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Many Paths to Success with DURECT's Pipeline

James Brown DURECT has a pipeline of drugs for a wide range of indications, from NASH to psoriasis to postoperative pain. In this interview with The Life Sciences Report, Dr. James Brown, DURECT's President and CEO, discusses the potentially groundbreaking epigenetic regulator DUR-928, POSIMIR's late-stage testing for postoperative pain and an abuse-deterrent oral technology.

Management Q&A: View From the Top

The Life Sciences Report: Jim, thanks for joining us. DURECT Corp.'s (DRRX:NASDAQ) DUR-928 is an epigenetic regulator that may have applications for metabolic disorders such as nonalcoholic fatty liver disease (NASH), acute organ injury and inflammatory conditions. Can you describe in layman's terms what an epigenetic regulator is and how it works?

James Brown: When you use the term epigenetic, epi means it's on top of genetics. Basically, if we look at how genes are expressed within the body, there are regulating proteins that sit on top of our DNA and allow those to be read. If you think back to the days of tape cassettes—they even call them cassettes actually—what happens is there's a protein that slides along the DNA and allows for a certain amount of the DNA to be read. Then the proteins based on that DNA can be made. The cells can have those changes from those genes expressed.

The proteins that allow the gene cassettes to be read are known as nuclear receptors. They influence the way nuclear receptors are modulated. DUR-928 binds to and influences those proteins that then influence the nuclear receptors that allow the genes to be read. So it's a double-layer system.

TLSR: Is that why the platform works for so many conditions that don't seem to have much in common?

JB: Yes, and it is unusual. We work with more than 20 well-known and well-respected doctors who are specialists in different kinds of liver or kidney disease, from the United States and internationally. They all come back to that same thing: DUR-928 appears to be a new class of stress hormones that influences how cells respond to stress.

They liken the discovery of DUR-928 and its family of molecules to the discovery of corticosteroids back in the late 1940s and early 1950s. Steroids can treat anything from poison oak or ivy to leukemia to arthritis.

With DUR-928 we do see that breadth of activity. We're treating liver disease. We're looking at the possibility for kidney disease. We're looking at it for skin conditions, such as psoriasis and atopic dermatitis.

TLSR: You've already completed some Phase 1 clinical trials for DUR-928. Can you tell us a little bit about the completed trials and what's ahead for Phase 2?

JB: We've dosed over 140 people now with DUR-928, and it looks like the molecule has a very wide therapeutic or safety index. DUR-928 is an endogenous molecule, so it's in all of us. In fact, we have tested rats, mice, hamsters, dogs and monkeys, as well as people, and found that all six species of mammals have very similar concentrations of DUR-928 in our bodies. We've dosed people to achieve plasma concentrations that are a thousand times our native levels and have not seen side effects.

When one looks at that kind of safety margin, it's not typical. I think what's going on is the receptor for DUR-928 seems to need cellular stress to be opened and available. The lock needs to be available for the key to be able to open it. So it's quite fascinating from that perspective.

From our Phase 1 trials, we've generated a lot of good safety information. We've delivered DUR-928 as an injection into the skin, an injection under the skin, intramuscular injections, intravenous injections and orally. And we've collected a nice array of safety data. We have our first patient data coming in and are starting to see some sense of activity in patients.

I can give a sense of some of those data. We'll actually be presenting more of this data on April 22 at the European Association for the Study of Liver (EASL) meeting in Amsterdam. The data we'll be presenting there will be from a study in nonalcoholic steatohepatitis (NASH) patients, who have metabolic disorders where they get a lot of fat accumulation in the liver; that creates local inflammation and they end up with progressive liver disease. It ends up being cirrhotic and the liver doesn't function properly.

Twenty NASH patients were dosed at two different strengths of DUR-928 and were compared to 12 different matched controls. The matched controls were also given DUR-928, but they had normal liver function. We were looking to see if having a diseased liver influences the flow and distribution of DUR-928 throughout the body. We found out that it didn't make any difference. So when dosing somebody with a damaged liver with DUR-928, it doesn't negatively impact the distribution of the product; that's an important concept to understand.

We saw from a safety standpoint that only one patient had a potentially adverse event, but it was just potential. It was shortness of breath that appeared to be maybe a panic attack. Because this occurred shortly after the dosing of DUR-928, it was deemed to be possibly treatment related. We definitely want to make sure that we have full disclosure on everything. But that shortness of breath went away and was not treated.

The interesting thing is, even though it was just a single dose, we did see some biomarkers making the same kind of changes in patients as we'd seen in different animal models; we were seeing some sense of bioactivity. We saw interleukin (IL-18), which is associated with inflammation in the kidney or liver when you have kidney or liver disease, reduced.

