DURECT Corporate Presentation - Life Sciences Report...DURECT Corporation A Biopharmaceutical Company with a Rich Pipeline • Epigenomic NCE’s for orphan diseases, acute organ injury

DURECT CorporationA Biopharmaceutical Company

DURECT CorporationA Biopharmaceutical Company

February 1, 2016

Forward-Looking Statements

The statements in this presentation regarding DURECT’s and its collaborative partners' products in development, anticipated product benefits, anticipated product markets, clinical trial results and plans, DURECT’s future business plans and projected financial results and DURECT’s emergence as an innovative biopharmaceuticals company 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, DURECT’s (and that of its third-party collaborators’, where applicable) abilities to successfully enroll and complete clinical trials, complete the design, development, and manufacturing process development of the product candidates, obtain product and manufacturing approvals from regulatory agencies and manufacture and commercialize the product candidates and marketplace acceptance of the product candidates, as well as DURECT’s ability to fund its growth and operations. Further information regarding these and other risks is included in DURECT's most recent Annual or Quarterly Report on Form 10-K or 10-Q filed with the SEC under the heading “Risk Factors.”

DURECT Corporation

A Biopharmaceutical Company with a Rich Pipeline

• Epigenomic NCE’s for orphan diseases, acute organ injury and NAFLD/NASH– Family of endogenous small molecules– DUR-928: lead molecule with compelling animal data from 8

animal models, successful initial Phase 1 studies, conducting patient studies in 2016

• 2 NDA stage 505(b)2 programs: POSIMIR™ and REMOXY®

– Large market opportunities in post-surgical pain and chronic pain– Distinct approaches to aid proper use of opioids

• Pipeline of other 505(b)2 programs, plus profitable ALZET® and LACTEL® product lines

DURECT Corporation

Areas of Focus

Reformulated Drugs• Pursuing 505(b)2 pathway

to approval

• Pain management and other indications

• Leverage drug delivery expertise

• Lead programs:– POSIMIR™– REMOXY®

New Chemical Entities• Pursuing 505(b)1 pathway

to approval

• NAFLD/NASH, acute organ injury, and orphan indications

• In-licensed, leverage drug development expertise

• Lead programs:– DUR-928 chronic metabolic

diseases (oral)– DUR-928 acute organ injury

(injectable)

Solid Progress in 2015

• Announcement of Epigenomic Regulator Program– Family of endogenous molecules affecting regulation of lipids, inflammation,

cell survival – 8 animal models with compelling data– Successful Phase 1a studies, chronic metabolic disease and acute organ

injury programs– First patient study (NASH) initiated in January 2016

• POSIMIR™– Designed pivotal Phase 3 trial in a model we like– PERSIST trial started in Q4

• REMOXY®

– Studies required for resubmission completed and clean– NDA prep underway and resubmission expected Q1 2016

• Other– Relday®: Positive Phase 1 data– ORADUR-MPH: Started Phase 3 in Taiwan– ALZET® and LACTEL® performing well– Insiders continue to show commitment

Epigenomic Regulator Program

• Family of ENDOGENOUS regulators and analogues– Sulfated oxysterols: a new class of therapeutics– Regulation of lipids, inflammation, and cell survival– In-licensed in 2012; exclusive WW rights with patents

issued and pending

• 2 programs, many potential orphan & broad-based indications– Chronic metabolic disorders . . . . Oral formulation– Acute organ injuries . . . . . . . . . Injectable formulation

• Lead molecule: DUR-928– Compelling data from 8 animal models– Successful initial Phase 1 safety studies with oral and

injectable formulations– First patient study (NASH) initiated in January 2016– Additional patient studies planned for 2016

Chromosome

DNA

Histones

Insulin Corticosteroids

Thyroid hormone Erythropoietin (epoetin alfa; Epogen®/Procrit®)

Growth hormone G-CSF(filgrastim; Neupogen®/Neulasta®)

Epigenomic Regulator ProgramEndogenous molecules

• Endogenous = produced naturally by the body

• DUR-928 is highly conserved and found in similar plasma concentrations in all mammals studied to date:– Humans, mice, rats, hamsters, monkeys, dogs

