Executive Summary

Q4 2024 was a transitional quarter: reported revenue fell to $0.45M as the ALZET product line was sold and reclassified to discontinued operations, while net income turned positive ($7.75M; $0.24 diluted EPS) driven by discontinued ops gains and warrant liability fair value changes .
Versus S&P Global consensus, DRRX materially missed on revenue (Actual $0.45M vs $1.61M consensus) and on “Primary EPS” (Actual -$0.09 vs -$0.02 consensus), while GAAP diluted EPS was positive due to discontinued operations; Street models appear to focus on continuing operations EPS, creating an optics gap versus reported GAAP EPS (see Estimates Context) [GetEstimates]*.
Balance sheet de-risking: the ALZET sale delivered $17.5M cash and enabled full repayment of the Oxford term loan; management now guides cash runway through Q3 2025 and is debt‑free, improving flexibility as the company seeks funding/partners for the Phase 3 program in AH .
Clinical/regulatory momentum remains intact: NEJM Evidence publication of AHFIRM Phase 2b (Jan 2025) and FDA BTD support the plan for a U.S. Phase 3 with 90‑day survival as the primary endpoint; timing to dose will be tightly controlled to address ex‑U.S. variability observed in AHFIRM .

What Went Well and What Went Wrong

What Went Well
- Balance sheet: Sold ALZET for $17.5M and repaid the entire term loan; “we…are now debt-free,” per CFO, extending runway and strategic optionality .
- Clinical credibility: AHFIRM Phase 2b results published in NEJM Evidence (Jan 2025), reinforcing medical interest and informing Phase 3 design .
- Operating discipline: R&D and SG&A trended lower YoY and QoQ as AHFIRM completed (Q4 R&D $1.85M vs $5.62M prior-year; SG&A $1.99M vs $2.22M prior‑year) .
- Quote: “In our Phase IIb trial, we saw nearly 60% reductions in mortality…in the 232 U.S. patients” — CEO James Brown .
What Went Wrong
- Topline miss: Q4 revenue was $0.45M vs $1.61M S&P consensus; Street EPS (“Primary EPS”) missed as well (Actual -$0.09 vs -$0.02 consensus). GAAP diluted EPS was +$0.24 due to discontinued ops, creating modeling dissonance [GetEstimates]*.
- Funding overhang: Phase 3 initiation remains contingent on financing/BD; management is “explor[ing] all options,” but provided no timeline for a deal .
- Commercial headwinds: Q4 revenues declined YoY ($0.45M vs $0.89M), reflecting lower Indivior earn‑out, feasibility and excipient revenue; product revenue fell sharply with ALZET exit .

Financial Results

Quarterly P&L (continuing company GAAP unless noted)

Metric	Q2 2024	Q3 2024	Q4 2024
Total Revenues ($USD Millions)	$2.171	$1.927	$0.453
Collaborative R&D and Other Rev ($M)	$0.606	$0.369	$0.425
Product Revenue, Net ($M)	$1.565	$1.558	$0.028
Research & Development ($M)	$2.247	$2.164	$1.853
Selling, General & Admin ($M)	$2.972	$3.217	$1.993
Loss from Operations ($M)	$(3.404)	$(3.967)	$(3.415)
Net Income (Loss) ($M)	$(3.700)	$(4.285)	$7.754
Diluted EPS (GAAP) ($)	$(0.12)	$(0.14)	$0.24

Year-over-year (Q4)

Metric	Q4 2023	Q4 2024
Total Revenues ($USD Millions)	$0.894	$0.453
Net Income (Loss) ($M)	$(1.441)	$7.754
Diluted EPS (GAAP) ($)	$(0.10)	$0.24

Estimates vs Actuals (S&P Global for Q4 2024)

Metric	Consensus	Actual
Revenue ($USD Millions)	$1.61*	$0.453
Primary EPS ($)	$(0.02)*	$(0.09)*

Note: Values marked with * retrieved from S&P Global.

Revenue Mix Detail

Metric	Q2 2024	Q3 2024	Q4 2024
Collaborative R&D and Other Rev ($M)	$0.606	$0.369	$0.425
Product Revenue, Net ($M)	$1.565	$1.558	$0.028

Key Balance Sheet & Liquidity KPIs

Metric	Q2 2024	Q3 2024	Q4 2024
Cash, Cash Equivalents & Investments ($M)	$15.8	$10.5	$12.0
Term Loan, Current Portion, Net ($M)	$12.545	$10.466	$0.000 (debt-free post ALZET sale)

Context: Management attributed lower 2024 revenues to reduced Indivior earn-out, feasibility agreements and excipient sales; Q4 product revenue declined sharply due to ALZET reclassification to discontinued operations .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Phase 3 Initiation (Larsucosterol, AH)	Program timing	“Begin as soon as possible, subject to funding” (Nov 2024)	“Goal is to begin in 2025, subject to funding” (Mar 2025)	Timing slipped (maintains funding dependency)
Phase 3 Topline	~2 years from start	“Topline within two years of initiation”	“Topline within two years of trial initiation”	Maintained
Cash Runway	Corporate	“Through Q1 2025” (as of Q3 call)	“Through Q3 2025” (post ALZET sale, Q4 call)	Raised
Debt	Corporate	$10.5M term loan outstanding (Q3)	Debt-free after ALZET sale	Improved
POSIMIR License	U.S. commercialization	Innocoll to terminate license effective May 2025 (noticed Nov 8, 2024)	Evaluating next steps post-transfer of data/know-how	Maintained status

