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DRRX: A $293 Million Deal with Sandoz for POSIMIR® in the United States

By Grant Zeng, CFA


The Development and Commercialization Deal 

On May 8, 2017, Durect ( DRRX) announced a development and commercialization agreement with Sandoz AG, a division of Novartis (NVS), to develop and market in the United States Durect’s POSIMIR® (SABER®-Bupivacaine), an investigational locally-acting, non-opioid analgesic intended to provide up to three days of continuous pain relief after surgery.

Under the terms of the agreement, Sandoz will make an upfront payment to DURECT of $20 million, with the potential for up to an additional $43 million in development and regulatory milestones, up to an additional $230 million in sales based milestones, as well as a tiered double digit royalty on product sales in the United States. The $43 million could be received when Durect resubmits the NDA and get approval for Posimir which could be done in 1Q18.

DURECT will remain responsible for the completion of the ongoing PERSIST Phase III clinical trial for POSIMIR as well as FDA interactions through approval. The deal was closed in June, 2017.

The Posimir (SABER®-Bupivacaine) Program

The company completed the enrollment of patients in PERSIST, a POSIMIR Phase III clinical trial consisting of patients undergoing laparoscopic cholecystectomy (gallbladder removal) surgery in June 2017.

The completion of enrollment was earlier than expected and represents an important milestone for the POSIMIR development program. The company expects to complete patient follow-up visits during the third quarter and announcing top-line data in the fourth quarter of this year.

In a previous clinical trial of 50 patients in the same surgical model (laparoscopic cholecystectomy), POSIMIR was compared with the active control bupivacaine HCl, against which POSIMIR demonstrated in a post hoc analysis an approximately 25% reduction in pain intensity on movement for the first 3 days after surgery (p=0.024) and for the first 2 days after surgery (p=0.0198), using the same statistical methodology specified for the current trial. 

POSIMIR is the company’s investigational post-operative pain relief depot that utilizes the company’s patented SABER technology and is intended to deliver bupivacaine to provide 3 days of pain relief after surgery. The company is in discussions with potential partners regarding licensing development and commercialization rights to POSIMIR, for outside the US. 

The Implication of the Deal 

We think this is a great deal for Durect. Sandoz has a very strong sales/marketing team and has a great presence in the US. Sandoz has a differentiated product portfolio including a range of state-of-the-art technologies, formulations and devices. In the U.S., Sandoz Inc. has a dedicated hospital sales and marketing organization, with expertise and relationships, which will be employed to deliver POSIMIR to the market.

The deal not only boosts Durect’s balance sheet, but also validate the company’s technology and clinical program. 

The market for a non-opioid post-surgical pain product is quite large.  One piece of evidence for this is Pacira and their product Exparel.  Pacira has a $1.9 billion market cap on the basis of Exparel, which is projected to have about $300 million in revenue in 2017.  If approved, POSIMIR will compete quite effectively in this marketplace:       
• There is an unmet medical need for a product with POSIMIR’s extended duration of action and potential to reduce the need for opioids (with their associated side-effects, risks of leading to addiction, and costs).
• POSIMIR would have an extended duration of action (up to 3 days).
• Durect’s development program will have generated data from multiple common surgeries including hernia, shoulder and gall bladder removal.
• POSIMIR is administered simply and rapidly into the surgical site under visual supervision, which puts the drug closer to the affected nerves.
• This administration technique also facilitates use in laparoscopic procedures with multiple ports, which is relevant given the number of laparoscopic surgeries today and the overall trend toward less invasive procedures.

The Great Potential of the DUR-928 Program

Among Durect’s multiple candidates, DUR-928 may be the most promising one in our view because this compound has the potential to target multiple indications including NAFLD/NASH and acute kidney injury. 

Update on Phase Ib Oral Study of DUR-928 for NASH  

In January, 2016, Durect initiated a single-ascending-dose Phase Ib clinical trial with oral DUR-928 in patients with nonalcoholic steatohepatitis (NASH) in Australia.

This Phase Ib trial of DUR-928 was a dose ranging (50 mg and 200 mg), single-ascending-dose safety and pharmacokinetic (PK) study of oral DUR-928 in subjects with NASH and matched control subjects (MCS). This study was conducted in successive cohorts evaluating single-dose levels (first a low dose and then a high dose) of oral DUR-928. Both cohorts consisted of 10 NASH patients and 6 MCS.

On April 24, 2017, Durect presented the updated Phase Ib data at the International Liver CongressTM2017 (the 52nd annual meeting of the European Association for the Study of the Liver (EASL)) in Amsterdam.  

In both cohorts, DUR-928 was well tolerated overall. There was approximately a 10-30% increase in DUR-928 exposure in NASH patients compared to MCS. A single serious adverse event (shortness of breath), designated as possibly related to study drug, was reported in Cohort 2 in a NASH patient with a prior history of arrhythmia and an ongoing viral infection; no unusual abnormal biochemistry was observed and the symptom spontaneously resolved.

