Transaction Case Studies
Sell-Side Engagement Leading to the Acquisition of DURECT Corp. for an Upfront Payment of ~$63M and Contingent Value Rights for up to $350M, for a total transaction value of up to ~$413M
Situation Assessment
DURECT Corporation (DRRX) is a US-based clinical-stage biopharmaceutical company focused on the development of epigenetic therapies that target dysregulated DNA methylation to transform the treatment of serious and life-threatening conditions
DURECT’s lead product, larsucosterol, is an endogenous sulfated oxysterol and an epigenetic modulator, that has demonstrated promising results for the treatment of alcohol-associated hepatitis (AAH) and received Breakthrough Therapy Designation from the FDA
Locust Walk was initially engaged in 2022 to seek a European regional partnership for larsucosterol. After the Phase 2b AHFIRM trial read out and DURECT’s subsequent Type C discussions with the FDA, Locust Walk shifted efforts to a global sell-side process to find the best strategic partner / buyer to advance development and maximize larsucosterol’s potential
Key Activities
Created targeted materials and executed a broad outreach campaign to 70+ global biopharma and biotech strategic partners with indication specific interests
Performed qualitative and quantitative analyses assessing company valuation and evaluating various deal structures (e.g., licensing and M&A) and associated impact to shareholders (e.g., warrant and option treatment)
Coordinated due diligence across parties and functional areas, ensuring effective communication and access to key information among all parties
Offered strategic advice and senior-level connectivity that catalyzed deal valuation and supported alignment on final term structure
Led negotiations on term sheets and deal documents, balancing essential business terms with buyer engagement to achieve deal success
Rendered fairness opinion to the Board of Directors for the transaction
Successful Outcome
Conducted multiple comprehensive outreach processes across various deal structures over the course of 3 years, generating offers to provide DURECT with a range of strategic options
Successfully negotiated economics for an M&A offer of ~$63M upfront with two CVRs up to an additional $350M
Evaluated offers and led negotiations to maximize shareholder value, resulting in an upfront offer that represents a premium of 217%1, and with the two CVRs, a premium up to 2,109%1
