DURECT Corporation Announces First Quarter 2014 Financial Results and Update of Programs

May 1, 2014

CUPERTINO, Calif., May 1, 2014 /PRNewswire/ — DURECT Corporation (Nasdaq: DRRX) announced today financial results for the first quarter of 2014. Total revenues were $6.3 million and net loss was $3.6 million for the three months ended March 31, 2014 as compared to total revenues of $4.2 million and net loss of $5.2 million for the three months ended March 31, 2013.

At March 31, 2014, we had cash and investments of $21.8 million, compared to cash and investments of $24.4 million at December 31, 2013. We have no debt obligations, other than normal liabilities associated with running our business.

“Next week, we plan to formally request a face-to-face meeting with the FDA to gain more clarity on the next steps that would be required to address the issues cited in the recent Complete Response Letter for POSIDUR((TM)),” stated James E. Brown, D.V.M., President and CEO of DURECT. “Regarding REMOXY(®), Pfizer has four studies posted on Clintrials.gov, with one slated for completion in April 2014 and the other three in June 2014. We also are pleased to have established a collaboration with Impax whereby ELADUR(®) is now back in development for post-herpetic neuralgia (PHN), the indication for which it was originally designed.”

Update of Programs:

    --  REMOXY (oxycodone) Extended-Release Capsules CII. Pfizer has efforts
        underway to resolve the issues raised in the Complete Response Letter
        for REMOXY, which primarily relate to manufacturing. Following guidance
        received from the FDA in 2013, Pfizer announced that they will proceed
        with the additional clinical studies and other actions required to
        address the Complete Response Letter received in June 2011. These new
        clinical studies will include, in part, a pivotal bioequivalence study
        with the modified REMOXY formulation to bridge to the clinical data
        related to the original REMOXY formulation, and an abuse-potential study
        with the modified formulation. As previously disclosed, the complete
        response submission is not expected to occur prior to mid-2015.

REMOXY, an investigational drug, is a unique long acting oral formulation of oxycodone intended to treat pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. Based on DURECT’s ORADUR(®) technology, which is covered by issued patents and pending patent applications owned by us, REMOXY is designed to discourage common methods of tampering associated with prescription opioid analgesic misuse and abuse.

    --  POSIDUR (SABER(®)-Bupivacaine) Post-Operative Pain Relief Depot. On
        February 12, 2014 we received a Complete Response Letter from the FDA.
        Based on its review, the FDA has determined that they cannot approve the
        NDA in its present form, stating the NDA does not contain sufficient
        information to demonstrate that POSIDUR is safe when used in the manner
        described in the proposed label, and the FDA has indicated that
        additional clinical safety studies need to be conducted. We are
        evaluating the issues and recommendations described in the Complete
        Response Letter and plan to have further discussions with the FDA around

As part of our on-going effort to communicate to the medical community data that we’ve generated in our development program for POSIDUR, DURECT presented four posters on POSIDUR at the 39(th) Annual American Society of Regional Anesthetic and Pain Medicine Meeting on April 5.

POSIDUR is our investigational post-operative pain relief depot that utilizes our patented SABER technology and is intended to deliver bupivacaine to provide up to three days of pain relief after surgery. We are in discussions with potential partners regarding licensing development and commercialization rights to POSIDUR, for which we hold worldwide rights.

    --  ELADUR(®) (TRANSDUR-bupivacaine). On January 7, 2014 we announced that
        we had entered into an agreement granting Impax the exclusive worldwide
        rights to develop and commercialize ELADUR. Under the terms of the
        agreement, Impax paid DURECT an upfront fee of $2 million, with possible
        additional payments of up to $61 million upon the achievement of
        predefined development and commercialization milestones. If ELADUR is
        commercialized, DURECT would also receive a tiered royalty on product
        sales. Impax will control and fund the development program.

ELADUR, for the treatment of pain associated with post-herpetic neuralgia (PHN), is our proprietary transdermal patch intended to deliver bupivacaine for a period of up to three days from a single application; existing lidocaine patches for this condition can be worn for 12 hours with a rest period of 12 hours during which time many patients experience breakthrough pain.

