DURECT Corporation Announces Third Quarter 2009 Financial Results

CUPERTINO, Calif., Oct. 29 /PRNewswire-FirstCall/ -- DURECT Corporation
(Nasdaq: DRRX) announced today financial results for the three months ended
September 30, 2009. Total revenues were $8.4 million for the three months
ended September 30, 2009, compared to $6.6 million for the same period in
2008; revenues in the 2009 period included $3.0 million related to the sale of
certain excipients used in REMOXY® to King Pharmaceuticals in 2008 and the
first quarter of 2009, all of which was recognized upon the execution of the
long term supply agreement between us and King in the third quarter of 2009.
Net loss for the three months ended September 30, 2009 was $5.5 million,
compared to a net loss of $9.2 million for the same period in 2008.

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At September 30, 2009, DURECT had cash and investments of $47.2 million,
compared to cash and investments of $52.7 million at December 31, 2008; these
figures include restricted investments of $0.8 million at September 30, 2009
and $1.0 million at December 31, 2008.

"Since our last earnings report, we have continued to advance our development
programs and business activities, including completing enrollment in our
POSIDUR(TM) Phase II shoulder study, entering into a new collaboration with
Orient Pharma that will allow us to generate Phase II data for a new drug
candidate for the Attention Deficit Hyperactivity Disorder market
(ORADUR®-ADHD) and a long term excipient supply agreement with King
Pharmaceuticals with respect to REMOXY," stated James E. Brown, D.V.M.,
President and CEO of DURECT. "In addition, we enhanced our cash position with
a $10 million sale of common stock to affiliates of Venrock, a highly
respected institutional investor."

Recent Highlights:

-- Remoxy. According to a King Pharmaceuticals / Pain Therapeutics press
release, King anticipates the resubmission of the NDA for REMOXY
intended to address all FDA comments in the Complete Response Letter
could occur mid-year 2010. King has stated that it remains committed
to
the development and commercialization of REMOXY and looks forward to
working closely with the FDA toward approval of the product. During
the
third quarter, DURECT and King signed an exclusive long term excipient
supply agreement with respect to REMOXY. This agreement stipulates the
terms and conditions under which DURECT will supply to King, based on
DURECT's manufacturing cost plus a specified percentage mark-up, two
key
excipients used in the manufacture of REMOXY.

REMOXY is an investigational 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(TM) (SABER(TM)-Bupivacaine). DURECT recently completed
enrollment in our Phase IIb clinical study in shoulder surgery of
approximately 60 patients and we expect to have top line data analysis
completed in December. In addition, Nycomed continues enrollment in a
Phase IIb study in hysterectomy patients and a Phase IIb study in
shoulder surgery patients. At the American College of Surgeons 95th
Annual Clinical Congress on October 12, 2009, we presented a
scientific
poster regarding our Phase IIb hernia study; this poster can be
accessed
through www.durect.com under "About DURECT" and "Publications." We
are
in active discussions with multiple potential partners regarding
licensing of the U.S./Canadian and Asian rights to this program.

POSIDUR is our investigational post-operative pain relief depot that utilizes
our patented SABER technology intended to deliver bupivacaine to provide up to
three days of pain relief after surgery. POSIDUR is licensed to Nycomed for
commercialization in Europe and select other countries, and we have retained
commercialization rights in the US, Canada and Asia.

-- ELADUR(TM) (TRANSDUR(TM)-Bupivacaine). In October 2008, worldwide
rights to this program were licensed to Alpharma, which was acquired
by
King Pharmaceuticals in December 2008. We continue to interact with
the
King team on details associated with next steps in the clinical
program,
which King expects to initiate in the first half of next year.

ELADUR is our proprietary transdermal patch intended to provide bupivacaine to
treat pain for a period of up to three days from a single application.

-- TRANSDUR-Sufentanil. A successful end-of-Phase II meeting with the
FDA
has been conducted for this program that laid out a potential
regulatory
pathway for the Phase III program and NDA submission. We are in active
discussions with multiple potential partners regarding licensing
development and commercialization rights to this program to which we
hold worldwide rights.

TRANSDUR-Sufentanil is our proprietary transdermal patch intended to provide
sufentanil to chronic pain sufferers for a period of up to seven days from a
single application.

-- License Agreement for ADHD Drug Candidate. During the third quarter,
we
signed a development and license agreement with Orient Pharma Co.,
Ltd.
under which DURECT has granted to Orient Pharma development and
commercialization rights in selected Asian and South Pacific countries
to a drug candidate based on DURECT's ORADUR Technology and one
specified active pharmaceutical ingredient for the treatment of
attention deficit hyperactivity disorder (ADHD). This drug candidate
(ORADUR-ADHD) is intended to provide once-a-day dosing with added
tamper-resistant characteristics to address common methods of abuse
and
misuse of these types of drugs. North American, European, Japanese and
select other countries' rights to this drug candidate are retained by
DURECT. 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 by DURECT as well as Orient Pharma in their respective
territories. DURECT will be responsible for formulation and study
design
of the pre-defined clinical program which Orient Pharma will fund and
execute.

