DURECT Corporation Reports First Quarter 2024 Financial Results and Business Update

Rhea-AI Summary

DURECT (Nasdaq: DRRX) announced its Q1 2024 financial results, showing $1.8 million in revenue and a net loss of $7.6 million, an improvement from the $12.0 million loss in Q1 2023. The company has $21.6 million in cash and investments, with a debt of $14.6 million as of March 31, 2024. The FDA's feedback supports a single pivotal Phase 3 trial for larsucosterol in alcohol-associated hepatitis (AH), with new Phase 3 protocol details expected later this year. DURECT will present Phase 2b AHFIRM trial data at the EASL Congress in June 2024. A webcast of the earnings call will be held today at 4:30 p.m. ET.

Positive

• FDA supports a single pivotal Phase 3 trial for larsucosterol in alcohol-associated hepatitis, potentially leading to NDA filing.
• Q1 2024 net loss improved to $7.6 million from $12.0 million in Q1 2023.
• Upcoming presentation of Phase 2b AHFIRM trial data at EASL Congress 2024 in June.
• Debt reduced to $14.6 million from $16.7 million in the previous quarter.

Negative

• Q1 2024 revenue decreased to $1.8 million from $2.1 million in Q1 2023.
• Cash and investments dropped to $21.6 million from $29.8 million at the end of 2023.

Financial Analyst

Overall, DURECT Corporation's first quarter financial results reflect a mixed picture for investors. **Revenue** for Q1 2024 at $1.8 million shows a **decline** from the $2.1 million reported in the same period last year. However, there is a **noteworthy improvement** in the net loss, which stands at $7.6 million compared to $12.0 million in Q1 2023. This indicates that while revenue generation has slightly dipped, the company has managed to significantly reduce its expenses or improve operational efficiency.

It's essential to scrutinize the **cash balance**. The current cash, cash equivalents and investments total $21.6 million, down from $29.8 million at the end of 2023. This decrease in cash might raise concerns about the company’s ability to finance its operations without additional funding or revenue growth. On the debt side, there is a **reduction**, with total debt at $14.6 million compared to $16.7 million at the end of 2023, which is a positive indicator of the company’s efforts to manage its liabilities.

For retail investors, the reduction in net loss and debt are positive signs, but the decline in revenue and cash reserve requires close monitoring. The company's ability to execute its clinical trials and bring products to market will be critical in the coming quarters. Investors should understand that biopharmaceutical companies often experience fluctuations in financial metrics based on their research and development cycles.

Medical Research Analyst

DURECT Corporation's progress with larsucosterol is a significant development in the treatment landscape for **alcohol-associated hepatitis (AH)**. The **FDA’s support** for a single pivotal Phase 3 trial is a notable milestone. This streamlined approach could potentially accelerate the time to market, subject to positive trial outcomes. The previous Phase 2b AHFIRM trial has provided a foundation and incorporating FDA feedback should enhance the design of the upcoming Phase 3 trial.

Retail investors should recognize that **FDA approvals** are often subject to rigorous scrutiny and timelines and the success of these trials is not guaranteed. The planned presentation of Phase 2b data at the **EASL Congress 2024** further adds credibility and visibility to the drug's potential, allowing for peer review and independent validation of results.

In the short term, this update is promising, showing progression in the clinical pipeline. However, the long-term value hinges on the successful execution of the Phase 3 trial and subsequent regulatory approvals. Understanding the **clinical trial phases** can be critical: Phase 3 is typically the last step before seeking market approval, involving larger patient populations to confirm efficacy and monitor adverse reactions.

-         FDA Feedback Supports Single Pivotal Trial for Approval of Larsucosterol in Alcohol-Associated Hepatitis

-         Webcast of Earnings Call Today, May 13th at 4:30 p.m. ET

CUPERTINO, Calif., May 13, 2024 /PRNewswire/ -- DURECT Corporation (Nasdaq: DRRX) today announced financial results for the three months ended March 31, 2024 and provided a business update.

