarter through the hiring of Joe Stauffer as our Chief Medical Officer, a former anesthesiologist and FDA reviewer with directly relevant experience covering all aspects of developing pain medications,” stated James E. Brown, D.V.M., President and CEO of DURECT. “It is also noteworthy that we signed four new feasibility projects in the quarter with pharmaceutical companies to apply our SABER(TM) depot and DURIN(TM) injectable technologies to address specific drug delivery challenges for both small molecule and biologic agents. Shortly after the end of the quarter, we were pleased to learn that King Pharmaceuticals met with the FDA regarding Remoxy(R) and believes that they have a clear path forward that could allow them to resubmit the Remoxy NDA in mid-2010.”

Recent Highlights:

— Remoxy. Pain Therapeutics, our licensee, received a Complete Response
Letter from the FDA in December 2008 indicating that the NDA is not
approved in its present form. King Pharmaceuticals, the
commercialization partner of Pain Therapeutics for Remoxy, assumed
responsibility for further development of Remoxy from Pain
Therapeutics in March 2009 and met with the Food and Drug
Administration (FDA) on July 2, 2009 to discuss the Complete Response
Letter. According to King Pharmaceuticals and Pain Therapeutics, the
outcome of that meeting provided King with a clear path forward to
resubmit the REMOXY NDA and to address all FDA comments in the
Complete Response Letter. According to the King Pharmaceuticals /
Pain Therapeutics press release, King now anticipates the
resubmission of the NDA could occur mid-year 2010. King has stated
that it remains committed to the development and commercialization of
REMOXY and looks forward to working closely with the FDA toward
approval of the product.

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

— POSIDUR(TM) (SABER(TM)-Bupivacaine). During the quarter, DURECT continued
enrollment in our approximately 60 patient Phase IIb clinical study in
shoulder surgery. In addition, Nycomed continued enrollment in a
Phase IIb study in hysterectomy patients and a Phase IIb study in
shoulder surgery patients. We are in active discussions with multiple
potential partners regarding licensing of the U.S./Canada and Asian
rights to this program.

POSIDUR is our investigational 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 we have retained commercialization rights in the US,
Canada and Asia.

— ELADUR(TM) (TRANSDUR(TM)-Bupivacaine). In October 2008, worldwide rights to
this program were licensed to Alpharma, which was acquired by King
Pharmaceuticals in December 2008. During the second quarter, we
continued to interact with the King team on details associated with
next steps in the clinical program, which King expects to initiate
this year.

ELADUR is our proprietary transdermal patch intended to provide
bupivacaine for a period of up to three days from a single

— TRANSDUR-Sufentanil. A successful end-of-Phase II meeting with the
FDA has been conducted for this program that laid out a potential
regulatory pathway for the Phase III program and approval. We are in
active discussions with multiple potential partners regarding
licensing development and commercialization rights to this program to
which we hold worldwide rights.

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.

— Feasibility Projects. During the second quarter, we signed four new
feasibility projects with pharmaceutical and biotechnology companies
whereby we will apply our SABER and DURIN technologies to both small
molecule and biologic agents of interest to our collaborator. We
undertake these feasibility projects as a means of demonstrating that
our technologies can achieve the drug delivery objectives set forth by
our collaborators and are worthy of further development. These
feasibility projects entail anticipated revenue to DURECT of
approximately $1.4 million in total during 2009.

Earnings Conference Call

A live audio webcast of a conference call to discuss second quarter 2009 results will be broadcast live over the internet at 4:30 p.m. Eastern Time on August 3 and is available by accessing DURECT’s homepage at 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(R), 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 www.www.durect.com.

