Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the DURECT Corporation Second Quarter Earnings Call. [Operator Instructions].

It is now my pleasure to introduce your host, Tim Papp, Chief Financial Officer. Thank you, Sir.

You may begin.

Timothy Papp

to Second welcome Conference XXXX and Call. afternoon, DURECT Quarter Corporation's Earnings Good Papp, of Financial is Chief This Tim Officer DURECT.

Before we our of remind to begin, I Safe would Harbor like you statement.

statements this benefits, and product potential, uncertainties involve actual financial clinical approval cause may course projections. larsucosterol, regulatory market call, results results, that the the development of can of make During to risks forward-looking and regarding trial These the expected statements risk and in that endpoints in we those materially differ company's can our such XX-Qs, the including meet trial. including the XX-K be filings, does forward-looking the under larsucosterol from heading in Further statements, not information other found AHFIRM Factors. the Risk SEC and regarding our forward-looking these risks

would second results. our I begin, quarter review to like financial XXXX To

primarily primarily Our the the in the $X.X year. R&D million, quarter compared research expenses, year. expenses were $X.X prior by SG&A partially costs. trial to higher year. AHFIRM and associated the million with costs The decrease to the prior were with patent costs. total million revenue with manufacturing million prior This was lower was $X.X employee-related due costs million lower for were contract $X expenses and and $X.X for contract similar expenses recruiting higher compared due to offset second decrease

to XX, XXXX, direct Subsequent in investments million July proceeds. as $XX.X a XXXX. registered cash end opposed quarter, of June million $XX.X of offering, and we $XX.X at XXXX, million completed As December had XX, of net we to raising in the the

program, hand through sufficient from excluding approximately was our to fund cash quarter sales on second million, is the in believe burn under ATM our we cash proceeds and mid-XXXX. operations Our $XX.X

our over like would the turn on Brown, Jim I Now, for an update to our programs. call CEO, to

James Brown

XXXX Hello, Tim. you our Thank for update. you, second today joining everyone. for us quarter Thank

clinical enrollment AHFIRM, trial second June, on that milestone toward hepatitis. alcohol-associated the for significant data continue fourth IIb year. of In productive had we on to which larsucosterol quarter we we quarter, completing for a completed AHFIRM and had top journey be our report Phase and the We during announced this line achieved in to a track we

believe anticipating for be to this DURECT event, and shareholders. We potential which we are has our the eagerly transformative

focus company primary for today. a larsucosterol no effective AH, to approval with potentially Our bringing and life-saving as this gaining remains patients options treatment and therapeutics

for look Assuming larsucosterol If the a in AHFIRM, XXXX. bringing positive forward plan from with of first the with available therapies life-saving to outcome would the the the approved, review to possibility today. effective potentially we no we AH, quarter and to FDA-approved treatment of be results first FDA patients therapeutics this

Furthermore, an the event. from American during data KOL AH, the Phase and quarter, in AH-focused clinical of trial Gastroenterology IIa we our Journal held second published

Lastly, our and we're epigenetic of announce we internally in into platform treatment expertise modulator our oncology. the developed epigenetic the solid both excited potential modulation, the new properties that have tumor of chemical to of multiple entities for have liquid attractive think types. leveraging field expansion By we

like new closer our upcoming data the program few on to to I'd program a in back AH provide I'll get oncology refresher we a But our come readout. as first, to minutes. quick

visit days, which in June track early puts completed year. these so I will to AHFIRM XX on As mentioned, in in line enrollment in us our the follow last September, fourth patients be our we top trial for We report of quarter. last data this patient's

equal to which and with scores to from double-blind, with Maddrey X each. multinational or study placebo-controlled, are arms and XX severe ranging patients dosed total, MELD reminder, a Function patients arm a with AHFIRM XX. active is placebo AH, Discriminate and In dosing patients randomized of XX approximately As a XXX greater we scores than XXX

global the for primary EU and treatment Australia, in U.K. clinical mortality the United and placebo. through the the is enrolled hospitals We in States, a including in AHFIRM liver patients of The at AHFIRM days transplant endpoint larsucosterol between network or difference sites, XX leading

include some thought of with Our centers, renowned world's AH. we and are in liver leaders sites working preeminent the

