DURECT Corporation (Nasdaq:DRRX) Enjoying a Current Uptrend

[[tagnumber 0]]Durect Corporation (Nasdaq:DRRX) is a biotech focused on developing pain management solutions and its stock had been on a fairly positive ride on the charts before cooling down a little bit in the last few weeks. Yesterday, DRRX shares closed trade at $2.26, down 4.64% from the day before, on a volume of some 462 thousand, way below the average turnover of 1.4 million. So what are the prospects for continual growth on the chart?[[tagnumber 1]] [[tagnumber 0]][[tagnumber 3]]At present, DRRX is in the process of conducting a few clinical trials at various stages. Last month, the company announced a new phase 3 clinical trial for its POSIDUR, an investigational post–operative pain relief drug, scheduled to cover 300 patients this time, or 6 times more than the previous study, after the FDA rejected the company‘s first NDA citing lack of sufficient data validating the full safety of the product. The enrollment will reportedly last for 12 months or so, which is why a new NDA will probably not be submitted until late 2016 at the earliest.[[tagnumber 1]] [[tagnumber 0]]Recently, Durect published some positive results for another early–stage trial. Yet, considering it is still in its first phase, it has a long way to go before even becoming eligible for an NDA.[[tagnumber 1]] [[tagnumber 0]]Nevertheless, financials reveal that Durect is generating an average of $4.5 million of revenue per quarter and incurring an average quarterly loss of $5.8 million as the company is still spending between $5 and $6 million for R&D, again on a quarterly basis. DRRX‘s cash and marketable securities average $30 million for the last few quarters, which seems ample enough to pay the bills for a good few months ahead. A quick look at the stock summary page on the Nasdaq reveals three analyst firms recommending DRRX as a strong buy.[[tagnumber 1]] [[tagnumber 0]][[tagnumber 10]]Along with the good stuff, however, investors should not forget to always proceed with cautious optimism and watch out for red flags, as well. Analysts are expecting a 20% decrease in earnings in 2015 as compared to 2014, which, if met, would go somewhere in the neighbourhood of $15 million or so. The fact that DRRX has only once managed to beat expectations for the last four quarters on record does little to suggest that this will change dramatically, either. In this respect, it is no wonder why Durect‘s earnings have failed to surpass those of the biotech industry as a whole.[[tagnumber 1]] [[tagnumber 0]]Overall, DRRX seems poised for a possible upward run in the forthcoming months provided that the clinical trials go on as planned and yield promising results. The 13 insider buying transactions recorded for the last 12 months suggests that the company‘s officers and 10% owners have some confidence in this stock. This is further backed up by the fairly small short interest in this stock, which means that the number of investors expecting to profit from a decline in the price of DRRX is not that big and, based on the days–to–cover ratio, would only need one day to close their positions if necessary. Finally, with a weighted alpha measure of 71.50, Durect finds itself well above the industry average.[[tagnumber 1]] [[tagnumber 0]]While the positive signals mentioned above might preserve the current trend in the short term, the outcome of the clinical trials still remains crucial to DRRX‘s long–term outlook.[[tagnumber 1]]