Durect Corp.
Annual Report 2002

Plain-text annual report

developing products for chronic disease and enabling biotechnology DURECT CORPORATION AR.02 company founders A. B. C. A. ____James E. Brown, D.V.M. PRESIDENT AND CHIEF EXECUTIVE OFFICER B. ____Felix Theeuwes, D.Sc. CHAIRMAN AND CHIEF SCIENTIFIC OFFICER C. ____Thomas A. Schreck CHIEF FINANCIAL OFFICER dear fellow stockholders, DURECT is focused on the development of therapies to treat chronic debilitating These collaborations help to reduce the risk profile of the company by broadening diseases and enabling the development of biotechnology products. To date, we our product portfolio mix, validating our technology platforms and providing have established a company with full development capabilities and a line of us with a substantial source of potential funding. We expect to continue to forge technologies that allow for drug administration for periods of days to a year for new collaborations with pharmaceutical and biotechnology companies throughout systemic and site-specific applications. The year 2002 was a very productive 2003. Through these collaborations, we are looking for partnerships that will drive year in forging new partnerships. Additionally, we made substantial progress in near term revenue and help reduce the company’s cash burn, while enhancing our our development programs. product development pipeline with products that have the potential to address significant medical needs, improve patients’ quality of life and provide for strong During 2002, we established 6 partnerships, most notably, our agreement with future growth for DURECT. Endo Pharmaceuticals, Inc. for the development and commercialization of our lead product in development, the CHRONOGESIC™ (sufentanil) Pain Therapy Sincerely, System for the U.S. and Canadian markets. When selecting a commercialization partner for CHRONOGESIC, we wanted to maximize the chances that this product would reach the marketplace and that we would receive a fair return on the invested resources. We believe our collaborative arrangement with Endo will accomplish these objectives. We are very proud to have signed five additional agreements in 2002, which include: • An agreement with Pain Therapeutics, Inc. to develop and commercialize certain long-acting oral opioid products using our SABER™ delivery system; • A development and commercialization agreement with Voyager Pharmaceutical James E. Brown, D.V.M. PRESIDENT AND CHIEF EXECUTIVE OFFICER Corporation for a DURIN™-based product for Alzheimer's Disease therapy; • Our first biotechnology partnership is with BioPartners, GmbH in which we are developing a SABER-based sustained release alpha interferon product for the treatment of Hepatitis C; • An agreement with Cardinal Health Pharmaceutical Technologies and Services Center, Inc. to explore the development of long acting oral gel-cap products using our SABER delivery system; Felix Theeuwes, D.Sc. CHAIRMAN AND CHIEF SCIENTIFIC OFFICER • We expanded our licensing agreement with Thorn BioScience LLC to develop selected SABER-based veterinary products. Thomas A. Schreck CHIEF FINANCIAL OFFICER platform technologies A. B. C. D. A. ____DUROS® TECHNOLOGY B. ____SABER™ DELIVERY SYSTEM C. ____MICRODUR™ BIODEGRADABLE MICROPARTICULATE TECHNOLOGY D. ____DURIN™ BIODEGRADABLE IMPLANT TECHNOLOGY products in development and strategic collaborations DURECT Corporation is pioneering the development and commercialization of patches. If approved for marketing and sale, this product will provide an alter- pharmaceutical systems for the treatment of chronic debilitating diseases native to current therapies for the treatment of chronic pain such as pills and and enabling biotechnology-based pharmaceutical products. DURECT is patches, as well as ensuring improved patient compliance and convenience. developing these pharmaceutical system products based on its solid We are developing our CHRONOGESIC product in conjunction with our partner foundation of four proprietary drug delivery technology platforms. These are ENDO Pharmaceuticals, Inc. for the U.S. and Canadian markets. the DUROS®, SABER™, MICRODUR™ and DURIN™ technology platforms. The chronic pain market is a large and growing market with over $3 billion in The DUROS system is an osmotically driven miniature drug-dispensing pump, annual sales. We have completed an initial Phase I clinical trial, a Phase II which is made out of titanium and can be as small as a wooden matchstick. clinical trial, a pilot Phase III clinical trial and a pharmacokinetic trial for our Once a DUROS system is placed under a patient’s skin it can deliver medicine CHRONOGESIC product. to a specific organ via a catheter or to the body as a whole, for periods of months to a year. We licensed the DUROS technology, a proven and patented drug delivery platform, for specified fields of use from ALZA Corporation. The patented SABER biodegradable drug delivery platform is a versatile controlled release injectable useful for protein and small molecule delivery. From a single injection, it can achieve up to 3 months delivery of small molecules or 30 days delivery of proteins. The SABER matrix can also be used as the core formulation in oral gel-caps to deliver drugs for once, or twice a day dosing. MICRODUR is a biodegradable microparticlulate controlled release injectable, typically designed to deliver