The substantial for FDA larsucosterol mind, this potential has we and NDA program our a where for FDA-approved that is Fast Track to granted AH has Designation, treatment an AHFIRM patients. first filing. positive could the the unmet With are result need in there be AH a in hopeful support larsucosterol

Our AHFIRM by of biology and comparisons, we is directly mechanism our action trial preclinical a recently-published multiple data, observed larsucosterol the organ animal compelling studies profound the survival IIa of which successful ties relevant AH, benefit models. the confidence multiple supported injury will the into where including in our that acute Phase be study of

designed hospitalized based of trial AHFIRM approximately on XX trial, are data, IIa expected days. all to our historical that result a to We XX potentially at on data. XX% based Phase days, AH XX IIa die be encouraging an within pivotal Phase open-label given our In patients survived patients

We also scores score key markers, across observed Lille level, including MELD bilirubin patients in a consistent and biochemical and improvement doses.

patients data trial conducted includes the were American Defeat a In peer-reviewed published Alcoholic DASH the Consortium. This our of Journal the contemporaneous or Phase comparisons second trial severe well-matched in article with IIa cross-study quarter, from Gastroenterology. by AH Steatohepatitis from the

milligrams comparisons significant were While compared not the sizes XX treated to controlled these including lower part a with has scores care, either or patients with statistically AH and milligrams these study, of the severe that of indicate of treated larsucosterol standard small Lille XX were sample patients steroids.

liver predictor a a Lille of scores, in as reminder, mortality disease. are

levels enzymes ALT. larsucosterol-treated as further potential larsucosterol enzyme, these believe In evidence of the statistically for liver treatment rapidly for We the a AH. in results addition, significant including reduction provide patients, a in the liver decreased

Einstein. May, Montefiore They from event need Columbia perspectives and our audio our their to by unmet on were the Paul from role We In Dr. share to provide pleased able the lethal we from AH the could were and be potential this Presbyterian slides wealth KOL physician The presentation Brett treatment devastating Gaglio highly patients hosted in for to investors this a this draw experience Dr. disease. to joined available and from of website. Fortune are on larsucosterol of disease. play AH transform treating views on their and

additional on to event, our opportunity larsucosterol, attain a the we commercial successful approach During and for information shared our building for KOL if launch. we approval,

at AH over $XX,XXX In addition rate, of with mortality to to cost to its healthcare between $XXX,XXX a high system, each. to the hospitalizations cost a U.S. represents AH XXX,XXX attributed significant

cost the healthcare system. potential States provide United As a to to a potential result, saving opportunity in alone savings in the patients' multibillion-dollar the could larsucosterol simultaneously overall represents addition lives, of that

force. for to States the the begun product groundwork commercializing a in hospital-focused potentially launch we the We've can larsucosterol moderately-sized through United lay and sales believe effectively

build also We of epigenetic like the awareness regulation acute to role diseases in AH. continue around

the you As website www. elucidate one of these find exploreahepigenetics.com disease new we to that can of epigenome initiatives, at in education launched AH. the role a

AH in is global a AH concern, potential attractive the support believe healthcare ex-U.S. patients other EMA represent commercial global their These may site a also positive from markets patients opportunities. allowing ex-U.S. additional to network, Because and filings larsucosterol regions. system. from a the regulatory AHFIRM we result and enroll serve we

the to pleased into announce field also oncology. of platform of epigenetic are the our modulation We expansion

methylation global shown this achieving significant latest that of play is been DNA step in DURECT emerging development at role and an the a towards in medicine, to tumors. mission is Aberrant goal. has field important the be epigenetic a Our development to leader of

DNMT As a of treatment we as potential class believe result, significant drug a inhibitors cancer. have the for

of We product that in well select properties of as currently advance against liquid of the we unique oncology novel of preclinical we our oncology. multiple favorable target The in a applications. understanding physiochemical to inhibition a development regulation of display complement clinical DNMTs, knowledge patients. on internally and to XXXX, our and spectrum molecule in desirable trials on compounds broad By have biologists, we tumor a focused well-established epigenetic teams solid large that and pharmacokinetic unique created chemical new activity Building highly DNMT exhibit and of is end as Working approach DNMT inhibitors cancer of with to have and a candidate and intend entities are profile chemists a novel multiple into tolerability. DNMT variety developed small inhibition. experienced desired have for These types.

