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1. Company Snapshot

1.a. Company Description

DURECT Corporation, a biopharmaceutical company, researches and develops medicines based on its epigenetic regulator and pharmaceutical programs.The company offers ALZET product line that consists of osmotic pumps and accessories used for research in mice, rats, and other laboratory animals.It also develops 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.


In addition, the company offers POSIMIR, a post-surgical pain product to deliver bupivacaine up to days of 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 Japan, Europe, and internationally.The company has strategic collaboration and other agreements with Virginia Commonwealth University Intellectual Property Foundation; Indivior UK Ltd.; and Santen Pharmaceutical Co., Ltd.


DURECT Corporation was incorporated in 1998 and is headquartered in Cupertino, California.

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1.b. Last Insights on DRRX

DURECT Corporation's recent performance was driven by a definitive agreement to be acquired by Bausch Health Companies Inc., a global diversified pharmaceutical company. This strategic partnership will strengthen Bausch Health's commitment to hepatology and patients suffering from liver disease complications globally. The acquisition includes DURECT's lead asset, Larsucosterol, an epigenetic modulator with FDA Breakthrough Therapy Designation, potentially becoming the first FDA-approved therapeutic option for treating patients with alcoholic hepatitis.

1.c. Company Highlights

2. DURECT Corporation Fourth Quarter and Full Year 2024 Earnings Report Analysis

DURECT Corporation reported a challenging financial performance in 2024, with total revenues declining to $2 million from $2.6 million in 2023. The fourth quarter was particularly weak, with revenues of $0.5 million, down from $0.9 million in the prior year. While the company has shifted its focus to R&D for its lead asset, larsucosterol, the drop in revenue underscores the challenges faced in its commercial operations. Operating expenses saw significant reductions, with R&D expenses dropping to $10.4 million from $29.4 million in 2023, and SG&A expenses falling to $10 million from $12.7 million. Despite these cost-cutting measures, the company ended the year with a cash balance of $12 million, down from $29.8 million in 2023, reflecting the impact of its strategic pivot away from its former product lines.

Publication Date: Mar -27

📋 Highlights
  • Revenue Decline:: Total revenues for 2024 were $2 million, down from $2.6 million in 2023, with Q4 revenues at $0.5 million compared to $0.9 million in the prior year.
  • R&D Expense Reduction:: R&D expenses decreased to $10.4 million in 2024 from $29.4 million in 2023, with Q4 expenses at $1.9 million compared to $5.6 million in the prior year.
  • SG&A Expense Reduction:: SG&A expenses were $10 million in 2024, down from $12.7 million in 2023, with Q4 expenses at $2 million compared to $2.2 million in the prior year.
  • Cash and Investments:: Cash and investments as of December 31, 2024, were $12 million, compared to $29.8 million at the end of 2023, with the sale of the Allset product line enabling debt repayment.
  • Phase 3 Trial Focus:: The company is focused on securing $20 million in funding for the Phase 3 trial of larsucosterol for alcohol-associated hepatitis, with a goal of reporting top-line data within two years.

Financial Performance and Strategic Shift

The sale of the Allset product line in the fourth quarter marked a pivotal moment for DURECT, enabling the company to repay its term loan and achieve a debt-free balance sheet. This strategic move highlights management's focus on preserving liquidity and prioritizing the development of larsucosterol, which has shown promising results in the Phase 2b trial, demonstrating a 60% reduction in mortality. However, the company faces a critical funding gap for the Phase 3 trial, estimated to cost $20 million, which remains a key concern for investors.

Valuation Considerations

From a valuation perspective, DURECT's stock reflects the risks and uncertainties associated with its transition. The company's price-to-sales ratio of 2.91 suggests a premium valuation relative to its limited revenue base, while its enterprise value-to-EBITDA ratio of -1.97 highlights the challenges in assessing its profitability given its current operating model. The lack of free cash flow and the high net debt-to-EBITDA ratio of -0.31 further underscore the financial strain the company is under as it pursues its R&D goals.

Risk and Market Reaction

Investors will likely remain cautious, given the company's reliance on securing external funding for the Phase 3 trial and the risks inherent in clinical development. While management remains optimistic about potential partnerships and funding opportunities, the execution risk remains elevated. The stock's performance will likely hinge on the company's ability to secure the necessary capital and deliver on its clinical milestones. As DURECT enters this critical phase, the market will be closely watching for signs of progress and funding clarity.