"We are pleased that the feedback from the U.S. Food and Drug Administration (FDA) supports the advancement of larsucosterol into a single pivotal Phase 3 clinical trial which, if successful, may serve as the basis for a New Drug Application (NDA) in alcohol-associated hepatitis (AH)," stated James E. Brown, D.V.M., President and CEO of DURECT.  "We are in the process of designing the registrational Phase 3 trial incorporating the FDA's comments and insights gained from our Phase 2b AHFIRM trial.  In addition, we are excited about the upcoming presentation at the European Association for the Study of the Liver (EASL) Congress 2024, which will be the first presentation of the AHFIRM data at a medical conference.  We expect to provide additional details on our planned Phase 3 protocol and present new analyses from AHFIRM later in the year." 

Business Update:

• During a Type C meeting with the FDA, DURECT received feedback on the recommendations for a Phase 3 clinical trial for larsucosterol in AH that could support a potential NDA filing. DURECT is in the process of designing its planned Phase 3 clinical trial based on the FDA feedback and the results from its completed Phase 2b AHFIRM clinical trial.
• DURECT announced the acceptance of a late-breaking oral presentation at the European Association for the Study of the Liver (EASL) Congress 2024 to take place June 5-8, 2024 in Milan, Italy. The presentation will feature data from the Company's Phase 2b AHFIRM trial, which evaluated the safety and efficacy of larsucosterol as a treatment for patients with severe AH.

Financial Highlights for Q1 2024:

• Total revenues were $1.8 million and net loss was $7.6 million for the three months ended March 31, 2024 compared to total revenues of $2.1 million and net loss of $12.0 million for the three months ended March 31, 2023.
• Cash, cash equivalents and investments were $21.6 million at March 31, 2024, compared to $29.8 million at December 31, 2023. Debt at March 31, 2024 was $14.6 million, compared to $16.7 million at December 31, 2023.

Earnings Conference Call
We will host a conference call and webcast today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time to discuss the first quarter 2024 results and provide a corporate update:

Monday, May 13 @ 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time

Toll Free:	1-877-407-0790
International:	1-201-689-8560
Conference ID:	13746111
Webcast:	https://callme.viavid.com/viavid/?callme=true&passcode=13740526&h=true&info=company-email&r=true&B=6

A live audio webcast of the presentation will be also available by accessing DURECT's homepage at www.durect.com on the "Events" page, under the "Investors" section. If you are unable to participate during the live webcast, the call will be archived on DURECT's website under the same section, following the completion of the call.

About the AHFIRM Trial
AHFIRM was a Phase 2b randomized, double-blind, placebo-controlled, international, multi-center study conducted in subjects with severe alcohol-associated hepatitis (AH) to evaluate the saFety and effIcacy of laRsucosterol treatMent (AHFIRM). The study was comprised of three arms and enrolled 307 patients, with approximately 100 patients in each arm: (1) Placebo, which consists of standard of care, with or without methylprednisolone capsules at the investigators' discretion; (2) larsucosterol (30 mg); and (3) larsucosterol (90 mg). Patients in the larsucosterol arms received the same supportive care without steroids. The primary outcome measure was the 90-Day incidence of mortality or liver transplantation for patients treated with larsucosterol compared to those treated with placebo, and the key secondary endpoint was 90-Day survival. The Company enrolled patients at clinical trial sites across the U.S., EU, U.K., and Australia. In November 2023, the Company announced topline data for the AHFIRM Trial. Reflecting the life-threatening nature of AH and the lack of therapeutic options, the U.S. Food and Drug Administration (FDA) has granted larsucosterol Fast Track Designation for the treatment of AH. For more information, refer to ClinicalTrials.gov Identifier: NCT04563026.

