Back to GetFilings.com



Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
  
 
For the quarterly period ended June 30, 2002
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
  
 
For the transition period from                                  to                                
 
Commission file number 000-31615
 
 
DURECT CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
  
94-3297098
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification No.)
 
10240 Bubb Road
Cupertino, California 95014
(Address of principal executive offices, including zip code)
 
(408) 777-1417
(Registrant’s telephone number, including area code)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x    No  ¨
 
As of July 31, 2002, there were 48,785,795 shares of the registrant’s Common Stock outstanding.
 

Table of Contents
 
INDEX
 
           
Page
PART I.    FINANCIAL INFORMATION
Item 1.
        
3
      
For the three and six months ended June 30, 2002 and 2001 (unaudited)
   
3
      
As of June 30, 2002 (unaudited) and December 31, 2001
   
4
      
For the six months ended June 30, 2002 and 2001 (unaudited)
   
5
         
6
Item 2.
        
11
Item 3.
        
33
PART II.    OTHER INFORMATION
Item 1.
        
34
Item 2.
        
34
Item 3.
        
34
Item 4.
        
34
Item 5.
        
35
Item 6.
        
35
         
35
         
35
  
36
 

2

Table of Contents
 
PART I.    FINANCIAL INFORMATION
 
Item 1.    Financial Statements.
 
DURECT CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
    
Three months ended
June 30,
     
Six months ended
June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Revenue, net
   
$
1,772
 
   
$
1,687
 
   
$
3,396
 
   
$
3,086
 
Cost of goods sold(1)
   
 
785
 
   
 
974
 
   
 
1,564
 
   
 
1,585
 
    
  
  
  
Gross profit
   
 
987
 
   
 
713
 
   
 
1,832
 
   
 
1,501
 
    
  
  
  
Operating expenses:
                                    
Research and development
   
 
8,178
 
   
 
5,333
 
   
 
16,173
 
   
 
9,474
 
Selling, general and administrative
   
 
2,441
 
   
 
2,157
 
   
 
4,764
 
   
 
4,035
 
Amortization of intangible assets
   
 
335
 
   
 
461
 
   
 
670
 
   
 
735
 
Stock-based compensation(1)
   
 
468
 
   
 
919
 
   
 
1,037
 
   
 
1,854
 
Acquired in-process research and development
   
 
—  
 
   
 
14,030
 
   
 
—  
 
   
 
14,030
 
    
  
  
  
Total operating expenses
   
 
11,422
 
   
 
22,900
 
   
 
22,644
 
   
 
30,128
 
    
  
  
  
Loss from operations
   
 
(10,435
)
   
 
(22,187
)
   
 
(20,812
)
   
 
(28,627
)
Other income (expense):
                                    
Interest income
   
 
598
 
   
 
1,281
 
   
 
1,309
 
   
 
2,864
 
Interest expense
   
 
(78
)
   
 
(84
)
   
 
(161
)
   
 
(145
)
    
  
  
  
Net other income
   
 
520
 
   
 
1,197
 
   
 
1,148
 
   
 
2,719
 
    
  
  
  
Net loss
   
$
(9,915
)
   
$
(20,990
)
   
$
(19,664
)
   
$
(25,908
)
    
  
  
  
Net loss per share, basic and diluted
   
$
(0.21
)
   
$
(0.45
)
   
$
(0.41
)
   
$
(0.57
)
    
  
  
  
Shares used in computing basic and diluted net loss per share
   
 
48,076
 
   
 
46,325
 
   
 
47,929
 
   
 
45,726
 
    
  
  
  
(1) Stock-based compensation related to the following:
                                    
     Cost of goods sold
   
$
17
 
   
$
65
 
   
$
46
 
   
$
87
 
     Research and development
   
 
330
 
   
 
613
 
   
 
724
 
   
 
1,294
 
     Selling, general and administrative
   
 
138
 
   
 
306
 
   
 
313
 
   
 
560
 
    
  
  
  
    
$
485
 
   
$
984
 
   
$
1,083
 
   
$
1,941
 
    
  
  
  
 
See accompanying notes.

3

Table of Contents
 
DURECT CORPORATION
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
    
June 30,
2002
     
December 31,
2001
  
    
(unaudited)
         
Assets
                  
Current assets:
                  
Cash and cash equivalents
   
$
7,376
 
   
$
12,596
 
Short-term investments
   
 
45,563
 
   
 
42,608
 
Accounts receivable, net
   
 
893
 
   
 
818
 
Inventories
   
 
1,551
 
   
 
1,864
 
Prepaid expenses and other current assets
   
 
1,945
 
   
 
2,325
 
    
  
Total current assets
   
 
57,328
 
   
 
60,211
 
Property and equipment, net
   
 
12,886
 
   
 
13,136
 
Goodwill
   
 
4,716
 
   
 
4,716
 
Intangible assets, net
   
 
4,791
 
   
 
5,462
 
Long-term investments
   
 
2,627
 
   
 
18,016
 
Restricted investments
   
 
2,870
 
   
 
3,402
 
    
  
Total assets
   
$
85,218
 
   
$
104,943
 
    
  
Liabilities and stockholders’ equity
                  
Current liabilities:
                  
Accounts payable
   
$
759
 
   
$
2,003
 
Accrued liabilities
   
 
2,162
 
   
 
2,140
 
Accrued construction in progress
   
 
—  
 
   
 
342
 
Contract research liability
   
 
1,219
 
   
 
580
 
Equipment financing obligations, current portion
   
 
505
 
   
 
523
 
Bonds payable, current portion
   
 
160
 
   
 
160
 
    
  
Total current liabilities
   
 
4,805
 
   
 
5,748
 
Equipment financing obligations, noncurrent portion
   
 
319
 
   
 
581
 
Bonds payable, noncurrent portion
   
 
1,415
 
   
 
1,415
 
Other long-term liabilities
   
 
198
 
   
 
151
 
Commitments and contingencies
                  
Stockholders’ equity:
                  
Common stock
   
 
4
 
   
 
4
 
Additional paid-in capital
   
 
189,713
 
   
 
189,396
 
Notes receivable from stockholders
   
 
(527
)
   
 
(597
)
Deferred compensation
   
 
(1,448
)
   
 
(2,551
)
Deferred royalties and commercial rights
   
 
(13,480
)
   
 
(13,480
)
Accumulated other comprehensive income
   
 
266
 
   
 
659
 
Accumulated deficit
   
 
(96,047
)
   
 
(76,383
)
    
  
Total stockholders’ equity
   
 
78,481
 
   
 
97,048
 
    
  
Total liabilities and stockholders’ equity
   
$
85,218
 
   
$
104,943
 
    
  
 
See accompanying notes.

4

Table of Contents
 
DURECT CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
    
Six months ended
June 30,
  
    
2002
     
2001
  
Cash flows from operating activities
                  
Net loss
   
$
(19,664
)
   
$
(25,908
)
Adjustments to reconcile net loss to net cash used in operating activities:
                  
Depreciation and amortization
   
 
1,955
 
   
 
1,275
 
Non-cash charges related to stock-based compensation
   
 
1,083
 
   
 
1,941
 
Acquired in-process research and development
   
 
—  
 
   
 
14,030
 
Changes in assets and liabilities:
                  
Accounts receivable
   
 
(75
)