Analyst: Durect's Phase 2 Trials Are An Entry Point For Investors

DURECT Corporation DRRX has had a rough few months since the failure of a Phase 3 trial for its formerly leading drug candidate.

Days after reporting top- and bottom-line quarterly beats, the biotech received support in the form of an upgrade from H.C. Wainwright. 

The Rating

H.C. Wainwright analyst Ed Arce upgraded Durect from Neutral to Buy with a $3.50 price target.

The Thesis

The rating was justified by multiple near-term catalysts and progress in Durect’s pipeline, Arce said in a Tuesday note. (See the analyst's track record here.) 

Durect is expected to release data this year on two open-label Phase 2a studies for its lead development asset, endogenous epigenetic regulator DUR-928 for primary sclerosing cholangitis and alcoholic hepatitis.

The firm also intends to initiate a Phase 2 study for psoriasis treatment, which Arce considers an entry point for investors. The analyst said he expects a positive readout.

“Importantly, we believe investor sentiment has now begun to shift to a positive bias, based on the broad preclinical and Phase 1 data set, and large commercial opportunity, of DUR-928,” Arce said. 

A second catalyst comes in the form of regulatory approvals on partnered assets. Indivior’s RBP-7000 for schizophrenia and Pain Therapeutics, Inc. PTIE’s REMOXY ER to deter oxycodone abuse each have Prescription Drug User Fee Act dates for New Drug Applications in the second half of the year.

Price Action

Durect stock popped 20 percent premarket and was up 10.67 percent at $1.66 at the time of publication Tuesday afternoon. 

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