DURECT Corporation (NASDAQ:DRRX) Q3 2019 Earnings Conference Call - Final Transcript
Nov 04, 2019 • 04:30 pm ET
Greetings, and welcome and to the DURECT's Third Quarter Conference Call. [Operator Instructions]
It is now my pleasure to introduce your host, Mike Arenberg, Chief Financial Officer of DURECT. Please go ahead.
Michael H. Arenberg
Good afternoon and welcome to our Third Quarter 2019 Earnings Conference Call. This is Mike Arenberg, Chief Financial Officer of DURECT Corporation. I will provide a brief overview of our financial results and then Jim Brown, our President and CEO, will provide an update on our programs. We will then open up the call for a question-and-answer session. Before beginning, I would like to remind you of our safe harbor statement. During the course of this call, we may make forward-looking statements regarding DURECT'S products and development, expected product benefits, our development plans, future clinical trials or projected financial results. These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Further information regarding those and other risks can be found in our SEC filings, including our 10-K and 10-Qs, under the heading Risk Factors.
Let me now turn to our financials. Total revenue in Q3, 2019 was $10.8 million compared to $8.0 million in Q3 2018. Q3 2019 revenue included $6.2 million recognized from our deferred revenue associated with the Gilead license agreement and Q3 2018 included the $5 million milestone payment Indivior paid us upon NDA approval for PERSERIS.
Adjusting for those, total revenue was $4.6 million in Q3 2019 versus $3.0 million in Q3 2018. Product revenue, largely from the sale of ALZET Pumps and LACTEL polymers, was $3.0 million in Q3 2019 compared to $2.3 million in Q3 2018. The gross margin on our product revenue was 76% in Q3 2019. These products continue to be strongly cash flow positive.
R&D expense was $7.9 million in Q3 2019 as compared to $6.5 million in Q3 2018, primarily due to higher cost of DUR-928 and our depot injectable programs, which are largely covered by revenue from partners, partially offset by lower costs associated with POSIMIR. SG&A expenses were $3.8 million in Q3 2019 as compared to $2.9 million in Q3 2018. Our underlying burn rate during the quarter was $6.0 million. At September 30 2019, we had cash and investments of $57.1 million compared to $34.5 million at December 31, 2018. Of course, subsequent to quarter end, we received a $10 million development milestone associated with our Gilead license agreement, so including that, our pro forma cash position would be $67.1 million. With that, thanks again for joining our call, and I will now turn it over to Jim for an update on certain of our programs.
James E. Brown
Thank you, Mike, and good afternoon, everyone. The third quarter was a strong one for DURECT. We continued to advance our flagship DUR-928 program on all fronts. We completed the DUR-928 Phase IIa, alcoholic hepatitis trial and announced impressive data on important endpoints, including bilirubin, MELD and Lille scores. The study results were selected for an oral late-breaking presentation