TICKERS: DRRX

Progress in Pain Control and Liver Disease Programs Spurs Rise in Company's Rating
Research Report

Source:

News about progress in two of this biotech's development programs prompted a rating upgrade by analyst Adam Walsh of Stifel Nicolaus & Company.

In a July 12 research report, Stifel announced it was raising its rating for DURECT Corp. (DRRX:NASDAQ) "to Buy from Hold and increasing our target price to $3 from a prior $1.25." The research firm also transferred coverage to analyst Adam Walsh.

In outlining the firm's investment thesis for the biotech, the report noted that "Durect appears poised for upside over the next 12-18 months, in our view. We expect Posimir to remain in focus near-term ahead of upcoming pivotal P3 PERSIST results due 4Q17 and potential approval/launch as soon as 2H18."

Walsh described Posimir as "a nonopioid analgesic that is designed to provide three days of local pain relief following one-time intraincisional instillation at the close of surgery. The drug forms a biodegradable depot that releases bupivacaine directly into the surgical site at a constant rate over 72 hours."

Should Posimir receive FDA approval, "we believe the drug could potentially play a role in reducing the duration and cost of hospital stays, decreasing the use of postoperative opioids, and reducing the resources required to manage postoperative pain," Walsh noted.

"We also like the recent Sandoz deal for U.S. rights to the drug, as it brings large pharma validation."

"We also like the recent Sandoz deal for U.S. rights to the drug, as it brings large pharma validation, experienced marketing muscle, and a potential steady source of future milestone/royalty revenue that can be leveraged to support the ambitious development program for key emerging pipeline asset DUR-928 ('928)," the report stated.

The report also commented on DURECT's lead compound, DUR-928, in development for treatment of NASH (nonalcoholic steatohepatitis, a type of nonalcoholic fatty liver disease) and other indications.

"DUR-928 is the company's lead candidate from its Epigenetic Regulator Program currently in P1 development and soon to be entering P2 studies," the Stifel report stated. "Based on our review of available data, '928 appears a highly safe, potent, and active compound with broad therapeutic potential. We are encouraged by recent P1b data in NASH patients, which showed that single dose '928 produced rapid and meaningful improvements in several key biomarkers of liver disease just 12 hours after dosing."

Walsh also mentioned DURECT's intent to launch a trial for DUR-928 in primary sclerosing cholangitis, another liver condition, in H2/17. "While some investors have questioned management's decision to prioritize PSC over NASH in the initial P2, we view it as a smart move," the report states. "Compared to NASH, PSC represents a vastly more efficient indication to demonstrate rapid proof of concept for '928 in liver disease. In addition, since 80% of PSC patients have associated inflammatory bowel disease (IBD), the PSC trial may have the added benefit of defining '928's potential utility in IBD."

In addition to addressing liver disease, Walsh noted DURECT is also looking at the compound's utility as "an injectable for acute organ injuries (i.e. kidney); and a topical for inflammatory skin conditions such as psoriasis and atopic dermatitis."

While DURECT's Remoxy, "an extended-release formulation of oxycodone," is not included in Stifel's model, the report notes that the compound, which has faced regulatory challenges, "provides optionality."

DURECT's shares are currently trading at $1.86.

Want to read more Life Sciences Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in this article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following company mentioned in this article is a billboard sponsor of Streetwise Reports: DURECT Corp. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.




Get Our Streetwise Reports Life Sciences Report Newsletter Free

A valid email address is required to subscribe