The data from the Phase Ib trial are encouraging in our view. Collectively, the reduction of these biomarkers plus results from the company’s animal and cell culture studies suggest potential therapeutic activity of DUR-928 for patients with liver disease. 

Update on Phase Ib Injectable DUR-928 for Kidney Disease 

This ongoing trial is also conducted in Australia.  

This Phase Ib trial of DUR-928 is an open-label single-ascending-dose safety and pharmacokinetic study in patients with impaired kidney function (stage 3 and 4 chronic kidney disease) and matched control subjects.  This study will be conducted in successive cohorts (first a low dose and then a high dose) evaluating single-dose levels of DUR-928 administered by injection.  

The company recently completed the Phase Ib study. The low dose cohort enrolled 6 kidney function impaired patients and 3 matched control subjects, and the high dose cohort enrolled 5 kidney function impaired patients and 3 matched control subjects.

In this trial, DUR-928 was well tolerated among all subjects and the PK parameters between the kidney function impaired patients and the matched control subjects were comparable.

In addition, Durect has held a pre-IND meeting with the Cardiovascular and Renal Products Division of the FDA, and the company is utilizing feedback from that meeting as well as from its clinical advisors to prepare an IND which is required to enable a future kidney disease clinical trial in the United States.

Topical Formulation

Durect completed an initial exploratory Phase Ib trial in psoriasis patients (n = 9 evaluable patients) in Australia.  The decision to proceed with clinical testing in psoriasis was based on the anti-inflammatory and cell survival properties of DUR-928, including the downregulation of IL-17, full length CK-18, cleaved CK-18, as well as the results of a psoriasis study with DUR-928 in mice.

The Phase Ib trial was conducted with intradermal micro injections of DUR-928, and the company thinks the results warrant further investigation.  As a result, the company has developed several topical formulations of DUR-928 that the company is evaluating for a topical application microplaque trial which will commence this year.   

There is a large unmet medical need for new topical drugs for psoriasis for use prior to systemic biologic treatments which often have significant associated side effects.

Future Development Plans

Durect is working with its clinical advisors to design several Phase II studies and is planning to submit INDs which are required to enable these studies to take place in the United States in 2017. 

Durect plans to conduct at least one Phase II trial in 2017. The company is actively working towards a Phase II trial in Primary Sclerosing Cholangitis (PSC), with an oral formulation of DUR-928. PSC is a chronic liver disease characterized by a progressive cause of cholestasis (decrease in bile flow) with inflammation and fibrosis of bile ducts. It is an orphan medical condition for which there is no established medical treatment.

The company also plans to select lead topical formulations for DUR-928 that will be taken into a proof-of-concept clinical trial in psoriasis patients in 2017. 

Large Market Opportunity for DUR-928 

Although DUR-928 may have broad applications in many indications, we believe the initial focus will be in NAFLD/NASH and acute kidney injury. 

Non-alcoholic fatty liver disease (NAFLD) is the build-up of extra fat in liver cells that is not caused by alcohol. It is normal for the liver to contain some fat. However, if more than 5% - 10% percent of the liver’s weight is fat, then it is called a fatty liver (steatosis). The more severe form of NAFLD is called non-alcoholic steatohepatitis (NASH). NASH causes the liver to swell and become damaged. 

NAFLD affects about 30% of adults and 10% of children in the US, among which 10-30% will develop NASH. 25-40% NASH patients will develop progressive liver fibrosis, while 20-30% NASH patients with advanced fibrosis will develop cirrhosis, which could lead to liver cancer. 

Currently there are no FDA approved medicines for the treatment of NAFLD/NASH. 

Acute kidney injury (AKI) is defined as an abrupt or rapid decline in renal filtration function. This condition is usually marked by a rise in serum creatinine concentration or by azotemia (a rise in blood urea nitrogen [BUN] concentration). 

Per Medscape, in the United States, approximately 1% of patients admitted to hospitals have AKI at the time of admission. The estimated incidence rate of AKI during hospitalization is 2-5%. AKI develops within 30 days postoperatively in approximately 1% of general surgery cases and arises in up to 67% of intensive care unit (ICU) patients. Approximately 95% of consultations with nephrologists are related to AKI. The appropriate nephrologist referral rate is approximately 70 cases per million populations. 

The current treatment for AKI is mainly supportive in nature. No therapeutic modalities to date have shown efficacy in treating the condition. Therapeutic agents (eg, dopamine, nesiritide, fenoldopam, mannitol) are not indicated in the management of AKI and may be harmful for the patient.

Certainly, there are highly unmet medical needs in the NAFLD/NASH and acute kidney injury fields. The unique mechanism of action and the compelling animal and human data so far make DUR-928 a highly promising candidate for the management of NAFLD/NASH and kidney injury. 


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