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Product revenue from the sale of ALZET pumps, LACTEL Polymers, and certain excipients to King increased by approximately $1.4 million or 59%, from $2.4 million in the first quarter last year to $3.9 million in the first quarter this year. Our gross margin on these products was around 64% in the first quarter. These businesses continue to be strongly cash flow positive for us.R&D expense was $9.4 million in the first quarter this year, as compared to $9.9 million in the first quarter last year. Now these figures included stock-based compensation of $1.3 million in the first quarter this year, and $2.3 million in the first quarter last year. So if we exclude stock-based comp, R&D expense actually increased by about $522,000. SG&A expenses were $3.5 million in the first quarter, as compared to $4.3 million in the first quarter last year. These figures included $669,000 of stock-based compensation in the first quarter this year and $1.2 million of stock-based compensation in the first quarter last year. Excluding the stock-based compensation, SG&A expense declined by about $253,000. Our net loss for the first quarter was $6.6 million, compared to a net loss of $8.7 million for the same period last year. Probably a more relevant financial metric for us than our net loss was net cash consumed during the quarter; that figure was $5.8 million. So at March 31, we had cash and investments of $35.8 million, compared with cash and investments of $41.6 million at December 31. Thanks again for joining the call and I will now turn it over to Jim for a non-financial discussion. Jim Brown Thank you, Matt. The first quarter was a strong one for DURECT. With regard to POSIDUR, we started BESST, the pivotal U.S. Phase III study. Nycomed continued their Phase II studies in Europe, and we amended our licensing agreement with Nycomed to separate funding and control of development for the U.S. and EU markets.
For REMOXY, we continue to support King's progress towards resubmission of the NDA in the fourth quarter this year. ELADUR started a large Phase II study in chronic lower back pain, and we continued activity in the licensing front with multiple programs.Let us now go through our major programs in a little more detail. Starting with REMOXY. REMOXY is a 12-hour extended release and tamper-resistant form of oxycodone. Our ORADUR technology is resistant to snorting, smoking, injecting, high-heat exposure, and dissolving in drinks. Regulatory history on this product shows us that the NDA was submitted in June of 2008 and it was granted priority review. However, a Complete Response letter was received in December of 2008. King then assumed control of the NDA from Pain Therapeutics in March last year and King met with the FDA in July of 2009, and they stated after that meeting that they had established a path to address the FDA's comments. King expects to resubmit the NDA in the fourth quarter of this year, with an expected PDUFA date six months after re-submission. If you look at the potential financial impact of REMOXY to DURECT, it is significant. The oxycodone sales in 2009 were $3.2 billion, and DURECT will receive a royalty on King sales that start at 6% and go to 11.5%, with the 11.5% being close to about $1 billion. So, we take and make some assumptions – we assume that the REMOXY annual sales are somewhat in the range of $500 million to $900 million. That would represent about 16% to 28% market penetration. DURECT would yield royalties that would range between $36 million and $72 million. That will make a big difference to a company that has an average burn rate over the last five years of $14 million. Read the rest of this transcript for free on seekingalpha.com