Durect (DRRX)

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Zacks take

http://scr.zacks.com/News/Press-Releases/Press-Release-Details/2017/DURECT-DRRX-A-175-Million-Patent-Purchase-Agreement-with-Indivior-PLC-/default.aspx?utm_content=buffera1fbf&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer


By Grant Zeng, CFA

NASDAQ:DRRX

The Patent Deal

On October 2, 2017, DURECT Corporation (DRRX) announced a patent purchase agreement with Indivior UK Limited, an affiliate of Indivior PLC (INDV.L).

Pursuant to the agreement, DURECT has assigned certain of its U.S. patent rights to Indivior. This assignment may provide further intellectual property protection for RBP-7000, Indivior's investigational once-monthly injectable risperidone product for the treatment of schizophrenia. Indivior has submitted a New Drug Application (NDA) for RBP-7000 to the U.S. Food and Drug Administration (FDA). We expect the approval of RBP-7000 by the FDA in 2H18.

Per the agreement, Indivior has made an upfront non-refundable payment to DURECT of $12.5 million, with the potential for an additional $5 million based on a regulatory milestone, as well as quarterly earn-out payments that are based on a single digit percentage of U.S. net sales for certain products covered by the patent rights, including RBP-7000. The patent rights include granted patents extending through at least 2026. Indivior estimates peak US sales of RBP-7000 in the range of 200 and 300 million dollars.

The Implication of the Deal

We think this is a great deal for Durect.

The deal not only boosts Durect’s balance sheet, but also validate the company’s long-acting risperidone formulation technology.

DURECT’s long-acting injectables are designed to achieve stable delivery of small-molecule and biologic therapeutics for periods of days to months following a single subcutaneous, intramuscular, or other localized injection. The company’s biocompatible, bioerodible technologies employ varied and customizable sets of components, allowing the formulation to be fine-tuned to suit the active pharmaceutical ingredient (API), the physiological environment, and the desired performance characteristics of the commercial product.

DURECT’s long-acting injectable technologies demonstrate the following advantages:
• High drug loading—Drug loading as high as 30%, permitting smaller injection volumes
• Controlled onset and release—Rapid onset and stable release of drug over time, with little to no post-injection “burst”
• Stabilization—Proteins, peptides, and small molecules can be shielded from water and biologically active enzymes to prolong in vivo activity
• Ease of administration—Low viscosity and small volumes for easier, less painful injections
• Ease of manufacture—scalable, low-cost manufacturing
• Strong patent protection—covered by U.S. and foreign patents