HCW assumes coverage of DURECT at buy

H.C. Wainwright has assumed coverage of DURECT (NASDAQ:DRRX) with a “buy” rating and $3 price target. The stock was quoted at $1.02 in afternoon trading on Feb. 28.

“Our focus is on the novel epigenetic regulator program,” writes analyst Ed Arce.

He said DURECT's epigenetic regulator program, now preparing to enter Phase 2 clinical trials, has demonstrated broad applicability and potential utility in several chronic metabolic diseases, including primary biliary cholangitis, primary sclerosing cholangitis and non-alcoholic steatohepatitis, as well as acute organ injuries such as acute kidney injury.

The lead drug candidate from this program, DUR-928, is an endogenous, orally bioavailable, small-molecule that modulates the activity of various nuclear receptors that play an important regulatory role in multiple interrelated cellular systems.

Mr. Arce said microarray studies on isolated hepatocytes showed that DUR-928 modulates the activity of over 240 genes, including several key genes involved in lipid homeostasis and bile acid synthesis; inflammation; and cell survival. DUR-928 also has been shown to be safe and well tolerated in both daily oral administration and as injections in over 120 individuals treated to date.

As a previously unrecognized molecule, he said DUR-928 contains no active moiety that has been approved by the FDA, and as such, DURECT believes the drug qualifies for five-year statutory exclusivity as a new chemical entity.

“We anticipate the initiation of a Phase 2b trial in acute kidney injury, and especially a potentially positive Phase 2a readout in an undisclosed chronic cholestatic liver disease, both expected later this year, to attract investor attention and interest in the program and DURECT,” he added.