DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934


Filed by the Registrant ☒	Filed by a Party other than the Registrant ☐

Check the appropriate box:


☐	Preliminary Proxy Statement
☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒	Definitive Proxy Statement
☐	Definitive Additional Materials
☐	Soliciting Material Pursuant to §240.14a-12

DURECT Corporation

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):


☒	No fee required.

☐	Fee paid previously with preliminary materials.

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

DURECT CORPORATION

10240 Bubb Road

Cupertino, CA 95014

NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD SEPTEMBER 25, 2024

On Wednesday, September 25, 2024 at 9:00 a.m. Pacific Time, DURECT Corporation (the “Company”) will hold its 2024 Annual Meeting of Stockholders (the “Annual Meeting”). The Annual Meeting will begin promptly at 9:00 a.m. Pacific Time. The Annual Meeting will be a virtual meeting of stockholders in order to facilitate greater stockholder access. Stockholders will not be able to physically attend the Annual Meeting. Stockholders will be able to attend the Annual Meeting via live audio webcast by visiting https://meetnow.global/M95KTCP, as well as vote shares electronically and submit questions electronically during the Annual Meeting. To attend and participate in the Annual Meeting, including voting shares at and submitting questions during the Annual Meeting, stockholders must have their 15-Digit Control Number assigned by Computershare Trust Company, N.A., the Company’s transfer agent. Instructions for how to obtain such 15-Digit Control Number are provided in the attached Proxy Statement. Stockholders may also view reference materials such as the Company’s list of stockholders as of August 5, 2024, the record date, which will be available for ten (10) days prior to the Annual Meeting. Please see the section entitled “Time and Place of the Annual Meeting” for additional details related to reviewing the Company’s list of stockholders.

Only stockholders who owned common stock at the close of business on August 5, 2024 can vote or submit questions at the Annual Meeting or any adjournment that may take place. At the Annual Meeting, the stockholders are being asked to vote on:

Electing three Class III directors to the Company’s Board of Directors to serve until the 2027 annual meeting of stockholders or until their successors have been duly elected and qualified or, if sooner, until their earlier deaths, resignations, or removals;

Approving an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock from 150,000,000 to 350,000,000;

Approving an amendment to the Company’s Amended and Restated Certificate of Incorporation to provide for exculpation of officers to the extent permitted by the Delaware General Corporation Law;

Approving an amendment and restatement of the Company’s 2000 Stock Plan to increase the number of shares of the Company’s common stock available for issuance pursuant to the plan by 2,000,000 shares and to extend the plan’s term for ten years from the date of the Annual Meeting;

A non-binding advisory vote to approve executive compensation;

Ratifying the appointment of WithumSmith+Brown, PC as the Company’s independent registered public accounting firm for the current fiscal year; and

Any other business properly brought before the Annual Meeting or any adjournment or postponement thereof.

You can find more information about each of these items, including the nominees for directors, in the attached Proxy Statement.

The Board of Directors recommends that you vote FOR each of the director nominees to the Company’s Board of Directors in Proposal 1 and FOR Proposals 2, 3, 4, 5 and 6, outlined in the attached Proxy Statement.

We cordially invite all stockholders to attend the Annual Meeting virtually. However, whether or not you expect to attend the Annual Meeting, please vote your shares as soon as possible. You may vote over the internet or by using the toll-free telephone number on your proxy card or voting instruction materials, or by mailing a proxy card or voting instruction card. Please review the instructions on the Notice of Internet Availability of Proxy Materials or on your proxy card or voting instruction materials regarding your voting options. If you vote and then decide to attend the Annual Meeting to vote your shares, you may still do so. Your proxy is revocable in accordance with the procedures set forth in the Proxy Statement.

Following the Annual Meeting, we will report on voting results as well as on the Company’s business results and other matters of interest to stockholders.


		By Order of the Board of Directors,

		/s/ Timothy M. Papp
		Timothy M. Papp
		Chief Financial Officer and Secretary
Cupertino, California
August 12, 2024

YOUR VOTE IS IMPORTANT!

Important Notice Regarding the Internet Availability of Proxy Materials for the Stockholder Meeting To Be

Held on September 25, 2024.

The Proxy Statement, a proxy card and the Company’s 2023 Annual Report are available free of charge on the internet at https://proxydocs.com/DRRX.

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE ENCOURAGE YOU TO READ THE PROXY STATEMENT AND VOTE YOUR SHARES AS SOON AS POSSIBLE, SO THAT YOUR SHARES MAY BE REPRESENTED AT THE ANNUAL MEETING. YOU MAY VOTE OVER THE INTERNET OR BY USING THE TOLL-FREE TELEPHONE NUMBER ON YOUR PROXY CARD OR VOTING INSTRUCTION MATERIALS, OR BY MAILING A PROXY CARD OR VOTING INSTRUCTION CARD. PLEASE REVIEW THE INSTRUCTIONS ON THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS OR ON YOUR PROXY CARD OR VOTING INSTRUCTION MATERIALS REGARDING YOUR VOTING OPTIONS. IF YOU ATTEND THE ANNUAL MEETING VIA THE INTERNET, YOU MAY VOTE IF YOU WISH TO DO SO EVEN IF YOU HAVE PREVIOUSLY SENT IN YOUR PROXY CARD OR VOTED.

DURECT CORPORATION

10240 Bubb Road

Cupertino, CA 95014

PROXY STATEMENT

FOR THE

2024 ANNUAL MEETING OF STOCKHOLDERS

SEPTEMBER 25, 2024

Information About Solicitation and Voting

The accompanying Proxy Statement is solicited on behalf of DURECT Corporation’s Board of Directors (the “Board of Directors” or the “Board”) for use at the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on September 25, 2024 at 9:00 a.m. Pacific Time via live audio webcast by visiting https://meetnow.global/M95KTCP, as well as vote shares electronically and submit questions electronically during the Annual Meeting. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully.

The Board has set August 5, 2024 as the record date for the Annual Meeting. Stockholders of record who owned our common stock on that date are entitled to vote at and attend the Annual Meeting, with each share entitled to one vote. Stockholders who hold shares in “street name” may vote at the Annual Meeting only if they hold a valid proxy from their brokers. As of the record date, there were 31,039,381 shares of common stock outstanding and entitled to vote at the Annual Meeting.

In this Proxy Statement:

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“We,” “us,” “our” and the “Company” refer to DURECT Corporation.

•

“Annual Meeting” refers to the 2024 Annual Meeting of stockholders.

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“Board of Directors” or “Board” refers to our Board of Directors.

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“Nasdaq” refers to The Nasdaq Capital Market.

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“SEC” refers to the U.S. Securities and Exchange Commission.

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“Computershare” or “transfer agent” refers to Computershare Trust Company, N.A.

The expenses of soliciting proxies will be paid by the Company. Following the original mailing of the soliciting materials, the Company and its agents may solicit proxies by mail, electronic mail, telephone, facsimile or by other similar means. Our directors, officers and other employees, without additional compensation, may solicit proxies personally or in writing, by telephone, email, or otherwise. Following the original mailing of the soliciting materials, the Company will request brokers, custodians, nominees and other record holders to forward copies of the soliciting materials to persons for whom they hold shares and to request authority for the exercise of proxies. In such cases, the Company, upon the request of the record holders, will reimburse such holders for their reasonable expenses. If you choose to access the proxy materials and/or vote through the internet, you are responsible for any internet access charges you may incur.

We have summarized below important information with respect to the Annual Meeting.

Internet Availability of Proxy Materials

Under rules adopted by the SEC, we are furnishing proxy materials to our stockholders primarily via the internet, instead of mailing printed copies of those materials to each stockholder. On or about August 15, 2024, we will mail stockholders of record who owned our common stock on the record date a Notice Regarding the Availability of Proxy Materials (the “Notice”) containing instructions on how to access and review all of the important information contained in our proxy materials, including this Proxy Statement, a proxy card and our 2023 Annual Report to Stockholders. These materials are also available free of charge on the internet at https://proxydocs.com/DRRX. The

Notice also provides instructions on how to vote by telephone or through the internet and includes instructions on how stockholders may obtain paper copies of our proxy materials if they so choose.

Time and Place of the Annual Meeting

The Annual Meeting is being held on Wednesday, September 25, 2024, at 9:00 a.m. Pacific Time. All stockholders who owned shares of our stock as of August 5, 2024, the record date, may attend the Annual Meeting. The Annual Meeting will be a virtual meeting of stockholders in order to facilitate greater stockholder access. Stockholders will not be able to physically attend the Annual Meeting. Stockholders will be able to attend the Annual Meeting via live audio webcast by visiting https://meetnow.global/M95KTCP, as well as vote shares electronically and submit questions electronically during the Annual Meeting. To attend and participate in the Annual Meeting, including voting shares at and submitting questions during the Annual Meeting, stockholders must have their 15-Digit Control Number assigned by Computershare, the Company’s transfer agent. Instructions for how to obtain such 15-Digit Control Number are provided in this Proxy Statement. Stockholders of record may also view our list of stockholders as of the record date for ten (10) days prior to the Annual Meeting, for any purpose germane to the Annual Meeting between the hours of 9:00 a.m. and 5:00 p.m., Pacific Time, at our offices located at 10240 Bubb Road, Cupertino, CA 95014. If you are a stockholder of record and want to inspect the stockholder list, please send a written request to Timothy M. Papp, Chief Financial Officer, DURECT Corporation, 10240 Bubb Road, Cupertino, CA 95014, or email IR@durect.com to arrange for electronic access to the stockholder list.

Purpose of the Proxy Materials

You are receiving proxy materials from us because you owned shares of our common stock on August 5, 2024, the record date. This Proxy Statement describes issues on which we would like you, as a stockholder, to vote. It also gives you information on these issues so that you can make an informed decision.

If you are a stockholder of record and submit a signed proxy card, you are appointing James E. Brown and Timothy M. Papp as your representatives at the Annual Meeting. James E. Brown and Timothy M. Papp will vote your shares at the Annual Meeting as you have instructed them. This way, your shares will be voted whether or not you attend the Annual Meeting. Alternatively, you may vote your shares on the internet or by telephone by following the instructions on your Notice or proxy card.

If your shares are held in a brokerage account, by a trustee or by another nominee, you are considered the beneficial owner of shares held in street name, and proxy materials were forwarded to you by your broker, trustee or nominee. As the beneficial owner, you have the right to direct your broker, trustee or nominee on how to vote and are also invited to attend the Annual Meeting.

Even if you plan to attend the Annual Meeting, it is a good idea to vote in advance of the Annual Meeting, indicate your preferences on the paper proxy card you requested (as described below), and then date, sign and return your proxy card, or vote your shares by telephone or via the internet, just in case your plans change and you are unable to attend the Annual Meeting.

Proposals to be Voted on at This Year’s Annual Meeting

You are being asked to vote on:

Approving an amendment to the Company’s Amended and Restated Certificate of Incorporation to provide for exculpation of officers (the “Officer Exculpation Charter Amendment”) to the extent permitted by the Delaware General Corporation Law (the “DGCL”);

A non-binding advisory vote to approve executive compensation;

Ratifying the appointment of WithumSmith+Brown, PC as the Company’s independent registered public accounting firm for the current fiscal year; and

Any other business properly brought before the Annual Meeting or any adjournment or postponement thereof.

The Board of Directors recommends a vote FOR each of the director nominees to the Board (Proposal 1) and FOR each of Proposals 2, 3, 4, 5 and 6.

Instructions for how to Obtain the 15-Digit Control Number and Vote

Stockholders of record

As a stockholder of record (i.e., you hold your shares through our transfer agent, Computershare), you may vote the shares held in your name.