3. NewsRoom

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Bausch Health Completes Acquisition of DURECT Corporation, Expanding Late-stage Liver Disease Portfolio

Sep -11

Source: accessnewswire.com

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Bausch Health Announces Extension of DURECT Corporation Tender Offer to September 10, 2025

Aug -26

Source: accessnewswire.com

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Durect (DRRX) Reports Q2 Loss, Tops Revenue Estimates

Aug -12

Source: zacks.com

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DURECT Corporation Reports Second Quarter 2025 Financial Results and Provides Update on Proposed Acquisition by Bausch Health

Aug -12

Source: prnewswire.com

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$HAREHOLDER ALERT: The M&A Class Action Firm Announces An Investigation of Chart Industries, Inc. (NYSE: GTLS)

Jul -31

Source: globenewswire.com

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Bausch Health Adds Late-Stage Ready Alcohol Liver Disease Drug Candidate In $63 Million DURECT Buyout

Jul -29

Source: benzinga.com

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DRRX Stock Alert: Halper Sadeh LLC Is Investigating Whether the Sale of DURECT Corporation Is Fair to Shareholders

Jul -29

Source: businesswire.com

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Shareholder Alert: The Ademi Firm Investigates Whether DURECT Corporation Is Obtaining a Fair Price for Its Public Shareholders

Jul -29

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.50%)

6. Segments

Pharmaceutical Products

Expected Growth: 8.5%

DURECT Corporation's 8.5% growth in Pharmaceutical Products is driven by increasing demand for its proprietary drug delivery technologies, such as the SABER™ platform, and partnerships with major pharmaceutical companies. Additionally, the company's focus on developing treatments for chronic diseases, like pain management and CNS disorders, contributes to its growth momentum.

7. Detailed Products

POSIMIR

A post-operative pain relief depot formulation of bupivacaine, a local anesthetic, for administration into the surgical site to reduce post-operative pain.

SABER-Bupivacaine

A long-acting, injectable formulation of bupivacaine, a local anesthetic, for pain relief.

ORADUR-ADHD

A transdermal patch formulation of methylphenidate, a central nervous system stimulant, for the treatment of attention deficit hyperactivity disorder (ADHD).

ORADUR-Methylphenidate

A transdermal patch formulation of methylphenidate, a central nervous system stimulant, for the treatment of ADHD.

DUR-928

A first-in-class, endogenous molecule that has been shown to have anti-inflammatory and anti-fibrotic properties.

8. DURECT Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

DURECT Corporation's products are moderately susceptible to substitutes, as there are alternative pharmaceutical products available in the market.

Bargaining Power Of Customers

DURECT Corporation's customers have limited bargaining power due to the company's strong brand presence and limited availability of alternative products.

Bargaining Power Of Suppliers

DURECT Corporation's suppliers have moderate bargaining power, as the company relies on a few key suppliers for raw materials and services.

Threat Of New Entrants

The pharmaceutical industry is highly competitive, and new entrants can easily enter the market, posing a significant threat to DURECT Corporation's market share.

Intensity Of Rivalry

The pharmaceutical industry is highly competitive, and DURECT Corporation faces intense rivalry from established players, leading to a high level of competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.39%
Debt Cost 8.62%
Equity Weight 41.61%
Equity Cost 8.62%
WACC 8.62%
Leverage 140.34%

11. Quality Control: DURECT Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Cyclo Therapeutics

A-Score: 3.8/10

Value: 8.0

Growth: 3.4

Quality: 5.0

Yield: 0.0

Momentum: 5.5

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
DURECT

A-Score: 3.8/10

Value: 6.0

Growth: 3.6

Quality: 4.3

Yield: 0.0

Momentum: 9.0

Volatility: 0.0

1-Year Total Return ->

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Assertio

A-Score: 3.4/10

Value: 9.2

Growth: 2.7

Quality: 4.5

Yield: 0.0

Momentum: 1.0

Volatility: 3.0

1-Year Total Return ->

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Emergent BioSolutions

A-Score: 3.2/10

Value: 6.5

Growth: 1.3

Quality: 5.8

Yield: 0.0

Momentum: 5.0

Volatility: 0.7

1-Year Total Return ->

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Stock-Card
Alpha Teknova

A-Score: 3.2/10

Value: 6.6

Growth: 1.3

Quality: 4.3

Yield: 0.0

Momentum: 5.5

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
Rockwell Medical

A-Score: 2.6/10

Value: 6.4

Growth: 4.2

Quality: 3.4

Yield: 0.0

Momentum: 0.5

Volatility: 1.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.91$

Current Price

1.91$

Potential

-0.00%

Expected Cash-Flows