drugs for periods of weeks to months. Our DURIN technology is a proprietary biodegradable implant that enables parenteral delivery of drugs from several weeks to six months or more. The DURIN technology can deliver a wide variety of drugs including small and large molecule compounds. At the end of its delivery life, the body absorbs what remains of the DURIN implant. chronic pain With our lead product, the CHRONOGESIC™ (sufentanil) Pain Therapy System, we intend to target patients with opioid responsive chronic pain that results from a variety of causes, ranging from failed back surgery to chronic cancer pain. The CHRONOGESIC product delivers sufentanil continuously within the therapeutic window, at physician prescribed doses for three months of uninterrupted pain therapy from a single application. Sufentanil is an opioid that is currently used in hospitals as an analgesic agent. The CHRONOGESIC product uses the DUROS®technology. In addition to our lead product, we have an agreement with Pain Therapeutics, Inc. to develop and commercialize certain long-acting oral opioid products using our SABER delivery system. local post-operative pain We are developing a sustained release formulation of a local anesthetic using our SABER delivery system for the treatment of post surgical pain. The physician would administer this product at the time of surgery. We believe that by delivering effective amounts of a potent analgesic to the location from which the pain originates, adequate pain control can be achieved with minimal exposure to the remainder of the body, and hence minimal side effects. The duration of local delivery of the anesthetic by the product is expected to be a few days, which coincides with the typical timeline by which post surgical pain resolves in most patients. We are currently conducting preclinical studies on this product. hepatitis c Together with BioPartners, we are developing an injectable controlled release version of the therapeutic protein alpha interferon for the treatment of Hepatitis C based on our SABER drug delivery platform. alzheimer’s disease With our partner Voyager Pharmaceutical, we are developing a biodegradable implant system for the treatment of Alzheimer’s Disease based on our DURIN The CHRONOGESIC product addresses the potential problems of peaks (too technology. This system will be designed to deliver a therapeutic peptide for much medication) and troughs (too little medication) associated with pills and months of therapy. highlights for the year 03.18 ___DURECT ANNOUNCES POSITIVE RESULTS OF PILOT PHASE III STUDY FOR THE CHRONOGESIC™ PRODUCT 03.27 ___DURECT AND CARDINAL HEALTH ANNOUNCE COLLABORATION TO RESEARCH AND DEVELOP LONG ACTING GEL-CAP PRODUCTS USING 11.12 ___DURECT AND ALZA AMEND LICENSING AGREEMENT 11.14 ___DURECT AND THORN BIOSCIENCE EXPAND EXISTING LICENSING AGREEMENT TO DEVELOP VETERINARY PRODUCTS USING DURECT’S SABER™ DELIVERY SYSTEM 11.19 ___DURECT AND BIOPARTNERS ENTER INTO AGREEMENT FOR DEVELOPMENT OF A DURECT’S SABER™ DELIVERY SYSTEM 04.02 ___DURECT FILES IND FOR THE LONG-TERM TREATMENT OF ASTHMA 07.29 ___DURECT AND VOYAGER PHARMACEUTICAL SIGN DEVELOPMENT AND COMMER- SUSTAINED RELEASE INTERFERON ALPHA PRODUCT 12.27 ___DAVID R. HOFFMANN APPOINTED TO THE BOARD OF DIRECTORS OF DURECT CORPORATION CIALIZATION AGREEMENT TO DEVELOP TREATMENT FOR ALZHEIMER'S DISEASE 1.14.03__PAIN THERAPEUTICS AND DURECT CORPORATION ANNOUNCE EXCLUSIVE 11.11 ___DURECT AND ENDO PHARMACEUTICALS ANNOUNCE COLLABORATION ON AGREEMENT TO FORMULATE CERTAIN LONG-ACTING OPIOID DRUGS THE DEVELOPMENT AND COMMERCIALIZATION OF DURECT’S CHRONOGESIC™ (SUFENTANIL) PAIN THERAPY SYSTEM FOR THE U.S. AND CANADA asthma / allergic rhinitis We are researching and developing a product for the treatment of asthma cardiovascular disease We are working to develop methods for treating ischemic heart disease and and allergic rhinitis utilizing one of our proprietary drug delivery platforms. other chronic cardiovascular diseases through continuous delivery of drugs to Cromolyn sodium, a non-steroidal anti-allergy medication, is an FDA- the pericardial sac of the heart. In collaboration with the University approved drug for the management of mild-to-moderate persistent asthma. In of Maastricht in The Netherlands, our pre-clinical research suggests that 2002, we completed an initial clinical feasibility study where we infused ischemic heart disease may be treated by continuously delivering an the drug intravenously to test the efficacy of delivery of cromolyn sodium when angiogenic factor to spur new blood vessel growth, thereby increasing blood delivered parenterally (i.e., not by inhalation as the drug is conventionally flow and restoring function to the diseased heart. administered). We anticipate that we will be pursuing additional clinical testing of this product concept. central nervous system disorders Millions of people suffer from chronic diseases and disorders of the central nervous system (CNS), including brain and spinal cord tumors, chronic pain, psychosis, epilepsy, spasticity, spinal meningitis, Parkinson’s disease, and multiple sclerosis. We are currently researching the development of minimally invasive drug delivery to the brain in collaboration with the Johns Hopkins University, Department of Neurology/Neurosurgery. long acting gel-caps DURECT is working with Cardinal Health to investigate the use of