Mr. Thomas J. Appio reports

BAUSCH HEALTH TO ACQUIRE DURECT CORPORATION, STRENGTHENING COMMITMENT TO DEVELOPING INNOVATIVE SOLUTIONS FOR PATIENTS WITH LIVER DISEASE

Bausch Health Companies Inc. has signed a definitive agreement, under which Bausch Health will indirectly acquire Durect Corp., including a novel therapeutic molecule, larsucosterol, which can harness the power of epigenetic modulation. Larsucosterol, an endogenous sulphated oxysterol and an epigenetic modulator, has demonstrated promising results for the treatment of alcoholic hepatitis (AH) in phase 2 trials. Bausch Health's hepatology development and commercial capabilities are well suited to support the clinical development and potential commercialization of larsucosterol.

AH is a life-threatening form of alcohol-associated liver disease (ALD), which can occur in individuals who chronically misuse alcohol. It is characterized by severe inflammation and destruction of liver tissue (that is, necrosis). AH accounted for roughly 164,000 hospital admissions in the United States in 2021. There is currently no treatment approved by the U.S. Food and Drug Administration (FDA) or European Medicines Agency (EMA) for AH, and novel therapeutic strategies are needed to improve patient survival.

"This announcement is fundamental progress on our strategic priority -- innovation, which is to intensify focus and operating rigour behind R&D [research and development] and business development -- and demonstrates our commitment to hepatology and finding new ways to address unmet medical needs, living our purpose of enriching lives through our relentless drive to deliver better health outcomes for patients," said Thomas J. Appio, chief executive officer of Bausch Health.

"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. We are very excited to add larsucosterol, an asset which has FDA breakthrough therapy designation, to our pipeline, particularly as it builds on our existing expertise within the hepatology space. It is complementary to our ongoing phase 3 program of soluble solid dispersion of rifaximin (rifaximin SSD) being studied in cirrhotic patients globally," stated Dr. Jonathan Sadeh, MD, MSc, executive vice-president, chief medical officer, and head of R&D at Bausch Health.

"AH, by our estimates, is responsible for about 100 deaths per day in the U.S. and billions of dollars in health care costs," stated James E. Brown, DVM, president and chief executive officer of Durect. "Since we reported results from our phase 2b AHFIRM clinical trial for larsucosterol in AH, our primary focus has been advancing larsucosterol towards the completion of clinical development. We chose this transaction with Bausch Health because we believe it provides significant value for our stakeholders, both immediately and in the long term, should larsucosterol be approved and achieve commercial success. 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. We look forward to the potential impact larsucosterol could have for patients with AH and the medical community that cares for them. Thank you to our team at Durect and our partners that have helped advance larsucosterol to this point."

A registrational phase 3 program to evaluate the safety and efficacy of larsucosterol for the treatment of patients with severe AH is being planned. The trial will be a randomized, double-blind, placebo-controlled, multicentre study. The primary end point will be 90-day survival. The trial design will incorporate feedback received from the FDA during a Type B meeting under breakthrough therapy designation as well as learnings from the prior phase 2b AHFIRM trial in AH.

The acquisition of the clinical development program for larsucosterol in AH complements the continuing Bausch Health Red-C clinical program, which is designed to assess the efficacy of a next-generation therapeutic, rifaximin SSD, to delay onset of first overt hepatic encephalopathy (OHE) hospitalization and all-cause mortality. There are no medications globally approved for the primary prophylaxis and delay in decompensation to first episode of OHE in cirrhosis. Patient enrolment in two global phase 3, randomized, double-blind, placebo-controlled studies is now complete, with efficacy and safety results expected to be announced in early 2026.

"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," stated Aimee Lenar, executive vice-president of U.S. pharma at Bausch Health. "We are excited to continue investment in bringing these breakthrough options to market, not just in the U.S., but also globally."

Transaction terms and financial considerations

Under the terms of the definitive agreement, a wholly owned subsidiary of Bausch Health will commence a tender offer for all outstanding shares of Durect. Under the terms of the definitive agreement, Bausch Health will pay $1.75 per share in an all-cash transaction for an upfront consideration of approximately $63-million at closing, with the potential for two additional net sales milestone payments of up to $350-million in the aggregate (subject to certain adjustments in respect of a retention plan) if the milestone is achieved before the earlier of the 10-year anniversary of the first commercial sale in the United States and Dec. 31, 2045. The purchase price payable at closing represents a premium of approximately 191 per cent to the 30-day volume-weighted average trading price of Durect's common stock on July 28, 2025, the last trading day before the announcement of the transaction. This upfront consideration represents a premium of approximately 217 per cent to the trading price of Durect's common stock ended on July 28, 2025.

The transaction is conditioned on a majority of the outstanding shares of Durect's common stock being tendered into the tender offer and not withdrawn as well as other customary closing conditions. The transaction is expected to close in the third quarter of 2025. Assuming the closing of the tender offer, Bausch Health will acquire any shares of Durect not tendered into the tender offer through a merger of a wholly owned subsidiary with and into Durect for the same per-share consideration payable in the tender offer.

Advisers

Centerview Partners LLC is serving as exclusive financial adviser and Sullivan & Cromwell LLP is serving as legal adviser to Bausch Health. Locust Walk is serving as exclusive financial adviser and Orrick Herington and Sutcliffe LLP is serving as legal adviser to Durect.

About Bausch Health Companies Inc.

Bausch Health is a global, diversified pharmaceutical company enriching lives through its relentless drive to deliver better health care outcomes. Bausch Health develops, manufactures and markets a range of products, primarily in gastroenterology, hepatology, neurology, dermatology, dentistry, aesthetics, international pharmaceuticals and eye health, through its controlling interest in Bausch + Lomb Corp. Bausch Health's ambition is to be a globally integrated health care company, trusted and valued by patients, health care providers, employees and investors. Bausch Health's gastroenterology business, Salix Pharmaceuticals, is one of the largest specialty pharmaceutical businesses in the world and has licensed, developed and marketed innovative products for the treatment of gastrointestinal diseases for more than 30 years.

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