for goal trials to be clinical is to prepared initiate program the Our this by XXXX. of end

the to of in the and on In quarter line AHFIRM are quarter in enrollment fourth results second the XXXX. successful, XXXX. to report we with top summary, results If AHFIRM quarter of we FDA review the first completed track in the is intend

We are leveraging lead development the knowledge clinic. look and NCE regulation forward candidate of our to field oncology to from into program of advancing a epigenetic selecting and product the our

take have. to We may questions any would you like now

Operator

Instructions]. [Operator

Fitzgerald. Our is first with Cantor from Kluska Kristen question

Richard Miller

give color of that on first molecules of Maybe magnitude terms Is kind Kristen. maybe for in screening the of screening process adding of of us terms library into you your on you're library process molecules in how the about any oncology Rick different can was? today. these the through there gone talked is with large here? where And This the program you you've

James Brown

give of the down into number number sufficient that we're have just a forward. We and that graduating kind say class of to it actually, there, probably we that large taking pared the molecules large from against cancers won't but of we is detail, initial a screened group

we're select the now cancer So close the in we first and and that year. have between taking forward. We'll -- we're very of drug first end

Richard Miller

Excellent.

You ex-U.S. opportunities also mentioned for larsucosterol.

kind about just of about as any Or about be thinking thinking you're you commercial of how at development ex-U.S. partners? are whether So is process? thinking you'd in kind that ex-U.S. there opportunities, looking

James Brown

ex-U.S. Europe is, the population or a larger to bit commercialize Yes, probably standpoint, looking a equivalent to it patient number We we ourselves Western opportunity think I be patient certainly U.S. think size. wouldn't than the is from

think are here desperate so States. United in it's they as these and as And we exciting patients need in are opportunity, the an

and we're a is put to there, in looking So the opportunity actually. absolutely place partnership

well, Keith, And the more on I'll speak who's line bit little a as maybe that. to let

Keith Lui

Europe just add would would ex-U.S. pricing factors partnership that likely it's a and I other we the the regulatory other reimbursement that diversity and markets. formidable there. for in Yes. given various look of

comments agree an regional I U.S., outside is not we there. and there, where the could there's achieve prominence a marketplace AH just so the if certainly U.S. not Jim's just issue. to equal, think is certainly it potentially global larger of with So larsucosterol

Richard Miller

program, there about indications back just X swing maybe inhibitors, the a little ask, potential Okay. we'll to in oncology the that whether also different And maybe for with Maybe to led the talk can road, to undertaking as you about indications for given process the DNMT more. specifically? bit touch past? talked in the oncology And on could be you've different decision-making down larsucosterol

James Brown

Yes.

is larsucosterol, with stay just theme the I DURECT. because that at main First, here

shown we've AH, lot multi-organ it can obviously, talked we've a of in as that, so at ranging but acute different things acute broad there so, models we, looking as about we've kidney past, as injury, about done things a yes, as opportunity where there's against well. dozen from protect pancreatitis, stroke, And damage like animal the sepsis,

As X-month where you know, we did study potential we showed as NASH, tremendous well for larsucosterol. the in

a we're get the what kind as doing far is of question oncology As next often from we outside larsucosterol. shareholders, here program, what is of

it's of a a years in so the ready it has now been and time. things that bring point number for program point And about WeiQi this development, why to we're to has and guiding that's talking where gotten into we're at finally

we that advantages of of into Currently, important targets into and because we can least for have world use the we potential decitabines dosing, over hematology because but in space. date. well. think we of number DNMTs the the liquid whole are the at azacitidines of cancers tumor as we tumors because advantages the of space DNMTs tolerability, in beyond Certainly, think various And see, expand to a solid

Operator

comes question François next with from Our Brisebois Oppenheimer.