About Alcohol-associated Hepatitis (AH)
AH is an acute form of alcohol-associated liver disease (ALD) associated with long-term heavy alcohol intake, often following a recent period of increased consumption (i.e., a binge). AH is typically characterized by severe inflammation and liver cell damage, potentially leading to life-threatening complications including liver failure, acute kidney injury and multi-organ failure. There are no FDA approved therapies for AH, and a retrospective analysis of 77 studies published between 1971 and 2016, which included data from 8,184 patients, showed the overall mortality from AH was 26% at 28 days, 29% at 90 days and 44% at 180 days. A subsequent global study published in December 2021, which included 85 tertiary centers in 11 countries across 3 continents, prospectively enrolled 2,581 AH patients with a median Model of End-Stage Liver Disease (MELD) score of 23.5, reported mortality at 28 and 90 days of approximately 20% and 31%, respectively. Stopping alcohol consumption is necessary, but frequently not sufficient for recovery in many moderate (defined as MELD scores of 11-20) and severe (defined as MELD scores >20) patients, and therapies that reduce liver inflammation, such as corticosteroids, are limited by contraindications, have not been shown to improve survival at 90 days or one year, and have demonstrated an increased risk of infection. While liver transplantation is becoming more common for ALD patients, including AH patients, the total number of such transplants is still relatively small, and limited by organ availability.  Average charges for a liver transplant exceed $875,000, and patients require lifelong immunosuppressive therapy to prevent organ rejection.

About Larsucosterol
Larsucosterol is an endogenous sulfated oxysterol and an epigenetic modulator. Epigenetic regulators are compounds that regulate patterns of gene expression without modifying the DNA sequence. DNA hypermethylation, an example of epigenetic dysregulation, results in transcriptomic reprogramming and cellular dysfunction, and has been reported in many acute (e.g., AH) and chronic diseases (e.g., MASH). As an inhibitor of DNA methyltransferases (DNMT1, DNMT3a and 3b), larsucosterol inhibits DNA methylation, which subsequently modulates expression of genes that are involved in cell signaling pathways associated with stress responses, cell death and survival, and lipid biosynthesis. This may ultimately lead to improved cell survival, reduced inflammation, and decreased lipotoxicity. As an epigenetic modulator, the proposed mechanism of action provides further scientific rationale for developing larsucosterol for the treatment of acute organ injury and certain chronic diseases.

About DURECT Corporation
DURECT is a late-stage biopharmaceutical company pioneering the development of epigenetic therapies that target dysregulated DNA methylation to transform the treatment of serious and life-threatening conditions, including acute organ injury and cancer. Larsucosterol, DURECT's lead drug candidate, binds to and inhibits the activity of DNA methyltransferases (DNMTs), epigenetic enzymes that are elevated and associated with hypermethylation found in alcohol-associated hepatitis (AH) patients. Larsucosterol is in clinical development for the potential treatment of AH, for which FDA has granted a Fast Track Designation; metabolic dysfunction-associated steatohepatitis (MASH) is also being explored. In addition, POSIMIR^® (bupivacaine solution) for infiltration use, a non-opioid analgesic utilizing the innovative SABER^® platform technology, is FDA-approved and is exclusively licensed to Innocoll Pharmaceuticals for sale and distribution in the United States. For more information about DURECT, please visit www.durect.com and follow us on X (formerly Twitter) at https://x.com/DURECTCorp.

DURECT Forward-Looking Statements
This press release contains forward-looking statements, including statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, relating to: the potential for a single Phase 3 trial of larsucosterol, if successful, to support an NDA filing, and the potential uses and benefits of laruscosterol in patients with AH and potentially other indications. Actual results may differ materially from those contained in the forward-looking statements contained in this press release, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from those projected include, among other things, the risk that future clinical trials of larsucosterol are delayed or do not confirm the results from subset analyses of the AHFIRM trial, including geographic or other segmentation, or of earlier clinical or pre-clinical trials, or do not demonstrate the safety or efficacy of larsucosterol in a statistically significant manner; the risk that the FDA or other government agencies may require additional clinical trials for larsucosterol before approving larsucosterol for the treatment of AH, and that larsucosterol may never be approved; risks that Innocoll may not commercialize POSIMIR successfully; and risks related to the sufficiency of our cash resources, our anticipated capital requirements, our need or desire for additional financing, our ability to continue to meet the minimum bid price for continued listing on Nasdaq, our ability to obtain capital to fund our operations and expenses, and our ability to continue to operate as a going concern. Further information regarding these and other risks is included in DURECT's most recent Securities and Exchange Commission (SEC) filings, including its annual report on Form 10-K for the year ended December 31, 2023 and quarterly report on Form 10-Q for the quarter ended March 31, 2024, when filed, under the heading "Risk Factors."  These reports are available on our website www.durect.com under the "Investors" tab and on the SEC's website at www.sec.gov. All information provided in this press release and in the attachments is based on information available to DURECT as of the date hereof, and DURECT assumes no obligation to update this information as a result of future events or developments, except as required by law.