If you do not wish to participate in the Annual Meeting via webcast, you may vote as follows:

Over the internet before the Annual Meeting: Go to www.investorvote.com/DRRX;

By telephone: Call 1-800-652-VOTE (8683) (toll-free within the United States, U.S. territories and Canada); or

By mail: You may vote by requesting that printed copies of the proxy materials be mailed to you pursuant to the instructions provided in the Notice and completing, signing, dating and returning, in the accompanying postage prepaid envelope, your paper proxy card that you receive in response to your request. Please allow sufficient time for us to receive your proxy card if you decide to vote by mail.

Votes submitted by telephone or through the internet before the Annual Meeting must be received by 11:59 p.m. Eastern Time, on September 24, 2024. If you vote by mail, your proxy card must be received by September 24, 2024. Submitting your proxy, whether by telephone, through the internet or by mail if you request or receive a paper proxy card, will not affect your right to vote in person should you decide to virtually attend the Annual Meeting.

If you wish to vote electronically while attending the Annual Meeting via webcast, you may vote while the polls remain open, at https://meetnow.global/M95KTCP. You will need the 15-Digit Control Number assigned by Computershare that is included on your Notice or proxy card in order to be able to attend and vote electronically during the Annual Meeting.

Even if you plan to attend the Annual Meeting via webcast, we recommend that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the Annual Meeting.

Beneficial owner of shares held in street name

As a beneficial owner of shares, you have the right to direct your bank, broker, trustee or other nominee how to vote your shares.

If you do not wish to participate in the Annual Meeting via webcast, you may vote by providing voting instructions to your bank, broker, trustee or other nominee. Subject to and in accordance with the instructions provided by your bank, broker, trustee or other nominee, you may vote in one of the following manners: over the internet, by telephone or by mail.

Beneficial owners of shares may also vote electronically while attending the Annual Meeting via webcast, while the polls remain open, at https://meetnow.global/M95KTCP. Since a beneficial owner is not the stockholder of record, you may not attend and vote your shares at the Annual Meeting unless you (i) obtain a “legal proxy” from the bank, broker, trustee or other nominee that holds your shares giving you the right to vote the shares at the Annual Meeting

and (ii) register with Computershare by submitting such legal proxy to Computershare as directed below and receiving a 15-Digit Control Number assigned by Computershare. Such legal proxy must reflect your holdings of our common stock along with your name and email address. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. Eastern Time on September 20, 2024. You will receive a confirmation of your registration by email after Computershare receives your registration materials.

Requests for registration should be directed to Computershare as follows:

By email: Forward the email from your bank, broker, trustee or other nominee containing your legal proxy, or attach an image of your legal proxy, to legalproxy@computershare.com; or

By mail: Mail your legal proxy to Computershare, DURECT Corporation, Legal Proxy, P.O. Box 43001, Providence, Rhode Island 02940-3001.

Your bank, broker, trustee or other nominee will also send you separate instructions describing additional procedures, if any, for voting your shares electronically during the Annual Meeting.

Even if you plan to attend the Annual Meeting via webcast, we recommend that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the Annual Meeting.

Voting Procedure

You may vote by internet.

If you are a stockholder of record, you may submit your proxy by internet by following the instructions on the Notice or your proxy card and by following the voting instructions on the website.

If you hold your shares in street name, please check the Notice or the voting instructions provided by your broker, trustee or nominee for internet voting availability and instructions. Holding shares in “street name” means your shares of stock are held in an account by your stockbroker, bank or other nominee, and the stock certificates and record ownership are not in your name.

You may vote by telephone.

If you are a stockholder of record, you may submit your proxy by following the “Vote-by-Telephone” instructions on the proxy card or the Notice.

If you hold your shares in street name, please check the voting instructions provided by your broker, trustee or nominee for telephone voting availability and instructions.

You may vote by mail.

If you requested and received paper copies of our proxy materials and you are a stockholder of record, and elect to vote by mail, please indicate your preferences on the proxy card, date and sign your proxy card and return it in the postage-prepaid and addressed envelope that was enclosed with your proxy materials. If you mark your voting instructions on the proxy card, your shares will be voted as you have instructed. Note that you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote via the internet and how to request paper copies of the proxy materials.

If you hold your shares in street name, you may vote by mail by completing, signing and dating the voting instruction card provided by your broker, trustee or nominee and mailing it in the accompanying postage-prepaid and addressed envelope.

You may vote at the Annual Meeting.

If you attend the virtual Annual Meeting, you will have the opportunity to vote at that time. If you hold your shares in street name, you must request a legal proxy from your stockbroker in order to vote at the Annual Meeting. Holding shares in “street name” means your shares of stock are held in an account by your stockbroker, bank, or other nominee, and the stock certificates and record ownership are not in your name. If your shares are held in “street name” and you wish to attend the Annual Meeting, you must notify your broker, bank or other nominee and obtain a valid

legal proxy to vote your shares at the Annual Meeting and then register in advance to attend the Annual Meeting through our transfer agent, Computershare, no later than 5:00 p.m. Eastern Time on September 20, 2024, as described in “Beneficial owner of shares held in street name” above.

The Annual Meeting webcast will begin promptly at 9:00 a.m. Pacific Time. We encourage you to access the Annual Meeting prior to the start time. Online check-in will begin at 8:30 a.m. Pacific Time, and you should allow ample time for the check-in procedures.

If you encounter any technical difficulties accessing the virtual Annual Meeting during the check in or meeting time, please call the technical support number 1-888-724-2416 (toll-free within the United States, U.S. territories and Canada) or 1-781-575-2748 (outside of the United States, U.S. territories and Canada).

You may change your mind after you have returned your proxy.

If you are the stockholder of record and you change your mind after you have submitted your proxy via the internet or by telephone or returned your proxy card, you may revoke your proxy at any time before the polls close at the Annual Meeting. You may do this by:

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entering a new vote via the internet, by telephone or by signing and returning another proxy card at a later date, but before 11:59 p.m. Eastern Time, on September 24, 2024; or

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voting before the polls close at the Annual Meeting.

If you hold your shares in street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee, or, if you have obtained a legal proxy from your broker, bank or other nominee giving you the right to vote your shares, by attending the virtual Annual Meeting and voting in person.

Multiple Proxy Cards

If you received more than one proxy card, it means that you hold shares in more than one account. Please sign and return all proxy cards to ensure that all your shares are voted.

Delivery of Documents to Security Holders Sharing an Address

Only one set of proxy materials is being delivered to you if you share an address with another stockholder, unless we receive contrary instructions from you or one of the other stockholder(s). We will deliver promptly upon written or oral request a separate copy of the proxy materials to you if you share an address to which we delivered a single copy of the documents. All requests and instructions should be directed to Timothy M. Papp, Chief Financial Officer, DURECT Corporation, 10240 Bubb Road, Cupertino, CA 95014, (408) 777-1417.

About this Proxy Statement

We are a “smaller reporting company” under the rules of the SEC and as such are not required to include certain information in this proxy statement that companies that are not “smaller reporting companies” must include. We have elected to take advantage of such streamlined disclosure requirements in presenting certain information in this proxy statement.

Quorum Requirement

Shares are counted as present at the Annual Meeting if the stockholder either:

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is present and votes at the Annual Meeting, or

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has properly voted via the internet or by telephone, or submitted a proxy card in the mail (or someone has submitted a card on the stockholder’s behalf).

A majority of our issued and outstanding shares that are entitled to vote at the Annual Meeting as of the record date must be present in person or represented by proxy at the Annual Meeting in order for us to hold the Annual Meeting and conduct business. This is called a “quorum.”

Consequences of Not Returning Your Proxy; Broker Non-Votes

If your shares are held in your name, you must return your proxy (or attend the Annual Meeting in person) in order to vote on the proposals. If you are a beneficial owner of shares and your brokerage firm or other similar organization does not receive voting instructions from you, your brokerage firm may either:

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vote your shares on routine matters, or

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leave your shares unvoted.

If you are a beneficial owner and hold your shares in “street name” through a broker or other nominee and do not provide the organization that holds your shares with voting instructions, the broker or other nominee will determine if it has the discretionary authority to vote on the particular matter. Under applicable rules, brokers have the discretion to vote on routine matters but do not have discretion to vote on non-routine matters. For example, if you do not provide voting instructions to your broker, the broker could vote your shares for the Authorized Share Charter Amendment (Proposal 2) or the ratification of the appointment of WithumSmith+Brown, PC as our independent registered public accounting firm for the current fiscal year (Proposal 6) because these are deemed to be routine matters under applicable rules, but the broker could not vote your shares for any of the other three proposals on the agenda for the Annual Meeting.

If you do not provide voting instructions to your broker and the broker has indicated that it does not have discretionary authority to vote on a particular proposal, your shares will be considered “broker non-votes” with regard to that matter. Broker non-votes will be considered as represented for purposes of determining a quorum but generally will not be considered as entitled to vote with respect to that proposal. Broker non-votes are not counted for purposes of determining the number of votes cast with respect to a particular proposal. Thus, a broker non-vote will make a quorum more readily obtainable, but the broker non-vote will not otherwise affect the outcome of the vote on a proposal that requires the affirmative vote of a majority of the votes cast by the holders of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter (Proposal 2), that requires the affirmative vote of the holders of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter (Proposals 4 – 6) or plurality of the votes of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the election of directors (Proposal 1). However, broker non-votes will be counted as votes AGAINST Proposal 3, which requires the affirmative vote of the holders of a majority of the votes entitled to vote at the Annual Meeting represented by shares outstanding as of the record date.

We encourage you to provide instructions to your brokerage firm by voting your proxy. This ensures that your shares will be voted at the Annual Meeting.

Effect of Abstentions and Withheld Votes

An abstention (Proposals 2 – 6) or withheld vote (Proposal 1) represent a stockholder’s affirmative choice to decline to vote on a proposal, as applicable. If you indicate on your proxy card that you wish to abstain from voting your shares as to Proposals 2 – 6 or withhold your vote as to Proposal 1, or if a broker, bank or other nominee holding your shares of record causes abstentions or withheld votes to be recorded for such shares, those shares will be considered present and entitled to vote for the purposes of determining the presence of a quorum, with abstentions counting as votes AGAINST Proposals 3 – 6 and having no effect on Proposal 2 and WITHHOLD votes having no effect on Proposal 1.

Required Vote

Assuming a quorum is present and as set forth in Proposal 1, each director nominee must be elected by a plurality of the votes of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the election of directors, meaning that the three nominees receiving the highest number of “FOR” votes of shares that are present and entitled to vote will be elected as Class III directors. The vote required to approve the Authorized Share Charter Amendment, as set forth in Proposal 2, is the affirmative vote of a majority of the votes cast by the holders of shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. The vote required to approve the Officer Exculpation Charter Amendment, as set forth in Proposal 3, is the affirmative vote of the holders of a majority of the votes entitled to vote at the Annual Meeting represented by shares outstanding as of the record date. The vote required to approve the proposed amendment to the Company’s 2000 Stock Plan, including an increase to the number of shares of the Company’s common stock available for issuance by 2,000,000 shares and to extend the plan’s term for ten years from the date of the Annual Meeting, as set forth in Proposal 4, and to ratify the appointment of the independent registered public accounting firm, as set forth in Proposal 6, is the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matters.

Proposal 5 to approve executive compensation is a non-binding advisory vote; however, the Compensation Committee and the Board of Directors will consider the voting result of this proposal based on the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter.

