DURECT Corporation (NASDAQ: DRRX) is a biopharmaceutical company actively developing new therapeutics based on its Epigenetic Regulator Program and proprietary drug delivery platforms.
Novartis has renegotiated its $293 million deal to commercialize Durect’s Posimir postoperative painkiller, cutting its milestone payments following the failure of a phase 3 trial reported last October. DRRX has entered into an amendment to the development and commercialization agreement with Sandoz AG, a division of Novartis (NVS), regarding POSIMIR® (SABER®-bupivacaine) in the United States on May 9, 2018. DURECT received an upfront payment from Sandoz of $20 million at the time the agreement between the two companies became effective in June 2017 and was initially eligible for up to an additional $43 million in payments based on successful development and regulatory milestones (of which $30 million is feasible following the results of the PERSIST Phase 3 clinical trial), and up to an additional $230 million in sales-based milestones. Sandoz received exclusive commercialization rights for POSIMIR in the U.S. upon regulatory approval with sole funding responsibility for commercialization activities. Sandoz has agreed to pay DURECT a tiered double-digit royalty on product sales for a defined period. Pursuant to the amended agreement, DURECT is now eligible for up to $30 million in milestone payments based on NDA approval, and remains eligible for up to an additional $230 million in sales-based milestones.
“We are very pleased with recent progress on our lead internal candidate DUR-928, with our first two Phase 2 trials in different indications now underway and a third Phase 2 trial in another indication expected to commence in the third quarter of this year,” stated James E. Brown, D.V.M., President and CEO of DURECT. “On other fronts, we have economic stakes in two drug candidates that have approaching PDUFA dates. Indivior’s NDA for RBP-7000, in development for schizophrenia, has a PDUFA target action date of July 28, 2018 and Pain Therapeutics’ REMOXY ER has a PDUFA target action date of August 7, 2018.”
On March 20, 2018, DURECT Corporation announced that its licensee, Pain Therapeutics (Nasdaq: PTIE), reported that the U.S. Food and Drug Administration (FDA) will hold an Advisory Committee Meeting to discuss the New Drug Application (NDA) for REMOXY ER (extended release oxycodone CII). REMOXY® ER is designed as an abuse-deterrent, extended release, capsule formulation of oxycodone, a prescription drug for severe pain. The tentative date for the Advisory Committee Meeting is June 26, 2018. The Prescription Drug User Fee Act (PDUFA) target date for the REMOXY ER NDA is August 7, 2018.
About the company:
DURECT is a biopharmaceutical company with research and development programs broadly falling into two categories: (i) new chemical entities derived from our Epigenetic Regulator Program, in which they attempt to discover and develop molecules which have not previously been approved and marketed as therapeutics, and (ii) Drug Delivery Programs, in which they apply their formulation expertise and technologies largely to active pharmaceutical ingredients whose safety and efficacy have previously been established. They also manufacture and sell osmotic pumps used in laboratory research and design, develop and manufacture a wide range of standard and custom biodegradable polymers and excipients for pharmaceutical and medical device clients for use as raw materials in their products.
As of May 5, 2017, DURECT held over 55 issued U.S. patents and over 355 issued foreign patents (which include granted European patent rights that have been validated in various EU member states). In addition, they have over 35 pending U.S. patent applications and over 100 foreign applications pending in Europe, Australia, Japan, Canada, and other countries.
Products:
DUR-928, a new chemical entity in Phase 1 development, is the lead candidate in DURECT’s Epigenetic Regulator Program. An endogenous, orally bioavailable small molecule, DUR-928 has been shown in preclinical studies to play an important regulatory role in lipid homeostasis, inflammation, and cell survival. Human applications may include acute organ injury, chronic metabolic diseases such as nonalcoholic fatty liver disease (NAFLD) and nonalcoholic steatohepatitis (NASH), and other liver disorders. DURECT’s advanced oral, injectable, and transdermal delivery technologies are designed to enable new indications and enhanced attributes for small-molecule and biologic drugs.