-- Financing. In September, DURECT entered into a privately negotiated
transaction to sell 4,444,444 shares of common stock to affiliates of
Venrock at a price of $2.25 per share, raising proceeds to DURECT of
approximately $10 million.

Earnings Conference Call
A live audio webcast of a conference call to discuss third quarter 2009
results will be broadcast over the internet at 4:30 p.m. Eastern Time on
October 29 and is available by accessing DURECT's homepage at www.durect.com
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(TM), ELADUR(TM), and
TRANSDUR(TM)-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 www.durect.com.

NOTE: POSIDUR(TM), SABER(TM), ORADUR®, TRANSDUR(TM), and ELADUR(TM) are
trademarks of DURECT Corporation. Other referenced trademarks belong to their
respective owners. REMOXY, POSIDUR, ELADUR, TRANSDUR-Sufentanil and
ORADUR-ADHD are drug candidates under development and have not been approved
for commercialization by the US Food and Drug Administration or other health
authorities.

DURECT Forward-Looking Statement

The statements in this press release regarding plans by King Pharmaceuticals
for resubmission of the REMOXY NDA in mid-2010 and their belief that this
resubmission will address all FDA comments in the Complete Response Letter,
the potential of FDA approving the REMOXY NDA, the expectation that we will
have top line data from our Phase IIb shoulder study in December, the
expectation that King will commence additional clinical studies in the first
half of next year with ELADUR, our plan to generate Phase II data with our
ORADUR-ADHD program, our possible licensing of development and
commercialization rights to POSIDUR and TRANSDUR-Sufentanil to third parties,
and potential agreements with third parties to license the development and
commercialization rights to our product candidates 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, the potential that
the REMOXY NDA resubmission may take longer to achieve than expected and may
not adequately address all of FDA's concerns, the potential that FDA may not
grant regulatory approval of REMOXY, failure of our clinical trials to
produce intended results, possible adverse events associated with the use of
our drug candidates, delays and costs due to additional work or other
requirements imposed by regulatory agencies for continued development,
approval or sale of our drug candidates, 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 filed on August 4, 2009 under the heading
"Risk Factors."

DURECT CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

Three months
ended Year ended
------------ ----------
September 30, September 30,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----

Collaborative research
and development revenue $3,027 $4,341 $9,378 $12,477
Product revenue, net 5,351 2,293 10,037 6,898
----- ----- ------ -----
Total revenues 8,378 6,634 19,415 19,375
----- ----- ------ ------

Operating expenses:
Cost of revenues (1) 2,834 870 4,495 2,674
Research and
development (1) 7,598 11,423 25,367 30,955
Selling, general and
administrative (1) 3,554 3,837 11,588 11,813
----- ----- ------ ------
Total operating
expenses 13,986 16,130 41,450 45,442
------ ------ ------ ------

Loss from operations (5,608) (9,496) (22,035) (26,067)

Other income (expense):
Interest and other income 82 349 367 1,285
Interest expense (9) (14) (31) (773)
--- --- --- ----
Net other income 73 335 336 512

------- ------- -------- --------
Net loss $(5,535) $(9,161) $(21,699) $(25,555)
======= ======= ======== ========

Net loss per share,
basic and diluted $(0.07) $(0.11) $(0.26) $(0.33)
====== ====== ====== ======

Shares used in computing
basic and diluted net
loss per share 82,781 81,779 82,317 77,124
====== ====== ====== ======

(1) Includes stock-based compensation related to the following:

Cost of revenues $91 $44 $286 $110
Research and development 1,665 1,300 5,273 4,267
Selling, general and
administrative 785 619 2,820 2,068
--- --- ----- -----
Total stock-based
compensation $2,541 $1,963 $8,379 $6,445
====== ====== ====== ======

DURECT CORPORATION
CONDENSED BALANCE SHEET
(in thousands)

As of As of
September December
30, 2009 31, 2008 (1)
--------- -------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $17,933 $29,445
Short-term investments 27,483 20,836
Short-term restricted investments 372 624
Accounts receivable 2,947 4,055
Inventories 2,882 3,474
Prepaid expenses and other current assets 1,020 1,850
----- -----
Total current assets 52,637 60,284

Property and equipment, net 4,516 5,971
Goodwill 6,399 6,399
Intangible assets, net 121 157
Long-term investments 1,000 1,362
Long-term restricted Investments 431 425
Other long-term assets 360 276
--- ---
Total assets $65,464 $74,874
======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $498 $1,018
Accrued liabilities 5,271 5,204
Contract research liability 797 995
Deferred revenue, current portion 5,073 9,235
Other short-term liabilities 435 431
--- ---
Total current liabilities 12,074 16,883

Deferred revenue, noncurrent portion 18,366 19,771
Other long-term liabilities 561 656

Stockholders' equity 34,463 37,564
------ ------
Total liabilities and stockholders' equity $65,464 $74,874
======= =======

(1) Derived from audited financial statements.

SOURCE DURECT Corporation

Matthew J. Hogan, Chief Financial Officer of DURECT Corporation,
+1-408-777-4936