Jefferies Reiterates Buy Rating on DURECT Corp. (DRRX)

Jefferies & Company is out with a research report this morning, where it reiterates its Buy rating on DURECT Corp. DRRX; it has a $4.00 price target on the stock. The Jefferies analysts cited the company’s recent earnings report, which beat estimates. They also noted that DRRX signed a partnership agreement with Hospira HSP during the quarter for the development and commercialization of Posidur in the U.S and Canada. DRRX received a $27.5M upfront pmt and may receive up to $185M in potential milestones and a royalty on sales. They also added that DRXX’s other partner, King Pharmaceuticals KG, plans to resubmit its NDA for Remoxy by the end of 2010. After accounting for a 6-month review, they “anticipate the product could be approved by mid-2011; however, this is assuming the FDA does not have additional concerns...which may not be a safe assumption.” As for valuation, they remarked, “We target 2015 to reflect earnings from the company's three main development programs and discounted at 20%, which is consistent with programs in Phase II/III development. Lastly, we arrived at our $4 PT by assigning a 20x multiple, which is in line with peers.”