Bausch Health Acquires Durect for $1.75/Share, Potential for $350M in Milestone Payments

Northland has downgraded Durect (DRRX) from Outperform to Market Perform with a $2.50 price target following Bausch Health's acquisition of the biopharmaceutical company for $1.75 per share. The deal includes up to $350 million in milestone payments dependent on achieving certain net sales targets post-acquisition. Durect's financial health is challenging, with significant revenue declines, negative margins, and a high risk of bankruptcy. The company's focus on innovative pharmaceutical programs could provide long-term growth opportunities if successfully executed.

Title: Bausch Health's Acquisition of Durect Corporation: A Strategic Move in the Hepatology Space

Bausch Health Companies Inc. (NYSE: BHC) has announced a definitive agreement to acquire Durect Corporation (NASDAQ: DRRX), marking a significant step in the company's commitment to innovation and hepatology. The acquisition includes Durect's novel therapeutic molecule, larsucosterol, which has shown promising results in Phase 2 trials for treating alcoholic hepatitis (AH) [1]. The deal involves Bausch Health paying $1.75 per share in an all-cash transaction, representing an upfront consideration of approximately $63 million at closing [1].

The acquisition is expected to close in the third quarter of 2025, subject to customary closing conditions, including a majority of Durect's outstanding shares being tendered. The purchase price represents a premium of approximately 191% to Durect’s 30-day volume-weighted average trading price ended on July 28, 2025 [1].

Alcoholic hepatitis is a life-threatening form of alcohol-associated liver disease, with no FDA or EMA approved treatment currently available. The acquisition complements Bausch Health’s ongoing Phase 3 program for rifaximin SSD, which is being studied in cirrhotic patients globally. Bausch Health plans to initiate a registrational Phase 3 program to evaluate larsucosterol for treating severe AH, with 90-day survival as the primary endpoint [1].

The deal also includes the potential for two additional net sales milestone payments of up to $350 million in aggregate if achieved before specific deadlines [1]. This acquisition aligns with Bausch Health's strategic priority of innovation and demonstrates their commitment to addressing unmet medical needs in the hepatology space.

Northland has recently downgraded Durect from Outperform to Market Perform with a $2.50 price target following the acquisition. The downgrade reflects Durect's challenging financial health, characterized by significant revenue declines, negative margins, and a high risk of bankruptcy. However, the potential long-term growth opportunities in innovative pharmaceutical programs could provide a positive outlook for the company if successfully executed [2].

The acquisition underscores Bausch Health's dedication to exploring and identifying new treatments for liver disease and its complications. The company aims to continue investing in bringing these breakthrough options to market globally [1].

References:
[1] https://za.investing.com/news/stock-market-news/bausch-health-stock-rises-durect-flies-after-acquisition-deal-93CH-3808929
[2] https://www.prnewswire.com/news-releases/bausch-health-to-acquire-durect-corporation-strengthening-commitment-to-developing-innovative-solutions-for-patients-with-liver-disease-302515568.html