NOTE: POSIMIR^® is a trademark of Innocoll Pharmaceuticals, Ltd. in the U.S. and a trademark of DURECT Corporation outside of the U.S. SABER^® is a trademark of DURECT Corporation. Other referenced trademarks belong to their respective owners. Larsucosterol is an investigational drug candidate under development and has not been approved for commercialization by the U.S. Food and Drug Administration or other health authorities for any indication.

 

DURECT CORPORATION CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except per share amounts) (Unaudited)
			Three months ended
			March 31
			2024		2023
Collaborative research and development and other revenue			$              496		$              643
Product revenue, net			1,331		1,411
	Total revenues		1,827		2,054
Operating expenses:
	Cost of product revenues		289		388
	Research and development		4,119		8,593
	Selling, general and administrative		3,136		4,095
Total operating expenses			7,544		13,076
Loss from operations			(5,717)		(11,022)
Other income (expense):
	Interest and other income		321		517
	Interest and other expenses		(529)		(726)
	Change in fair value of warrant liabilities		(1,718)		2,477
	Issuance cost for warrants		-		(1,200)
	Loss on issuance of warrants		-		(2,033)
Other income (expense), net			(1,926)		(965)
Net loss			(7,643)		(11,987)
Net change in unrealized gain on available-for-sale securities, net of reclassification adjustments and taxes			4		6
Total comprehensive loss			$          (7,639)		$        (11,981)
Net loss per share
	Basic		$           (0.25)		$           (0.50)
	Diluted		$           (0.25)		$           (0.52)
Weighted-average shares used in computing net loss per share
	Basic		30,637		23,767
	Diluted		30,637		23,940

 

DURECT CORPORATION CONDENSED BALANCE SHEETS (in thousands) (unaudited)
		As of		As of
		March 31, 2024		December 31, 2023 (1)
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$                              19,252		$                              28,400
Short-term Investments		2,187		1,280
Accounts receivable, net		1,020		1,261
Inventories, net		2,398		2,219
Prepaid expenses and other current assets		1,228		1,511
Total current assets		26,085		34,671
Property and equipment, net		58		91
Operating lease right-of-use assets		3,631		3,980
Goodwill		6,169		6,169
Long-term restricted Investments		150		150
Other long-term assets		128		128
Total assets		$                              36,221		$                              45,189
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$                                  782		$                               1,777
Accrued liabilities		5,105		5,966
Term loan, current portion, net		14,612		16,663
Operating lease liabilities, current portion		1,298		1,381
Warrant liabilities		2,942		1,224
Total current liabilities		24,739		27,011
Operating lease liabilities, noncurrent portion		2,466		2,702
Other long-term liabilities		716		693
Stockholders' equity		8,300		14,783
Total liabilities and stockholders' equity		$                              36,221		$                              45,189
(1)  Derived from audited financial statements.

 

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SOURCE DURECT Corporation

FAQ

What were DURECT's Q1 2024 revenues and net loss?

DURECT's Q1 2024 revenues were $1.8 million with a net loss of $7.6 million.

How much cash and investments does DURECT have as of March 31, 2024?

DURECT had $21.6 million in cash, cash equivalents, and investments as of March 31, 2024.

What is the FDA's feedback on DURECT's larsucosterol?

The FDA supports a single pivotal Phase 3 trial for larsucosterol in alcohol-associated hepatitis, which could lead to a New Drug Application (NDA) filing if successful.

When will DURECT present the Phase 2b AHFIRM trial data?

DURECT will present the Phase 2b AHFIRM trial data at the EASL Congress 2024 from June 5-8.

What are DURECT's debt levels as of March 31, 2024?

DURECT's debt was $14.6 million as of March 31, 2024.