Vote Solicitation; No Use of Outside Solicitors

DURECT Corporation is soliciting your proxy to vote your shares at the Annual Meeting. The expense of preparing, printing and mailing this Proxy Statement and the accompanying material will be borne by the Company. In addition to this solicitation by mail, our directors, officers, agents, and other employees may contact you by telephone, internet, in person or otherwise to obtain your proxy. These persons will not receive any additional compensation for assisting in the solicitation. We will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners. We will reimburse these entities and Computershare, our transfer agent, for their reasonable out-of-pocket expenses in forwarding proxy materials. We have not retained the services of a proxy solicitor.

Voting Procedures

Votes cast by proxy or at the Annual Meeting will be tabulated by a representative of Computershare, our transfer agent, who will act as the Inspector of Election. The Inspector of Election will also determine whether a quorum is present at the Annual Meeting. The Inspector of Election will separately tabulate affirmative, negative and withheld votes, abstentions and broker non-votes. Those shares represented by votes cast via the internet or by telephone, or represented by proxy cards received, marked, dated, and signed, and in each case, not revoked, will be voted at the Annual Meeting. If a stockholder submits proxy voting instructions with respect to any matter to be acted on, the shares will be voted in accordance with that specified choice. If you are a stockholder of record (that is, if your shares are held in your name and not in street name by a brokerage firm) and you sign, date and return a proxy card but do not give specific voting instructions, then the proxy holders will vote your shares in the manner recommended by our Board of Directors on all matters presented in this Proxy Statement, and the proxy holders may determine in their discretion any other matters properly presented for a vote at the Annual Meeting. Broker non-votes will be counted for the purpose of determining the presence or absence of a quorum, but will not be counted for the purpose of determining the number of votes cast.

We believe that the procedures to be used by the Inspector of Election to count the votes are consistent with Delaware law concerning voting of shares and determination of a quorum.

Publication of Voting Results

We will announce preliminary voting results at the Annual Meeting. We will publish the final results in a Current Report on Form 8-K, which we will file with the SEC within four business days of the Annual Meeting. You can get

a copy of the Current Report on Form 8-K from our website at www.durect.com in the Investor Relations section, by contacting Timothy M. Papp, our Chief Financial Officer, at (408) 777-1417, or from the SEC at www.sec.gov.

Other Business

We do not know of any business to be considered at the Annual Meeting other than the proposals described in this Proxy Statement. However, if any other business is properly presented at the Annual Meeting, if you are a stockholder of record and submit your signed proxy card, you are giving authority to James E. Brown and Timothy M. Papp to vote on such matters at their discretion.

Stockholder Proposals for the 2025 Annual Meeting

To have your proposal included in our proxy statement for our 2025 annual meeting of stockholders, you must submit your proposal in writing no later than April 16, 2025 to Timothy M. Papp, Chief Financial Officer and Secretary, DURECT Corporation, 10240 Bubb Road, Cupertino, CA 95014. Any such proposal must also comply with Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the regulations thereunder, as well as our bylaws, which may be obtained free of charge by written request to Timothy M. Papp, Chief Financial Officer and Secretary, DURECT Corporation, 10240 Bubb Road, Cupertino, CA 95014 or online at www.sec.gov.

Pursuant to our bylaws, stockholders must provide notice of any business that they wish to submit for consideration at the 2025 annual meeting of stockholders but not for inclusion in the related proxy statement pursuant to Rule 14a-8 of the Exchange Act, including shareholder nominations for candidates for election as directors, to our executive offices (Attention: Secretary) no later than June 27, 2025 and no earlier than May 28, 2025; provided, however, that if the 2025 annual meeting of stockholders is moved more than 30 days prior to or 60 days after the anniversary of the Annual Meeting and less than 60 days’ notice is provided to stockholders, then notice of a stockholder proposal must be received within 10 days of public notice of the Annual Meeting. Additionally, to comply with universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must comply with the additional requirements of Rule 14a-19(b) under the Exchange Act.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our Certificate of Incorporation provides that our Board of Directors is divided into three classes, with staggered three-year terms. Our Class III directors, whose terms expire at the Annual Meeting and who are being nominated for re-election for a three-year term, are Mohammad Azab, James E. Brown and Gail M. Farfel. Each nominee has consented to serve an additional three-year term. If re-elected at the Annual Meeting, each of these nominees would serve until the 2027 Annual Meeting.

Our Class I directors, whose terms expire at our 2025 annual meeting, are Terrence F. Blaschke and Gail J. Maderis. Our Class II directors, whose terms expire at our 2026 annual meeting, are Peter S. Garcia and Judith J. Robertson. You only elect one class of directors at each annual meeting. The other classes continue to serve for the remainder of their three-year terms. Mohammad Azab, James E. Brown and Gail M. Farfel, currently Class III directors, are nominees for re-election at the Annual Meeting.

Directors

The names of our directors, their ages as of August 5, 2024 and certain other information about them are set forth below.


Name	Age	Position
James E. Brown, D.V.M.	68	President, Chief Executive Officer, Director and Director Nominee
Mohammad Azab, M.D., M. Sc., M.B.A. (1) (3)	68	Director and Director Nominee
Terrence F. Blaschke, M.D. (3)	81	Director
Gail M. Farfel, Ph.D.	60	Director and Director Nominee
Peter S. Garcia, M.B.A. (1) (2)	63	Director, Chair of the Audit Committee
Gail J. Maderis, M.B.A. (1) (2)	67	Chair of the Board, Chair of the Compensation Committee
Judith J. Robertson (2) (3)	65	Director, Chair of the Nominating and Corporate Governance Committee

(1)

Member of the Compensation Committee

(2)

Member of the Audit Committee

(3)

Member of the Nominating and Corporate Governance Committee

James E. Brown, D.V.M. co-founded DURECT in February 1998 and has served as our President, Chief Executive Officer and on our Board of Directors since June 1998. He previously worked at ALZA Corporation as Vice President of Biopharmaceutical and Implant Research and Development from June 1995 to June 1998. Prior to that, Dr. Brown held various positions at Syntex Corporation, a pharmaceutical company, including Director of Business Development from May 1994 to May 1995, Director of Joint Ventures for Discovery Research from April 1992 to May 1995, and held a number of positions including Program Director for Syntex Research and Development from October 1985 to March 1992. Dr. Brown holds a B.A. from San Jose State University and a D.V.M. (Doctor of Veterinary Medicine) from the University of California, Davis where he also conducted post-graduate work in pharmacology and toxicology. Dr. Brown’s scientific expertise and pharmaceutical industry experience as well as his valuable perspective as the Company’s Chief Executive Officer and co-founder are among the special qualifications that he brings to our Board of Directors.

Mohammad Azab, M.D., M. Sc., M.B.A. has served on our Board of Directors since January 2021. Dr. Azab served as President and Chief Medical Officer of Astex Pharmaceuticals, Inc. (“Astex”) from January 2014 to November 2020 after holding the position of Chief Medical Officer there commencing in July 2009. Upon retirement from his management role, Dr. Azab served as the chair of the board of directors for Astex, a subsidiary of Otsuka pharmaceuticals Co. Ltd, till May 2022. Previously, Dr. Azab served as President and Chief Executive Officer of Intradigm Corporation, a developer of small interfering RNA cancer therapeutics. Prior to this, Dr. Azab served as Executive Vice President of Research and Development, and Chief Medical Officer of QLT Inc., and in several drug development leadership positions at Astra Zeneca in the UK and Sanofi Pharmaceuticals in France. Dr. Azab holds his M.D. degree (M.B., B.Ch.) from Cairo University and a Master of Business Administration from the Richard Ivey School of Business, University of Western Ontario. He received post-graduate training and degrees in oncology research from the University of Paris-Sud and biostatistics from the University of Pierre et Marie Curie in Paris, France. Dr. Azab has more than 30 years of experience in clinical research, global drug development, and business management and led the global development of several drugs currently approved in oncology and other therapeutic areas. Dr. Azab currently serves on the board of directors of Lisata Therapeutics. Dr. Azab previously served on the board of directors of Xenon Pharmaceuticals Inc. until June 2024. Dr. Azab’s scientific background including his senior management experience in the pharmaceutical industry and his service as a board member on multiple publicly traded companies are among the qualifications he brings to our Board of Directors.

Terrence F. Blaschke, M.D. has served on our Board of Directors since December 2006. Dr. Blaschke has served on the faculty of Stanford University since 1974 and is Professor of Medicine and Molecular Pharmacology (Emeritus) at the Stanford University School of Medicine. Dr. Blaschke held the position of Vice President of Methodology and Science at Pharsight Corporation from 2000 to 2002. During the course of his career, Dr. Blaschke has served as an independent consultant working with a number of leading pharmaceutical and biotechnology companies. Dr. Blaschke was formerly a board member of Therapeutic Discovery Corporation until 1997 and Crescendo Pharmaceuticals until 2001, two publicly traded companies. He has also worked as a special government employee for the U.S. Food and Drug Administration (the “FDA”) and has served as Chair of the FDA’s Generic Drugs Advisory Committee. After becoming emeritus, Dr. Blaschke joined the Bill and Melinda Gates Foundation as a Senior Program Officer from 2012 to January 2016. Dr. Blaschke holds his M.D. degree from Columbia University and a B.S. in Mathematics from the University of Denver. Dr. Blaschke’s medical and scientific expertise and pharmaceutical industry experience relating to drug development are among the qualifications he brings to our Board of Directors.

Gail M. Farfel, Ph.D. has served on our Board of Directors since April 2019. Dr. Farfel served as the Chief Executive Officer of ProMIS Neurosciences Inc. from September 2022 through December 2023. Dr. Farfel previously served on the board of directors of AVROBIO, Inc. from October 2020 to June 2024. Prior to that, Dr. Farfel served as the Executive Vice President and Chief Development Officer of Zogenix, Inc. (“Zogenix”) from July 2015 and on the board of directors of Zogenix International Ltd., a wholly owned subsidiary of Zogenix, Inc. until the acquisition of Zogenix by UCB Pharma S.A. in March 2022, where she oversaw Nonclinical and Clinical Development and Regulatory Affairs. Before joining Zogenix, Dr. Farfel was Chief Clinical and Regulatory Officer of Marinus Pharmaceuticals Inc., a biopharma engaged in development of treatment for neurological disorders. Prior to her entry into the biotech space, Dr. Farfel served as Vice President and Therapeutic Area Head for Neuroscience at Novartis Pharmaceuticals Corporation, where she oversaw their portfolio of neurology and psychiatry products. Dr. Farfel began her career in pharmaceutical drug development at Pfizer Inc., where she worked in Clinical Development and Global Medical Affairs, directing programs through all stages of clinical development and regulatory submissions. Dr. Farfel is the author of over 50 scientific articles and presentations in the areas of neuropsychopharmacology and drug effects and is a Director on the Board of the American Society for Experimental Neurotherapeutics. She holds a Ph.D. in Neuropsychopharmacology from the University of Chicago. Dr. Farfel also holds a bachelor’s degree in Biochemistry from the University of Virginia. Dr. Farfel’s pharmaceutical industry experience relating to executive management, strategic planning, medical and scientific expertise and pharmaceutical industry experience as it relates to drug development and regulatory affairs are among the qualifications she brings to our Board of Directors.