• Endogenous molecules have been approved in various therapeutic areas:

DUR-928Background

• A naturally occurring nuclear regulator

• Acts in the nucleus and affects a number of nuclear receptors

• Discovered in human and animal liver cells– Present in liver tissue and macrophages

• Highly conserved across all species tested:– Mouse, rat, hamster, dog, and monkey

• Made in association with the mitochondria

• Production is regulated by insulin

Compelling Animal Data

Chronic Disease Models

• High fat diet mouse

• High fat diet hamster

• NASH mouse

• Leptin deficient rat

Acute Organ Injury Models

• Liver toxicity mouse

• Endotoxin-induced shock mouse

• Renal ischemia/reperfusion injury rat

• Brain ischemia/stroke rat

HFD + PlaceboChow + Placebo

10 weeks

+ Placebo

+ Placebo

+ DUR-928

6 weeks

Chow diet

High fat diet (HFD)

HFD + DUR-928

Improvement in Liver MorphologyHigh fat diet mouse

Serum ALT, ASTPlasma cholesterol

Liver TG & cholesterol

Glucose toleranceInsulin sensitivity

Compelling Animal Data

Chronic Disease Models

• High fat diet mouse

• High fat diet hamster

• NASH mouse

• Leptin deficient rat

Acute Organ Injury Models

• Liver toxicity mouse

• Endotoxin-induced shock mouse

• Renal ischemia/reperfusion injury rat

• Brain ischemia/stroke rat

Chemical InjuryAcetaminophen/ethanol exposure mouse

90% lived on DUR-92890% died on vehicle

0

20

40

60

80

100

0 2 4 6 8 10

Perc

enta

ge s

urvi

ving

, %

Time, days

n=20

Vehicle control

n=20

DUR-928

APAP/EtOH

DUR-928 or vehicle controlDosed 2 times after APAP/EtOH

DUR-928

Vehicle

Reductions in serum creatinine and BUN, edema, and MRI T2 lesion

Ischemic Injury

100% lived on DUR-92860% died on vehicle

Biologic Injury

90% lived on DUR-92890% died on vehicle

Chemical Injury

Reductions in hepatic triglyceride, cholesterol and free fatty acids in 3 weeks

Leptin Deficient Rat

Reduction of NASH score & fibrosis in 4 weeks

NASH

Improved liver morphology & reduced lipids in 6 weeks

High Fat DietHamster & Mouse

Broad Potential Clinical Utility Suggested by multiple animal models

Orphan indications

DUR-928 Development ProgramsCurrently in Phase 1

NAFLD/NASHAFLD/ASH

Others

Chronic Metabolic DiseaseOral

Acute kidney injury

Others

Acute Organ InjuryInjectable

Phase 1: Safety in healthy human subjectsSingle-site, randomized, double-blind, placebo controlled studies

Chronic Metabolic Disease• Oral formulation• Single-ascending dose in

30 subjects• Multiple-ascending dose in 30

subjects (5 consecutive days)

Acute Organ Injury• Injectable formulation• Single-ascending dose in

24 subjects• Multiple-ascending dose in 10

subjects (5 consecutive days)

• Over 75 healthy volunteers treated with DUR-928• High doses resulted in plasma levels >100-fold higher than

endogenous levels• No food effect observed• Well tolerated at all doses, no severe or serious drug-related

adverse events• No accumulation in plasma concentrations observed with repeated

dosing, dose related increases in plasma concentrations observed

Chronic Metabolic Disease ProgramPhase 1b: Initial Patient Study (NASH)

• Initiated January 2016 in Australia

• 3 successive cohorts evaluating different levels of DUR-928 administered orally

• Single-site, open label, dose ranging safety and PK study

• 3 cohorts (low dose, medium dose, high dose)– 10 NASH patients and 6 matched control subjects per dose (30 total

NASH, 18 matched control subjects)

• Results expected in H1 2016

Enables and informs multi-dose POC study in NASH patients in 2016

Acute Organ Injury ProgramPhase 1b: Initial Patient Study

• Injectable formulation

• Working with investigators to finalize protocol and update IRB

• Single-site, open label, dose ranging safety and PK study in renal impaired patients

