DURECT Posts Net Loss Of $8.7 Million For Q1 2009

At March 31, 2009, DURECT had cash and investments of $47.0 million, compared to cash and investments of $52.7 million at December 31, 2008; these figures include restricted investments of $0.8 million at March 31, 2009 and $1.0 million at December 31, 2008.

“The most significant events for DURECT during the first quarter were interactions with the US Food & Drug Administration (FDA),” stated James E. Brown, D.V.M., president and chief executive officer of DURECT. “A successful end-of-Phase II meeting with the FDA was conducted for TRANSDUR-Sufentanil, and the company also recently received FDA feedback on the POSIDUR program, enabling us to construct our Phase III development plans. In addition, the company is awaiting a mid-year meeting by King Pharmaceuticals with the FDA to clarify the status of the REMOXY New Drug Application (NDA).”

Recent Highlights:

Remoxy: Pain Therapeutics, the licensee, received a Complete Response Letter from the FDA in December 2008 indicating that the NDA is not approved in its present form. According to Pain Therapeutics, the FDA indicated that additional non-clinical data will be required to support the approval of REMOXY but the FDA has not requested or recommended additional clinical efficacy studies prior to approval. The understanding is that Pain Therapeutics and its commercialization collaborator, King Pharmaceuticals, and their outside technical advisors have been evaluating the FDA Complete Response Letter and there are plans to meet with the FDA in mid-2009, which should provide the collaborators with a more reliable context with which to make projections about REMOXY.

REMOXY, an investigational drug, is a 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 (SABER-Bupivacaine): Recently, the company received detailed feedback from the FDA on the proposed Phase III program. The company is pursuing a target label for POSIDUR that would allow POSIDUR to be used for a broad range of surgeries. Based on FDA feedback, in contrast to the two pivotal efficacy studies that the company had previously planned, the company now anticipates conducting one pivotal efficacy study and several other supportive clinical studies in additional surgical models to provide greater definition for the settings in which the product should be used and to support the target label. The company currently expects that the total number of patient exposures that the company will submit to the FDA in an NDA will be around 700-800. Under the current development program, around 300 human subjects have been exposed to POSIDUR. Assuming the program progresses as the company expect, the company anticipate that the Phase III program should take around two years from initiation to NDA filing. To review the major planned activities for POSIDUR in 2009:

The company expect to have data from the around 60 patient Phase IIb clinical study in shoulder surgery this year.

The company plan to conduct a thorough QTc (tQTc) study in 2009. A tQTc study is a cardiac safety test increasingly recommended by the FDA. To date, the company has not observed any differences in cardiovascular or central nervous system side effects between the roughly 300 patients dosed to date with POSIDUR versus around 150 placebo patients.

Nycomed is conducting a Phase IIb study in hysterectomy patients and a Phase IIb study in shoulder surgery patients beginning in 2009. Those studies will be conducted in a different manner than US studies and will be suitable for European regulatory approval purposes. The company anticipates that these studies will provide data from an additional surgical model (hysterectomy) and will add to the safety database.

Lastly, the company are in discussions with various parties about licensing development and commercialization rights to POSIDUR in the US, Canada and Asia.

POSIDUR is the investigational post-operative pain relief depot that utilizes the patented SABER technology 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 the company have retained commercialization rights in the US, Canada and Asia.

ELADUR (TRANSDUR-Bupivacaine). In October 2008, worldwide rights to this program were licensed to Alpharma, which was acquired by King Pharmaceuticals in December 2008. The main activities since that time have involved interacting with the King team on the program such that specific decisions can be made with respect to the clinical program.

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

TRANSDUR-Sufentanil: A 74 patient Phase IIb clinical trial of chronic pain patients using TRANSDUR-Sufentanil was completed during 2008 and described by us in the first quarter of 2009. In this trial, all of the primary and secondary objectives were met by showing patients could be converted from oral opioids such as OxyContin and from fentanyl patches such as Duragesic to TRANSDUR-Sufentanil, while also showing a reduction in pain scores on the therapy. A end-of Phase II meeting was held with the FDA in February 2009. As a result of that meeting, the company believe the company understand the anticipated regulatory pathway for the Phase III program and approval, which the company expect will follow a 505(b)2 pathway as discussed with FDA. Effective August 26, 2009, the company will receive back from Endo Pharmaceuticals the rights to develop and commercialize TRANSDUR-Sufentanil in the US and Canada. The company is in active discussions with several potential partners regarding licensing of the program.

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

Other Business Matters

In an effort to conserve cash during the current adverse economic environment, in March the company implemented a headcount reduction of 41 positions. This action affected most functional groups, but the company believes this should not affect the key corporate goals for the year. The current headcount is around 25% lower than at the start of the year.