Peter S. Garcia, M.B.A. has served on our Board of Directors since December 2021. Mr. Garcia has worked as a Chief Financial Officer in the life sciences industry for over 25 years and raised over $2 billion in capital during that period. He is currently the Chief Financial Officer of ALX Oncology Holdings Inc. (“ALX”) since joining them in January 2020 and led their initial public offering in July 2020 and follow on offering in December 2020. Prior to ALX, he served as Vice President and Chief Financial Officer from 2013 until 2019 at PDL BioPharma, Inc. (“PDL”), an acquirer of royalties and pharmaceutical assets. Before his time at PDL, Mr. García served as Chief Financial Officer at BioTime, Inc., a clinical-stage biotechnology company now known as Lineage Cell Therapeutics. He previously served as Chief Financial Officer of Marina Biotech, Nanosys, Nuvelo, Novacept, IntraBiotics Pharmaceuticals and Dendreon, and began his life science career at Amgen where he served in a number of financial roles of increasing responsibility. Mr. García holds an M.B.A. from the University of California, Los Angeles and a B.A. in Economics and Sociology from Stanford University. Mr. Garcia’s pharmaceutical industry experience relating to finance and

accounting, executive management, treasury, employee benefits and audit matters are among the qualifications he brings to our Board of Directors.

Gail J. Maderis, M.B.A. has served on our Board of Directors since January 2021 and as Chair of our Board of Directors since March 2023. Ms. Maderis has served as Chair of the board of Antiva Biosciences, Inc. (“Antiva”), a venture funded biopharma company developing topical therapies to treat the pre-cancerous lesions caused by human papillomavirus, since April 2023. From 2015 to April 2023, Ms. Maderis served as President and Chief Executive Officer of Antiva. From 2009 to 2015, Ms. Maderis led BayBio, the industry organization representing and supporting Northern California’s life science community, as its President and Chief Executive Officer. From 2003 to 2009, Ms. Maderis served as President and Chief Executive Officer of Five Prime Therapeutics, Inc., a protein discovery and development company focused on immuno-oncology. Prior to FivePrime, Ms. Maderis held senior executive positions at Genzyme Corporation, including Founder and President of Genzyme Molecular Oncology. Ms. Maderis also practiced management and strategy consulting with Bain & Co. She currently serves on the boards of directors of Antiva and Valitor, Inc., as well as on the nonprofit boards of California Life Sciences Association, The Termeer Foundation and the University of California Berkeley Foundation Board of Trustees. Ms. Maderis previously served on the board of directors of Allarity Therapeutics, Inc. (“Allarity”) from July 2021 until January 2023 and on the board of directors of Allarity Therapeutics A/S, Allarity’s predecessor, since October 2020. She received a Bachelor of Science in business from the University of California at Berkeley and a Master of Business Administration from Harvard Business School. Ms. Maderis’ operational, industry and leadership experience in the biopharmaceutical industry as Chief Executive Officer of Five Prime Therapeutics, Inc., Founder and President of Genzyme Molecular Oncology and her current position at Antiva, and her insight into business and policy trends impacting the biopharma industry are among the qualifications she brings to our Board of Directors.

Judith J. Robertson has served on our Board of Directors since April 2019. Since January 2022, Ms. Robertson has served as the Chief Commercial Officer of Opthea Limited (“Opthea”) and previously was the Chief Commercial Officer of Aerie Pharmaceuticals Inc. (“Aerie”) from December 2016 to December 2018, during which time she built the commercial organization and led the successful commercial launch of Rhopressa® (netarsudil) for glaucoma. Ms. Robertson joined Aerie from the Janssen Pharmaceutical Companies of Johnson & Johnson (“Janssen”), where she was the Vice President and Global Commercial Strategy Leader of Immunology, Ophthalmology, and Commercial Analytics from June 2013 to November 2016. Part of her duties at Janssen included evaluating all external licensing and acquisition opportunities. Prior to Janssen, she was Vice President Global Business Franchise Head of Ophthalmology at Novartis Pharma AG (“Novartis”) (f/k/a Alcon Laboratories, Inc.), Vice President Global Franchise Head of Respiratory at Novartis, Vice President of Sales & Marketing of Respiratory and Dermatology at Novartis, and President of Bristol Myers Squibb Canada Co. Ms. Robertson previously served on the board of directors of Opthea from June 2021 to January 1, 2022. Ms. Robertson holds a Master of Management from the Kellogg School of Business at Northwestern University and holds a Bachelor of Arts in social science from Ryerson University. Ms. Robertson’s pharmaceutical industry experience relating to executive leadership experience with pharmaceutical companies and her expertise with respect to sales, marketing and commercialization of pharmaceutical products are among the qualifications she brings to our Board of Directors.

There are no family relationships among any of our directors or executive officers.

The Board, Board Committees and Meetings

Corporate governance is typically defined as the system that allocates duties and authority among a company’s stockholders, board of directors and management. The stockholders elect the Board and vote on extraordinary matters; the Board is our governing body, responsible for hiring, overseeing and evaluating management, particularly the Chief Executive Officer; and management runs our day-to-day operations. The Board reviews management succession planning with the Nominating and Corporate Governance Committee on an annual basis and has a written succession plan. The total number of authorized directors on our Board is currently seven.

“Independent” Directors Mr. Azab, Mr. Blaschke, Ms. Farfel, Mr. Garcia, Ms. Maderis and Ms. Robertson each qualify as “independent directors” as defined under Nasdaq rules. Nasdaq’s definition of independent director includes a series of objective tests, such as that the director is not a Company employee and has not engaged in various types of business dealings with us or does not have a family member who is a partner with our independent registered public accounting firm. In addition, as further required by Nasdaq rules, the Board has made a subjective determination as to each independent director that no relationships exist which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Board and Committee Responsibilities The primary responsibilities of the Board are providing oversight, counseling and direction to our management in the long-term interests of the Company and its stockholders. The Chief Executive Officer and management are responsible for seeking the advice and, in appropriate situations, the approval of the Board with respect to extraordinary actions to be undertaken by us.

The Board and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time as appropriate. The Board has delegated various responsibilities and authority to different Board committees as described in this section of the proxy statement. Committees regularly report on their activities and actions to the full Board.

Board Leadership Structure The roles of Board chair and principal executive officer are currently separated. Our Board chair is currently Gail J. Maderis, and our principal executive officer is currently James E. Brown, who serves as our President and Chief Executive Officer and as a director. By having the President and Chief Executive Officer serve on the Board, the Company believes it can better ensure that relevant information is made available directly between management and the Board. We also believe this separation of responsibilities provides an appropriate delegation of duties and responsibilities, with our Board chair concentrating on the strategic opportunities and direction of the Company with guidance from the Board, and our principal executive officer focusing on the management and coordination of the operational performance and efforts of the Company in alignment with the strategic guidance and direction offered from the Board of Directors.

Board Oversight of Risk The Board of Directors is ultimately responsible for overseeing the Company’s risks, which includes oversight of cybersecurity risks in coordination with the Audit Committee. In carrying out this responsibility, the Board evaluates the most critical risks relating to our business, allocates responsibilities for the oversight of risks among the full Board and its committees, and ensures that management has established effective systems and processes for managing the Company’s risks. Additionally, because risk is inherently present in the Company’s strategic decisions, the Board analyzes risk on an ongoing basis in connection with its consideration of specific proposed actions.

While the Board is responsible for oversight, management is responsible for identifying and communicating risk to the Board. Management fulfills this obligation in a variety of ways, including its establishment of appropriate and effective internal processes for the identification of risk. Management may report its findings to the full Board or its committees. Committees of the Board play an important role in risk oversight, including the Audit Committee, which oversees our processes for assessing risks (including cybersecurity threats) and the effectiveness of our internal controls, and the Compensation Committee, which oversees risks present in the Company’s compensation programs. Committees, to the extent that they deem appropriate or as required by their charters, report their findings and deliberations with respect to risk to the full Board.

In fulfilling its duties, the Audit Committee oversees and works in conjunction with our independent registered public accounting firm. In accordance with its charter, the Audit Committee is responsible for making examinations as necessary to monitor corporate financial reporting and the internal and external audits of the Company, reporting to the Board the results of such examinations and recommending changes that may be made in the Company’s internal accounting controls. The Compensation Committee, with the assistance of its compensation consultants, periodically reviews the Company’s compensation policies and profile with management to ensure that executive compensation incentivizes its executive officers to meet the Company’s goals and strategic objectives. The Compensation Committee periodically performs an analysis of risks arising from our compensation policies and practices and has concluded that such policies and practices are not reasonably likely to expose the Company to material risk.

Board Committees and Charters The Board currently has, and appoints the members of, standing Audit, Compensation and Nominating and Corporate Governance Committees. Each of the Board committees has a written charter approved by the Board. Copies of each charter are available on our website at www.durect.com under “Investors—Corporate Governance—Documents & Charters.” The Board of Directors had previously established a Research and Development Committee to assist the Board in the evaluation and oversight of the Company’s research and development programs. Due to the advanced nature of the Company’s lead drug development program, the Board disbanded this committee.

Audit Committee The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Exchange Act. In accordance with its charter, the Audit Committee assists the Board in its general oversight of our financial reporting, internal controls and audit functions, and is directly responsible for the appointment, retention, compensation and oversight of the work of our independent registered public accounting firm. The Audit Committee also supervises the financial function of the Company, including the Company’s investment activities. The Audit Committee engages and compensates independent counsel and other advisors as it deems necessary to carry out its duties and delegates to one or more members of the Audit Committee the authority to grant pre-approvals of audit services and non-audit services by its independent registered public accounting firm provided such decisions are presented to the full Audit Committee at regularly scheduled meetings. The Audit Committee held four meetings in 2023. The responsibilities and activities of the Audit Committee are described in greater detail in the “Audit Committee Report.” At the end of the last fiscal year, the Audit Committee was composed of the following directors: Peter S. Garcia, Gail J. Maderis and Judith J. Robertson. Mr. Garcia has served as Chair of the Audit Committee since June 2023.

Among other matters, the Audit Committee monitors the activities and performance of our external auditors, including the audit scope, external audit fees, auditor independence matters and the extent to which the independent registered public accounting firm may be retained to perform non-audit services. Our independent registered public accounting firm provides the Audit Committee with the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee discusses with the independent registered public accounting firm and management that firm’s independence.

In accordance with Audit Committee policy and the requirements of law, all services to be provided by our independent registered public accounting firm are pre-approved by the Audit Committee. Pre-approval includes audit services, audit-related services, tax services and other services. In its pre-approval and review of non-audit service fees, the Audit Committee considers, among other factors, the possible effect of the performance of such services on the auditor’s independence. To avoid certain potential conflicts of interest in maintaining auditor independence, the law prohibits a publicly traded company from obtaining certain non-audit services from its auditing firm.

As required by Nasdaq rules, the members of the Audit Committee each qualify as “independent” under special standards established for members of audit committees. The Audit Committee also includes at least one member who has been determined by the Board to meet the qualifications of an “audit committee financial expert” in accordance with SEC rules. Peter S. Garcia has been determined by the Board of Directors to be an “audit committee financial expert.” Stockholders should understand that this designation is a disclosure requirement of the SEC related to Mr. Garcia’s experience and understanding with respect to certain accounting and auditing matters. The designation does not impose upon Mr. Garcia any duties, obligations or liability that are greater than are generally imposed on him as a member of the Audit Committee and the Board, and his designation as an audit committee financial expert pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of the Audit Committee or the Board.

