DURECT Corporation Announces Second Quarter 2010 Financial Results

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CUPERTINO, Calif., Aug 04, 2010 /PRNewswire via COMTEX/ —

DURECT Corporation (Nasdaq: DRRX) announced today financial results for the three months ended June 30, 2010. Total revenues were $7.3 million for the three months ended June 30, 2010 compared to $4.9 million for the three months ended June 30, 2009. Net loss for the three months ended June 30, 2010 was $6.3 million, compared to a net loss of $7.5 million for the same period in 2009.

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At June 30, 2010, we had cash and investments of $57.2 million, compared to cash and investments of $41.6 million at December 31, 2009.

“The key event in the second quarter was our entry into a strategic collaboration with Hospira covering the development and commercialization of POSIDUR(TM) in the U.S. and Canada,” stated James E. Brown, D.V.M., President and CEO of DURECT. “We continue to advance our pipeline of product candidates. BESST, our pivotal U.S. Phase III clinical study for POSIDUR(TM), continued enrollment during the quarter. King Pharmaceuticals is preparing the NDA resubmission for REMOXY(R) by year-end and initiated a Phase IIb clinical study of ELADUR(TM) in chronic low back pain during the second quarter. Lastly, we recently commenced a Phase I clinical trial in our ORADUR(R)-ADHD program.”

    Business Highlights:

         REMOXY.  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 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 June 2010, we entered into an agreement with Hospira, Inc.
         covering the development and commercialization of POSIDUR in the
         U.S. and Canada.  Under terms of the agreement, Hospira made an
         upfront payment to us of $27.5 million, with the potential for
         up to an additional $185 million in performance based milestone
         payments based on the successful development, approval and
         commercialization of POSIDUR.  For the U.S. and Canada, the two
         companies will jointly direct and equally fund the remaining
         development costs for POSIDUR, while Hospira will have exclusive
         commercialization rights with sole funding responsibility.  In
         addition, if commercialized, Hospira will pay DURECT a royalty
    --   on product sales.

      In the second 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
       Hospira for commercialization in the U.S. and Canada, and to
       Nycomed for commercialization in Europe and other defined
       countries. We have retained commercialization rights in Japan and
       all other countries not subject to the Nycomed and Hospira

         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 each

           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.

         ORADUR-ADHD Program.  In July 2010, we commenced a Phase I
         clinical trial in this program with multiple formulations.
         ORADUR-ADHD applies our proprietary ORADUR technology to a
         leading active pharmaceutical ingredient for the treatment of
         attention deficit disorder (ADHD).  Under an agreement with
         Orient Pharma, we are collaborating to perform a clinical
         development program through a Phase II study intended to produce
         a data package that will support later stage development of the
         drug candidate and subsequent licensing by DURECT. We are
         responsible for formulation and study design of the pre-defined
    --   clinical program, which Orient Pharma will fund and execute.

Earnings Conference Call

A live audio webcast of a conference call to discuss second quarter 2010 results will be broadcast live over the internet at 4:30 p.m. Eastern Time on August 4 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, POSIDUR, ELADUR, and TRANSDUR-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 including the anticipated timing of completion of the trial and patient enrollment, potential milestone payments and royalties receivable from Hospira, Phase IIb trial for ELADUR including anticipated patient enrollment numbers and timing thereof, our intention to enter into collaborations with respect to TRANSDUR-Sufentanil and our ORADUR-ADHD Phase I trial, the potential benefits and uses of our drug 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, 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, our failure to achieve the performance milestones or commercial sales that trigger the referenced payments or royalties under our collaborative agreements, our (and that of our third party collaborators where applicable) difficulty or failure to obtain approvals from regulatory agencies with respect to development activities and products, design, enroll, conduct and complete clinical trials, complete the design, development, and manufacturing process development of the referenced drug candidates, consummate collaborative agreements relating to our drug candidates and technologies, manufacture and commercialize the referenced drug candidates, obtain marketplace acceptance of the referenced drug 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-Q on May 10, 2010 under the heading “Risk Factors.”

