Durect shares rise following solid 1Q financial results

Shares of drug developer Durect Corp. surged Thursday, after the company reported a smaller first-quarter loss on lower costs and greater research and development partnership revenue.

Shares rose 82 cents, or 21.6 percent, to $4.62, on triple average volume. Shares have traded between $3.60 and $6.96 over the past year.

Durect is developing drug-delivery systems for chronic pain, heart disease, cancer and Alzheimer's treatments, including controlled-release injectables; a transdermal patch and a biodegradable implant.

Late Wednesday, the Cupertino, Calif.-based company reported a loss of $7.8 million, or 11 cents per share, in line with analysts' average estimate. Revenue growth of 12 percent to $6.4 million topped Wall Street's $5.7 million forecast.

Both PiperJaffray analyst Caroline Stewart and Jefferies' David Windley recommended buying Durect shares, given recent weakness in the stock. Stewart holds a $10 price target on shares.

Windley says the stock is a good long-term investment given the company's advancing pipeline. But he thinks investors had become disinterested of late, given management's non-committal stance on commercial progress and the fact that no major clinical programs are underway, which eliminates another key source of potential positive news.