Compensation Committee The Compensation Committee reviews and approves salaries, performance-based incentives and other matters relating to executive compensation, and administers our stock option plans, including reviewing and granting stock options to executive officers. The Compensation Committee also reviews and approves various other Company compensation policies and matters, including compensation of independent directors. The Compensation Committee reports annually to the Company’s stockholders on executive compensation matters. The Compensation Committee held three meetings in 2023. At the end of the last fiscal year, the Compensation Committee was composed of Mohammad Azab, Peter S. Garcia and Gail J. Maderis. Ms. Maderis has served as Chair of the Committee since June 2021. As required by Nasdaq rules, the members of the Compensation Committee each qualify as “independent” under special standards established for members of compensation committees. The Compensation Committee may delegate, as permitted by law, its authority to one or more subcommittees of the Compensation Committee (consisting either of a subset of members of the Compensation Committee or, after giving due consideration to whether the eligibility criteria described within the Compensation Committee charter with respect to committee members and whether such other Board members satisfy such criteria, any members of the Board) except compensation paid to the Chief Executive Officer and to the extent permitted by applicable law. In addition, the Compensation Committee, from time to time, retains independent compensation consultants to assist it with the benchmarking of executive and Board compensation. The Compensation Committee retained Larry Setren & Associates as an independent compensation consultant to assist it with the benchmarking of executive and Board compensation for 2023. The process by which compensation is set for executive officers is described in the Compensation Discussion and Analysis below under the heading “Setting Officer Compensation.”

Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee identifies, evaluates and recommends to the Board individuals, if any, including individuals proposed by stockholders, qualified to serve as members of the Board and the nominees for election as directors at the next annual or special meeting of stockholders at which directors are to be elected. The Nominating and Corporate Governance Committee also identifies, evaluates and recommends to the Board individuals to fill any vacancies or newly created directorships that may occur between such meetings. The Nominating and Corporate Governance Committee also is responsible for preparing and recommending to the Board adoption of corporate governance guidelines, reviewing and assessing our Code of Ethics, establishing, overseeing and conducting an annual evaluation of the Board’s performance and effectiveness, and periodically reviewing the composition of the Board and its committees. The Nominating and Corporate Governance Committee did not hold a meeting in 2023. At the end of the last fiscal year, the Nominating and Corporate Governance Committee was composed of Mohammad Azab, Terrence F. Blaschke and Judith J. Robertson. Ms. Robertson has served as Chair of the Committee since June 2022. As required by Nasdaq rules, the members of the Nominating and Corporate Governance Committee each qualify as “independent” under special standards established for members of the committee.

Criteria for Board Membership In recommending candidates for appointment or re-election to the Board, the Nominating and Corporate Governance Committee considers the appropriate balance of experience, skills and characteristics required of the Board of Directors, and seeks to ensure that at least a majority of our directors are independent under Nasdaq rules, and that members of the Audit Committee meet the financial literacy and sophistication requirements under Nasdaq rules and at least one of them qualifies as an “audit committee financial expert” under SEC rules. Nominees for director are selected on the basis of their depth and breadth of experience, integrity, ability to make independent analytical inquiries, understanding of our business environment and willingness to devote adequate time to Board duties.

Stockholder Nominees The Nominating and Corporate Governance Committee will consider written proposals from stockholders for nominees for director. Any such nominations should be submitted to the Nominating and Corporate Governance Committee, c/o Timothy M. Papp, Chief Financial Officer and Secretary, 10240 Bubb Road, Cupertino, CA 95014 and should include the following information: (i) the name, age, business address and residence address of such proposed nominee, (ii) the principal occupation or employment of such proposed nominee, (iii) the class and number of shares of the Company which are beneficially owned by such proposed nominee and (iv) any other information relating to such proposed nominee that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including, without limitation, such proposed nominee’s written consent to being name in the proxy statement as a nominee and to serving as a director if elected); and as to the stockholder giving the notice (i) the name and address of the stockholder and (ii) the class and number of shares of the Company which are owned of record by such stockholder, and should be submitted in the time frame described in our bylaws and under the caption “Stockholder Proposals for the 2025 Annual Meeting” above.

Process for Identifying and Evaluating Nominees The Nominating and Corporate Governance Committee believes that the Company is well-served by its current directors. In the ordinary course, absent special circumstances or a material change in the criteria for Board membership, the Nominating and Corporate Governance Committee will re-nominate incumbent directors who continue to be qualified for Board service and are willing to continue as directors. If an incumbent director is not standing for re-election, or if a vacancy on the Board occurs between annual stockholder meetings and the decision is not made to reduce the size of the Board, the Nominating and Corporate Governance Committee will seek out potential candidates for Board appointment who meet the criteria for selection as a nominee and have the specific qualities or skills being sought. Director candidates will be selected based on input from members of the Board, our senior management and stockholder nominations.

Consideration of Diversity and Board Diversity Matrix The Nominating and Corporate Governance Committee believes that the interests of the stockholders are best served by a board of directors whose members collectively have a diverse balance of experience, skills and characteristics as appropriate to our business because it encourages a full discussion on board topics from a variety of viewpoints and with the benefit of many different experiences. Although we do not have a policy regarding diversity, in looking for a candidate who will best meet the particular needs of the Board at the time, the Nominating and Corporate Governance Committee does consider whether the specific skills, background and work experience of a candidate would add to and complement the existing viewpoints represented by the present Board members, as well as applicable legal and listing requirements. As of the date of this filing, the Board consists of 4 men and 3 women, with one member self-designating as a Latino. The Nominating and Corporate Governance Committee believes that the current Board composition represents a diversity of experience and skills appropriate to our business, as well as gender and ethnic diversity.

The table below provides certain highlights of the composition of our Board members. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f)(1).


Board Diversity Matrix (as of August 5, 2024)

Total Number of Directors		7
Part I: Gender Identity	Female		Male		Non-Binary		Did Not Disclose Gender
Directors	3			4		—		—

Part II: Demographic Background		—
Hispanic or Latinx			1			—		—
White	3			3		—		—

Director Resignation Policy. It is the policy of the Company that any nominee for director in an uncontested election who does not receive a majority of the votes cast (i.e., receives a greater number of votes “withheld” from his or her election than votes “for” in such election) shall submit his or her offer of resignation for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee shall consider all of the relevant facts and circumstances and recommend to the Board the action to be taken with respect to such offer of resignation. The Board will then act on the Committee’s recommendation. Promptly following the Board’s decision, the Company will disclose that decision and an explanation of such decision in a filing with the SEC and a press release.

Attendance at Board, Committee and Annual Stockholders’ Meetings. The Board and its committees meet throughout the year on a set schedule and hold special meetings and act by written consent from time to time. The Board held eight meetings during 2023, including virtual meetings, the Audit Committee held four meetings, the Compensation Committee held three meetings and the Nominating and Corporate Governance Committee did not hold meetings. All directors are expected to attend each meeting of the Board and the committees on which they serve and are also strongly encouraged to attend our annual meeting of stockholders. During 2023, each director attended at least 75% of all Board and applicable committee meetings during the period which such director served. Our policy is to invite and encourage each member of our Board to be present at our annual meetings of stockholders. All directors attended our 2023 annual meeting of stockholders.

Communications from Stockholders to the Board. The Board recommends that stockholders initiate any communications with the Board in writing and send them c/o the Company’s Secretary, Timothy M. Papp. Stockholders can send communications by e-mail to IR@durect.com, by fax to (408) 777-3577 or by mail to Timothy M. Papp, Chief Financial Officer and Secretary, DURECT Corporation, 10240 Bubb Road, Cupertino, California 95014. This centralized process will assist the Board in reviewing and responding to stockholder communications in an appropriate manner. The name of any specific intended Board recipient should be noted in the communication. The Board has instructed the Secretary to forward such correspondence only to the intended recipients; however, the Board has also instructed the Secretary, prior to forwarding any correspondence, to review such correspondence and, in his discretion, not to forward certain items if they are deemed to be of a commercial or frivolous nature or otherwise inappropriate for the Board’s consideration. In such cases, some of that correspondence may be forwarded elsewhere in the Company for review and possible response.

Code of Ethics

In December 2023, the Board approved an amended Code of Ethics applicable to all of our employees, officers and directors. The purpose of the Code of Ethics is to deter wrongdoing and, among other things, promote compliance with applicable laws, fair dealing, proper use and protection of our assets, prompt and accurate public company reporting, reporting of accounting complaints or concerns and avoidance of conflicts of interest and usurpation of corporate opportunities.

Our Code of Ethics can be found on our corporate website at www.durect.com under “Investors—Corporate Governance—Documents & Charters.” If we make any substantive amendments to the Code of Ethics or grant any waiver from a provision of the Code of Ethics to any executive officer or director, we will promptly disclose the nature of the amendment or waiver by a method selected by the Board of Directors and in conformity with applicable SEC and Nasdaq rules.

Whistleblower Policy

In December 2003, in compliance with Section 301 of the Sarbanes-Oxley Act, the Audit Committee of the Board of Directors established procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, and confidential, anonymous employee submissions of concerns regarding questionable accounting or auditing matters (“Whistleblower Policy”). In December 2023, the Board approved an amended Whistleblower Policy. Our Whistleblower Policy can be found on our corporate website at www.durect.com under “Investors—Corporate Governance—Documents & Charters.”

Recommendation of the Board:

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR

THE ELECTION OF ALL NOMINEES NAMED ABOVE.

PROPOSAL NO. 2

APPROVAL OF THE AUTHORIZED SHARE CHARTER AMENDMENT TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 150,000,000 TO 350,000,000

The Board of Directors has unanimously adopted a resolution to increase our authorized common stock, $0.0001 par value per share, from 150,000,000 shares to 350,000,000 shares, and has voted to recommend that the stockholders adopt the Authorized Share Charter Amendment.

If our stockholders approve the Authorized Share Charter Amendment at the Annual Meeting, the Company will amend Article IV of the Company’s Amended and Restated Certificate of Incorporation. The description in this Proposal 2 should be read in conjunction with the full text of the Authorized Share Charter Amendment, which is included in this Proxy Statement as Appendix A. In accordance with the DGCL, our Board of Directors may elect to abandon the Authorized Share Charter Amendment without further action by stockholders at any time prior to the effectiveness of the filing of the Authorized Share Charter Amendment with the Secretary of State of the State of Delaware, notwithstanding stockholder approval of the Authorized Share Charter Amendment.

As of August 5, 2024, 31,039,381 shares of our common stock were issued and outstanding, an additional 5,065,734 shares were reserved for issuance upon the exercise of options that are either granted or reserved for future grant under our 2000 Stock Plan plus shares reserved for future grant under our 2000 Employee Stock Purchase Plan (the “ESPP”), and an additional 3,591,027 shares were reserved for issuance upon the exercise of outstanding common stock warrants. Additionally, as of August 5, 2024, $72.7 million of our common stock are available pursuant to a sales agreement dated July 30, 2021 with Cantor Fitzgerald & Co. (the “2021 Sales Agreement”). However, due to the SEC’s “baby shelf” rules, only up to $18.1 million of our securities are available for sale under the 2021 Registration Statement and pursuant to the 2021 Sales Agreement. Taking into account 17,674 treasury shares, a total of 110,286,184 shares of common stock is currently available for future issuance. No shares of preferred stock are outstanding.

The Company decreased the number of authorized common stock in November 2022. In the interim period, shares have been issued in connection with financings and equity-based compensation plans. These uses have enabled the Company to complete its double-blind, placebo-controlled Phase 2b clinical trial called AHFIRM (trial in alcohol-associated hepatitis (“AH”) to evaluate saFety and effIcacy of laRsucosterol treatMent), assist in business development activities, and attract and retain key scientists, managers and employees. The Board of Directors believes it continues to be in the Company’s best interest to have sufficient additional authorized but unissued shares of common stock available in order to provide flexibility for corporate action in the future, including a Phase 3 clinical trial for larsucosterol in AH that could support a potential New Drug Application filing. Management believes that the availability of additional authorized shares for issuance from time to time at the Board of Directors’ discretion in connection with future financings, investment opportunities, stock splits or dividends or for other corporate purposes is desirable in order to avoid repeated separate amendments to our charter and the delay and expense of holding special meetings of stockholders to approve such amendments. Other than shares of common stock that we may issue pursuant to our 2000 Stock Plan, the ESPP, the 2021 Sales Agreement or our outstanding common stock warrants, we currently have no specific understandings, arrangements or agreements that would require us to issue new shares of our common stock. The Board of Directors believes, however, that the currently available unissued shares do not provide sufficient flexibility for corporate action in the future.

