On Sept. 26, DURECT Corp. announced that Pain Therapeutics received a "Complete Response Letter (CRL) from the FDA for Pain Therapeutics' New Drug Application (NDA) for REMOXY ER (oxycodone) extended-release capsules CII. Based on its review, the FDA has determined that the NDA cannot be approved in its present form and specifies additional actions and data that are needed for drug approval." DURECT would receive royalties of 6.0% to 11.5% of net sales from Pain Therapeutics.
Pain Therapeutics notes that the "CRL specifies additional actions that are needed in order to obtain approval of REMOXY ER with label claims against three routes of abuse (i.e., injection, inhalation and snorting). These actions may take approximately a year to conduct and may cost approximately $5MM, pending discussions with the FDA and outside clinical/regulatory consultants."
Analyst Jim Molloy of Laidlaw & Company, in a Sept. 30 research report, states that the FDA's action pushes back approval of Remoxy until 2019 at the earliest, and he maintains a Buy on DURECT. He notes DURECT's other programs remain on track: "DUR-928 is still expected to read out Phase 1 data in 4Q16 for both liver (NASH) and kidney, and Posimir remains on track for 4Q17 Phase 3 data on post-surgical pain relief. "He places a target price of $3.00 on DURECT, explaining, "Our price target is based on a sum-of-the-parts analysis with the Remoxy royalty at $0.50/share, the Posimir royalty at $1.00/share, DUR-928 at $1.00/share, and net cash (end-2017) tech & legacy polymer business valued at $0.50/share."
Rodman and Renshaw also is maintaining its Buy recommendation on DURECT. Analyst Raghuram Selvaraju, in a Sept. 27 report, states, "In the wake of this update, we have shifted our projection of the time frame for REMOXY commercialization from 2016 to 2018, and adjusted our price target of DURECT shares to $3.50 from $4 per share, while maintaining our Buy rating." He calls attention to DUR-928, which is being "tested in two Phase1b safety and pharmacokinetic (PK) trials in patients with NASH and impaired kidney function, respectively, in Australia. Both trials of DUR-928 are expected to be completed in 2016." Selvaraju adds, "We continue to expect positive readouts from DUR-928 trials considering the drug's multiple levels of mechanism of action."
Selvaraju also notes "DURECT's locally acting controlled-release formulation of bupivacaine for post-operativepain, POSIMIR, is being tested in the Phase 3 PERSIST study in patients undergoing laparoscopic cholecystectomy (gallbladder removal). . . We continue to expect positive data from this pivotal study."
Veteran investor Chen Lin, who writes the popular What is Chen Buying? What Is Chen Selling? newsletter, also remains confident. In a Sept. 28 letter, Lin writes, "Now I have a full [stock] position ahead of the important results of 928 phase 1. If they can show impressive results as they did in the animal trial, major pharma will be jumping in to partner with them big time. I invested in DRRX because of the 928, not the pain killer."
Leonard Yaffe of healthcare hedge fund Stoc*Doc Partners/Kessef Capital Management says, "My enthusiasm for DUR-928 is undeterred. DUR-928's success is totally unrelated to Remoxy." In a Sept. 16 note he states, "My positive opinion of DRRX relates to its Phase 1 drug, DUR-928, which is being studied for NASH and acute kidney injury. This is a high risk/high reward opportunity that if successful, should be worth $30 per share in incremental value (vs. analyst estimates of $0.50-$1.00)."
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1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Laidlaw & Company, Durect Corp., Sept. 30, 2016
The analyst responsible for the content of this report hereby certifies that the views expressed regarding the company or companies and their securities accurately represent his personal views and that no direct or indirect compensation is to be received by the analyst for any specific recommendation or views contained in this report. As of the date of this report, neither the author of this report nor any member of his immediate family or household maintains an ownership position in the securities of the company (ies) mentioned in this report.
Associated persons of Laidlaw & Co (UK), Ltd not involved in the preparation of this report may have investments in securities/instruments or derivatives of securities/instruments of companies mentioned herein and may trade them in ways different from those discussed in this report. While Laidlaw & Co (UK), Ltd., prohibits analysts from receiving any compensation. Bonus or incentive based on specific recommendations for, or view of, a particular company, investors should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest.
Laidlaw & Co (UK) Ltd. has not provided any investment banking services for the company (ies) mentioned in this report over the last 12 months. For important disclosures, please see Laidlaw & Co (UK), Ltd.’s disclosure website at www.Laidlawltd.com.
Rodman and Renshaw, Durect Corp., Sept. 27, 2016
I, Raghuram Selvaraju, Ph.D. and Yi Chen, Ph.D., CFA , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of (including, without limitation, any option, right, warrant, future, long or short position).
As of August 31, 2016 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of DURECT Corporation.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from DURECT Corporation for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in DURECT Corporation as of the date of this research report.
What is Chen Buying? What is Chen Selling? Sept. 28, 2016
Chen Lin owns, or members of his immediate household or family own, shares of the following companies mentioned in this article: Durect Corp.
Chen Lin is not a financial adviser and Lin Asset Management LLC is not a financial service company. Chen is a very experienced trader and this Publication is intended for experienced traders only. Subscribers must conduct their own research and due diligence, and consult their own financial advisers prior to placing any trades.
Prior to the recommendations, Chen may have discussed the stocks recommended in the letter, including but not limited to, private and public communications as well as internet groups and investment clubs. Chen may continue such communications in person and online after the recommendation without updating the letter. Chen may buy or sell the stocks any time after the recommendation without updating the letter. Companies are selected for purchase or sale in this publication strictly on their merits as determined by Chen. No fee is charged to companies for inclusion in the Publication.
Leonard Yaffe, Stoc*Doc Partners/Kessef Capital Management
I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Durect Corp. Funds controlled by Stoc*Doc Partners/Kessef Capital Management hold shares of the following companies mentioned in this article: Durect Corp.