DURECT Corporation ((DRRX)) has held its Q4 earnings call. Read on for the main highlights of the call.
DURECT Corporation’s recent earnings call showcased a mixed sentiment, highlighting significant cost reductions and the promising potential of their lead asset, larsucosterol. Despite facing challenges such as revenue declines and decreased cash reserves, the company’s strategic focus on developing their lead asset and achieving a debt-free status are positive indicators for future growth.
R&D Expense Reduction
DURECT Corporation reported a substantial decrease in R&D expenses, which fell to $10.4 million in 2024 from $29.4 million in 2023. This reduction was primarily due to lower clinical trial-related expenses and other external costs, reflecting the company’s strategic cost management efforts.
SG&A Expense Decrease
The company also achieved a reduction in SG&A expenses, which decreased to $10 million in 2024 from $12.7 million in the previous year. This decrease was attributed to lower employee and consulting expenses, further demonstrating DURECT’s commitment to cost efficiency.
Debt-Free Status Achieved
A significant milestone for DURECT was becoming debt-free after using proceeds from the sale of the Allset product line to repay their term loan. This achievement strengthens the company’s financial position and allows for greater focus on strategic initiatives.
Larsucosterol’s Breakthrough Potential
Larsucosterol, DURECT’s lead asset, showed a nearly 60% reduction in mortality in Phase 2b trials, earning it an FDA breakthrough therapy designation. This promising development underscores the potential impact of larsucosterol in treating alcohol-associated hepatitis.
Revenue Decline
DURECT faced a decline in total revenues, which fell to $2 million in 2024 from $2.6 million in 2023. Fourth-quarter revenues also dropped to $0.5 million from $0.9 million the previous year, attributed to lower earn-out revenue from Indivior, reduced feasibility agreement revenues, and decreased excipient sales.
Decrease in Cash and Investments
The company’s cash and investments decreased to $12 million by the end of 2024, down from $29.8 million at the end of 2023. Despite this decline, DURECT has sufficient funds to support operations through the third quarter of 2025.
Forward-Looking Guidance
Looking ahead, DURECT Corporation is focused on developing larsucosterol for alcohol-associated hepatitis, with Phase 3 trials expected to cost around $20 million and take approximately two years to yield top-line data. The company remains committed to advancing its lead asset while maintaining financial discipline.
In summary, DURECT Corporation’s earnings call reflected a cautious yet optimistic outlook. While facing revenue challenges and reduced cash reserves, the company’s strategic cost reductions and debt-free status, coupled with the promising potential of larsucosterol, position it well for future growth. Investors will be keenly watching the progress of larsucosterol’s development and its impact on DURECT’s financial performance.