We also saw a reduction of two markers associated with the death of cells. They're called full-length CK-18 and cleaved CK-18. Both of these markers go up when cell death is going on. Full length is associated with cell death, or necrosis, when the cells are dying from forces from the outside. Cleaved CK-18 is when the cell dies from a process called apoptosis, where a preprogrammed cell death occurs. In both cases we saw dramatic reductions in CK-18 after just a single dose of DUR-928.

Those are very important markers for particularly the liver but, also, other organs in the body; when the organ is undergoing additional stress, are more cells dying or not? We saw changes not only right after dosing, but the effect actually lasted for longer than a day after dosing. We'll be presenting these data and more at the April 22 EASL meeting.

There were a couple of papers given at a liver meeting in Boston in November 2016 that demonstrated that by reducing CK-18, both cleaved and full length, in NASH patients for a period of about six months, the greater the reduction in those markers led to a greater reduction of fibrosis, which is the thing you want to reduce when you're trying to treat NASH. So we're very excited about those results.

TLSR: Can you tell us what your Phase 2 plans are?

JB: The next step is we actually have two other Phase 1b trials, one that is completed and one that we're still working on. The one that we're still working on is chronic kidney patients. We're dosing patients who have stage 3 or 4 kidney disease, looking to see how dosing DUR-928 influences the distribution of the drug in patients with kidney disease versus the matched controls. We expect to complete the trial and are hoping to get those data in Q2/17. Then we'll have an opportunity to move forward in looking at various kidney disease opportunities.

We also completed a Phase 1b study in psoriasis patients. We injected little microinjections into the plaque of patients with psoriasis to see what happens when we get DUR-928 right into the lesion. As a precursor, this is a go/no-go decision as to whether or not we want to pursue DUR-928 for the potential topical treatment for psoriasis. So we gave patients just a fraction of a drop of DUR-928 into the lesion. We tested two different formulations and their vehicles. We also tested a steroid called Kenalog, which is often used to treat psoriasis. We saw activity within that study that was quite promising. So from there, we're now moving on to a topical cream formulation that we're going to take into the clinic this year as well.

So if we look at DUR-928 and where we're looking to go, we have three different ways with which we're going to dose DUR-928: orally for the chronic diseases, NASH and various orphan diseases, injection for acute organ injury, and topically with a cream for indications like psoriasis and potentially other conditions like atopic dermatitis or allergic dermatitis.

Our Phase 2 work will then fall along the same lines. Our first oral Phase 2 study will most likely be in an orphan condition called primary sclerosing cholangitis (PSC). Typically, 60 to 80% of these patients have inflammatory bowel disease at the same time they have this problem in their livers. It's a very devastating disease and can lead to patients having to get liver transplants. We look forward to starting that trial later this year.

We'll be doing our next level of studying in the psoriasis patients with a topical gel once that formulation is finalized.

We haven't yet gone public with which of the injectable Phase 2 trials we're looking at. But we're looking at a number of opportunities there, where acute organ injuries are an immediate assault on the body and where DUR-928 could step in and help out these very desperate patients in those circumstances.

TLSR: Let's switch over to POSIMIR, which is a drug for postoperative pain, the product that's farthest along for DURECT at this point. Would you talk about the Phase 3 trial, where it is and when you expect to have results?

JB: We're taking a drug called bupivacaine and giving it a new life in a controlled release form. Bupivacaine is a relative of Novocain, which is used when you go to the dentist and get your gums numbed. The concept with POSIMIR is to numb the incision site for three days after surgery.

With most laparoscopic abdominal surgeries today, you will have several small wounds where the instruments were inserted. The concept behind POSIMIR is to squirt a little bit in each wound. It takes the surgeon less than a minute to squirt it in all these wounds.

It's very different from the drugs that are out there today to treat postoperative laparoscopic abdominal pain, where surgeons inject a local anesthetic. Surgeons actually stick a needle through the edge of the wound, and they inject it in a trailing injection. They stick it back in again and again and again, all the way around the wound. It takes a lot of time for a surgeon to do that.

And the surgeon has to be lucky to get close enough to a nerve to actually influence the pain. We've shown, back since the days at ALZA Corp., when you inject a drug under the skin, by the time it diffuses away a centimeter, which is the diameter of a pea, you go down three orders of magnitude in concentration. So if you were injecting 1,000 nanograms/milliliter, it would be down to 1 by the time it goes just the diameter of a pea away.

In our case, we just put it where it hurts. We squirt it right into the wound, so as it diffuses through the edge of that wound, it's diffusing through that distance, the diameter of a pea. It's going right through where the cut nerve is. We're seeing really nice efficacy.

We have two different pivotal trials we've already completed for POSIMIR. One is in shoulder surgery, and the other is in hernia surgery. By using POSIMIR, we saw 20 to 30% less pain and 60 to 80% less narcotics being taken by those patients in those trials. In addition, about 20% more of the patients in both of those trials didn't take any narcotics at all after shoulder or hernia surgery than if they weren't given POSIMIR.