One late-stage product candidate in this category is POSIMIR® (SABER®-Bupivacaine), an investigational non-opioid analgesic intended to address key unmet needs in postoperative pain management. Another is REMOXY® ER (oxycodone), based on DURECT’s ORADUR® technology, an investigational extended-release pain reliever that has been out-licensed to Pain Therapeutics, Inc. Opioid medications such as oxycodone expose users to risks of addiction, misuse, and abuse.
ALZET® Osmotic Pumps, The ALZET product line consists of miniature implantable pumps and a range of accessories for experimental research in mice, rats, and other laboratory animals. ALZET pumps continuously deliver drugs, hormones, and other test agents at controlled rates for durations ranging from 1 day to 6 weeks. They eliminate the need for external connections, frequent handling, or repeated dosing. In laboratory research, these infusion pumps can be used for systemic administration when implanted under the skin or in the body. They can also be attached to a catheter for intravenous, intracerebral, or intra-arterial infusion, or for targeted delivery, where the goal is to localize the effects of a drug or test agent to a particular tissue or organ. The wide use and broad application of the ALZET product line is evidenced by more than 16,000 references in the scientific literature.
ALZET pumps are neither approved nor intended for human use.
LACTEL® Absorbable Polymers, DURECT designs, develops, and manufactures a wide range of standard and custom biodegradable polymers based on lactide, glycolide, and caprolactone for use as raw materials in pharmaceutical and medical device products under the LACTEL brand. These polymers are manufactured and sold by DURECT at their facility in Birmingham, AL. They are used by DURECT and its third-party customers for a variety of controlled-release and medical-device applications, and they are incorporated into several FDA-approved commercial products. Their experience in this field has allowed them to work with clients to:
Increase polymer solubility
Increase molecular weight for enhanced mechanical properties
Tightly control low-molecular-weight polymers to degrade rapidly
Change molar ratios to give desired drug release profiles
Market
The pharmaceutical industry is subject to rapid and substantial technological change. The market for pharmaceutical product candidates is rapidly changing and competitive, and new products or technologies developed by others could impair their ability to grow their business and remain competitive.
Technological competition in the industry from pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into the field is intense and is expected to increase. They face competition from other companies in numerous industries including pharmaceuticals, medical devices and drug delivery.
Competition for DUR-928, if approved, will depend on the specific indications for which DUR-928 is approved. Intercept, Gilead, Shire, Conatus Pharmaceuticals, Galectin Therapeutics, Genfit, Pfizer, Roche, Bristol Myers Squibb, Novartis, Terns Pharmaceuticals, Galmed Pharmaceuticals, Enanta Pharmaceuticals, Novo Nordisk, Takeda, Vital Therapies, Allergan, Akarna Therapeutics, Inventiva Pharma, Genkyotex, VBL Therapeutics, NGM Biopharmaceuticals, Gemphire Therapeutics, Albireo Pharma, CymaBay Therapeutics, Madrigal Pharmaceuticals, Viking Therapeutics, CohBar, FALK Pharma, Acorda, and others have development plans for products to treat NAFLD/NASH, PSC or other liver diseases. AbbVie, Ischemix, Thrasos Therapeutics, AM-Pharma, Complexa, Quark Pharmaceuticals and others have development plans for products to treat acute kidney injury. Bristol Myers Squibb, Novartis, Eli Lilly, Almirall, LEO Pharma, Pfizer, Janssen, AbbVie, Boerhinger-Ingelheim, Amgen, Sandoz, Astra-Zeneca, Valeant, Takeda, Merck, Idera Pharmaceuticals and others have development plans for products to treat psoriasis.
POSIMIR and REMOXY ER, if approved, will compete with currently marketed oral opioids, transdermal opioids, local anesthetic patches, implantable and external infusion pumps which can be used for infusion of opioids and local anesthetics. Products of these types are marketed by Purdue Pharma, AbbVie, Janssen, Actavis, Medtronic, Endo, AstraZeneca, Pernix Therapeutics, Tricumed, Halyard Health, Cumberland Pharmaceuticals, Pacira, Acorda Therapeutics, Mallinckrodt, Inspirion Delivery Technologies, Mylan, Shire, Johnson & Johnson, Eli Lilly, Pfizer, Novartis, Egalet, Teva Pharmaceuticals, Collegium Pharmaceutical and others. Purdue Pharma, Sandoz, Actavis, Collegium Pharmaceutical, Pfizer, Elite Pharmaceuticals, Intellipharmaceutics, Egalet, Teva Pharmaceuticals and others have also announced regulatory approval or development plans for abuse deterrent opioid products.