• To be conducted in Australia

Enables and informs POC study in acute kidney injury and/or chronic kidney injury patients in 2016

DUR-928 ProgramsNext Steps

• Metabolic disease program– Data from Phase 1b single-ascending-dose study– Phase 1b / 2a multi-dose study

• Acute organ injury program– Data from Phase 1b single-ascending-dose study– Initiate POC study

• Investigating multiple orphan indications– Conducting additional pre-clinical studies– Working closely with KOL’s

Conduct multiple Phase 2 studies

505(b)2 Program PipelineMultiple Products and Partnerships to Drive Value

* POSIMIR and REMOXY are the subject of Complete Response Letters from the FDA.1 Estimates for potential market opportunities are based on publicly available information, research reports, and company reports.

Phase 2 Phase 3Potential Market1PROJECT

CommercializationCompanyPhase 1 NDA *Preclinical

$1+ BillionORADUR®-

Hydromorphone

$1+ Billion ORADUR®-ADHD (Methylphenidate) In Taiwan

POSIMIR™

(SABER®-Bupivacaine)$1+ Billion

ELADUR® (TRANSDUR®-Bupivacaine Patch) Orphan - PHN

$1+ BillionREMOXY®

(ORADUR®-Oxycodone)

Relday® (Risperidone) $1+ Billion

Ophthalmic Product (API not disclosed) Not disclosed

POSIMIR™: Post-Operative Pain ControlSABER®-Bupivacaine

• True 3 days of post-op pain control

• Unmet need: non-narcotic analgesia, 24-72 hoursafter surgery

• Designed for local control of post-surgical pain

• Plus reduced narcotic use and associated side effects and costs– Nausea, vomiting, ileus, constipation, respiratory depression– Potential for earlier hospital discharge

DURECT holds WW rights to POSIMIR

POSIMIR™Reduction in Pain on Movement

P-values derived from ANOVA.

Hernia Surgery

0

1

2

3

4

5

6

7

8

Placebo POSIMIR

−31%

P=0.003

LS m

ean

pain

inte

nsity

sco

re(ti

me-

norm

aliz

ed A

UC

1-72

)

1-72 hours

Shoulder Surgery

0

1

2

3

4

5

6

7

8

Placebo POSIMIR

−21%

P=0.012

1-72 hours

POSIMIR™Reduction in Opioid Use

P-values derived from nonparametric Wilcoxon Rank Sum test.

Hernia Surgery

0

2

4

6

8

10

12

14

Placebo POSIMIR

−80%

P=0.009

Med

ian

cum

ulat

ive

opio

id c

onsu

mpt

ion

(IV m

orph

ine

mg

equi

vale

nts)

0-72 hours

Shoulder Surgery

0

2

4

6

8

10

12

14

Placebo POSIMIR

−67%

P=0.013

0-72 hours

P-values derived from CMH Chi-Square test adjusted by study sites.

POSIMIR™Proportion of Patients NOT Taking ANY Supplemental Opioid

>20% more patients did not require a single opioid

Hernia Surgery

28%

49%

0

10

20

30

40

50

Placebo POSIMIR

P=0.066

Shoulder Surgery

16%

40%

0

10

20

30

40

50

Placebo POSIMIR

P=0.031

% of Patients Not Taking Opioids, 0-72 hours

Pat

ient

per

cent

age

POSIMIR™Phase 3 Pivotal Trial

PERSIST

• A Placebo-Controlled Trial of SABER™-Bupivacaine for the Management of Postoperative Pain Following Laparoscopic Cholecystectomy

• 306 patient Phase 3 clinical trial in laparoscopic cholecystectomy (gallbladder removal)– We anticipate ~1 year to enroll, ~6 months to resubmit, 6 month

review after resubmission

• Positive previous experience with this surgery

POSIMIR™Using statistical method to be used in upcoming Phase 3

0

1

2

3

4

5

6

7

8

0 12 24 36 48 60 72 84

Hours after surgery

BESST TrialPain intensity on movement

Laparoscopic cholecystectomy (Cohort 2, N=50)

