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DURECT Corporation Announces Fourth Quarter and Year End 2009 Financial Results

CUPERTINO, Calif., Feb. 24 /PRNewswire-FirstCall/ -- DURECT Corporation (Nasdaq: DRRX) announced today financial results for the three months and year ended December 31, 2009. Total revenues were $4.9 million for the three months ended December 31, 2009 and $7.7 million for the three months ended December 31, 2008.  Net loss for the three months ended December 31, 2009 was $9.0 million, compared to a net loss of $18.4 million for the same period in 2008 which included a $13.5 million non-cash write-down associated with a research and development program (Chronogesic®) that we are no longer actively pursuing.    


For the fiscal year ended December 31, 2009, total revenues were $24.3 million, compared to $27.1 million for the same period in 2008.  Net loss for the year ended December 31, 2009 was $30.7 million, compared to a net loss of $43.9 million for the same period in 2008 (including the $13.5 million write-down described above).

At December 31, 2009, we had cash and investments of $41.6 million, compared to cash and investments of $52.7 million at December 31, 2008.    

"We advanced our late stage pipeline in 2009, most notably through the recent initiation of BESST, our pivotal U.S. Phase III clinical study for POSIDUR™, and through work by King Pharmaceuticals to prepare the NDA resubmission for REMOXY™," stated James E. Brown, D.V.M., President and CEO of DURECT.  "Our goals for 2010 include enrolling patients in POSIDUR's Phase III program, assisting King with aspects of the REMOXY NDA resubmission, advancing our other development programs, and establishing favorable licensing collaborations."

Highlights for DURECT in Fiscal Year 2009 and Major Potential Milestones over the Next 12-18 Months:

    -- 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 it will resubmit the NDA for REMOXY intended to
       address all FDA comments in the Complete Response Letter in 2010.
       During the third quarter of 2009, we entered into an exclusive long
       term excipient supply agreement with King. This agreement stipulates
       the terms and conditions under which we will supply to King two key
       excipients used in the manufacture of REMOXY, based on DURECT's
       manufacturing cost plus a specified percentage mark-up.  
       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
       December 2009, we reported positive top-line results from our Phase IIb
       clinical study in shoulder surgery of 60 patients.  In addition,
       Nycomed continued enrollment in a Phase IIb study in hysterectomy
       patients and a Phase IIb study in shoulder surgery patients.  
       In January 2010, we announced that we had commenced our U.S. pivotal
       Phase III clinical study known as BESST (Bupivacaine Effectiveness and
       Safety in SABER(TM) Trial).  We expect to complete enrollment of BESST,
       comprising approximately 300 patients, in the first half of 2011.  In
       Europe, we expect to have top-line data in 2010 from the Phase IIb
       hysterectomy study being conducted by Nycomed and, depending on the
       pace of enrollment, potentially from the Phase IIb study in shoulder
       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 active
       discussions with multiple potential partners regarding licensing of 
       the U.S./Canadian and Japanese rights to this program.
    -- 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.  During 2009, we and King focused 
       on details associated with next steps in the clinical program, a Phase
       IIb study which King expects to initiate in the first half of 2010.  
       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 active discussions with multiple potential 
       partners regarding licensing development and commercialization rights
       to this program to which we hold worldwide rights.  Pending licensing
       of this drug candidate or other programs, the next step would be the
       commencement of Phase III for this drug candidate.
       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 August 2009, we signed a development and
       license agreement with Orient Pharma related to a drug candidate based
       on our ORADUR Technology and one specified active pharmaceutical
       ingredient for the treatment of attention deficit hyperactivity
       disorder (ADHD). Under this agreement, the parties will collaborate 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 will be responsible for formulation and study design of the 
       pre-defined clinical program, which Orient Pharma will fund and
       execute. We expect to commence Phase I studies during 2010 with this
    -- Feasibility Projects.  During 2009, we signed multiple new feasibility
       projects with pharmaceutical and biotechnology companies whereby we
       will apply our SABER and DURIN™ technologies to both small molecule 
       and biologic agents of interest to our collaborators.  We undertake
       these feasibility projects as a means of demonstrating that our
       technologies can achieve the drug delivery objectives set forth by our
       collaborators and are worthy of further development.  During 2010, we
       anticipate establishing and commencing additional feasibility projects
       with biotechnology and pharmaceutical company collaborators utilizing
       our drug delivery technologies.  
    -- Financial Guidance.  Our net cash consumption is heavily influenced by
       the timing and structure of new corporate collaborations, as well as
       the achievement of milestones under existing collaborations.  While we
       anticipate entering into new collaborations in 2010 and beyond,
       assuming no new collaborations, no milestone payments and aggressive
       funding of our R&D programs, many of which are in clinical development,
       we anticipate our net cash consumption in 2010 will be approximately
       $23-27 million.
    -- Business Development Activities.  We have multiple late stage programs
       that may potentially be partnered over the next 12-18 months.  These
       include TRANSDUR-Sufentanil worldwide rights, POSIDUR for the United
       States/Canada and Japan, as well as various internal programs which we
       have not described publicly in detail.