our SABER drug delivery platform to extend the use of liquid gel-caps from immediate release to periods of 12-24 hour release. We are conducting this work initial- ly with over the counter oral pain and cough cold medicines. veterinary products With Thorn BioScience, we are developing a number of injectable veterinary products using our SABER drug delivery platform. The efficacy portion of the New Animal Drug Application (NADA) for the first of these products has been We are developing the DUROS platform technology in combination with various approved by the FDA. The safety portion of the NADA has also been submitted catheter systems for targeted treatment of select CNS disorders and are also and approval is pending. The remainder of this NADA is expected to be sub- developing our biodegradable platform technologies for systemic and targeted mitted to the FDA this year. This is the first SABER-based product to be delivery of drugs to treat select CNS disorders. reviewed by the FDA for market approval. strategic collaborations INDICATION PARTNER Endo __________________________________________CHRONIC PAIN________________________________CHRONOGESIC _____________________________________PHASE II/III Cardinal Health _______________________________PAIN & OTHERS_______________________________LONG ACTING GEL-CAPS _____________________________CLINICAL FEASIBILITY BioPartners ___________________________________HEPATITIS C __________________________________CONTROLLED RELEASE INJECTION ____________________PRE-CLINICAL Voyager Pharmaceutical _____________________ALZHEIMER'S DISEASE ________________________BIODEGRADABLE IMPLANT ___________________________PRE-CLINICAL Thorn BioScience_________________________________________________________________VARIOUS VETERINARY PRODUCTS _____________________NADA PENDING Pain Therapeutics ____________________________CHRONIC PAIN________________________________ORAL CONTROLLED RELEASE OPIOIDS_________________PRE-CLINICAL PRODUCT STATUS corporate directory and information executive officers Felix Theeuwes, D.Sc. Chairman and board of directors Felix Theeuwes, D.Sc. Chairman and annual meeting The company's annual meeting sec form 10-k A copy of the Company’s annual of stockholders will be held at report to the United States Securities Chief Scientific Officer Chief Scientific Officer 9:00 A.M. local time June 4, 2003 and Exchange Commission on Form James E. Brown, D.V.M. James E. Brown, D.V.M. President, President, Chief Executive Officer and Director Chief Executive Officer and Director Thomas A. Schreck Thomas A. Schreck Chief Financial Officer and Director Chief Financial Officer and Director Judy A. Magruder Senior Vice President, Regulatory and Development Tai Wah Chan, Ph.D. Vice President, Pharmaceutical Research and Development Edward M. Gillis Vice President, Product Engineering Randolph M. Johnson, Ph.D. Vice President, Preclinical Research Jean I Liu Vice President, Legal and General Counsel James R. Butler Director John L. Doyle Director David R. Hoffmann Director Armand P. Neukermans, Ph.D. Director Albert L. Zesiger Director at Company Headquarters. 10-K is available without charge upon auditors Ernst & Young LLP Palo Alto, CA legal counsel Venture Law Group Menlo Park, CA transfer agent EquiServe Trust Company, N.A. 150 Royall Street Canton, MA 02021 USA Phone (781) 575-3400 written request to: DURECT Corporation Attn: Investor Relations 10240 Bubb Road Cupertino, CA 95014 trademarks DURECT™, CHRONOGESIC™, SABER™, MICRODUR™ and DURIN™ are trademarks of DURECT Corporation. DUROS®is a trademark of ALZA Corporation. The statements in this annual report regarding DURECT's products in development, product development plans, or expected product benefits or anticipated product mar- kets, are forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. additional information For more information please contact: Potential risks and uncertainties include, but are not limited to, DURECT's ability to develop, manufacture and commercialize its products, successfully complete clinical Schond L. Greenway trials and obtain product and manufacturing approvals from regulatory agencies, as well Timothy S. Nelson Senior Director, Investor Relations as marketplace acceptance of DURECT's products. Further information regarding these Vice President, Business and Strategic Planning and other risks is included in the company's quarterly and annual reports filed with the and Commercial Development Lew Peterson Tel: 408.777.1417 Fax: 408.777.3577 SEC, including Annual Report on Form 10K filed with the SEC on March 14, 2003 under the heading “Factors that may affect future results.” Vice President, Manufacturing Email: schond.greenway@durect.com The CHRONOGESIC™ (sufentanil) Pain Therapy System is under development by Wallace B. Smith, Ph.D. Mailing Address: Vice President, Birmingham Operations DURECT Corporation DURECT and has not been submitted or approved for commercialization by the US Food and Drug Administration or other health authorities. Arthur J. Tipton, Ph.D. Vice President, SABER Technologies 10240 Bubb Road Cupertino, CA 95014 Corporate Website: www.durect.com © 2003 DURECT Corporation design : Artemis®Creative, Inc. (Palo Alto, CA) durect corporation 10240 BUBB ROAD CUPERTINO, CA 95014 PHONE 408.777.1417 FAX 408.777.3577 WWW.DURECT.COM

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