Pain-Free Payday for DURECT

Drug-delivery company DURECT (NASDAQ:DRRX) is headed straight to phase 3; it won't get to pass go, but it will get to collect $8 million.

Results released Tuesday from a pivotal study to determine whether its pain reliever POSIDUR would advance to a phase 3 trial were good, triggering an $8 million milestone payment from DURECT's partner, privately held European drugmaker Nycomed. The company plans to meet with the Food and Drug Administration shortly to get its input on the design of a phase 3 clinical trial.

POSIDUR is a liquid administered during surgery directly to the site of the pain. The local anesthetic is released slowly, thanks to DURECT's SABER technology; it can control pain for up to three days.

The phase 2b clinical trial, which included 122 patients, measured POSIDUR's ability to reduce the amount of post-operative pain in patients undergoing inguinal hernia repair. Patients receiving the highest dose had 31% less pain in the first three days after surgery. That dose also reduced the need for supplemental opioid-based medications, which have severe side effects in some patients; only 53% of the patients who took POSIDUR required additional drugs, compared with 72% of the patients in the placebo group. This difference wasn't statistically significant, but if the percentages hold true in a larger phase 3 trial, the larger number should result in that goal being met.

DURECT licensed the European marketing rights to POSIDUR to Nycomed last November. DURECT got $14 million up front in the deal, and it could earn an additional $180 million in milestone payments if POSIDUR advances through clinical trials. If the liquid wins marketing approval, Nycomed would market it in Europe and keep all the profits from its territory, minus a double-digit royalty fee due to DURECT.

The SABER technology is a viscous, gel-like substance that allows for slow release of drugs over time. While getting POSIDUR to market would certainly help DURECT, the clinical trial data also provides evidence that the SABER technology works. That should make DURECT's other partners, King Pharmaceticals (NYSE:KG) and Pain Theraputics (NASDAQ:PTIE), happy, because their slow-release Oxycodone drug, Remoxy, uses an oral version of the technology. Because the platform can be used with different types of drugs, DURECT could try to win additional partnerships.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool's disclosure policy is pain-free reading.