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DURECT CORP (DRRX)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue of $0.45M beat S&P Global consensus of $0.32M, while EPS of -$0.07 beat consensus of -$0.13; net loss narrowed materially year over year due to lower R&D and SG&A *. Values retrieved from S&P Global.
  • Sequentially, revenue improved from $0.32M and EPS improved from -$0.13 in Q1 2025; cash and investments ended Q2 at $6.7M, down from $12.0M at year-end 2024 and $8.4M in Q1 .
  • Strategic catalyst: Bausch Health agreed to acquire DURECT for $1.75/share cash (≈$63M upfront) plus up to $350M in sales milestones; tender offer commenced Aug 12, 2025, with closing targeted in Q3 2025 .
  • The company did not issue financial guidance; management focus remains on larsucosterol’s registrational Phase 3 program under Breakthrough Therapy Designation and the pending merger timeline .

What Went Well and What Went Wrong

What Went Well

  • Revenue and EPS both beat consensus in Q2; revenue $0.45M vs $0.32M est., EPS -$0.07 vs -$0.13 est., reflecting tighter operating expenses and favorable warrant liability fair value change *. Values retrieved from S&P Global.
  • Operating discipline: R&D fell to $1.18M (from $3.06M in Q2 2024) and SG&A to $2.07M (from $4.64M), narrowing net loss to -$2.27M from -$6.50M YoY .
  • Strategic transaction unlock: “We chose this transaction with Bausch Health because we believe it provides significant value for our stakeholders… and view Bausch Health as the right partner to advance larsucosterol” — James E. Brown, President & CEO .

What Went Wrong

  • Cash burn and liquidity: Cash, cash equivalents and investments declined to $6.7M at Q2 (from $8.4M in Q1 and $12.0M at YE 2024), heightening reliance on the pending acquisition to fund development .
  • Year-over-year revenue decline: Q2 revenue fell vs prior year ($0.45M vs $0.65M), underscoring lack of commercial scale ahead of larsucosterol development .
  • No formal financial guidance and continued GAAP losses; limited product revenue ($19K) and modest collaborative revenue ($428K) signal ongoing pre-commercial profile .

Financial Results

Summary Financials (GAAP)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$0.45 $0.32 $0.45
Net Income (Loss) ($USD Millions)$7.75 $(4.23) $(2.27)
EPS ($USD)$0.25 basic $(0.13) basic $(0.07) basic
R&D Expense ($USD Millions)$1.85 $1.88 $1.18
SG&A Expense ($USD Millions)$1.99 $2.58 $2.07
Cash & Equivalents + Investments ($USD Millions)$12.00 $8.40 $6.70

Actual vs S&P Global Consensus

MetricQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 Actual
Revenue ($USD)$0.292M*$0.321M $0.320M*$0.447M
EPS ($USD)$(0.117)*$(0.13) $(0.13)*$(0.07)

Note: Values retrieved from S&P Global.

Revenue Composition

ComponentQ4 2024Q1 2025Q2 2025
Collaborative R&D & Other Revenue ($USD Thousands)425 321 428
Product Revenue ($USD Thousands)28 — (none reported) 19
Total Revenues ($USD Thousands)453 321 447

Operating Profile and KPIs

KPIQ4 2024Q1 2025Q2 2025
Total Operating Expenses ($USD Thousands)3,868 4,460 3,250
Other Income (Expense), net ($USD Thousands)1,700 (24) 538
Warrant Liabilities ($USD Thousands)1,548 1,667 1,222
Deferred Revenue, Current ($USD Thousands)— — 320
Weighted-Average Shares (Basic) (Millions)31.041 31.042 31.042

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Financial guidance (Revenue, EPS, margins)FY/Q2 2025None provided None provided Maintained (no guidance)
Merger timelineQ3 2025Announced 7/29: tender offer and Q3 close target Tender offer commenced 8/12, close expected Q3 2025 Maintained timeline
Larsucosterol Phase 3 plan2025 initiationTarget to begin in 2025, topline within two years (contingent on funding) Phase 3 program planning continues under BTD; Bausch to advance post-close Reaffirmed, strategic backing post-merger

Earnings Call Themes & Trends

(Company did not have a Q2 2025 earnings call transcript available; themes derived from press releases and filings.)