RBP-7000, if approved, will compete with currently marketed or approved products by Johnson & Johnson, Eli Lilly, Otsuka, Alkermes, Merck, Allergan, Novartis, and others. Our ORADUR-ADHD product candidates, if approved, will compete with currently marketed or approved products by Shire, Johnson & Johnson, UCB, Novartis, Noven, Eli Lilly, Pfizer and others.
Numerous companies are applying significant resources and expertise to the problems of drug delivery and several of these are focusing or may focus on delivery of drugs to the intended site of action, including Alkermes, Pacira, Immune Pharmaceuticals, Innocoll, Nektar, Kimberly-Clark, Acorda Therapeutics, Flamel, Alexza, Mallinckrodt, Hospira, Pfizer, Cumberland Pharmaceuticals, Egalet, Acura, Elite Pharmaceuticals, Phosphagenics, Intellipharmaceutics, Collegium Pharmaceutical, Heron Therapeutics, Charleston Laboratories, Daiichi Sankyo and others.
Analysts Rating and Target price
Three equities research analysts have rated the stock with a hold rating and two have given a buy rating to the company. DURECT presently has a consensus rating of “Hold” and an average price target of $2.83.
- HC Wainwright upgraded shares of DURECT from a “neutral” rating to a “buy” rating and raised their target price for the stock from $1.50 to $3.50 in a research note on Tuesday, March 6th.
- ValuEngine upgraded shares of DURECT from a “sell” rating to a “hold” rating in a research note on Wednesday, March 7th.
Latest Quarter Financial position:
DURECT Corporation (DRRX) announced financial results for the three months ended March 31, 2018. The financial highlights as of March 31, 2018,
- Revenues: Total revenues were $3.5 million and net loss was $8.3 million for the three months ended March 31, 2018 as compared to total revenues of $4.6 million and net loss of $8.1 million for the three months ended March 31, 2017.
- Cash and Debt: Cash and investments were $44.3 million, compared to cash and investments of $36.9 million at December 31, 2017. Debt at March 31, 2018 was $19.8 million.
- Liquidity and financial flexibility: The Company had an accumulated deficit of $451.6 million as well as negative cash flows from operating activities. The Company historically has had negative cash flows from operating activities and expects its negative cash flows to continue.
- Inventories: The remaining carrying value of the excipient in the Company’s inventory was $68,000. In the event that management determines that the Company will not utilize all of these materials, there could be a potential write-off related to this inventory. If the Company is able to subsequently sell products made with raw materials that were previously written down, the Company will report an unusually high gross profit as there will be no associated cost of goods for these materials.
- Operating losses: They had an accumulated deficit of $451.6 million. The net loss was $8.3 million for the three months ended March 31, 2018. The net losses were $3.7 million and $34.5 million for the years ended December 31, 2017 and 2016, respectively. These losses have resulted primarily from costs incurred to research and develop our product candidates and to a lesser extent, from selling, general and administrative costs associated with our operations and product sales.
Stock Influences and Risk Factors:
- The Company will continue to require substantial funds to continue research and development, including clinical trials of its product candidates.
- They expect the research and development expenses in the near future to increase compared to the first quarter of 2018 as they experience higher research and development expenses related to DUR-928;
- Their current and potential competitors may succeed in obtaining patent protection or commercializing products before them.
Stock Chart:
Comments:
On Friday, June 1, 2018 DRRX shares were at $2.03 per share on traded volume of 599K shares. The current RSI (14) is 55.66
At $2.03, DRRX shares are trading below their 50 DMA of $2.09 and above their 200 DMA of $1.52.
DURECT has a 1-year low of $0.75 and a 1-year high of $2.55.
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