DURECT Corporation Announces First Quarter 2010 Financial Results

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CUPERTINO, Calif., May 10, 2010 /PRNewswire via COMTEX/ –DURECT Corporation (Nasdaq: DRRX) announced today financial results for the three months ended March 31, 2010. Total revenues were $7.7 million for the three months ended March 31, 2010 and $6.2 million for the three months ended March 31, 2009. Net loss for the three months ended March 31, 2010 was $6.6 million, compared to a net loss of $8.7 million for the same period in 2009.

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At March 31, 2010, we had cash and investments of $35.8 million, compared to cash and investments of $41.6 million at December 31, 2009.

“Our late stage pipeline continues to advance in 2010. Of note, BESST, our pivotal U.S. Phase III clinical study for POSIDUR(TM), is well underway. With respect to our partnered programs, King Pharmaceuticals is preparing the NDA resubmission for REMOXY(R) by year-end and has initiated a Phase IIb clinical study of ELADUR(TM) in chronic low back pain,” stated James E. Brown, D.V.M., President and CEO of DURECT.

    Recent Highlights:

    --   REMOXY.  In March 2009, King Pharmaceuticals assumed
     responsibility for the REMOXY New Drug Application (NDA) from
     Pain Therapeutics.  In July 2009, King met with the FDA to
     discuss the Complete Response Letter received in December 2008
     regarding the REMOXY NDA. According to King, it anticipates
     that in the fourth quarter of 2010 it will resubmit the NDA for
     REMOXY intended to address all FDA comments in the Complete
     Response Letter.
         REMOXY, an investigational drug, is a unique 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 (SABER(TM)-Bupivacaine) Post-Operative Pain
     Relief Depot.  In the first quarter of 2010 we continued to
     enroll patients in our U.S. pivotal Phase III clinical study
     known as BESST (Bupivacaine Effectiveness and Safety in SABER
     Trial).  We expect to complete enrollment of BESST, comprising
     approximately 300 patients, in the first half of 2011.
         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 other
          defined countries, and we have retained commercialization
          rights in the U.S., Canada, Japan and all other countries. In
          February 2010, we amended our agreement with Nycomed to
          separate funding and control of the U.S. and European clinical
          programs and to expand the territory licensed to Nycomed. The
          parties are not altering the final decision making authority
          and financial responsibility for the remainder of the
          development activities, such as the non-clinical and CMC
          (Chemistry, Manufacturing and Control) activities, which will
          continue to be jointly managed and funded by Nycomed and us.
          We are in discussions with potential partners regarding
          licensing of the U.S./Canadian and Japanese rights to this

    --   ELADUR (TRANSDUR(TM)-Bupivacaine).  In October 2008,
     worldwide rights to this program were licensed to Alpharma,
     which was acquired by King Pharmaceuticals in December 2008. In
     April 2010, King Pharmaceuticals initiated a Phase IIb trial
     evaluating the safety and efficacy of ELADUR in patients with
     chronic low back pain.  King expects to enroll approximately
     260 patients in this study.
         ELADUR is our proprietary transdermal patch intended to deliver
          bupivacaine for a period of up to three days from a single

    --    TRANSDUR-Sufentanil.  In February 2009, a successful
     end-of-Phase II meeting with the FDA was conducted for this
     program outlining a potential regulatory pathway for the Phase
     III program and NDA submission. During 2009, we transitioned
     the program back to our control. We are in discussions with
     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 deliver sufentanil to chronic pain sufferers for a
          period of up to seven days from a single application.

Earnings Conference Call

A live audio webcast of a conference call to discuss first quarter 2010 results will be broadcast live over the internet at 4:30 p.m. Eastern Time on May 10 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), ELADUR(TM), and DURIN(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 U.S. Food and Drug Administration or other health authorities.

DURECT Forward-Looking Statement

The statements in this press release regarding the anticipated resubmission of the REMOXY NDA, our U.S. pivotal Phase III clinical trial (BESST) for POSIDUR and Phase IIb trial for ELADUR including anticipated patient enrollment numbers and timing thereof, the potential benefits and uses of our drug candidates and potential collaborations with third parties 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, delays and additional costs due to requirements imposed by regulatory agencies on our drug candidates, unexpected results and adverse events from clinical trials for 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 our growth, operations and expenses. Further information regarding these and other risks is included in DURECT’s Form 10-K on March 4, 2010 under the heading “Risk Factors.”

                               DURECT CORPORATION
                          STATEMENT OF OPERATIONS DATA
                    (in thousands, except per share amounts)

                                                 Three months ended
                                                      March 31,
                                                  2010              2009
                                                  ----              ----

    Collaborative research and development and
     other revenue                              $3,816            $3,745
    Product revenue, net                         3,850             2,415
                                                 -----             -----
      Total revenues                             7,666             6,160
                                                 -----             -----

    Operating expenses:
      Cost of product revenues (1)               1,378               824
      Research and development (1)               9,421             9,903
      Selling, general and administrative (1)    3,502             4,257
      Total operating expenses                  14,301            14,984
                                                ------            ------

    Loss from operations                        (6,635)           (8,824)

    Other income (expense):
      Interest and other income                     11               179
      Interest and other expense                    (2)              (11)
                                                   ---               ---
    Net other income                                 9               168

    Net loss                                   $(6,626)          $(8,656)
                                               =======           =======

    Net loss per share, basic and diluted       $(0.08)           $(0.11)
                                                ======            ======

    Shares used in computing basic and diluted
     net loss per share                         86,756            82,023
                                                ======            ======

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

    Cost of product revenues                       $84               $78
    Research and development                     1,277             2,281
    Selling, general and administrative            669             1,171
                                                   ---             -----
      Total stock-based compensation            $2,030            $3,530
                                                ======            ======

                                 DURECT CORPORATION
                              CONDENSED BALANCE SHEETS
                                   (in thousands)

                                                  As of        As of
                                                  -----        -----
                                                March 31,   December 31,
                                                   2010       2009 (1)
                                               ----------  -------------
    Current assets:
        Cash and cash equivalents                   $3,529         $8,287
        Short-term investments                      31,827         32,834
        Short-term restricted
         investments                                    66              -
        Accounts receivable                          3,603          1,700
        Inventories                                  2,651          2,799
        Prepaid expenses and other
         current assets                              1,712          1,433
                                                     -----          -----
    Total current assets                            43,388         47,053

    Property and equipment, net                      3,158          3,808
    Goodwill                                         6,399          6,399
    Intangible assets, net                              96            108
    Long-term restricted Investments                   366            431
    Other long-term assets                             344            352
    Total assets                                   $53,751        $58,151
                                                   =======        =======

    Current liabilities:
        Accounts payable                            $1,018         $1,019
        Accrued liabilities                          5,246          5,337
        Contract research liability                  1,421            990
        Deferred revenue, current portion            4,530          4,703
        Other short-term liabilities                   220            208
                                                       ---            ---
    Total current liabilities                       12,435         12,257

    Deferred revenue, noncurrent
     portion                                        16,430         17,543
    Other long-term liabilities                        447            508

    Stockholders' equity                            24,439         27,843
    Total liabilities and
     stockholders' equity                          $53,751        $58,151
                                                   =======        =======

    (1)  Derived from audited financial statements.


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