Although at present the Board of Directors has no specific plans to issue shares of common stock in excess of the number previously authorized, the Board believes it is desirable to have a significant number of available and authorized shares, to provide the Board with flexibility to use common stock for business and financial purposes in the future. The additional shares may be issued without further stockholder approval, except as may be required by law, regulatory authorities, or the rules of Nasdaq or any other stock exchange on which our shares may be listed at the time of any proposed issue. The additional shares may be used for various purposes including, without limitation, raising capital, conducting future clinical trials, providing equity incentives to employees, directors and consultants, establishing strategic relationships with other companies, expanding our business or research and development programs through the acquisition of other businesses and products, and stock splits and dividends. If this amendment to increase the number of authorized shares of common stock is not approved, our business could be materially harmed as our ability to undertake the corporate actions listed above would be severely constrained by the fact that only a total of 810,349 shares of common stock is available for future issuance as of August 5, 2024.

All newly authorized shares of common stock when issued would have the same rights as the presently authorized shares of common stock including, but not limited to, the right to cast one vote per share and to receive dividends if and to the extent we declare and pay them, subject to any shares of preferred stock outstanding at the time. There would be no change in the par value of $0.0001 per share. Stockholders would have no preemptive rights or cumulative voting rights with respect to the issuance of additional common stock.

The proposed Certificate of Amendment to effect the Authorized Share Charter Amendment is included in this Proxy Statement as Appendix A.

Recommendation of the Board:

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AUTHORIZED SHARE CHARTER AMENDMENT TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 150,000,000 TO 350,000,000.

PROPOSAL NO. 3

APPROVAL OF THE OFFICER EXCULPATION CHARTER AMENDMENT TO PROVIDE FOR EXCULPATION OF OFFICERS TO THE EXTENT PERMITTED BY THE DGCL

The Board of Directors has unanimously adopted a resolution to approve the Officer Exculpation Charter Amendment to amend the Company’s Amended and Restated Certificate of Incorporation, subject to stockholder approval, to provide for the elimination or limitation of monetary liability of certain officers of the Company for breaches of the fiduciary duty of care, and has voted to recommend that the stockholders adopt the Officer Exculpation Charter Amendment.

If our stockholders approve the Officer Exculpation Charter Amendment at the Annual Meeting, the Company will amend Article XIII of the Company’s Amended and Restated Certificate of Incorporation. The description in this Proposal 3 should be read in conjunction with the full text of the Officer Exculpation Charter Amendment, which is included in this Proxy Statement as Appendix B. In accordance with the DGCL, our Board of Directors may elect to abandon the Officer Exculpation Charter Amendment without further action by stockholders at any time prior to the effectiveness of the filing of the Officer Exculpation Charter Amendment with the Secretary of State of the State of Delaware, notwithstanding stockholder approval of the Officer Exculpation Charter Amendment.

Article XIII of the Company’s Amended and Restated Certificate of Incorporation currently provides for the Company to limit the monetary liability of directors for breaches of fiduciary duties as a director, pursuant to and consistent with Section 102(b)(7) of the DGCL. Effective August 1, 2022, Section 102(b)(7) of the DGCL was amended to permit a Delaware corporation’s certificate of incorporation to include a provision eliminating or limiting monetary liability for certain officers for breaches of the fiduciary duty of care (the “Section 102(b)(7) Amendment”). Our Board of Directors desires to amend the Company’s Amended and Restated Certificate of Incorporation to maintain provisions consistent with the governing statutes contained in the DGCL. Prior to the Section 102(b)(7) Amendment, Delaware law permitted Delaware corporations to exculpate directors from personal liability for monetary damages associated with breaches of the fiduciary duty of care, but such protection did not extend to a Delaware corporation’s officers. Consequently, stockholder plaintiffs have employed a tactic of bringing certain claims that would otherwise be exculpated if brought against directors, against individual officers to avoid dismissal of such claims. The Section 102(b)(7) Amendment was adopted to address inconsistent treatment between officers and directors as well as rising litigation and insurance costs for public companies.

This provision would not exculpate any officers from liability for breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Nor would this provision exculpate such officers from liability for claims brought by or in the right of the Company, such as derivative claims. Our Board of Directors believes it is necessary to provide protection to officers to the fullest extent permitted by law in order to attract and retain top talent. This protection has long been afforded to directors, and accordingly, our Board of Directors believes that this proposal is fair and in the best interests of the Company and its stockholders.

The proposed Certificate of Amendment to effect the Officer Exculpation Charter Amendment is included in this Proxy Statement as Appendix B.

Recommendation of the Board:

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE OFFICER EXCULPATION CHARTER AMENDMENT TO PROVIDE FOR EXCULPATION OF OFFICERS TO THE EXTENT PERMITTED BY THE DGCL.

PROPOSAL NO. 4

APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE 2000 STOCK PLAN

We are asking you and the other stockholders to approve the amendment and restatement of the Company’s 2000 Stock Plan (the “Stock Plan”) (as amended and restated, the “Amended Stock Plan”), in order to (i) increase the number of shares of our common stock authorized for issuance pursuant to the Amended Stock Plan by 2,000,000 shares and (ii) increase the term of the Stock Plan by another ten years. We consider the Stock Plan to be a vital element of our employee compensation program and believe that the continued ability to grant stock awards at competitive levels is in the best interest of the Company and its stockholders. Accordingly, you are being requested to approve the Amended Stock Plan.

Reasons to Approve the Amended Stock Plan

Approval of the Amended Stock Plan will increase the number of shares of our common stock authorized for issuance pursuant to the Stock Plan by 2,000,000 shares (the “Share Increase”). As of August 5, 2024, Awards (as defined below) (net of expired, cancelled or repurchased awards as defined in the Stock Plan) covering an aggregate of 5,619,301 shares of common stock had been granted under the Stock Plan, and 810,349 shares of common stock (plus any shares that might in the future be returned to the Stock Plan as a result of expiration of Awards) remain available for future grant under the Stock Plan. As of August 5, 2024, there were 3,653,118 shares of common stock covered by options outstanding under the Stock Plan, with a weighted average exercise price of $8.85 and a weighted remaining average life of 5.87 years, there were 275,000 shares of common stock covered by restricted stock units outstanding under the Stock Plan and our closing stock price on Nasdaq was $1.36. There were no stock awards, other than stock options and restricted stock units, outstanding under the Stock Plan as of August 5, 2024.

We believe that the current share reserve amount is insufficient to meet our future needs with respect to attracting, motivating and retaining key executives and employees in a competitive market for talent. We believe the Share Increase will be sufficient to enable us to grant stock awards under the Stock Plan for at least one year, based on historical grant and forfeiture levels, the recent market prices of our common stock, and anticipated use of equity awards as an incentive and retention tool as we continue to compete for talent.

In addition to the Share Increase, the Amended Stock Plan also increases the number of shares, pursuant to which we may grant incentive stock options and restricted stock units by 2,000,000 shares and extends the term of the Stock Plan by ten years.

The Amended Stock Plan will become effective if it is approved by our stockholders at the Annual Meeting. If our stockholders do not approve this Proposal 4, the Amended Stock Plan and the Share Increase will not become effective.

Note Regarding Forecasts and Forward-Looking Statements

We do not as a matter of course make public forecasts as to our total shares outstanding and utilization of various equity awards due to the unpredictability of the underlying assumptions and estimates. In particular, the forecasts set forth in this Proposal 4 include embedded assumptions which are highly dependent on the public trading price of our common stock and other factors, which we do not control and, as a result, we do not as a matter of practice provide forecasts. These forecasts reflect various assumptions regarding our future operations. The inclusion of the forecasts set forth above should not be regarded as an indication that these forecasts will be predictive of actual future outcomes, and the forecasts should not be relied upon as such.

The Amended Stock Plan Combines Compensation and Corporate Governance Best Practices

The Amended Stock Plan includes provisions that are designed to protect our stockholders’ interests and reflect corporate governance best practices.

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No Repricings, Exchanges or Buyouts Without Stockholder Approval. The Amended Stock Plan prohibits (i) reducing the exercise price of any option or stock appreciation right (“SAR”) granted under the Amended Stock Plan or (ii) the cancellation of an option or SAR at a time when its exercise price

exceeds the fair market value of the underlying shares, in exchange for another option, SAR or other award or for a cash payment.

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Stockholder Approval Required for Additional Shares. The Amended Stock Plan does not contain an annual “evergreen” provision. The Amended Stock Plan authorizes a fixed number of shares, so that stockholder approval is required to issue any additional shares.

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Limit on Full Value Awards. The Amended Stock Plan limits the number of shares available for full value awards (awards other than stock options or SARS) by providing that each share issued pursuant to a full value award reduces the number of shares available for grant under the Amended Stock Plan by two shares.

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No Liberal Share Counting or Recycling. If fewer shares are issued in settlement of a stock award than were covered by such stock award for reasons other than the failure to satisfy vesting conditions, or other than as a result of termination or forfeiture (for example, to satisfy the exercise price or tax withholding obligation of such award), then the unissued shares will generally not become available again for issuance under the Amended Stock Plan.

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No Liberal Corporate Transaction Provisions. No corporate transaction related vesting acceleration and other benefits may occur without an actual corporate transaction occurring.

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No Discounted Stock Options or SARs. All stock options and SARs granted under the Amended Stock Plan must have an exercise or strike price equal to or greater than the fair market value of our common stock on the date the stock option or SAR is granted.

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Minimum Vesting Requirement for Stock Grants and Restricted Stock Units. Stock grants and stock units granted under the Amended Stock Plan will have a minimum one-year vesting period from the date of grant, subject to certain exceptions that are described below.

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No Dividends and Dividend Equivalents on Unvested Awards. Dividends and dividend equivalents will not be paid or settled with respect to any award granted under the Amended Stock Plan until the underlying shares or units vest. Furthermore, no dividend equivalents or otherwise may be credited with respect to options or SARs, whether vested or unvested.

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Awards Subject to Clawback. In the event of a restatement of incorrect financial results, the Administrator (as defined below) will seek to recover any erroneously awarded performance-based incentive-based compensation received by any person who is or was a Section 16 officer during the three-fiscal year recovery period, as described in more detail below in “Recoupment of Awards”.

Description of the Amended Stock Plan

A copy of the Amended Stock Plan will be filed with the SEC contemporaneously with this Proxy Statement as Appendix C and is available online at www.sec.gov or from the Company upon request by any stockholder. The following description of the Amended Stock Plan is only a summary and so is qualified by reference to the complete text of the Amended Stock Plan. Except as otherwise noted, this summary reflects the amendment proposed above.

Purpose. The purpose of the Company’s Stock Plan is to offer incentives to attract and retain the best available personnel for positions of substantial responsibility and by providing additional incentive to employees, consultants and directors to promote the success of the Company’s business. Stock options, stock purchase rights, restricted stock, restricted stock units, SARs and cash awards may be granted under the Amended Stock Plan (each an “Award”). Options granted under the Amended Stock Plan may be either “incentive stock options,” as defined in section 422 of the Code, or nonstatutory stock options.

Administration. The Amended Stock Plan is administered by the Board of Directors or a committee designated by the Board. The Compensation Committee presently acts as the Administrator (the “Administrator”).