                                    DURECT CORPORATION

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

                                                    Three months ended
                                                          June 30,
                                                       2010         2009
                                                       ----         ----

    Collaborative research and
     development and other revenue                   $4,657       $2,606
    Product revenue, net                              2,656        2,271

                             Total revenues           7,313        4,877

    Operating expenses:
                              Cost of product
                              revenues (1)              861          837
                              Research and
                              development (1)         9,204        7,866
                              Selling, general
                              and administrative
                               (1)                    3,584        3,777
                              Total operating
                              expenses               13,649       12,480
                                                     ------       ------

    Loss from operations                             (6,336)      (7,603)

    Other income (expense):
                              Interest and other
                              income                     48          106
                              Interest and other
                              expense                   (21)         (11)
                                                       ----          ---
    Net other income                                     27           95

    Net loss                                        $(6,309)     $(7,508)
                                                    =======      =======

    Net loss per share, basic and
     diluted                                         $(0.07)      $(0.09)
                                                     ======       ======

    Shares used in computing basic
     and diluted net loss per
     share                                           86,845       82,138
                                                     ======       ======

    (1) Includes stock-based
     compensation related to the

    Cost of product revenues                            $86         $117
    Research and development                          1,290        1,327
    Selling, general and
     administrative                                     663          864
                                                        ---          ---
                              Total stock-based
                              compensation           $2,039       $2,308
                                                   ========       ======

                                                      Six months ended
                                                           June 30,
                                                        2010          2009
                                                        ----          ----

    Collaborative research and
     development and other revenue                    $8,473        $6,518
    Product revenue, net                               6,506         4,686

                             Total revenues           14,979        11,204
                                                           -             -

    Operating expenses:
                              Cost of product
                              revenues (1)             2,239         1,661
                              Research and
                              development (1)         18,625        17,936
                              Selling, general
                              and administrative
                               (1)                     7,086         8,034
                              Total operating
                              expenses                27,950        27,631
                                                      ------        ------

    Loss from operations                             (12,971)      (16,427)

    Other income (expense):
                              Interest and other
                              income                      59           285
                              Interest and other
                              expense                    (23)          (22)
                                                        ----           ---
    Net other income                                      36           263

    Net loss                                        $(12,935)     $(16,164)
                                                    ========      ========

    Net loss per share, basic and
     diluted                                          $(0.15)       $(0.20)
                                                      ======        ======

    Shares used in computing basic
     and diluted net loss per
     share                                            86,801        82,081
                                                      ======        ======

    (1) Includes stock-based
     compensation related to the

    Cost of product revenues                            $170          $195
    Research and development                           2,567         3,608
    Selling, general and
     administrative                                    1,332         2,035
                                                       -----         -----
                              Total stock-based
                              compensation            $4,069        $5,838
                                                  ==========        ======

                            DURECT CORPORATION
                         CONDENSED BALANCE SHEETS
                              (in thousands)

                                               As of        As of
                                                         December 31,
                                           June 30, 2010   2009 (1)
                                           ------------- ------------
    Current assets:
        Cash and cash equivalents                $21,273       $8,287
        Short-term investments                    32,875       32,834
        Short-term restricted investments             66            -
        Accounts receivable                        3,340        1,700
        Inventories                                2,852        2,799
        Prepaid expenses and other current
         assets                                    1,773        1,433
                                                   -----        -----
    Total current assets                          62,179       47,053

    Property and equipment, net                    2,656        3,808
    Goodwill                                       6,399        6,399
    Intangible assets, net                            84          108
    Long-term investments                          2,591            -
    Long-term restricted Investments                 366          431
    Other long-term assets                           260          352
    Total assets                                 $74,535      $58,151
                                                 =======      =======

    Current liabilities:
        Accounts payable                            $931       $1,019
        Accrued liabilities                        4,117        5,337
        Contract research liability                1,370          990
        Deferred revenue, current portion          8,220        4,703
        Other short-term liabilities                 219          208
                                                     ---          ---
    Total current liabilities                     14,857       12,257

    Deferred revenue, noncurrent
     portion                                      38,888       17,543
    Other long-term liabilities                      396          508

    Stockholders' equity                          20,394       27,843
                                                  ------       ------
    Total liabilities and stockholders'
     equity                                      $74,535      $58,151
                                                 =======      =======

    (1)  Derived from audited financial statements.


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