Francois Brisebois

and you maybe trial the the differences IIa IIb? Phase in us the remind Phase Can between design

James Brown

aren't side great you, patients day first, look and hear the by steroid on laid In -- allowed we dosing, at confusion trial, -- on larsucosterol. really this to way. it's want confusion Good the upon a Yes, same. to be day we steroids question. used. trial, X. We didn't dose if first In effects then to potential you X the of be the shoulders That's The there another the from dose of get many. they the

X I that so a we've placebo, a placebo arrangement steroids. the I instead. I doses then get active that of have If I then would get larsucosterol, receive of So set X double-blind, get up capsule would this double-dummy capsule if

So difference. that X is

patients illness which which the the we XXX severe, we could The first days other as In were XX followed to difference we components. all patients. and as dosed MELD had And is of and severity go had versus of MELD for that this the X the at We XX In scores were of that were me, received up the had had to days. moderate MELD XX. the high XX. trial, -- MELDs of XX, excuse XX started study, then patients, XX

versus So to days, absolutely their XX a if XX blinded in and they steroids physician wanted, all larsucosterol the And give no fashion. in days steroids placebo severe, patients group. could

Francois Brisebois

Can XX what's And historically XX that us days, you versus the mortality changed remind days? rate past? just has at the in known

James Brown

hasn't changed patients really last and confirmed that publication? it with been X,XXX No, in -- X,XXX what XX it's really this the years, -- was X,XXX,

WeiQi Lin

Yes. X,XXX, X X,XXX. in

James Brown

yes. Yes,

Yes. So right. Yes. X,XXX, that's okay.

the been to was And of historically X,XXX-patient kind so XX and days, a XX it. rate spoke But XX%, large at there that has days publication mortality at XX%.

over another adding only you the last see So X months. you're can X%

the deaths of and on. damage done, early the majority of it's So occur majority is the the --

Operator

Ed H.C. question next comes Our from Wainwright. Arce with

Antonio Arce

me hear you okay? Can

James Brown

can. We

Antonio Arce

Great.

Okay.

you moderately-sized, then things this investments on stage? investments? I been little development. So a your to now I we're Any wanted plans. into prime commercialization or has now filing, details years any enabling In you the Are know a force. ask readout, of for particular, website. to more for could ask provide have rightly awareness hospital-focused preparations sort to on of that The you there physicians other I sales more. wanted a And mentioned potentially the mentioned now And if on the several about your focus X market? I first, at the cusp also

James Brown

I'll we and speak certainly let are, to Keith that. Yes,

Keith Lui

Yes. for Ed. question, Thanks, Jim. the Thanks

-- On doing the had a we've commercialization efforts there. front, we've number been surely, of

of that small but are year conferences. have in awareness remarks, and actually. AH team. a certainly, Explore personnel the had have the we that years, the presence even liver major We both side then we have though launch late site couple at launched the last mentioned on affairs experience, in marketing live Epigenetics, mighty disease we medical And a the past the Jim international side, his

just just the a Austria actually poster recruitment. on been with We're AHFIRM off last of booths. coming and year, last month. in And EASL really, both We've focus awareness presenting EASL was AASLD at at

with certainly have New shifted I gears research larsucosterol's that's various unmet we've KOL of those disease really landscaping, the could line Now needs that drug we market closed, into a education. in understanding invested the and But medical market sit. continue results May. we efforts. those York But And some in back profile product launch readiness we top at explained when presented event where in

cross-functional the has as obstacles. really, expectations at that launch plans to the both folks and outside we same putting same our same internally ensure all and are is every take external place at as about DURECT budget, the certainly it's And fully-integrated in well consultants. is on Really, to both to it's we launch everybody ensure a internal plan expectations. work launch a pace And sheets have off village, different, of on readiness that moving own consultants because on challenges going hymn singing our with groups on the timelines, every with its

if between everything, not very But pace to will, and interactions and if results, what it's and a right now at short launch, having really could . about overpreparing, the plans and in after top time right you FDA our line be with place but execute top preparing line after results now, preparation

Antonio Arce

hand, specific if launch? Great. you with And view very really particular, initial maybe potentially particular, physicians save a is but ICUs, know that further, lot of little in can is But point there's That's I you in this ramp with a this. the a situations and just the you on in high-stress therapy have bit dealing call helpful, lives. could hospital life-changing, Keith. like other In how general, therapies wondering discuss inertia changing of a the

mix So I'm physicians about of just of the the in ramp regards think not in how but that, payers? you speed also to wondering only

James Brown

have certainly continue. and Keith I'll I'll then start Yes.

