DURECT Q4 2024 Earnings Report

DURECT EPS Results

• Actual EPS: -$0.06
• Consensus EPS: $0.06
• Beat/Miss: Missed by -$0.12
• One Year Ago EPS: N/A

DURECT Revenue Results

• Actual Revenue: $2.30 million
• Expected Revenue: $6.91 million
• Beat/Miss: Missed by -$4.61 million
• YoY Revenue Growth: N/A

DURECT Announcement Details

• Quarter: Q4 2024
• Date: 3/26/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, March 26, 2025
• Conference Call Time: 4:30PM ET

DURECT (NASDAQ:DRRX), a biopharmaceutical company, develops medicines based on its epigenetic regulator program. The company's lead product larsucosterol (DUR-928), an endogenous, orally bioavailable small molecule that is in Phase IIb clinical trial to play a regulatory role in lipid metabolism, stress and inflammatory responses, and cell death and survival to treat alcohol-associated hepatitis, as well as completed Phase Ib clinical trial to treat patients with nonalcoholic steatohepatitis. It also offers ALZET product line that consists of osmotic pumps and accessories used for research in mice, rats, and other laboratory animals. In addition, the company offers POSIMIR, a post-surgical pain product to deliver bupivacaine over three days in adults; and Methydur to treat attention deficit hyperactivity disorder. It markets and sells its ALZET lines through direct sales force in the United States, as well as through a network of distributors in other countries. The company has strategic collaboration and other agreements with Virginia Commonwealth University Intellectual Property Foundation; Indivior UK Ltd.; and Innocoll Pharmaceuticals Limited. DURECT Corporation was incorporated in 1998 and is headquartered in Cupertino, California.

DURECT Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Greetings, and welcome to the Direct Corporation Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Tim Papp, Chief Financial Officer.

[Timothy Papp, CFO & Secretary at DURECT]

Good afternoon, and welcome to Direct Corporation's fourth quarter twenty twenty four earnings conference call. This is Tim Papp, Chief Financial Officer of Direct. Before we begin, I would like to remind you of our safe harbor statement. During the course of this call, we may make forward looking statements regarding Durex products and development, expected product benefits, our development plans, future clinical trials or projected financial results. These forward looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward looking statements.

[Timothy Papp, CFO & Secretary at DURECT]

Further information regarding these and other risks can be found in our SEC filings, including our 10 ks and 10 Qs under the heading Risk Factors.

[Timothy Papp, CFO & Secretary at DURECT]

To begin, I would like to review our fourth quarter and full year '20 '20 '4 financial results. The following financial information relates solely to our continuing operations and therefore does not include the operations of our ALLZET product line, which we sold in the fourth quarter of twenty twenty four. Total revenues in 2024 were $2,000,000 compared with $2,600,000 in 2023 and $500,000 for the fourth quarter of twenty twenty four compared to $900,000 for the prior year. 2024 revenues were lower due to lower earn out revenue from Indivior, lower revenue recognized from feasibility agreements with other companies and lower sales of excipients. R and D expense was $10,400,000 in 2024 as compared to $29,400,000 for the prior year and $1,900,000 for the fourth quarter compared with $5,600,000 for the prior year 2023.

[Timothy Papp, CFO & Secretary at DURECT]

The decreases were primarily due to lower clinical trial related expenses following completion of the AFFIRM trial. We also experienced lower contract manufacturing expenses and other external expenses as well as lower employee related costs. SG and A expenses were $10,000,000 in 2024 as compared to $12,700,000 for the prior year and 2,000,000 for the fourth quarter of twenty twenty four compared with $2,200,000 for the prior year. These decreases were primarily due to lower employee expenses as well as lower consulting, patent and audit related expenses. As of the end of twenty twenty four, we had cash and investments of $12,000,000 as compared to $29,800,000 at 12/31/2023.

