Bausch Health to acquire Durect

Executive Summary

• Bausch Health Companies Inc. has signed a definitive agreement to indirectly acquire Durect Corp. in an all-cash transaction valued at approximately $63 million upfront, with potential milestone payments up to $350 million.
• The acquisition includes Durect’s novel therapeutic molecule, larsucosterol, an epigenetic modulator currently in Phase 2 trials for alcoholic hepatitis (AH), a condition with no currently approved treatments.
• Bausch Health plans to initiate a registrational Phase 3 program for larsucosterol in severe AH, leveraging its existing hepatology expertise and complementing its ongoing rifaximin SSD development program.

Key Details

• Transaction Structure: Bausch Health will commence a tender offer for all outstanding shares of Durect, followed by a merger for any non-tendered shares.
• Consideration:
  • Upfront cash payment: $1.75 per share.
  • Total upfront value: Approximately $63 million.
  • Milestone payments: Up to $350 million in aggregate, contingent on net sales milestones achieved before the earlier of the 10-year anniversary of the first US commercial sale or December 31, 2045.
• Valuation Premium: The $1.75/share price represents a ~191% premium to Durect’s 30-day volume-weighted average trading price and a ~217% premium to the closing price on July 28, 2025.
• Asset Acquired: Larsucosterol, an endogenous sulphated oxysterol and epigenetic modulator.
• Clinical Status of Larsucosterol:
  • Indication: Alcoholic Hepatitis (AH), a life-threatening form of alcohol-associated liver disease.
  • Current Stage: Phase 2 trials showed promising results; FDA Breakthrough Therapy designation granted.
  • Future Plan: Registrational Phase 3 program planned to evaluate safety and efficacy in severe AH.
  • Trial Design: Randomized, double-blind, placebo-controlled, multicentre study.
  • Primary Endpoint: 90-day survival.
  • Regulatory Context: Trial design incorporates FDA feedback from a Type B meeting under breakthrough therapy designation.
• Strategic Context:
  • Complements Bausch Health’s existing hepatology pipeline, specifically the rifaximin SSD program for cirrhotic patients.
  • Rifaximin SSD Phase 3 patient enrollment is complete, with results expected in early 2026.
  • Addresses a significant unmet medical need; AH accounted for ~164,000 US hospital admissions in 2021 and causes ~100 deaths per day in the US.
• Closing Conditions: Majority of Durect shares must be tendered and not withdrawn; customary closing conditions apply.
• Expected Closing: Third quarter of 2025.
• Advisers:
  • Bausch Health: Centerview Partners LLC (Financial), Sullivan & Cromwell LLP (Legal).
  • Durect: Locust Walk (Financial), Orrick Herington and Sutcliffe LLP (Legal).

Notable Quotes

• Thomas J. Appio, CEO, Bausch Health: "This announcement is fundamental progress on our strategic priority -- innovation... and demonstrates our commitment to hepatology and finding new ways to address unmet medical needs..."
• Dr. Jonathan Sadeh, EVP, Chief Medical Officer, Bausch Health: "There is a significant unmet need in the treatment of patients with AH... We are very excited to add larsucosterol, an asset which has FDA breakthrough therapy designation, to our pipeline..."
• James E. Brown, President and CEO, Durect: "We chose this transaction with Bausch Health because we believe it provides significant value for our stakeholders... We view Bausch Health as the right partner to advance larsucosterol due to their expertise in hepatology, commercial success with Xifaxan and experienced development team."