Eligibility. Nonstatutory stock options, stock awards and cash awards may be granted under the Amended Stock Plan to employees, directors (including non-employee directors) and consultants of the Company, its parent and subsidiaries. Incentive stock options may be granted only to employees of the Company, its parent or its subsidiaries. The Administrator, in its discretion, selects the individuals to whom stock options and stock awards, as well as cash awards, may be granted, the time or times at which such Awards are granted, and the terms of such to be granted under

the Stock Plan. The maximum number of shares which may be subject to options and stock awards granted to any one employee under the Amended Stock Plan for any fiscal year of the Company is 1,500,000 shares. The maximum amount payable pursuant to a cash award granted under the Amended Stock Plan for any fiscal year to any participant will not exceed $1,000,000. As of August 5, 2024, the Company had approximately 47 employees, 1 consultant and 6 current non-employee directors who are eligible to participate in the Stock Plan.

Stock Subject to the Plan. The maximum aggregate number of shares that may be sold or issued under the Amended Stock Plan is 8,429,650 shares; provided, however, that the maximum aggregate number of shares that may be issued pursuant to incentive stock options is 8,429,650 shares and restricted stock units is 4,214,825 shares. The shares may be authorized, but unissued, or reacquired common stock. Notwithstanding the foregoing, any shares issued in connection with Awards granted on or after June 23, 2010, other than options and SARs, shall be counted against the limit set forth herein as two (2) shares for every one (1) share issued in connection with such Award (and shall be counted as two (2) shares for every one (1) share returned or deemed not have been issued from the Amended Stock Plan in connection with Awards other than options and SARs).

Any shares covered by an Award (or portion of an Award) which is forfeited, canceled or expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes of determining the maximum aggregate number of shares which may be issued under the Amended Stock Plan. Shares that actually have been issued under the Amended Stock Plan pursuant to an Award shall not be returned to the plan and shall not become available for future issuance under the Amended Stock Plan, except that if unvested shares are forfeited, or repurchased by the Company at the lower of their original purchase price or their fair market value at the time of repurchase, such shares shall become available for future grant under the Amended Stock Plan. Notwithstanding anything to the contrary contained herein: (i) shares tendered or withheld in payment of an option exercise price shall not be returned to the Amended Stock Plan and shall not become available for future issuance under the Amended Stock Plan; (ii) shares withheld by the Company to satisfy any tax withholding obligation shall not be returned to the Amended Stock Plan and shall not become available for future issuance under the Amended Stock Plan; and (iii) all shares covered by the portion of a SAR that is exercised (whether or not shares are actually issued to the participant upon exercise of the SAR) shall be considered issued pursuant to the Amended Stock Plan.

Nontransferability of Awards. Incentive stock options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. Other awards are transferable (i) by will and by the laws of descent and distribution and (ii) during the lifetime of the participant, to the extent and in the manner authorized by the Administrator, but only to the extent such transfers are made in accordance with applicable laws to family members, to family trusts, to family controlled entities, to charitable organizations, and pursuant to domestic relations orders or agreements, in all cases without payment for such transfers to the participant.

Dividends and Dividend Equivalents. The Administrator may credit to each participant who holds an Award other than a stock purchase right, option or SAR, in the form of dividend equivalents or otherwise, an amount equal to the value of all dividends and other distributions (whether in cash or other property) paid or distributed by the Company on an equivalent number of shares. However, participants will only be paid dividends or other distributions (or any related earnings or interest on such dividends or distributions, if the Administrator in its sole discretion provides for such payments) if, when and to the extent that the underlying Award vests. The value of dividends or other distributions (or any related earnings or interest, if applicable) payable with respect any Award or any portion thereof that does not vest will be forfeited. No dividends, dividend equivalents or otherwise may be paid or credited with respect to options and SARs.

In the case of any unvested stock award or unvested stock purchase right or unvested portion thereof, the participant will not be entitled to any dividends and other distributions paid or distributed by the Administrator on an equivalent number of vested shares. Notwithstanding the foregoing, at the Administrator’s discretion, such participant may be credited with dividends and other distributions in the case of any unvested stock award or unvested stock purchase right or unvested portion thereof, provided that such dividends and other distributions shall be paid or distributed to the participant only if, when and to the extent such shares vest. The value of dividends and other distributions payable or distributable with respect to any unvested stock award or unvested stock purchase right or unvested portion thereof that does not vest shall be forfeited.

Stock Options

Exercise Price. The Administrator determines the exercise price of options at the time the options are granted. The exercise price of a stock option may not be less than 100% of the fair market value of our common stock on the date of grant of such option, and the exercise price of an incentive stock option to an employee who is also a 10% stockholder must have an exercise price at least equal to 110% of the fair market value of our common stock on the date of grant of such option. The Company may grant options with exercise prices less than 100% of the fair market value of our common stock on the date of grant in connection with an acquisition by the Company of another company. The fair market value of our common stock is generally the closing sales price as quoted on Nasdaq on the date of grant. No option may be repriced to reduce the exercise price of such option without stockholder approval (except in connection with a change in our capitalization, such as a stock split or a recapitalization, merger or certain other transactions). In addition, no option may be cancelled at a time when its exercise price exceeds the fair market value of the underlying shares of common stock subject to the option in exchange for another option, SAR, or other award or for a cash payment (except in connection with a change in our capitalization, such as a stock split or a recapitalization, merger or certain other corporate transactions). Notwithstanding the foregoing, canceling an option in exchange for another option, SAR or other Award with an exercise price, purchase price or base appreciation amount (as defined below) that is equal to or greater than the exercise price of the original option will not be subject to stockholder approval.

Exercise of Option; Form of Consideration. The Administrator determines when options vest and become exercisable, and in its discretion may accelerate the vesting and/or exercisability of any outstanding option. The means of payment for shares issued upon exercise of an option are specified in each option agreement. The Amended Stock Plan permits payment to be made by cash, check, promissory note, other shares of common stock of the Company (with some restrictions), broker assisted same-day sale, withholding of shares subject to the option (with some restrictions) or any other means of consideration permitted by applicable law.

Term of Option. The term of an option may be no more than ten years from the date of grant; provided that the term of an incentive stock option may not be more than five years from the date of grant for an optionee who is also a 10% stockholder. No option may be exercised after the expiration of its term.

Termination of Options. Generally, we have granted options that provide that if an optionee’s service to the Company as an employee, consultant or director terminates, such individual’s vested options will remain exercisable for periods of between 60 days and a year, with special longer periods of two years for certain director options and for up to seven years for certain options granted in lieu of salary or director fees. The Administrator shall have the authority to extend the period of time for which an option is to remain exercisable following optionee’s termination; provided that in no event will an option be exercisable later than the expiration of the term of the option.

Stock Awards

Stock awards may be stock grants, stock purchase rights, stock units or SARs. Stock grants are awards of a specific number of shares of our common stock. Stock purchase rights are rights to purchase our common stock. Stock units represent a promise to deliver shares of our common stock, or an amount of cash or property equal to the value of the underlying shares, at a future date. SARs are rights to receive cash and/or shares of our common stock based on the appreciation in the fair market value of a specific number of shares of our common stock. Each stock award is evidenced by a stock award agreement between the Company and the participant. The Amended Stock Plan allows the Administrator broad discretion to determine the terms of individual awards, including the number of shares that such participant shall be entitled to purchase or receive and the price (if any) to be paid by the recipient in connection with the issuance of the shares. Each stock award agreement will contain provisions regarding (i) the number of shares subject to such stock award or a formula for determining such number, (ii) the purchase price of the shares, if any, and the means of payment for the shares, (iii) the performance criteria (including the Qualifying Performance Criteria, as defined below), if any, and level of achievement versus these criteria that will determine the number of shares granted, issued, retainable and vested, as applicable, (iv) such terms and conditions on the grant, issuance, vesting and forfeiture of the shares, as applicable, as may be determined from time to time by the Administrator, (v) restrictions on the transferability of the stock award, and (vi) such further terms and conditions, in each case not inconsistent with the Amended Stock Plan, as may be determined from time to time by the Administrator. Shares may be granted under the Amended Stock Plan as stock awards without requiring the participant to pay the Company an amount equal to the fair market value of our common stock as of the Award grant date in order to acquire the Award shares. Notwithstanding the foregoing, SARs may not be granted with a base appreciation amount that is less than fair market value on the grant date. The maximum term of SARs is ten (10) years.

Newly granted stock grants and stock units may not provide for vesting more rapidly than after one (1) year, with an exception for up to 5% of the shares reserved for issuance under the Amended Stock Plan.

The following actions will be subject to stockholder approval unless such actions are taken in connection with a change in our capitalization, such as a stock split or a recapitalization, merger or certain other corporate transactions: (i) the reduction in the price used to determine the amount payable to a participant upon exercise of any SAR granted under the Amended Stock Plan (such price referred to herein as the “base appreciation amount”); or (ii) the cancellation of a SAR at a time when its base appreciation amount exceeds the fair market value of the underlying shares of common stock subject to the SAR in exchange for another option, SAR, other award or for a cash payment. Notwithstanding the foregoing, canceling a SAR in exchange for another option, SAR or other Award with an exercise price, purchase price or base appreciation amount that is equal to or greater than the base appreciation amount of the original SAR will not be subject to stockholder approval.

Cash Awards

Each cash award granted under the Amended Stock Plan will be subject to Qualifying Performance Criteria and will be reflected in an agreement containing provisions regarding (1) the target and maximum amount payable to the participant as a cash award, (2) the Qualifying Performance Criteria and level of achievement versus the criteria that will determine the amount of such payment, (3) the period as to which performance shall be measured for establishing the amount of any payment, (4) the timing of any payment earned by virtue of performance, (5) restrictions on the alienation or transfer of the cash award prior to actual payment, (6) forfeiture provisions, and (7) such further terms and conditions, in each case not inconsistent with the Amended Stock Plan, as may be determined from time to time by the Administrator. The maximum amount payable as a cash award that is settled for cash may be a multiple of the target amount payable. Nothing in the Amended Stock Plan prevents the Company from granting cash awards outside of the Amended Stock Plan to any individual.

Performance-based Awards

The Amended Stock Plan currently permits the Company to issue such Awards incorporating performance objectives and provides that these performance objectives (“Qualifying Performance Criteria”) may be based upon: (i) cash flow (including operating cash flow or free cash flow); (ii) earnings (including gross margin, earnings before interest and taxes, earnings before taxes, and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholders’ equity; (vii) total stockholder return; (viii) return on capital; (ix) return on assets or net assets; (x) return on investment; (xi) revenue; (xii) income or net income; (xiii) operating income or net operating income; (xiv) operating profit or net operating profit; (xv) operating margin; (xvi) return on operating revenue; (xvii) market share; (xviii) contract awards or backlog; (xix) overhead or other expense reduction; (xx) growth in stockholder value relative to the moving average of the S&P 500 Index or a peer group index; (xxi) credit rating; (xxii) strategic plan development and implementation (including individual performance objectives that relate to achievement of the Company’s or any business unit’s strategic plan); (xxiii) improvement in workforce diversity; (xxiv) expenses; (xxv) economic value added; (xxvi) product quality; (xxvii) number of customers; (xxviii) objective customer indicators; (xxix) customer satisfaction; (xxx) new product invention or innovation; (xxxi) profit after taxes; (xxxii) pre-tax profit; (xxxiii) working capital; (xxxiv) sales; (xxxv) advancement of the Company’s product pipeline; (xxxvi) consummation of strategic transactions; (xxxvii) reduction in cash utilization; and (xxxviii) addition of technologies and products.