[Timothy Papp, CFO & Secretary at DURECT]

We believe our cash on hand is sufficient to fund operations through the third quarter of twenty twenty five. As I previously mentioned, we completed the sale of the Allstate product line during the fourth quarter of twenty twenty four. We used a portion of the proceeds to repay the remainder of our term loan and are now debt free. This transaction both strengthened our balance sheet and was consistent with our corporate strategy of streamlining our operations to focus on developing larcutosterol for alcohol associated hepatitis. We are continuing to explore all options for funding the clinical development of LARSUKOSTERIL, including strategic partnerships and financing through the capital markets.

[Timothy Papp, CFO & Secretary at DURECT]

Now, I would like to turn the call over to Jim for a business update.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Thank you, Jim, and hello, everyone. Thank you for joining us today for our fourth quarter twenty twenty four update. I'd like to use our call today to provide some context for the rare opportunity we have here at Direct. Our lead asset, LarcicoSterol for the treatment of alcohol associated hepatitis has shown life saving potential for a disease with no approved therapy. About thirty of the one hundred and sixty four thousand U.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

S. Patients hospitalized due to Ah will die within ninety days of hospitalization. This means Ah is responsible for greater than forty thousand deaths each year in The U. S, more than one hundred people each day. This is roughly equivalent to the number of deaths from breast cancer or car accidents, but the awareness of this disease remains limited.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

We believe we have a potential solution that can save a large portion of these patients. In our Phase 2b trial, we saw nearly sixty percent reductions in mortality with both doses of larcucosterol compared with placebo in the two thirty two U. S. Patients. This represents approximately seventy five percent of the total patients enrolled in this study.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

These strong results have garnered significant attention in the medical and scientific community highlighted by the FDA granting LASUKOSTERAL breakthrough therapy designation, the New England Journal of Medicine's publication of our Phase 2b results in NEJM evidence and the late breaker presentation of our top line data at EASL last year. We are committed to developing larcukosterol to provide hope for our Ah patients, for their families and loved ones and for the medical professionals who have no effective treatments to offer these patients. Our sole focus as a company is to secure the funding to complete our Phase three trial, whether through financing or business development. With such funding, we are ready to initiate our Phase three trial and once underway, we expect to be able to report top line data in approximately two years. We firmly believe that larcicosterol represents the best hope for breakthrough in the treatment of Ah and look forward to the opportunity to demonstrate this in our Phase three trial.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

We would now like to take any questions that you may have.

[Operator]

And our first question comes from the line of Francois Bourgeault with Oppenheimer and Company. Please proceed.

[François Brisebois, Managing Director, Senior Biotechnology Research Analyst at Oppenheimer & Co. Inc.]

All right. Thanks guys. Just a couple of quick ones here. I was just wondering if you have an idea or you can share how much you think this trial will cost you? And then I'll have a

[François Brisebois, Managing Director, Senior Biotechnology Research Analyst at Oppenheimer & Co. Inc.]

follow-up.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Sure. Yes, I think right now we're estimating it would be about $20,000,000 There are some things that we are considering that might take it a little bit under that, but that's approximately what it would cost.

[François Brisebois, Managing Director, Senior Biotechnology Research Analyst at Oppenheimer & Co. Inc.]

And two years to data, is that what you're going to say?

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Right, right.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Yes.

[François Brisebois, Managing Director, Senior Biotechnology Research Analyst at Oppenheimer & Co. Inc.]

Okay, great. And then is there any just a quick chance for you to kind of elaborate a little bit more maybe on the variations in time from hospitalization to first dose that were highlighted in kind of the recent in the article and New England Journal evidence here. So just anything there that kind of totally makes sense where the issue might have been ex U. S. Here.

[François Brisebois, Managing Director, Senior Biotechnology Research Analyst at Oppenheimer & Co. Inc.]

And that's it for me.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Yes. It does totally make sense. It makes intuitive sense because this is an acute assault based on chronic conditioning of the liver. So I kind of think about it that it's almost like a heart attack for the liver. So it's hepatitis, right, it's acute inflammation of the liver.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

And so time to intervention is very important. And we certainly learned that in this trial. We're fortunate on the call to have both Norman and Wei Chi and I think I'll ask both of them in their turn to kind of speak to that and also how we're looking to address that in the Phase three. So maybe, Norman, you can start and then Wei Chee can follow on.

