Durect Corp (DRRX) Q1 2024 Earnings Call Transcript Highlights: Navigating Financial Challenges and Clinical Advances

Amidst revenue decline and significant cash burn, Durect Corp reports promising clinical trial results and strategic FDA interactions.

Summary
  • Total Revenue: $1.8 million in Q1 2024, down from $2.1 million in Q1 2023.
  • R&D Expenses: $4.1 million in Q1 2024, decreased from $8.6 million in Q1 2023.
  • SG&A Expenses: $3.1 million in Q1 2024, reduced from $4.1 million in Q1 2023.
  • Cash and Investments: $21.6 million as of March 31, 2024, compared to $29.8 million as of December 31, 2023.
  • Cash Burn: $8.9 million in Q1 2024, excluding net proceeds of approximately $650,000 from ATM financing.
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Release Date: May 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Durect Corp (DRRX, Financial) reported significant reductions in 90-day mortality rates in the AHFIRM trial, showing a 41% reduction with the 30 milligram dose and a 35% reduction with the 90-milligram dose of larsucosterol compared to placebo.
  • Larsucosterol exhibited an excellent safety profile in the AHFIRM trial with no serious adverse events reported and a greater than 20% reduction in the number of treatment-emergent adverse events for both active arms.
  • The company received positive feedback from the FDA indicating that a single successful Phase 3 trial could be sufficient to support an NDA filing for larsucosterol in treating alcohol-associated hepatitis (AH).
  • Durect Corp (DRRX) has sufficient cash on hand, amounting to $21.6 million as of March 31, 2024, to fund operations through the end of the year.
  • The AHFIRM data has been accepted for an oral, late-breaker presentation at the upcoming EASL conference, providing an opportunity to share significant clinical results with the medical community.

Negative Points

  • Total revenues in the first quarter of 2024 decreased to $1.8 million from $2.1 million in the same period in 2023, primarily due to lower revenues from feasibility agreements and product sales.
  • The company experienced a significant cash burn of $8.9 million in the first quarter of 2024, excluding net proceeds of approximately $650,000 from ATM financing.
  • Neither the primary endpoint nor the key secondary endpoint of the AHFIRM trial achieved statistical significance, despite showing numerical improvements.
  • Durect Corp (DRRX) will need additional financing to complete the upcoming Phase 3 trial, with the specifics of this financing still being determined.
  • There are currently no approved therapies for AH, indicating a high risk and uncertainty surrounding the potential market approval and commercial success of larsucosterol.

Q & A Highlights

Q: Can you share anything about the upcoming EASL presentation or any progress with the FDA?
A: James Brown, President and CEO of DURECT Corp., mentioned that the EASL presentation will be the first opportunity to present AHFIRM data. No additional FDA updates will be provided beyond what was discussed in the call. Further data analysis will be presented at the AASLD meeting in the fall.

Q: Has there been consideration of including milder patient populations in your studies, given the focus on moderate-to-severe patients?
A: James Brown explained that while the current focus is on severe patients, there is potential for the drug to help all severity levels. The severe patient population provides a clearer distinction of the drug's benefits, which is crucial for the approval process. Future studies might expand to include moderate patients.

Q: Do you have an internal target date for initiating the pivotal Phase 3 study?
A: James Brown stated that the protocol is currently being worked on, with the aim to start the trial as soon as possible due to the high risk associated with the disease. Specific timelines will be shared later in the year.

Q: Can you discuss preliminary thoughts on the Phase 3 trial design and key elements, especially concerning efficacy endpoints?
A: James Brown indicated that details of the Phase 3 trial are still being finalized. Lessons from the AHFIRM trial will influence the design to ensure efficiency and effectiveness. Details will be shared once the protocol is finalized.

Q: What are the financing options for the Phase 3 study?
A: Tim Papp, CFO of DURECT Corp., noted that various financing options are being considered, including business development and financial markets. Specific details on timing and strategies are still under discussion.

Q: What are the key takeaways from the AHFIRM trial data presented?
A: James Brown highlighted that the AHFIRM trial showed significant reductions in 90-day mortality rates and an excellent safety profile for larsucosterol. These results provide a strong foundation for the upcoming Phase 3 trial and underscore the potential of larsucosterol as a treatment for alcohol-associated hepatitis.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.