Bausch Health Companies Inc. announced a definitive agreement to acquire DURECT Corporation for approximately $63 million upfront, gaining access to larsucosterol, an epigenetic modulator with FDA Breakthrough Therapy Designation for the treatment of alcoholic hepatitis (AH). The transaction includes potential milestone payments of up to $350 million based on commercial success.
Strategic Acquisition Targets Critical Unmet Need
The acquisition addresses a significant medical gap in treating alcoholic hepatitis, a life-threatening form of alcohol-associated liver disease characterized by severe inflammation and destruction of liver tissue. According to DURECT CEO James E. Brown, "AH, by our estimates, is responsible for about 100 deaths per day in the US and billions of dollars in healthcare costs." The condition accounted for roughly 164,000 hospital admissions in the U.S. in 2021, with no FDA or European Medicines Agency approved treatments currently available.
"There is a significant unmet need in the treatment of patients with AH given the high mortality rate and that there are no currently approved treatments," stated Jonathan Sadeh, Executive Vice President and Chief Medical Officer at Bausch Health. "We are very excited to add larsucosterol, an asset which has FDA Breakthrough Therapy Designation, to our pipeline."
Larsucosterol's Mechanism and Clinical Progress
Larsucosterol is an endogenous sulfated oxysterol that functions as an epigenetic modulator by binding to and inhibiting DNA methyltransferases, enzymes that are elevated and associated with hypermethylation found in AH patients. The compound has demonstrated promising results in Phase 2 trials for alcoholic hepatitis treatment.
DURECT has completed a Phase 2b AHFIRM clinical trial for larsucosterol in AH, with results informing the design of the upcoming registrational program. The FDA has granted both Fast Track and Breakthrough Therapy designations for the compound in alcoholic hepatitis, reflecting its potential to address the critical treatment gap.
Planned Phase 3 Development Program
A registrational Phase 3 program to evaluate larsucosterol's safety and efficacy in patients with severe AH is being planned as a randomized, double-blind, placebo-controlled, multi-center study. The primary endpoint will be 90-day survival, incorporating feedback received from the FDA during a Type B meeting under Breakthrough Therapy Designation and learnings from the prior Phase 2b AHFIRM trial.
The acquisition complements Bausch Health's existing hepatology pipeline, particularly the ongoing RED-C clinical program evaluating rifaximin SSD to delay onset of first overt hepatic encephalopathy hospitalization and all-cause mortality in cirrhotic patients. Patient enrollment in two global Phase 3 studies for rifaximin SSD is complete, with efficacy and safety results expected in early 2026.
Transaction Details and Strategic Rationale
Under the agreement terms, Bausch Health will pay $1.75 per share in an all-cash transaction, representing a premium of approximately 191% to DURECT's 30-day volume-weighted average trading price and 217% to the closing price on July 28, 2025. The transaction is expected to close in the third quarter of 2025, subject to customary closing conditions including majority shareholder approval.
"This announcement is fundamental progress on our Strategic Priority - Innovation, which is to intensify focus and operating rigor behind R&D and business development," said Thomas J. Appio, Chief Executive Officer of Bausch Health. The acquisition aligns with the company's hepatology expertise, building on their commercial success with Xifaxan and experienced development capabilities.
Aimee Lenar, Executive Vice President of US Pharma at Bausch Health, emphasized the strategic fit: "The addition of larsucosterol to our pipeline is a strategic fit with our focus in hepatology and underscores our continued dedication to exploring and identifying new treatments for individuals who are suffering with liver disease and its complications."
