DURECT Corporation Announces First Quarter 2010 Financial Results

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® 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™-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 program.

• ELADUR (TRANSDUR™-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 application.  

• 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.

DURECT CORPORATION

STATEMENT OF OPERATIONS DATA

(in thousands, except per share amounts)

(unaudited)

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

March 31, 2010

As of

December 31, 2009 (1)

(unaudited)

ASSETS

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

LIABILITIES AND STOCKHOLDERS' EQUITY

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.