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Biopharma Advances Alcohol-Associated Hepatitis Trial, Receives Analgesia Drug Approval
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These corporate events and the Q4/20 financials of DURECT are summarized in an H.C. Wainwright & Co. report.

In a March 15 research note, H.C. Wainwright & Co. analyst Ed Arce provided an update on DURECT Corp.'s (DRRX:NASDAQ) DUR-928 and Posimir as well as Q4/20 financial numbers.

Regarding DUR-928, the first patient was dosed for the biopharma's Phase 2b AHFIRM trial in patients with severe alcohol-associated hepatitis (AH), and the company "is now primarily focused on the trial's successful execution in 2021," reported Arce.

He reiterated AHFIRM's design and endpoints. The trial will be conducted at about 40–50 clinical sites in the U.S. and European Union, and total enrollment will be 300 patients. To achieve that number, this year DURECT will focus on opening additional study sites.

For the trial, patients will be randomized on a 1:1:1 basis to receive, on day one and, if still hospitalized, on day four, two intravenous doses of either DUR-928 30 milligrams, DUR-928 90 milligrams or placebo plus AH standard of care, which could include methylprednisolone if believed warranted by the treating physician.

The primary endpoint is the 90-day survival rate of patients treated with DUR-928 versus placebo plus standard of care. Secondary endpoints are survival rate at 28 days, frequency of adverse events, Lille and Model for End-Stage Liver Disease, or MELD, scores and time spent in the Intensive Care Unit.

As for a potential timeline regarding DUR-928 in AH, H.C. Wainwright expects AHFIRM enrollment to be completed in about 12 months or in Q1/22, with topline trial data released in about Q3/22. If the data show a clear survival benefit, they could support DURECT's filing of a new drug application for DUR-928 in this indication. Should that occur, the U.S. Food and Drug Administration (FDA) could approve the drug in H1/23.

The analyst noted that an article in the peer-reviewed Journal of Lipid Research explained DUR-928's mechanism of action as an epigenetic regulator. It indicated that the drug inhibits the activity of DNA methyltransferases 1, 3a and 3b that regulate the expression of genes responsible for cellular activities, such as cell death and lipid biosynthesis. As such, DUR-928 could regulate various correlated processes, such as lipid accumulation and inflammation, symptoms tied to AH and nonalcoholic steatohepatitis, or NASH.

Regarding another of DURECT's drugs, Posimir, the FDA approved it earlier this month as postsurgical analgesia in adults who undergo arthroscopic subacromial decompression, Arce relayed. The biopharma is looking to market Posimir in the U.S. through a commercial partnership, yet to be formed.

Arce recapped DURECT's financial performance in Q4/20. The company had a Q4/20 net loss of $8.8 million. It generated $2.2 million, including $1.9 million from sales of its legacy products, and at year-end 2020, DURECT had $56.9 million in cash and cash equivalents. More recently, this February, it raised $47.8 million in an equity offering.

H.C. Wainwright has a Buy rating and a $6 per share target price on DURECT, the stock of which is trading now at about $2.26 per share.


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Disclosures from H.C. Wainwright & Co., Durect Corporation, Earnings Update, March 15, 2021

Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.

I, Ed Arce and Thomas Yip, 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 DURECT Corporation (including, without limitation, any option, right, warrant, future, long or short position).

As of February 28, 2021 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 received compensation from DURECT Corporation for non-investment banking services in the previous 12 months.

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.

H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.

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