Otonomy, Inc. (NASDAQ:OTIC), a biopharmaceutical company
focused on the development and commercialization of innovative
therapeutics for diseases and disorders of the ear, today reported
financial results for the quarter ended March 31, 2017 and provided
an update on its corporate activities and product pipeline.
First Quarter 2017 and Subsequent
Highlights
• Enrollment Completed in the U.S. Phase 3 AVERTS-1
Trial for OTIVIDEXä in Ménière’s
Disease, with Results Expected in the Third Quarter of
2017: Otonomy is conducting two identical, parallel
Phase 3 trials for OTIVIDEX (formerly known as OTO-104) in patients
with Ménière’s disease, AVERTS-1 in the United States and
AVERTS-2 in Europe. Each trial is a 16-week, prospective,
randomized, double-blind, placebo-controlled trial designed to
enroll approximately 160 patients with unilateral Ménière’s
disease. A total of 165 patients were enrolled in the AVERTS-1
trial, and topline data is expected in the third quarter of 2017.
Enrollment is ongoing in the AVERTS-2 trial with topline data
expected by the end of 2017.
• OTIPRIO® Launch
Update: OTIPRIO (ciprofloxacin otic suspension) is
approved in the United States for the treatment of
pediatric patients with bilateral otitis media with effusion
undergoing tympanostomy tube placement (TTP). In March
2017, Otonomy announced a number of changes to its
commercial organization to increase the focus on OTIPRIO
utilization and improve sales performance. These changes include
the hiring of David Kaplan, vice president of sales, who previously
led the sales team at Pacira Pharmaceuticals, focusing and
realigning the sales force to 20 sales territories to provide
coverage of 400 priority accounts that collectively comprise about
one-third of the U.S. TTP market, and replacing sales personnel
where necessary to improve sales performance.
An update of key commercial metrics include:
-- End user demand totaled 1,334 vials during the first
quarter of 2017 representing an increase of 14% from the fourth
quarter of 2016. -- From launch through the end of March,
more than 220 facilities had purchased OTIPRIO with over 60% of
these accounts placing repeat orders. -- Ongoing tracking of
reimbursement claims by Otonomy's third party vendor continues to
demonstrate separate payment for OTIPRIO in addition to the TTP
procedure itself by multiple payors for both Medicaid and
commercially-insured patients.
• Announced Positive Top-Line Results from Phase 3 Trial
of OTIPRIO in Patients with Acute Otitis Externa (AOE) and
submitted sNDA: In January 2017, Otonomy announced
positive results from its pivotal Phase 3 clinical trial of OTIPRIO
in 262 pediatric and adult patients with AOE, also known as
swimmer's ear. This single administration trial of OTIPRIO met its
primary endpoint showing a statistically significant increase in
clinical cure rate compared to sham (no treatment) at Day 8
(p<0.001). OTIPRIO also demonstrated a statistically significant
superiority to sham in clinical cure rate at all other time points
assessed including Day 4 (p=0.021), Day 15 (p<0.001) and Day 29
(p<0.001), and was well-tolerated. Based on these positive
results, Otonomy recently submitted a Supplemental New Drug
Application (sNDA) to the U.S. Food and Drug Administration
(FDA).
• Initiated Patient Enrollment for
Phase 2 Trial of OTIVIDEX in Hearing Loss Indication: In
January 2017, Otonomy initiated enrollment of the first patients in
a Phase 2 trial evaluating OTIVIDEX for the prevention of hearing
loss in pediatric cancer patients undergoing chemotherapy with
platinum-based agents. This multicenter trial is designed to assess
the feasibility, safety and exploratory efficacy of OTIVIDEX given
by intratympanic administration in subjects at risk for ototoxicity
from cisplatin chemotherapy.
• Sucessfully Completed Phase 1
Clinical Safety Trial of OTO-311, a Potential Tinnitus
Treatment: OTO-311 is a single-dose, sustained-exposure
formulation of the potent and selective N-Methyl-D-Aspartate (NMDA)
receptor antagonist gacyclidine that is in development for the
treatment of tinnitus. OTO-311 was well-tolerated in the Phase 1
trial, and a dose was selected for evaluation in a Phase 2 clinical
trial that is expected to start in the second half of 2017.