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
R&D execution (larsucosterol)NEJM Evidence publication; Phase 3 design informed by AASLD data Target 2025 initiation; topline ~2 years post-start Registrational Phase 3 program planning; will be advanced within Bausch hepatology framework Strengthening via strategic acquirer
Funding/Strategic alternativesBalance sheet strengthened by ALZET sale and debt repayment Active funding dialogues; business development explored Merger announced with upfront cash and milestone structure Transition to M&A-funded pathway
Regulatory statusBTD/FTD recognized; design aligned with FDA feedback Reiterated BTD and Phase 3 alignment Bausch reiterated Phase 3 under BTD planning Consistent, reinforced
Product portfolio (POSIMIR)ALZET divested (discontinued ops contribution) POSIMIR license terminated; next partner under evaluation No new commercial revenue drivers; focus on larsucosterol Narrowing to core asset
LiquidityYE cash $12.0M Cash $8.4M Cash/investments $6.7M Downtrend, mitigated by pending acquisition

Management Commentary

  • “We chose this transaction with Bausch Health because we believe it provides significant value for our stakeholders, both immediately and in the long term… We view Bausch Health as the right partner to advance larsucosterol due to their expertise in hepatology…” — James E. Brown, President & CEO .
  • “Our primary focus continues to be initiating the Phase 3 trial of larsucosterol for severe AH, contingent on securing sufficient funding” — James E. Brown, President & CEO (Q1 update) .
  • “We are pleased to complete the acquisition of DURECT, which brings larsucosterol into our hepatology pipeline as a promising advanced-stage therapy” — Thomas J. Appio, CEO, Bausch Health (post-period completion) .

Q&A Highlights

  • No Q2 2025 earnings call transcript was available; the company furnished results via press release and 8-K with the acquisition update and financial statements .
  • Guidance clarifications and analyst Q&A were not published for Q2; investor focus centered on the tender offer and Phase 3 planning under BTD .

Estimates Context

  • Q2 2025: Revenue beat ($0.447M vs $0.320M est.) and EPS beat (-$0.07 vs -$0.13 est.), driven by lower operating expenses and positive warrant liability fair value adjustment; minimal product revenue remains a constraint on scale *. Values retrieved from S&P Global.
  • Q1 2025: Revenue modest beat ($0.321M vs $0.292M est.), but EPS slight miss (-$0.13 vs -$0.117 est.) reflecting higher operating expense mix in the quarter *. Values retrieved from S&P Global.
  • With the announced acquisition, near-term sell-side estimates may be discontinued or adjusted to reflect consolidation into Bausch Health and removal of standalone guidance .

Key Takeaways for Investors

  • The quarter delivered a clean beat on both revenue and EPS versus consensus despite the pre-commercial profile; operating discipline is improving loss trajectory *. Values retrieved from S&P Global.
  • Liquidity declined to $6.7M at quarter-end; the pending Bausch transaction is the key funding catalyst for advancing the Phase 3 program .
  • Strategic alignment with Bausch’s hepatology franchise and R&D infrastructure de-risks development and commercialization for larsucosterol under BTD .
  • No financial guidance was provided; investors should anchor expectations on transaction timeline and Phase 3 initiation milestones rather than near-term revenue/earnings .
  • Near-term trading is likely driven by merger process milestones (tender progress, regulatory clearances, close timing) rather than quarterly fundamentals .
  • Post-close, DURECT’s standalone estimates and coverage may transition; focus shifts to Bausch Health’s disclosures for larsucosterol program updates .
  • Watch for Phase 3 design specifics and timelines (sites, enrollment start, endpoint details); these will shape value inflection and update the development risk profile .
* S&P Global consensus and actuals used where noted.