[Norman Sussman, Chief Medical Officer at DURECT]

Hi, Frank. So previously there's been no active there's been no effective therapy. And so time was never a factor and steroids, time to dosing didn't make any difference. But if you have an effective therapy in an acute evolving disease, it really makes sense that it would be effective. And you saw the graphs in the New England Journal article.

[Norman Sussman, Chief Medical Officer at DURECT]

They're quite impressive. There's clearly appears to be an effect of early dosing or dosing within the first, in this case, nine days.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Yes. Wei Qi, would you want to add anything to that?

[Weiqi Lin, Executive VP of Research & Development and Principal Scientist at DURECT]

I think Jim and Norman have both answered very well about this time to treat importance of that. And then I think it's certainly critical for to control the time to treat in this particular patient population. But I just want to add on top of Jim and Norman is that time to treat indeed contributes a large part to the differences between U. S. And ex U.

[Weiqi Lin, Executive VP of Research & Development and Principal Scientist at DURECT]

S. Patient population, what the difference we saw in the results. But it's just one of those. But although it's a very important factor, but one of the multiple factors. So that's what I would like to add.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Yes, I think that's an important point. And in The U. S. Typically patients are treated within four days or so and in the poorest performing region, the Franco Belgium region, it was two weeks. So there's a substantial difference if you've got an acute circumstance to wait two weeks before you do much.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

And so we're really excited about the what this might mean for our Phase three because we intend to dose everyone within nine days or so in the Phase three trial, which will eliminate the longer term duration. In fact, most of the patients will probably treated very quickly based on what we've learned and anticipate that we should even possibly have a stronger signal. That certainly was the case when we looked at these data.

[François Brisebois, Managing Director, Senior Biotechnology Research Analyst at Oppenheimer & Co. Inc.]

Thank you.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Thanks.

[Operator]

The next question comes from the line of Carl Burns with Northland Capital Markets. Please proceed.

[Carl Byrnes, Managing Director at Northland Capital Markets]

Thanks for the question. I'm wondering if you can share any updates on potential strategic partnerships or business development discussions that you might be having that would support the Phase three study, whether it's a co development or regional licensing or other non dilutive opportunities? Thanks.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Yes, certainly, we've been in that process and we continue in that process, but I think I'll let maybe Tim, since you're leading the effort, why don't you maybe have a comment here?

[Timothy Papp, CFO & Secretary at DURECT]

Yes. Carl, we certainly have ongoing efforts on to explore the full range of possibilities to take this product forward. As you can appreciate, I'm sure we can't comment on specifics or give a sense of what the timing would be, but we have been very active over the past couple of quarters certainly in having discussions and we're optimistic that we'll be able to find a solution that despite the challenges of the capital markets these days.

[Carl Byrnes, Managing Director at Northland Capital Markets]

Understood. Thanks so much.

[Operator]

And the next question comes from the line of Ed Parsley with H. C. Wainwright. Please proceed.

[Thomas Yip, Research Associate at H.C. Wainwright & Co., LLC]

Hi, this is Tom Yip asking a couple of questions for Ed. Thank you so much for taking my questions. So first question, hi, Jim. Given the statistical significance ninety day mortality reduction observed in U. S.

[Thomas Yip, Research Associate at H.C. Wainwright & Co., LLC]

Patients in the Phase IIVIA firm study, is there a possibility to seek funding for a smaller, but more rigorous Phase IIbA study to generate new data to confirm less adversarial under a tighter setting in The U. S. Market?

