Bausch Health has struck a deal to buy Durect for $63 million upfront, landing a phase 3-ready liver disease candidate that the companies believe has blockbuster potential.
Durect reported top-line data from a phase 2b trial in alcohol-associated hepatitis late in 2023. The study found DNMT modulator larsucosterol was no better than placebo on the primary endpoint of mortality or transplant at 90 days. While Durect argued secondary endpoint data supported further development, investors sent the stock into a sustained slump and the company’s cash pile fell below $10 million.
Bausch Health came to the rescue Tuesday. The company has agreed to pay a premium of more than 200% over Durect’s closing price Monday, but that still amounts to a small upfront outlay.
The value of the deal will, however, swell if larsucosterol lives up to Durect’s blockbuster vision for the molecule. Bausch Health has agreed to pay $100 million if sales top $500 million in a calendar year. If annual sales exceed $1 billion, Bausch Health will pay a further $250 million. The contingent value rights agreement pushes the total potential value of the deal above $400 million.
Durect has estimated (PDF) the peak sales potential of larsucosterol exceeds $1 billion in the U.S. alone, but it has struggled to drum up investor enthusiasm since the phase 2b failed. The company has released subgroup analyses on regional differences in the patient population to make the case for larsucosterol. Encouraged by the findings, Durect began preparing to start a two-year phase 3 trial this year.
With Bausch Health funding the phase 3, larsucosterol has a shot at becoming the first approved therapy for the liver disease. Aldeyra Therapeutics, Alfasigma’s Intercept Pharmaceuticals and Yale University are enrolling patients in phase 2 trials. Nterica Bio is gearing up to start a phase 1 trial. Surrozen dropped out of the race in March.
Based on the timeline Durect provided in May, Bausch Health could have top-line data from the phase 3 larsucosterol trial in 2027. Durect has said results from a single pivotal trial will be enough to support a filing for FDA approval.
The timeline positions larsucosterol to support Bausch Health’s preparations for the loss of exclusivity on Xifaxan. Bausch Health is fighting generics manufacturers in the courts but expects to lose exclusivity in 2028. Larsucosterol forms part of a two-pronged response to the problem, slotting in alongside a soluble solid dispersion of rifaximin that is on course for a phase 3 readout in cirrhotic patients early next year.