Earnings Conference Call

A live audio webcast of a conference call to discuss 2009 results will be broadcast live over the internet at 4:30 p.m. Eastern Time on February 24 and is available by accessing DURECT's homepage at 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

NOTE: POSIDUR™, SABER™, ORADUR®, TRANSDUR™, ELADUR™, and DURIN™ 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 our anticipated net cash consumption, the anticipated resubmission of the REMOXY NDA, anticipated clinical trials (including timing and results) for POSIDUR, TRANSDUR-Sufentanil, ELADUR, ORADUR-ADHD and our other drug candidates, the potential benefits and uses of our drug candidates and potential collaborations with third parties 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, DURECT's (and that of its third party collaborators where applicable) difficulty or failure to obtain approvals from regulatory agencies with respect to its development activities and products,

design, enroll, conduct and complete clinical trials, complete the design, development, and manufacturing process development of the referenced product candidates, consummate collaborative agreements relating to our product candidates and technologies, manufacture and commercialize the referenced product candidates, obtain marketplace acceptance of the referenced product candidates, avoid infringing patents held by other parties and secure and defend patents of our own, and manage and obtain capital to fund its growth, operations and expenses. Further information regarding these and other risks is included in DURECT's Form 10-Q on November 2, 2009 under the heading "Risk Factors."

                           DURECT CORPORATION                       
                   CONDENSED STATEMENTS OF OPERATIONS               
                (in thousands, except per share amounts)            
                              Three months ended     Year ended     
                              ------------------     ----------     
                                 December 31,       December 31,    
                                --------------     --------------   
                                2009      2008      2009      2008 
                                ----      ----      ----      ---- 
    Collaborative research                                          
     and development and                                            
     other revenue             $2,802    $5,859   $12,180   $18,336 
    Product revenue, net        2,076     1,867    12,113     8,765 
                                -----     -----    ------     ----- 
      Total revenues            4,878     7,726    24,293    27,101 
                                -----     -----    ------    ------ 
    Operating expenses:                                             
      Cost of revenues (1)        848       691     5,343     3,365 
      Research and                                                  
       development (1)          9,546     8,456    34,913    39,411 
      Selling, general and                                          
       administrative (1)       3,548     3,697    15,136    15,510 
      Write down of deferred                                        
       royalties and                                                
       commercial rights            -    13,480         -    13,480 
                                  ---    ------       ---    ------ 
      Total operating                                               
       expenses                13,942    26,324    55,392    71,766 
                               ------    ------    ------    ------ 
    Loss from operations       (9,064)  (18,598)  (31,099)  (44,665)
    Other income (expense):                                         
      Interest and other                                            
       income                      53       262       420     1,547 
      Interest and other                                            
       expense                     (5)      (16)      (36)     (789)
                                  ---       ---       ---      ---- 
    Net other income               48       246       384       758 
                              -------  --------  --------  -------- 
    Net loss                  $(9,016) $(18,352) $(30,715) $(43,907)
                              =======  ========  ========  ======== 
    Net loss per share,                                             
     basic and diluted         $(0.10)   $(0.22)   $(0.37)   $(0.56)
                               ======    ======    ======    ====== 
    Shares used in computing                                        
     basic and diluted net                                          
     loss per share            86,720    81,927    83,427    78,332 
                               ======    ======    ======    ====== 
    (1) Includes stock-based
         compensation related
         to the following: 
    Cost of revenues              $96       $25      $382      $135 
    Research and development    1,104     1,308     6,377     5,575 
    Selling, general and                                            
     administrative               656       722     3,476     2,790 
                                  ---       ---     -----     ----- 
      Total stock-based                                             
       compensation            $1,856    $2,055   $10,235    $8,500 
                               ======    ======   =======    ====== 
                                               DURECT CORPORATION            
                                            Condensed Balance Sheet          
                                                 (in thousands)              
                                          As of               As of          
                                    December 31, 2009 December 31, 2008 (1)  
                                    ----------------- ---------------------  
    Current assets:                                                          
        Cash and cash equivalents              $8,287               $29,445  
        Short-term investments                 32,834                20,836  
        Short-term restricted                                                
         investments                                -                   624  
        Accounts receivable                     1,700                 4,055  
        Inventories                             2,799                 3,474  
        Prepaid expenses and other                                           
         current assets                         1,433                 1,850  
                                                -----                 -----  
    Total current assets                       47,053                60,284 
    Property and equipment, net                 3,808                 5,971  
    Goodwill                                    6,399                 6,399  
    Intangible assets, net                        108                   157  
    Long-term investments                           -                 1,362  
    Long-term restricted                                                     
     Investments                                  431                   425  
    Other long-term assets                        352                   276  
                                                  ---                   ---  
    Total assets                              $58,151               $74,874  
                                              =======               =======  
    LIABILITIES AND                                                          
     STOCKHOLDERS' EQUITY                                                    
    Current liabilities:                                                     
        Accounts payable                       $1,019                $1,018  
        Accrued liabilities                     5,764                 5,204  
        Contract research liability               990                   995  
        Deferred revenue,                                                    
         current portion                        4,703                 9,235  
        Other short-term                                                     
         liabilities                              208                   431  
                                                  ---                   ---  
    Total current liabilities                  12,684                16,883 
    Deferred revenue,                                                        
     noncurrent portion                        17,543                19,771  
    Other long-term liabilities                   508                   656  
    Stockholders’ equity                       27,416                37,564  
                                               ------                ------  
    Total liabilities and                                                    
     stockholders’ equity                     $58,151               $74,874  
                                              =======               =======  
    (1)  Derived from audited financial statements. 


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