Mea

n (±

SE

) pai

n in

tens

ity s

core

Bupivacaine HCl

POSIMIR

P=0.024

~25% Pain Reduction

POSIMIRDifferentiating Features

• NDA to include efficacy data from 3 common surgical models– Hernia, shoulder, gall bladder removal– Aiming to be first product to demonstrate efficacy in

laparoscopic procedures– Data set will include ~1,400 patients

• Superior duration of action (3 days)– SABER® formulation allows dosing 660 mg — 2½ times more

than any other bupivacaine product– No other product has demonstrated efficacy after 1 day

• Simple and rapid administration into the wound under visual supervision– Puts more drug closer to affected nerves– Facilitates use in laparoscopic procedures with multiple ports

POSIMIRCommercial Opportunity

• >70 million surgeries per year in the U.S.

• 10-20 million procedures as a potential available market

• Targeting ~$300 / procedure based on strong pharmacoeconomics– Driven by reduction in opioid use and side-effects

Easy product concept for surgeons, anesthesiologists, and payers to get behind– Better for patients– Potentially large healthcare cost savings– Benefits to administration technique– Underlying desire for non-opioid, extended post-surgical pain relief

Crushed

Intact

Long-Acting Oxycodone Tablets

ORADUR®-OpioidsREMOXY®

Crushed

REMOXY®

Intact

Tamper Resistant

• Snorting

• Smoking

• Injecting

• Chewing

• Dissolving in drinks

Minimal Impact

ORADUR®-OpioidsREMOXY®: Path to resubmission and approval

• Pfizer met with FDA in 2013 re: resubmission requirements– FDA agreed to resubmission strategy and data required– Detailed outline in place

• Required clinical studies completed, NDA prep underway– Per Pain Therapeutics, data supports resubmission and resubmission

approach reconfirmed with the FDA– Positive likability study – met primary endpoints in FDA Category 3

Human Abuse Potential study– Stability tests on commercial lots met specs at 18 months– Study reports completed for 4 clinical studies conducted by Pfizer

(dose-proportionality, pivotal BE, food-effect, and alcohol interaction studies)

• Pain Therapeutics’ resubmission target is Q1 2016– 6 month FDA review after resubmission acceptance (Q3 2016)

* Does not include revenue / profits associated with manufacturing mark-up of key excipients.

Illustrative royalty calculations:(in millions)

• U.S. OxyContin® sales in 2014: ~$2.4 billion

• Blended royalties on net sales: 6% to 11.5%

% of 2014 US OxyContin Sales 10% 20% 30%

REMOXY Annual Sales 242$ 484$ 726$

Royalties to DURECT * 16$ 35$ 55$

REMOXY®: Potential Financial Impact to DURECT(dollars in millions)

DURECT CorporationCompany Financials

September 30, 2015 Shares Outstanding (October 26, 2015) 120.5 Cash and Investments 32.4$ MM Recent Share Price 1.20$ Debt 19.8 MM Market Value 144.6$ MM

Potential Milestone Payments Federal NOL carryforward at 12/31/14 277$ MMREMOXY and ORADUR-Hydromorphone 3.4$ MM State NOL carryforward at 12/31/14 204$ MMRelday 103.0 MMELADUR 61.0 MMSanten ophthalmic product 76.0 Total 243.4$ MM

Insider buying 2012-2015 >2.0 MM sharesInsider ownership (excl. options) 4.9%Options paid in lieu of cash bonuses 2011-2013 ~$4.7 MMReduced salaries / BOD fees for options 2012-2014 >$1 MM2013 cash bonus declined by Section 16 Officers ~$158,000

Potential Key Drivers Next 12-24 Months

Next 12 months• Potential for 1st product approval

(REMOXY®)

• Initial patient data and start of Phase 2 (DUR-928)

• Complete Phase 3 (POSIMIR™)

• 1 new meaningful collaboration

• Phase 3 data in Taiwan (ORADUR®-Methylphenidate)

• Start of Phase 3 (Relday®)

Next 24 months• Potential for 2 product approvals

(REMOXY® and POSIMIR®)

• Phase 2 data in one or more indications (DUR-928)

• POSIMIR resubmission, potential approval

• At least 1 new meaningful collaboration

• Phase 3 in Europe/US (ORADUR®-Methylphenidate)

• Phase 3 underway (Relday®)