DURECT's Strategic Shift: Selling ALZET to Focus on Larsucosterol

In a strategic move, DURECT Corporation has announced the sale of its ALZET product line to Lafayette Instrument Co. for $17.5 million. This transaction allows DURECT to redirect resources towards the development of its lead drug candidate, larsucosterol, for treating alcohol-associated hepatitis (AH). The sale also strengthens DURECT's financial position and extends its cash runway.

The ALZET product line, comprising miniature, implantable osmotic pumps, had been a part of DURECT's portfolio for some time. However, as the company prioritizes its epigenetic therapies, it has determined that the ALZET line is no longer aligned with its long-term strategic priorities. By divesting the line, DURECT gains a significant cash influx, enabling it to pay off remaining obligations under the term loan agreement with Oxford Finance LLC and invest in its core drug development programs.

Lafayette Instrument Co., a portfolio company of Branford Castle Partners II, L.P., acquired the ALZET product line, which includes miniature osmotic pumps and accessories for research use in laboratory animals. These pumps are not approved for human use but have wide applications in preclinical research, evidenced by over 22,000 published scientific references. The acquisition allows Lafayette to expand its life science instruments offerings, complementing its existing products and customer base.

As part of the transaction, DURECT has paid off all remaining obligations under the term loan agreement with Oxford Finance LLC. This elimination of debt enhances DURECT's financial flexibility, enabling it to prioritize its primary therapeutic development and seek additional resources to fund its planned Phase 3 clinical trial for larsucosterol in AH.

Larsucosterol, DURECT's lead drug candidate, is in clinical development for the potential treatment of AH, a serious and life-threatening condition. The FDA has granted both Fast Track and Breakthrough Therapy designations to larsucosterol, reflecting its potential to address an unmet medical need. The proceeds from the sale of the ALZET product line will be allocated towards funding the planned Phase 3 clinical trial, further advancing DURECT's mission in developing treatments for serious and life-threatening conditions.

This strategic divestment underscores DURECT's commitment to its primary therapeutic development and positions it for potential growth in the biopharmaceutical sector. Although the sale reduces DURECT's product offerings, it strengthens the company's cash position and extends its financial runway, allowing it to focus on its core drug development programs.

In conclusion, DURECT's sale of the ALZET product line to Lafayette Instrument Co. marks a strategic shift for the company, enabling it to prioritize its epigenetic therapies, particularly larsucosterol, and enhance its financial flexibility. As DURECT continues to advance its drug development programs, investors should monitor the progress of larsucosterol and its potential impact on the treatment of AH.