is to the patients, the in term right and But typically patients to these aren't you're First die hospitalized the determined of these their in be near oftentimes going very, outcome are we all, going are or hours who as that and very larsucosterol That ICU. in the selected was and thing, you because next kind with that. take XX AH time. the one acute first could would get of things reason for like indication sepsis as stroke the

here, you they're we very XX% because at one variability time of history to slow, which the And when in that clinical leads of challenging talk to -- because because look unrelenting -- diseases families, have And trials preclinical to these for gets of with a lot death other work, their patients. train a and that these more on there we've a done the of have them. ride patients been

-- in dosing. at hospice our to coordinator or alive our talked our a looked and for Dr. years And at his was Phase man who's -- just was just site time was And than commented enrolled on who die, years on how was witness just The to so XXs IIa to later. hospital that he after last week in San Diego X he a month the a in more home good sent first trial. study I trial another gentleman X a Hassanein,

the to So able evaluate patients. time to circumstance certainly, has one the the be in

more kind is we information ramp the during off we which as on a this thoughts with website. I'll from let Keith of our -- information KOL regard of discussed our But obviously, Keith you of he that. what and far As like, some the if have event, want description presented to give that of ClearView,

Keith Lui

question. Ed, Yes. good

blinded year with there this that, would when approved of a assume data statistical never XX% it no we being like XX our that transplant where the statistically and drug in shown product especially very assessment kind primary past steroids only we we high willingness hit disease days. of given point, were the applicable outputs suboptimal, to that end are AHFIRM, one from patients for physicians, about of significant would standard to physicians in benefit qualitative overall that area had or care survival of from profile we is study with at AH, significance earlier profiles that a looking that are product SATO's relates any target commercial As that had survival

range AH, the XX MELD to AHFIRM prescribe the willingness particularly patient So the standpoint, the physician to very in severe XX high. from population, was

so there But we the to the prescribe that And of of cross-check drugs. significant. also the the and ramp could willingness hospital environment think there delivered DRG-driven inpatient be reimbursement that and reimbursement we with reality the

what understanding what will So the we've products, done the factors, quite top initial a working obstacles And those we and understand delivered we're at the other, landscape, lot influence can access what's from focus deploy particularly worked for be as of understanding -- certainly, that and efforts. internally, on market to now the up the results, where we and and been developing have we line challenges commercialization can early. what environment against acute strategies strategies it again, access, what care understanding positively learning work to relates, us after in-hospital plan, on market launch, and do for looking commercialization better strategic have like, those to our

And for prior those and in to We team certain research can even on propositions, environment, value and the to to develop health start will get changes given outcomes our the that our allows mind those that top of us those commercialization payers models, of efforts commercial economics prior launch. hospitals building those be to launch. regulatory and with interact out the now, some

Antonio Arce

given to expansion more to That's new is and that and apply NCEs and -- just tumors. this several could great. X both you I'm I'd produced like If into that already oncology. platform, you've liquid there's your squeeze in, regarding mentioned can, wondering, solid they I

you help is of would that year? that, criteria So be what be looking here clinic I into which decide And your first the guess candidate your nominate next a end couple what at preference? of would of best of sort you are decide the to questions to would you go by how sort

James Brown

Sure.

I will brief. going let we're WeiQi science really a think the to let give it, I drive but

WeiQi Lin

the aspects -- many designs, the criteria what be quite indications, then with that trial and the including expertise including compounds populations, it's talk it's think driving really the lead including is I by so really determined the a experts then the input. people is generated. not Well, also would multiple factor of to have their single also oncology And -- various in in to And get process. -- X we need

really it's by factors. driven multiple So multiple,

will more we about to the think time. that future happy I information So be talk in

James Brown

I think so. Yes,

think indication for that the use filter we be we taking when we'll larsucosterol. I selected same an

different. we'll this time to So be of case. at to proof looking in with oncology, unmet it's concept, time need, Obviously, market,

So that kind of thing.

