DURECT Corporation (NASDAQ:DRRX) Higher on Sandoz Deal and Q1 2017 Results

DURECT Corporation (NASDAQ:DRRX)

DURECT Corporation (NASDAQ:DRRX) shares are up over 10% after the developer of drug delivery systems posted their Q1, 2017 earnings. DRRX ended trading yesterday at $1.10, gapped up to open the session at $1.12 and hit an inter-day high of $1.29. Volumes supporting the gains have been strong. The 30-day, daily average volume is listed at 696,530 but before 1 PM EST over 3 million shares have traded hands.

DURECT Corporation (NASDAQ:DRRX), founded in 1998, develops drug delivery systems that enhance the physical, pharmacokinetic, and pharmacodynamic properties of the active agents. They have also entered the new field of molecular pharmacology and have developed a family of endogenous molecules that have exhibited potentially promising results.

Yesterday DURECT Corporation (NASDAQ:DRRX) announced a collaborative agreement with Sandoz AG, a division of Novartis, for the U.S.A. for Posimer. DURECT will continue to have responsibilities related to Posimer’s Phase 3 trial which compares it to bupivacaine in patients that have had a gall bladder removed through a laparoscopic procedure. Posimer has been U.S. FDA approved and Sandoz may make up to $43 million in development and regulatory milestone payments. Additionally, there is the potential for an additional $230 million in sales-based milestone payments. Analysts have generally given the agreement a nod of approval.

Today DURECT Corporation (NASDAQ:DRRX) released Q1, 2017 financial earnings. For Q1 2017 the company posted revenues of $4.57 million compared to $3.61 million for Q1 2016. There was a net loss of (-$8.11) million which is wider than the (-$7.85) million loss for the same quarter last year. DURECT Corporation (NASDAQ:DRRX) EPS represented the same loss amount this quarter as the same quarter last year – (-$0.06) per share.

Two firms follow DURECT Corporation (NASDAQ:DRRX). One rates DRRX shares as a “Strong Buy” while the other rates them a “Hold”. Their consensus price target is $3.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

DURECT Corporation (NASDAQ:DRRX) Inks $293 Million Sandoz Deal For POSIMIR Development

DURECT Corporation (NASDAQ:DRRX)

Shares of DURECT Corporation (NASDAQ:DRRX) traded higher in the market after the company announced it had entered into a development and commercialization agreement with Novartis AG (ADR) (NYSE:NVS) division Sandoz AG. The agreement is for the development and marketing of non-opioid analgesic POSIMIR (R).

Durect-Sandoz Agreement

Under the terms of the agreement, DURECT Corporation (NASDAQ:DRRX) is to receive $20 million in up-front payments from the Novartis division. The company also stands to receive an additional $43 million in development and regulatory milestones. An additional $230 million on sales-based milestones is also at stake depending on how the drug turns out in trials.

DURECT Corporation (NASDAQ:DRRX) has been given the go-ahead to complete an ongoing PERSIST Phase 3 clinical trial for the novel treatment. It will also be responsible for any Foods and Drug Administration interactions leading to approval. The company could receive $43 million as soon as it makes an NDA application – possibly as early as Q1 2018. The deal should close in the second quarter of the year.

“We believe that POSIMIR has the potential to become a cornerstone of multi-modal post-operative pain management. As a non-opioid local analgesic, we believe POSIMIR may be an important contributor to the on-going efforts to reduce the use of opioid-based medications following surgery, “said Chief executive officer James E. Brown.

POSIMIR Prospects

If approved, POSIMIR will fight for market share in a multi-billion pain relief industry that currently boasts of the likes of Pacira with its Exparel treatment. The drug generated about $300 million in revenues last year.

POSIMIR is a novel treatment designed to provide three days of continuous pain relief for patients who have undergone surgery. DURECT Corporation (NASDAQ:DRRX) is currently undertaking Phase 3 trials on patients who have undergone a laparoscopic cholecystectomy. Dosing of patients should be completed in the third quarter after which the company says it will release results.

The development and marketing agreement is a great deal for DURECT Corporation (NASDAQ:DRRX) given that Sandoz comes with a robust sales and marketing team that it can take advantage off. The Novartis division also comes into the deal with a range of state of the art technologies that should benefit Durect in the long run.

Sandoz’s deal should go a long way in validating DURECT Corporation (NASDAQ:DRRX)’s balance sheet given the amount of money the company is set to receive leading to the approval of POSIMIR. Sandoz partnership also goes a long way in validating the company’s technology as well as its clinical program.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.