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 → Q3)	Current Period (Q4 2024)	Trend
Phase 3 Design & Endpoint	FDA BTD; Type B meeting; single pivotal sufficient; plan U.S.-only; 90-day survival primary; ~200 pts; first dose Day 1, second Day 4 if hospitalized	Reinforced U.S.-only design; 90-day survival; tight control of time-to-dose; randomization by site to reduce bias	Consistent and refined
Time-to-Treatment Variability	Ex-U.S. delays (e.g., biopsy, Monday dosing) explained AHFIRM regional differences; aim to dose earlier in Phase 3	Emphasized dosing within ~9 days, most sooner; expect stronger signal with earlier dosing	Stronger emphasis
Funding/BD Strategy	Actively exploring financing; trial external cost ~$20–25M; burn ~$3.5–4M/qtr when scaled	Trial cost “about $20M”; active BD discussions; no timeline disclosed	Ongoing, critical
Balance Sheet Actions	Term loan $12.5M (Q2)→$10.5M (Q3)	ALZET sale $17.5M; debt fully repaid; runway to Q3’25	Materially improved
Regulatory/Medical Validation	BTD granted; positive FDA dialogue; KOL interest; EASL presentation	NEJM Evidence publication (Jan 2025) and AASLD presentations (Nov 2024) highlighted; continued KOL support	Momentum maintained
POSIMIR	Innocoll to terminate U.S. license; minimal near-term financial impact	Evaluating next steps post-termination	Neutral

Management Commentary

Strategic focus: “Our sole focus as a company is to secure the funding to complete our Phase III trial…we are ready to initiate our Phase III trial and once underway, we expect…top line data in approximately 2 years.” — James Brown, CEO .
Clinical signal and rationale: “We saw nearly 60% reductions in mortality with both doses of larsucosterol compared with placebo in the 232 U.S. patients.” — James Brown .
Execution levers for Phase 3: “We intend to dose everyone within 9 days…most…very quickly…we anticipate…a stronger signal.” — James Brown .
Cost and runway: “Right now, we’re estimating [the Phase 3] would be about $20 million.” — James Brown; “We…used [ALZET proceeds] to repay the remainder of our term loan and are now debt‑free…cash on hand is sufficient to fund operations through the third quarter of 2025.” — Timothy Papp, CFO .

Q&A Highlights

Trial cost and timeline: Management estimates Phase 3 external costs “about $20 million” with ~2 years to topline once initiated; burn to run the business expected ~$3.5–4.0M/quarter when scaled .
Time-to-dose drives outcomes: Large U.S. vs ex‑U.S. differences in AHFIRM tied to time from hospitalization to first dose; Phase 3 will control dosing within ~9 days to mitigate variability .
Funding pathways: Active BD and financing discussions ongoing; no specifics on timing, but management remains “optimistic” despite capital market challenges .
Study scope: Prior AHFIRM effectively functioned as two Phase 2s (two active arms with similar results); management prefers to proceed to a streamlined Phase 3 rather than run another Phase 2b .
Ex‑U.S. options: Potential for regional partnerships or ex‑U.S. studies remains on the table longer-term, but near-term focus is a U.S. Phase 3 in AH .

Estimates Context

Q4 2024 vs S&P Global consensus: Revenue $0.45M vs $1.61M consensus; Primary EPS -$0.09 vs -$0.02 consensus — both misses. GAAP diluted EPS was +$0.24 due to discontinued ops and warrant liability fair value gains; Street “Primary EPS” appears closer to continuing operations and thus diverges from reported GAAP EPS optics [GetEstimates]*.
Implications: Street models may need to reset revenue baselines post‑ALZET divestiture and align EPS frameworks to continuing operations while incorporating non‑cash P&L items (e.g., warrant liability fair value) that can swing GAAP EPS .

Note: Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Funding is the near-term catalyst: equity/BD to initiate Phase 3; each update on financing or partnership could be stock‑moving .
Clinical/regulatory de‑risking is meaningful: NEJM Evidence publication, FDA BTD, and a focused U.S. Phase 3 with a clinically meaningful 90‑day survival endpoint improve probability of success .
Balance sheet reset: ALZET sale materially improved liquidity and removed debt; CFO guides runway through Q3 2025, providing a window to secure Phase 3 funding .
Street models need recalibration: Post‑divestiture revenue base is smaller; “Primary EPS” (continuing ops) better reflects operating performance than GAAP diluted EPS distorted by discontinued ops and FV changes [GetEstimates]*.
Execution focus: Tight control of time‑to‑dose and site‑level randomization are key design features intended to replicate U.S. AHFIRM signal in Phase 3 .
Risk‑reward: If Phase 3 reproduces AHFIRM U.S. mortality reduction, the program could be transformative in AH (no approved therapies, high mortality/cost burden), but the financing path and single‑trial strategy concentrate binary risk .

Appendix: Additional Q4 2024 Items

ALZET divestiture: $17.5M proceeds; debt fully repaid; aligns portfolio with larsucosterol focus .
AASLD Liver Meeting 2024: Oral presentation on time to treatment; posters on transplant ethics and drinking behavior in AHFIRM .

Citations:

Q4 2024 8-K and press release:
Q3 2024 8-K and press release:
Q2 2024 8-K:
Q4 2024 earnings call transcript:
Q3 2024 earnings call transcript:
Q2 2024 earnings call transcript:
ALZET sale press release:
AASLD presentations press release:

Note: S&P Global consensus/actuals where marked with * from GetEstimates.

DURECT CORP (DRRX)·Q4 2024 Earnings Summary