POSIMIR is DURECT Corp.'s (DRRX:NASDAQ) "locally acting, non-opioid analgesic intended to provide up to three days of continuous pain relief after surgery." DURECT announced that, under the terms of the agreement, "Sandoz will make an upfront payment to DURECT of $20 million, with the potential for up to an additional $43 million in development and regulatory milestones, up to an additional $230 million in sales based milestones, as well as a tiered double digit royalty on product sales in the United States."
DURECT will remain responsible for conducting the PERSIST Phase 3 trial, comparing POSIMIR to bupivacaine HC1 after laparoscopic gall bladder removal. The company anticipates completing the dosing patients in Q3/17 and expects to have top-line data shortly thereafter. POSIMIR has not been approved for commercialization by the FDA.
The Sandoz deal was lauded by a pair of analysts. Francois Brisebois, a healthcare research analyst with Laidlaw & Company, noted that "we see the deal as relatively heavily front loaded and are encouraged by this large pharma validation. Sandoz's market presence and resources could truly benefit DRRX and help them take market share from PCRX's [Pacira Pharmaceuticals Inc.] comparable Exparel. We believe DRRX's favorable terms might have come as a result of PCRX's strong FY2017 guidance ($290M–$310M) and see this partnership as an interesting non-dilutive funding event."
"As DRRX has made clear in the past that they were in negotiations with a number of potential partners, we see Sandoz's impressive expertise and strong hospital presence as a real positive for DRRX," summed up Brisebois.
Laidlaw & Company has a Buy rating and $3 price target on DURECT. The stock is currently trading around $1.00.
Grant Zeng, an analyst with Zacks Small Cap Research, stated that "we think this is a great deal for Durect. Sandoz has a very strong sales/marketing team and has a great presence in the U.S. Sandoz has a differentiated product portfolio including a range of state-of-the-art technologies, formulations and devices." Zheng noted that "the deal not only boosts Durect's balance sheet, but also validates the company’s technology and clinical program."
"The market for a non-opioid post-surgical pain product is quite large. One piece of evidence for this is Pacira and their product Exparel. Pacira has a $1.9 billion market cap on the basis of Exparel, which is projected to have about $300 million in revenue in 2017. If approved, POSIMIR will compete quite effectively in this marketplace," concluded Zeng.
As of May 3, Zacks Small Cap Research had a fair market value of $6/share for DURECT.
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