Operator

Our from JonesTrading. next Kim question Sean comes with

Sean Kim

statistical whether the for is, has please the detail And question you provided been any have powering first if AHFIRM My trial? us could the you trial on for remind statistical submitted? plan the

James Brown

has perform we've in proceed will would the always. it all end. been significant dictated and group then color certainly has a such that say, for trial to as events we're submitted, at have the a that, dictate allow placebo Suffice as to remains hope, It Yes. we of but that. But be XXX really we of great the Data trial. patients seen, we'll the range statistically history should provided -- haven't and that as designed to bit it

Sean Kim

recently, intent Okay. share more to and you And around prescribe... color physician excitement their some maybe could did the the expressed from the specifically that doctors the by you about willingness on survey survey,

James Brown

I'd I'll love Yes, that. do quite Keith nice. to, but certainly was let that

Keith Lui

Keith. Yes. This is

study. Again, positive we the profile very the is a to AHFIRM willingness Again, those physicians was so for This ClearView on idea parameters what prescribe. to we of target did a with off what based year, physicians . well that who's in product like had So called profile, look known no the they drug to name would product the of a this earlier presumed like that. group what is, and of recruited look blinded high may and space, the had that market with for we company X-page trial. just a the blinded our safety worked it efficacy and statistical on assessment based

the But whether really arm how designed mimicked that in product very of or pleasure current they used And care particularly an trial, not is that we it standard are the physician of placebo for or in affinity an XX their with that difference versus significant like care. what have again, for a as something with considered would highest endpoint really and of days acute where steroids and on especially statistical improvement their disease with of discretion survival the significant order transplant, for kind be this, standard would them.

And to so are was signed population we product -- patient their they testing see quite was that share in high, see nice it preference testing we and we're for did in particularly that mix have between XX. AHFIRM that with MELDs that that that to this -- severe XX

James Brown

Yes.

able disease I are where patients that. exactly change there's and think Yes, if you it well-received. hoped it therapy the what have was that's of a one XX% it's is dying have would to no -- so

Keith Lui

with approved And rate X that what MELDs mentioned There than the no for not but need than a medical are point. more XX. willingness patient product greater to and maybe we're for products was label also unmet population. there would greater all, XX. extremely or just high there's severe certainly prescribing this for MELDs those who at that are study prescribe larsucosterol affinity X the high But that final given product was there I sure with AHFIRM be, in

reassuring hepatologists. a to hear target again, unbiased That our from from would key be So that commercial standpoint. take our

James Brown

Sean, just other piece. X additional

days a have MELD you -- the XX%. expected XX, of got If is you've XX mortality

goes quickly. gets it -- So very up

Sean Kim

to for in my to by prioritization thoughts potential move curious upcoming is, you. just Okay. for as today hear year, these of the and programs resource clinic And on other between allocation programs larsucosterol? expansion end next question indications cancer into and you Got hepatological cancer look last strategic your

James Brown

Yes, it's question. a great

questions X the to The efforts find discussed certainly, first and partnership. where the already of That's and earlier because is a AH. are we focus our primary

as if be as we we'll to forward. as for And will So on advance looking trial indications as it have ex-U.S. and deck we'll the comes out at hands a quickly hope we here that be DURECT We AHFIRM, for data at the larsucosterol. submission to next to with successful then be to partner move looking well, possible. all

-- not very large oncology then And WeiQi that running a effort -- budget the is but item. that is

with As take of the research at it any all costing a just of It doesn't takes into amount time, you it been of get who've most clinic. know, money involved lot reasonable cut but to money. doesn't

And we'll that, own its be take preparing that so and for will unfolds, as year the obviously course.

focus partnerships, all and will an if But of kind of the AHFIRM things. will submission primary the be with those be of meeting the NDA FDA, commercialization deciding for sufficient trial X and rest and

Operator

back Jim Brown for There comments. questions over would are no floor the further at this I time. closing now like turn to to

James Brown

And time. are your for as all always, you here. thank we to want Just

look a have follow-up care. lot, a talking you question, take Thanks out. to forward reach if So you. just We to and

Operator

concludes today's conference. This

participation. disconnect may for you Thank your You at your time. lines this

Timothy Papp	CFO & Secretary
James Brown	Co-Founder, CEO, President & Director
WeiQi Lin	EVP, Research & Development and Principal Scientist
Keith Lui	SVP, Business Development, Commercial & Medical Affairs
Richard Miller	Cantor Fitzgerald
Francois Brisebois	Oppenheimer
Antonio Arce	H.C. Wainwright & Co.
Sean Kim	JonesTrading

DURECT (DRRX) 9 Aug 232023 Q2 Earnings call transcript