[James Brown, Co-Founder, CEO, President & Director at DURECT]

It's an interesting question. We actually what we're looking at right now with our Phase three is a very tight study. What we're looking at here is we're taking advantage of the fact that this trial can be conducted entirely in The U. S. Where the healthcare system is more uniform than what one sees the disease is diagnosed and patients are presented in a more timely manner as they are in The U.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

S. Versus ex U. S. So that's the first thing is going

[James Brown, Co-Founder, CEO, President & Director at DURECT]

to be U. S. With that, the next piece we're going to

[James Brown, Co-Founder, CEO, President & Director at DURECT]

do is we're going to, we're going to centralize by or excuse me, we're going to randomize by site versus central randomization and that will hopefully eliminate any regional biases that we certainly saw with the ex U. S. Group. And we didn't see nearly as much of that in The U. S.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

But when we have now randomization. So if you have a site in New York, let's say, you're going to receive a kit of four, two will be placebo, two will be active. And when you go burn through that, then you'll get another kit of four. And so we'll keep the randomization balanced across the various sites. And then lastly, we're going to control that time to dose that we spoke about earlier, and that's going to be very important.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

So everyone who's in the trial will be dosed within nine or ten days or earlier, probably much earlier based since it's based in U. S. But to conduct another Phase IIb trial, you'd have to have about 200 patients to show reasonable signal. And by the time you've done that, you've done the Phase III. And so I think at this point, it's faster and more cost effective for us simply to do a Phase III trial rather than an underpowered Phase IIb, what might still leave you guessing.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

I don't know.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

I mean, Norman, do you have any thoughts on that?

[Norman Sussman, Chief Medical Officer at DURECT]

Well, what I would say is the other

[Norman Sussman, Chief Medical Officer at DURECT]

trial, first

[Norman Sussman, Chief Medical Officer at DURECT]

of all, was a three inpatient trial, but there were two doses. So we really had two active arms and they gave nearly identical results.

[Norman Sussman, Chief Medical Officer at DURECT]

So in my mind, that was the

[Norman Sussman, Chief Medical Officer at DURECT]

equivalent of two Phase II trials. Also with FDA's enthusiasm for the product and what they're saying, if you have a good result in another trial, we would consider that sufficient. I don't know why we wouldn't just move to the Phase III trial. It is, as Jim says, a very compact and streamlined trial.

[Thomas Yip, Research Associate at H.C. Wainwright & Co., LLC]

Got it. Yes, understood the rationale there. And then what about opportunities, would there be opportunity for non dilutive funding in six U.

[Thomas Yip, Research Associate at H.C. Wainwright & Co., LLC]

S.

[Thomas Yip, Research Associate at H.C. Wainwright & Co., LLC]

Countries just really to generate new data perhaps in a country you mentioned trial count outs in countries with rigorous control in place, would that be possible?

[James Brown, Co-Founder, CEO, President & Director at DURECT]

We do some work outside The U. S. Certainly, we could. There are obviously numerous other indications one could pursue as well, but what we're doing right now is just focusing entirely and the entirety of our effort on Ah. But the possibility of doing a regional study with an ex U.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

S. Partner is certainly something that we would consider. So that might indeed be there are certain markets that like to have that for sure that I can see it in their population.

[Norman Sussman, Chief Medical Officer at DURECT]

I see. Thank you again for the kind of questions.

[Operator]

Thank you. Ladies and gentlemen, there are no further questions at this time. I would like to turn the call back to Jim Brown for closing remarks.

[James Brown, Co-Founder, CEO, President & Director at DURECT]

Thank you. And we thank you all for your time today and look forward to catching up. If you have any further questions, please reach out. Thank you all and take care.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Enjoy the rest of

Participants

Executives

• Timothy Papp, CFO & Secretary
• James Brown, Co-Founder, CEO, President & Director
• Norman Sussman, Chief Medical Officer
• Weiqi Lin, Executive VP of Research & Development and Principal Scientist

Analysts

• François Brisebois, Managing Director, Senior Biotechnology Research Analyst at Oppenheimer & Co. Inc.
• Carl Byrnes, Managing Director at Northland Capital Markets
• Thomas Yip, Research Associate at H.C. Wainwright & Co., LLC