    --  Relday((TM)) (Risperidone Program).  In 2013, Zogenix (our licensee)
        announced positive single-dose pharmacokinetic (PK) results from a Phase
        1 clinical trial of Relday at 25 mg, 50 mg and 100 mg once-monthly
        doses, representing the full dose range that would be anticipated to be
        used in clinical practice.  According to Zogenix, the positive results
        from this study extension positions Zogenix to begin a multi-dose
        clinical trial, which would provide the required steady-state
        pharmacokinetic and safety data prior to initiating Phase 3 development
        studies, and Zogenix plans to commence this multi-dose trial in the
        fourth quarter of 2014.

Relday is a proprietary, once-monthly subcutaneous injectable formulation of risperidone with immediate onset of action using DURECT’s SABER controlled-release formulation technology. An existing long-acting injectable risperidone product, which achieved $1.3 billion in global net sales in 2013, requires twice-monthly, intramuscular injections and drug reconstitution prior to use.

    --  ORADUR-ADHD Program. In 2013, we selected a lead formulation for the
        lead program in our ORADUR-ADHD (Attention Deficit Hyperactivity
        Disorder) program, ORADUR-Methylphenidate. This formulation was chosen
        based on its potential for rapid onset of action, long duration with
        once-a-day dosing and target pharmacokinetic profile as demonstrated in
        a Phase 1 trial. In addition, this product candidate utilizes a small
        capsule size relative to the leading existing long acting products on
        the market and incorporates our ORADUR anti-tampering technology. Our
        licensee, Orient Pharma, has met with the Taiwan Food and Drug
        Administration (TFDA) to discuss the Phase 3 program in that market and
        is developing its plans for further development in the defined Asian and
        South Pacific countries to which it has rights from us. We retain rights
        to all other markets in the world, notably including the U.S., Europe
        and Japan, and are engaged in licensing discussions with other

    --  Other ORADUR-based Opioids. We have licensed three other ORADUR-based
        opioids (hydrocodone, hydromorphone and oxymorphone) to Pain
        Therapeutics. Phase I clinical trials have been conducted for
        ORADUR-hydrocodone and ORADUR-hydromorphone, and an Investigational New
        Drug (IND) application has been accepted by the FDA for
        ORADUR-oxymorphone. During the first quarter of 2014, we conducted
        research and development activities on these programs under approved
        workplans with Pain Therapeutics.

    --  Feasibility Projects and Other Activities. During the first quarter of
        2014, we continued work on several feasibility projects and have
        multiple discussions underway with other parties about new feasibility
        projects which are designed to demonstrate that our technologies can
        achieve the drug delivery objectives set forth by our collaborators and
        are worthy of further development. The Relday program, described above,
        was one such project which has matured into a development and license
    --  Business Development Activities. We have multiple programs that may
        potentially be licensed over the next 12-18 months. These include
        POSIDUR, TRANSDUR-Sufentanil, ORADUR-ADHD, as well as various other
        programs which we have not described publicly in detail.

Earnings Conference Call

A live audio webcast of a conference call to discuss first quarter 2014 results will be broadcast live over the internet at 4:30 p.m. Eastern Time on May 1 and is available by accessing DURECT’s homepage at www.durect.com and clicking “Investor Relations.” If you are unable to participate during the live webcast, the call will be archived on DURECT’s website under Audio Archive in the “Investor Relations” section.

About DURECT Corporation

DURECT is a specialty pharmaceuticalcompany developing innovative drugs for pain and chronic diseases, with late-stage development programs including REMOXY(®), POSIDUR((TM)), ELADUR(®), and TRANSDUR(®)-Sufentanil. DURECT’s proprietary oral, transdermal and injectable depot delivery technologies enable new indications and superior clinical/commercial attributes such as abuse deterrence, improved convenience, compliance, efficacy and safety for small molecule and biologic drugs. For more information, please visit www.durect.com.

NOTE: POSIDUR((TM)), SABER(®), ORADUR(®), TRANSDUR(®) and ELADUR(®) are trademarks of DURECT Corporation. Other referenced trademarks belong to their respective owners. REMOXY and other ORADUR-based programs, POSIDUR, ELADUR, TRANSDUR-Sufentanil and Relday are drug candidates under development and have not been approved for commercialization by the U.S. Food and Drug Administration or other health authorities.