The way they ask them to look at their pain is, with shoulder surgery, to raise the arm, and with hernia surgery, to do a crunch because it's pain on movement that is the most meaningful. I had my appendix out about 10 years ago. I didn't feel much pain at all when I was just sitting in bed reading or on the sofa. But when I got up to move to go the bathroom or to get something to drink, that's when I felt it. It's pain on movement that matters.

We're doing one last Phase 3 trial for POSIMIR called PERSIST. It's a trial in gallbladder removal. We're over halfway enrolled in that trial and expect to finish it up this summer. That trial is comparing POSIMIR against bupivacaine hydrochloride at a specific dose. In this case, we're going against an active comparator rather than placebo like saline.

We feel quite comfortable that we should be successful here. You never can say for sure with any clinical trial, but we have 264 patients in this efficacy portion of this trial and we were previously successful in a 50-patient trial when we compared POSIMIR against bupivacaine hydrochloride in this same surgery.

TLSR: If the PERSIST trial reads out positively, would you bring POSIMIR to market yourself or would you partner with a larger pharmaceutical company?

JB: That's always a tough question for a small company. If we didn't have the opportunity that we have with DUR-928 and the family of molecules there, then we most likely would look to potentially commercialize POSIMIR ourselves. But because we have DUR-928 and the opportunity there—and it's a great opportunity for POSIMIR but the opportunity for DUR-928 is potentially much, much larger—we are in discussions with a number of companies to be our commercial partner on POSIMIR.

We think it's going to be a very good product because we've shown in this study that the dischargeability index went up. If you assume a $1,200 a day hospital bed, we can save the healthcare system about $620 by virtue of using POSIMIR. When we shared that with Blue Cross/Blue Shield, the insurer stated if you save us $600, we'd be willing to pay as much as $400 for that.

We think there's a nice price opportunity for POSIMIR that will allow for the healthcare system to save money but, at the same time, help the patients out. Patients will have less pain and will be taking less narcotics. We could potentially see fewer narcotic prescriptions being written, which is really important to our country where we have this huge epidemic with patients dying from narcotic abuse on a daily basis, with probably 6 or 7% of the population having a predisposition for abusing these drugs. And if patients never get the drug in the first place or the prescription is not in their grandmother's medicine chest after she had surgery, the leftovers aren't there, you might be able to reduce that risk somewhat.

TLSR: Looking ahead, what catalysts and value drivers do you see over the next few years?

JB: We have the Phase 1b data from the NASH patients we're going to be presenting at that EASL meeting in Amsterdam on April 22.

We have the ongoing potential for a POSIMIR deal as we're in negotiations with multiple companies right now to leverage the commercialization rights for the United States.

We have an opportunity to have Phase 1b data from our kidney patients coming from the Australian work.

We'll have the POSIMIR Phase 3 data coming up later this year.

Just prior to that, we actually also have another product. We have an abuse deterrent oral technology. There's a methylphenidate formulation that we have been developing with a company called Orient Pharma, and it just is finishing up a Phase 3 trial in Taiwan. We should have top-line data in Q2/17. We have the rights to the methylphenidate oral product abuse deterrent form for the U.S. and Europe markets. So there will be an opportunity to announce those data and to start looking for potential partners there.

And then we'll also look to start various Phase 2 trials for DUR-928, potentially getting some DUR-928 psoriasis data as well.

So we have a lot of opportunities for milestones coming up. If anybody wants to get more information, please look into our website or feel free to contact us.

TLSR: Thank you for your time.

James E. Brown, D.V.M., cofounded DURECT in February 1998 and has served as president, CEO and a director since June 1998. He previously worked at ALZA Corp. as vice president of Biopharmaceutical and Implant Research and Development from June 1995 to June 1998. Prior to that, Dr. Brown held various positions at Syntex Corp., a pharmaceutical company, including director of business development from May 1994 to May 1995, director of joint ventures for discovery research from April 1992 to May 1995, and held a number of positions including program director for Syntex Research and Development from October 1985 to March 1992. Dr. Brown holds a bachelor's degree from San Jose State University and a Doctor of Veterinary Medicine degree from the University of California, Davis, where he also conducted post-graduate work in pharmacology and toxicology.

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Disclosure:
1) Patrice Fusillo compiled this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
2) DURECT Corp. is a sponsor of Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclaimers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) DURECT Corp. had final approval of the content and is wholly responsible for the validity of the statements. Opinions expressed are the opinions of James Brown and not of Streetwise Reports or its officers.
4) James Brown: I was not paid by Streetwise Reports to participate in this interview. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview. I or my family own shares of the following companies mentioned in this interview: DURECT Corp.
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