NOTE: POSIDUR(TM), SABER(TM), ORADUR(R), TRANSDUR(TM), and ELADUR(TM) are 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 plans by King Pharmaceuticals for resubmission of the REMOXY NDA in mid-2010 and their belief that this resubmission will address all FDA comments in the Complete Response Letter, the potential of FDA approving the REMOXY NDA, the timing and content of any potential update to be provided by King Pharmaceuticals, as well as the potential royalty and other payments that may be received by DURECT from REMOXY, our possible licensing of development and commercialization rights to POSIDUR and TRANSDUR-Sufentanil to third parties, and potential agreements with third parties about licensing and development rights to our product candidates 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, the potential that the REMOXY NDA resubmission may not adequately address all of FDA’s concerns, the potential that FDA may not grant regulatory approval of REMOXY, failure of our clinical trials to produce intended results, possible adverse events associated with the use of our drug candidates, delays and costs due to additional work or other requirements imposed by regulatory agencies for continued development, approval or sale of our drug candidates, DURECT’s (and that of its third party collaborators where applicable) difficulty or failure 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 secure and defend 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 filed on May 7, 2009 under the heading “Risk Factors.”

                           DURECT CORPORATION
                (in thousands, except per share amounts)

                              Three months ended     Year ended
                                 ------------        ----------
                                   June 30,           June 30,
                                  ----------         ----------
                                 2009     2008      2009      2008
                                 ----     ----      ----      ----

    Collaborative research
     and development revenue   $2,606   $3,867    $6,351    $8,136
    Product revenue, net        2,271    2,436     4,686     4,605
                                -----    -----     -----     -----
      Total revenues            4,877    6,303    11,037    12,741
                                -----    -----    ------    ------

    Operating expenses:
      Cost of revenues (1)        837      982     1,661     1,804
      Research and
       development (1)          7,866    9,898    17,769    19,532
      Selling, general and
       administrative (1)       3,777    4,086     8,034     7,976
      Total operating
       expenses                12,480   14,966    27,464    29,312
                               ------   ------    ------    ------

    Loss from operations       (7,603)  (8,663)  (16,427)  (16,571)

    Other income (expense):
      Interest and other
       income                     106      368       285       936
      Interest expense            (11)    (304)      (22)     (759)
                                  ---     ----       ---      ----
    Net other income               95       64       263       177

                              -------  -------  --------  --------
    Net loss                  $(7,508) $(8,599) $(16,164) $(16,394)
                              =======  =======  ========  ========

    Net loss per share,
     basic and diluted         $(0.09)  $(0.11)   $(0.20)   $(0.22)
                               ======   ======    ======    ======

    Shares used in computing
     basic and diluted net
     loss per share            82,138   75,430    82,081    74,772
                               ======   ======    ======    ======

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

    Cost of revenues             $117      $31      $195       $66
    Research and development    1,327    1,360     3,608     2,967
    Selling, general and
     administrative               864      674     2,035     1,449
                                  ---      ---     -----     -----
      Total stock-based
       compensation            $2,308   $2,065    $5,838    $4,482
                               ======   ======    ======    ======

                              DURECT CORPORATION
                           Condensed Balance Sheet
                                (in thousands)

                                                   As of        As of
                                                  June 30,    December 31,
                                                    2009        2008 (1)
                                                 ---------   -------------
      Current assets:
          Cash and cash equivalents               $10,024       $29,445
          Short-term investments                   24,507        20,836
          Short-term restricted investments           372           624
          Accounts receivable                       2,336         4,055
          Inventories                               2,737         3,474
          Prepaid expenses and other current
           assets                                   3,037         1,850
                                                    -----         -----
      Total current assets                         43,013        60,284

      Property and equipment, net                   4,955         5,971
      Goodwill                                      6,399         6,399
      Intangible assets, net                          133           157
      Long-term investments                         6,528         1,362
      Long-term restricted Investments                428           425
      Other long-term assets                          368           276
                                                      ---           ---
      Total assets                                $61,824       $74,874
                                                  =======       =======

      Current liabilities:
          Accounts payable                           $846        $1,018
          Accrued liabilities                       4,135         5,204
          Contract research liability                 616           995
          Deferred revenue, current portion         8,074         9,235
          Other short-term liabilities                421           431
                                                      ---           ---
      Total current liabilities                    14,092        16,883

      Deferred revenue, noncurrent portion         19,552        19,771
      Other long-term liabilities                     614           656

      Stockholders' equity                         27,566        37,564
                                                   ------        ------
      Total liabilities and stockholders'
       equity                                     $61,824       $74,874

                                                  =======       =======

    (1) Derived from audited financial statements.



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