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Durect Corp. (DRRX)
NASDAQ:DRRX

Durect (DRRX) AI Stock Analysis

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Durect

(NASDAQ:DRRX)

Rating:43Neutral
Price Target:
$0.50
▼(-9.09%Downside)
Durect Corporation's overall score is primarily affected by its financial struggles, including declining revenue and negative cash flows. Technical indicators further reflect weak momentum. While the debt-free status and cost reductions are positive, the lack of profitability and limited valuation appeal weigh heavily on the score.
Positive Factors
Clinical Trial Success
The agreed Phase 3 trial design positions larsucosterol well for success.
Regulatory Approvals
The FDA has granted larsucosterol Fast Track Designation and Breakthrough Therapy Designation for the treatment of alcohol-associated hepatitis.
Negative Factors
Financial Risks
DURECT is viewed as a significant 'going concern' risk with its current cash runway that extends into 1Q25.
Funding Challenges
Funding remains a key missing piece for the registrational Phase 3 trial of larsucosterol in patients with severe alcohol-associated hepatitis.

Durect (DRRX) vs. SPDR S&P 500 ETF (SPY)

Durect Business Overview & Revenue Model

Company DescriptionDURECT Corporation, a biopharmaceutical company, researches and develops medicines based on its epigenetic regulator and pharmaceutical programs. The company offers ALZET product line that consists of osmotic pumps and accessories used for research in mice, rats, and other laboratory animals. It also develops larsucosterol (DUR-928), an endogenous, orally bioavailable small molecule that is in Phase IIb clinical trial to play a regulatory role in lipid metabolism, stress and inflammatory responses, and cell death and survival to treat alcohol-associated hepatitis, as well as completed Phase Ib clinical trial to treat patients with nonalcoholic steatohepatitis. In addition, the company offers POSIMIR, a post-surgical pain product to deliver bupivacaine up to days of in adults; and Methydur to treat attention deficit hyperactivity disorder. It markets and sells its ALZET lines through direct sales force in the United States, as well as through a network of distributors in Japan, Europe, and internationally. The company has strategic collaboration and other agreements with Virginia Commonwealth University Intellectual Property Foundation; Indivior UK Ltd.; and Santen Pharmaceutical Co., Ltd. DURECT Corporation was incorporated in 1998 and is headquartered in Cupertino, California.
How the Company Makes MoneyDurect Corporation generates revenue through a combination of product sales, collaborative research and development agreements, and licensing arrangements. The company earns income from its proprietary drug delivery technologies by partnering with other pharmaceutical companies who utilize Durect's platforms to enhance their own drug formulations. Additionally, Durect receives milestone payments and royalties from these partnerships as specific development and commercialization goals are achieved. The company also sells its own developed products, contributing to its revenue streams. Key collaborations with major industry players, as well as the commercialization of its approved therapeutics, are significant factors contributing to Durect's earnings.

Durect Earnings Call Summary

Earnings Call Date:May 13, 2025
(Q4-2024)
|
% Change Since: -16.67%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant cost reductions and the promising potential of 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.
Q4-2024 Updates
Positive Updates
R&D Expense Reduction
R&D expenses decreased to $10.4 million in 2024 from $29.4 million in 2023, primarily due to lower clinical trial-related expenses and other external costs.
SG&A Expense Decrease
SG&A expenses were reduced to $10 million in 2024 from $12.7 million in the previous year, reflecting lower employee and consulting expenses.
Debt-Free Status Achieved
DURECT Corporation became debt-free after using proceeds from the sale of the Allset product line to repay their term loan.
Larsucosterol's Breakthrough Potential
Larsucosterol showed a nearly 60% reduction in mortality in Phase 2b trials, contributing to its FDA breakthrough therapy designation.
Negative Updates
Revenue Decline
Total revenues in 2024 fell to $2 million from $2.6 million in 2023, with fourth-quarter revenues dropping to $0.5 million from $0.9 million the previous year.
Decrease in Cash and Investments
Cash and investments decreased to $12 million by the end of 2024, down from $29.8 million at the end of 2023.
Company Guidance
During the DURECT Corporation's fourth quarter and full-year 2024 earnings call, CFO Timothy Papp detailed the company's financial results, highlighting total 2024 revenues of $2 million, a decline from $2.6 million in 2023, with fourth-quarter revenues at $0.5 million, down from $0.9 million the previous year. The decrease was attributed to lower earn-out revenue from Indivior, reduced feasibility agreement revenues, and decreased excipient sales. R&D expenses dropped significantly to $10.4 million in 2024 from $29.4 million in 2023, mainly due to the completion of the Affirm trial. SG&A expenses also decreased to $10 million from $12.7 million the previous year. The company ended 2024 with $12 million in cash and investments, down from $29.8 million at the end of 2023, sufficient to fund operations through Q3 2025. Additionally, the sale of the Allset product line was completed, and the proceeds were used to repay the company's term loan, leaving DURECT debt-free. Jim Brown, CEO, emphasized their focus 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.