Adjustments on Changes in Capitalization, Merger or Change of Control

In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change to the capital structure of the Company without receipt of consideration by the Company, or in the event of distribution to the stockholders of cash or stock other than an ordinary cash dividend, appropriate adjustments will be made to (i) the number of shares subject to the Amended Stock Plan, (ii) the number of shares that may be awarded to any individual under the Amended Stock Plan during a single fiscal year, and (iii) the price per share and number of shares under each outstanding Award. Any such adjustments shall be made by the Board, and the decision of the Board shall be final, binding and conclusive.

In the event of a proposed sale of all or substantially all of the Company’s assets or a merger of the Company with or into another corporation, each outstanding Award shall be assumed or an equivalent Award shall be substituted by the successor corporation or a parent or subsidiary of such successor corporation, unless the successor corporation

does not agree to assume such Award, in which case such Award shall accelerate immediately prior to the consummation of the transaction.

In the event of a proposed dissolution or liquidation of the Company, each Award will terminate immediately prior to the consummation of the dissolution or liquidation, unless otherwise determined by the Administrator.

Recoupment of Awards

Performance-based awards under the Amended Stock Plan are subject to the Company’s Compensation Recovery Policy. Please see the section entitled “Compensation Recovery Policy” in “Compensation Discussion and Analysis” for information about the Company’s Compensation Recovery Policy.

Amendment and Termination of the Amended Stock Plan

The Board may amend, alter, suspend or discontinue the Amended Stock Plan. However, the Company shall obtain stockholder approval for any amendment to the Amended Stock Plan to the extent necessary and desirable to comply with applicable laws and listing requirements. Generally, no such action by the Board or stockholders may alter or impair any outstanding Award under the Amended Stock Plan without the written consent of the holder. In addition, without the written consent of the stockholders, no amendment shall be made that would result in a repricing of options or SARs by (i) reducing the exercise price or base appreciation amount of outstanding options or SARs or (ii) cancelling an outstanding option or SAR held by a participant and re-granting to the participant a new option with a lower exercise price, a SAR with a lower base appreciation amount, or another Award or for a cash payment, in either case other than in connection with a change in the Company’s capitalization, merger or certain other corporate transactions. The Amended Stock Plan will terminate in September 2034.

U.S. Federal Income Tax Consequences of Awards under the Amended Stock Plan

THE FOLLOWING IS A GENERAL SUMMARY OF THE TYPICAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE OF OPTIONS OR OTHER AWARDS UNDER THE AMENDED STOCK PLAN. IT DOES NOT DESCRIBE STATE OR OTHER TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE OF OPTIONS OR OF OTHER AWARDS.

Nonstatutory Stock Options. The grant of a nonstatutory stock option under the Amended Stock Plan generally will not result in any federal income tax consequences to the participant or to the Company. Upon exercise of a nonstatutory stock option, the participant generally is subject to income taxes at the rate applicable to ordinary compensation income on the difference between the option exercise price and the fair market value of the shares at the time of exercise. For employees, this income is subject to withholding for federal income and employment tax purposes. The Company is entitled to an income tax deduction in the amount of the income recognized by the participant, subject to possible limitations imposed by Section 162(m) of the Code and so long as the Company withholds the appropriate taxes with respect to such income (if required) and the participant’s total compensation is deemed reasonable in amount. Any gain or loss on the participant’s subsequent disposition of the shares will receive long or short-term capital gain or loss treatment, depending on whether the shares are held for more than one year following exercise. The Company does not receive a tax deduction for any such gain.

A nonstatutory stock option can be considered non-qualified deferred compensation and subject to Section 409A of the Code. If such a nonstatutory stock option does not meet the requirements of Code Section 409A, the option can result in the acceleration of income recognition, an additional 20% tax obligation, plus penalties and interest.

Incentive Stock Options. The grant of an incentive stock option under the Amended Stock Plan generally will not result in any federal income tax consequences to the participant or to the Company. A participant recognizes no federal taxable income upon exercising an incentive stock option (subject to the alternative minimum tax rules discussed below), and the Company receives no deduction at the time of exercise. In the event of a disposition of stock acquired upon exercise of an incentive stock option, the tax consequences depend upon how long the participant has held the shares. If the participant does not dispose of the shares within two years after the incentive stock option was granted, nor within one year after the incentive stock option was exercised, the participant will recognize a long-term capital gain (or loss) equal to the difference between the sale price of the shares and the exercise price. The Company is not entitled to any deduction under these circumstances.

If the participant fails to satisfy either of the foregoing holding periods (referred to as a “disqualifying disposition”), he or she must recognize ordinary income in the year of the disposition. The amount of ordinary income generally is the lesser of (i) the difference between the amount realized on the disposition and the exercise price or (ii) the difference between the fair market value of the stock at the time of exercise and the exercise price. Any gain in excess of the amount taxed as ordinary income will be treated as a long or short-term capital gain, depending on whether the stock was held for more than one year. The Company, in the year of the disqualifying disposition, is entitled to a deduction equal to the amount of ordinary income recognized by the participant, subject to possible limitations imposed by Section 162(m) of the Code and so long as the participant’s total compensation is deemed reasonable in amount.

The “spread” under an incentive stock option—i.e., the difference between the fair market value of the shares at exercise and the exercise price—is classified as an item of adjustment in the year of exercise for purposes of the alternative minimum tax. If a participant’s alternative minimum tax liability exceeds such participant’s regular income tax liability, the participant will owe the larger amount of taxes. In order to avoid the application of alternative minimum tax with respect to incentive stock options, the participant must sell the shares within the calendar year in which the incentive stock options are exercised. However, such a sale of shares within the year of exercise will constitute a disqualifying disposition, as described above.

Stock Appreciation Rights. Recipients of SARs generally should not recognize income until the SAR is exercised (assuming there is no ceiling on the value of the right). Upon exercise, the recipient will normally recognize taxable ordinary income for federal income tax purposes equal to the amount of cash and fair market value of the shares, if any, received upon such exercise. Recipients who are employees will be subject to withholding for federal income and employment tax purposes with respect to income recognized upon exercise of a SAR. Recipients will recognize gain upon the disposition of any shares received on exercise of a SAR equal to the excess of (i) the amount realized on such disposition over (ii) the ordinary income recognized with respect to such shares under the principles set forth above. That gain will be taxable as long or short-term capital gain depending on whether the shares were held for more than one year. The Company will be entitled to a tax deduction to the extent and in the year that ordinary income is recognized by the recipient, subject to possible limitations imposed by Section 162(m) of the Code and so long as we withhold the appropriate taxes with respect to such income (if required) and the recipient’s total compensation is deemed reasonable in amount.

A SAR can be considered non-qualified deferred compensation and subject to Section 409A of the Code. If such a SAR does not meet the requirements of Code Section 409A, the SAR can result in the acceleration of income recognition, an additional 20% tax obligation, plus penalties and interest.

Restricted Stock and Stock Purchase Rights. The grant of restricted stock and stock purchase rights will subject the recipient to ordinary compensation income on the difference between the amount paid for the shares subject to the Award and the fair market value of the shares on the date that the restrictions lapse. For employees, this income is subject to withholding for federal income and employment tax purposes. The Company is entitled to an income tax deduction in the amount of the ordinary income recognized by the recipient, subject to possible limitations imposed by Section 162(m) of the Code and so long as the Company withholds the appropriate taxes with respect to such income (if required) and the participant’s total compensation is deemed reasonable in amount. Any gain or loss on the recipient’s subsequent disposition of the shares will receive long or short-term capital gain or loss treatment depending on how long the stock has been held since the restrictions lapsed. The Company does not receive a tax deduction for any such gain.

Recipients of restricted stock and stock purchase rights may make an election under Section 83(b) of the Code (“Section 83(b) Election”) to recognize as ordinary compensation income in the year that such restricted stock is granted or stock purchase right is exercised, the amount equal to the spread between the amount paid for such stock and the fair market value on the date of the issuance of the stock. If such an election is made, the recipient recognizes no further amounts of compensation income upon the lapse of any restrictions and any gain or loss on subsequent disposition will be long or short-term capital gain to the recipient. The Section 83(b) Election must be made within thirty days from the time the restricted stock is granted or the time when restricted stock is purchased through a stock purchase right.

Restricted Stock Units. Recipients of restricted stock units generally should not recognize income until such units are converted into cash or shares. Upon conversion, the recipient will normally recognize taxable ordinary

income for federal income tax purposes equal to the amount of cash and fair market value of the shares, if any, received upon such conversion. Recipients who are employees will be subject to withholding for federal income and employment tax purposes with respect to income recognized upon conversion of the restricted stock units. Participants will recognize gain upon the disposition of any shares received upon conversion of the restricted stock units equal to the excess of (i) the amount realized on such disposition over (ii) the ordinary income recognized with respect to such shares under the principles set forth above. That gain will be taxable as long or short-term capital gain depending on whether the shares were held for more than one year. The Company will be entitled to a tax deduction to the extent and in the year that ordinary income is recognized by the recipient, subject to possible limitations imposed by Section 162(m) of the Code and so long as the Company withholds the appropriate taxes with respect to such income (if required) and the recipient’s total compensation is deemed reasonable in amount.

Restricted stock units also can be considered non-qualified deferred compensation and subject to Section 409A of the Code. If such an Award of restricted stock units does not meet the requirements of Code Section 409A, the restricted stock units will result in an additional 20% tax obligation, plus penalties and interest to such recipient.

Cash Awards. Upon receipt of cash, the recipient will have taxable ordinary income, in the year of receipt, equal to the cash received. Any cash received will be subject to tax withholding by the Company. Unless limited by Section 162(m) of the Code, the Company will be entitled to a tax deduction in the amount and at the time the recipient recognizes compensation income.

Amended Plan Benefits. The Amended Stock Plan does not provide for set benefits or amounts of awards, and we have not approved any awards that are conditioned on stockholder approval of the Amended Stock Plan. However, as discussed in further detail in the section entitled “Director Compensation” below, each of our current non-employee directors who have served for at least 6 months will receive an option grant covering 5,500 shares on September 25, 2024, the date of the Annual Meeting, which will vest on the day before the first anniversary of the date of grant. The following table summarizes the option grants that our current non-employee directors as a group will receive if they remain a director following the Annual Meeting and highlights the fact that none of our executive officers (including our Named Executive Officers) or employees will receive any set benefits or awards that are conditioned upon stockholder approval of the Amended Stock Plan. All other future awards to directors, executive officers, employees and consultants of the company under the Amended Stock Plan are discretionary and cannot be determined at this time.


Name and Position	Dollar Value ($)		Number of Shares Subject to Stock Awards (#)
James E. Brown, D.V.M.		—		—
President and Chief Executive Officer
Timothy M. Papp, M.B.A.		—		—
Chief Financial Officer
Norman L. Sussman, M.D.		—		—
Chief Medical Officer
Current Executive Officers Group (3 persons)		—		—
Non-Executive Director Group (6 persons) (1)		—		33,000
Non-Executive Officer/Employee Group		—		—

(1) Represents the number of shares subject to stock options that will be granted to our non-employee directors on the date of the Annual Meeting.

History of Grants under the Stock Plan

The following table sets forth, with respect to the individuals and groups named below, the aggregate number of shares subject to stock awards granted under the Stock Plan (whether or not outstanding, vested, or forfeited, as applicable), as of August 5, 2024.


Name and Position (1)	Number of Shares
James E. Brown, D.V.M.		1,136,864
President and Chief Executive Officer
Timothy M. Papp, M.B.A (2)		732,377
Chief Financial Officer
Norman L. Sussman		199,394
Chief Medical Officer