DURECT Forward-Looking Statements

The statements in this press release regarding the potential regulatory meetings and discussions and submissions for REMOXY and POSIDUR, potential FDA approval of REMOXY, POSIDUR, or any of our other product candidates, anticipated studies and clinical trials (including timing and results) for REMOXY, Relday, ORADUR-Methylphenidate and our other drug candidates, potential royalties or milestone payments from Impax, the potential benefits and uses of our drug candidates, collaborations with third parties and potential business development, licensing and commercialization activities are forward-looking statements involving risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the risk that Pfizer will discontinue development of REMOXY, the risk of adverse decisions by regulatory agencies, including rejection of meeting requests, requests for additional information or product non-approval or non-acceptance of our POSIDUR or other NDA submissions, delays and additional costs due to requirements imposed by regulatory agencies, potential adverse effects arising from the testing or use of our drug candidates, the potential failure of clinical trials to meet their intended endpoints, our potential failure to maintain our collaborative agreements with third parties or consummate new collaborations and risks related to our (and our third party collaborators where applicable) ability to design, enroll, conduct and complete clinical trials, complete the design, development, and manufacturing process development of product candidates, manufacture and commercialize product candidates, obtain marketplace acceptance of product candidates, avoid infringing patents held by other parties and secure and defend patents of our own, and manage and obtain capital to fund operations and expenses. Further information regarding these and other risks is included in DURECT’s Annual Report on Form 10-K for the fiscal year ending December 31, 2013 under the heading “Risk Factors.”

                                DURECT CORPORATION


                     (in thousands, except per share amounts)


                                        Three months

                                         March 31,

                                                  2014                   2013
                                                  ----                   ----

    Collaborative research and
     development and other revenue              $3,512                   $913

    Product revenue, net                         2,781                  3,240

       revenues                                  6,293                  4,153
                                                 -----                  -----

    Operating expenses:

      Cost of
       revenues                                  1,063                  1,658

      Research and
       development                               5,469                  4,789

       general and
       administrative                            3,363                  2,901

    Total operating expenses                     9,895                  9,348
                                                 -----                  -----

    Loss from operations                        (3,602)                (5,195)

    Other income (expense):

      Interest and
       (expenses)                                    3                     14

       expense                                      (1)                    (2)
                                                   ---                    ---

    Net other income (expense)                       2                     12

    Net loss                                   $(3,600)               $(5,183)
                                               =======                =======

    Net loss per share

      Basic                                     $(0.03)                $(0.05)
                                                ======                 ======

      Diluted                                   $(0.03)                $(0.05)
                                                ======                 ======

    Weighted-average shares used in computing net
     loss per share

      Basic                                    110,468                101,881
                                               =======                =======

      Diluted                                  110,468                101,881
                                               =======                =======

    Total comprehensive loss                   $(3,596)               $(5,181)
                                               =======                =======

                               DURECT CORPORATION

                            CONDENSED BALANCE SHEETS

                               (in thousands)

                                          As of                  As of

                                      March 31, 2014     December 31, 2013(1)
                                      --------------     --------------------



    Current assets:

        Cash and cash
         equivalents                              $1,970               $7,836

         investments                              15,838               12,753

        Accounts receivable                        2,108                2,349

        Inventories                                3,510                3,502

        Prepaid expenses
         and other current
         assets                                    2,064                1,888
                                                   -----                -----

    Total current
     assets                                       25,490               28,328

    Property and
     equipment, net                                1,837                1,985

    Goodwill                                       6,399                6,399

    Intangible assets,
     net                                              13                   18

     investments                                   3,611                3,352

     Investments                                     350                  450

    Other long-term
     assets                                          288                  288

    Total assets                                 $37,988              $40,820
                                                 =======              =======



        Accounts payable                          $1,161                 $736

        Accrued liabilities                        3,869                5,865

        Contract research
         liability                                   202                  329

        Deferred revenue,
         current portion                             255                  255
                                                     ---                  ---

    Total current
     liabilities                                   5,487                7,185

    Deferred revenue,
     noncurrent portion                            1,232                1,296

    Other long-term
     liabilities                                   1,604                1,618

     equity                                       29,665               30,721

    Total liabilities
     and stockholders'
     equity                                      $37,988              $40,820
                                                 =======              =======

    (1)  Derived from
     audited financial

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