Durect Financial Statement Overview

Summary
Durect's financial performance is challenged by significant revenue declines, persistent losses, and negative cash flows. The balance sheet shows high leverage and reduced equity, signaling potential financial instability without improvements in revenue and cost management.
Income Statement
40
Negative
Durect has experienced a significant revenue decline from 2020 to 2024, with total revenue dropping from $30.1M to $2.03M. Gross profit margins remain positive but are overshadowed by persistent negative EBIT and net profit margins, indicating ongoing operational challenges. Consistently negative EBITDA and net income reflect struggles in cost management and profitability.
Balance Sheet
45
Neutral
The company's balance sheet shows a decreasing trend in total assets and equity from 2019 to 2024, with stockholders' equity shrinking significantly. The debt-to-equity ratio remains relatively high, indicating leverage concerns, although recent efforts to reduce debt are noted. The equity ratio has deteriorated, suggesting a reduced buffer for absorbing financial shocks.
Cash Flow
35
Negative
Durect's cash flow situation is concerning, with consistently negative operating and free cash flow over the years. Despite some improvement in investing activities, the operating cash flow to net income ratio remains negative, highlighting inefficiencies in translating income into cash flow. Financing activities have not sufficiently offset the negative cash flows from operations.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
525.00K2.03M8.55M19.28M13.98M30.11M
Gross Profit
736.00K1.95M6.83M17.70M12.02M28.70M
EBIT
-17.33M-18.91M-36.88M-35.08M-34.27M-12.62M
EBITDA
-15.83M-18.83M-24.68M-32.78M-33.98M-11.80M
Net Income Common Stockholders
-4.91M-8.32M-27.62M-35.58M-38.13M-2.52M
Balance SheetCash, Cash Equivalents and Short-Term Investments
11.80M11.80M29.68M43.48M69.81M40.73M
Total Assets
18.35M18.35M45.19M60.10M91.99M75.64M
Total Debt
2.21M2.21M20.75M23.26M24.30M25.82M
Net Debt
-8.80M-8.80M-7.65M-20.22M-25.54M4.50M
Total Liabilities
9.22M9.22M30.41M35.12M34.21M35.53M
Stockholders Equity
9.13M9.52M14.78M24.98M57.78M40.12M
Cash FlowFree Cash Flow
-15.87M-19.09M-34.47M-26.39M-37.51M-38.91M
Operating Cash Flow
-15.86M-19.09M-34.41M-26.28M-37.31M-38.70M
Investing Cash Flow
19.43M18.04M-1.17M19.84M15.31M9.43M
Financing Cash Flow
-14.85M-16.35M20.50M83.00K50.53M15.66M

Durect Technical Analysis

Technical Analysis Sentiment
Negative
Last Price0.55
Price Trends
50DMA
0.65
Negative
100DMA
0.73
Negative
200DMA
0.95
Negative
Market Momentum
MACD
-0.03
Negative
RSI
42.64
Neutral
STOCH
53.22
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRRX, the sentiment is Negative. The current price of 0.55 is below the 20-day moving average (MA) of 0.58, below the 50-day MA of 0.65, and below the 200-day MA of 0.95, indicating a bearish trend. The MACD of -0.03 indicates Negative momentum. The RSI at 42.64 is Neutral, neither overbought nor oversold. The STOCH value of 53.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DRRX.

Durect Risk Analysis

Durect disclosed 51 risk factors in its most recent earnings report. Durect reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
We contract with third parties for the manufacture of larsucosterol and expect to continue to do so for any required additional clinical trials as well as the commercialization of larsucosterol. Our reliance on third parties increases the risk that submissions for regulatory approval of larsucosterol may be delayed or that we will not have sufficient quantities of larsucosterol available at an acceptable cost, which could delay, prevent or impair our development and commercialization efforts of larsucosterol Q1, 2023

Durect Peers Comparison

Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
54
Neutral
$5.31B3.26-45.10%2.79%16.76%0.02%
47
Neutral
$14.47M-7.72%35.25%81.05%
43
Neutral
$16.79M-203.11%-41.45%40.69%
$8.90M-58.27%
31
Underperform
$26.71M-576.46%38.50%
$54.40M0.0957.63%
39
Underperform
$16.80M-201.88%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DRRX
Durect
0.55
-0.86
-60.99%
TXMD
TherapeuticsMD
1.25
-0.83
-39.90%
SISI
Shineco
0.48
-79.32
-99.40%
KALA
Kala Pharmaceuticals
4.11
-2.10
-33.82%
SXTC
China SXT Pharmaceuticals
1.94
-6.62
-77.34%
IXHL
Incannex Healthcare Limited Sponsored ADR
0.19
-3.17
-94.35%

Durect Corporate Events

Executive/Board Changes
Durect Corporation Announces Board Member’s Retirement
Neutral
Feb 21, 2025

On February 14, 2025, Terrence F. Blaschke retired from his role on the Board of Directors of DURECT Corporation, where he also served on the Nominating and Corporate Governance Committee. His resignation, effective immediately, was not due to any disagreements with the company’s management or board over its operations or policies.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.