“The completion of enrollment in the AVERTS-1 Phase 3 trial is
an important milestone given the significant unmet medical need
with Ménière’s disease and the attractive market potential of
OTIVIDEX in this indication,” said David A. Weber, Ph.D., president
and CEO of Otonomy. “Likewise, the submission of the sNDA for
OTIPRIO in AOE is an important achievement and supports our plan to
build a successful OTIPRIO franchise. The changes to the commercial
organization that we initiated in the first quarter have focused
our effort on priority accounts and should enable us to demonstrate
accelerating growth in OTIPRIO revenue over the course of the
year."
Anticipated Upcoming Milestones
• Completion of an End-of-Phase 2 meeting with
the FDA for OTIPRIO in acute otitis media with tympanostomy tubes
(AOMT) by the end of the second quarter of 2017.
• Announcement of topline data from the
AVERTS-1 Phase 3 trial of OTIVIDEX in Ménière’s disease patients in
the third quarter of 2017 and topline data from the AVERTS-2 trial
by the end of 2017.
• Initiation of a Phase 2 clinical trial
for OTO-311 for the treatment of tinnitus in the second half of
2017.
First Quarter Financial Highlights
• Cash Position: Cash,
cash equivalents, and short-term investments totaled $168.1 million
as of March 31, 2017, compared to $196.4 million as of December 31,
2016.
• Revenue: Net sales of
OTIPRIO totaled $0.4 million for the first quarter of
2017.
• Operating Expenses:
GAAP operating expenses were $27.3 million for the first quarter of
2017, compared to $26.9 million for the first quarter of 2016.
Non-GAAP operating expenses, which exclude stock-based compensation
and rent abatement expense, were $22.9 million for the first
quarter of 2017, compared to $24.1 million for the first quarter of
2016.
• Research and Development
Expenses: GAAP research and development (R&D) expenses
for the first quarter of 2017 were $13.2 million, compared to $13.9
million for the first quarter of 2016. The decrease was primarily a
result of decreased clinical trial activities for OTIPRIO versus
the prior year period.
• Selling, General and
Administrative Expenses: GAAP selling, general and
administrative (SG&A) expenses in the first quarter of 2017
were $14.1 million, compared to $13.0 million for the first quarter
of 2016. The increase was primarily attributable to one-time
expenses related to changes to the commercial organization
initiated during the first quarter of 2017.
• Financial Guidance:
Otonomy reaffirms its expectations that GAAP operating expenses
will be in the range of $103-$108 million for 2017, and that
non-GAAP operating expenses will be in the range of $80-$85 million
for 2017.
Webcast
and Conference Call
Otonomy management will host a webcast and conference call
regarding this announcement at 4:30 p.m. EDT/1:30 p.m. PDT today.
The live call may be accessed by dialing (877) 305-6769 for
domestic callers and (678) 562-4239 for international callers with
conference ID code number: 14732387. A live webcast of the call
will be available online in the investor relations section of
Otonomy’s website at www.otonomy.com and will be archived there for
30 days.
Non-GAAP Operating Expenses
In this press release, Otonomy’s operating expenses are provided
in accordance with generally accepted accounting principles (GAAP)
in the United States and also on a non-GAAP basis. Non-GAAP
operating expenses exclude stock-based compensation and rent
abatement expense. Non-GAAP operating expenses are provided as a
complement to operating expenses provided in accordance with GAAP
because management believes non-GAAP operating expenses help
indicate underlying trends in the company’s business, are important
in comparing current results with prior period results and provide
additional information regarding the company’s financial position.
Management also uses non-GAAP operating expenses to establish
budgets and operational goals that are communicated internally and
externally and to manage the company’s business and to evaluate its
performance. The attached financial information includes a
reconciliation of the GAAP operating expenses to non-GAAP operating
expenses and a reconciliation of GAAP operating expense guidance to
non-GAAP operating expense guidance.
About OTIPRIO®
OTIPRIO (ciprofloxacin otic suspension) is a fluoroquinolone
antibacterial indicated for the treatment of pediatric patients
with bilateral otitis media with effusion undergoing tympanostomy
tube placement. OTIPRIO is administered by a physician as a single
0.1 mL (6 mg) intratympanic administration into each affected ear,
following suctioning of the middle ear effusion. The
thermosensitive suspension exists as a liquid at or below room
temperature and gels when warmed. In two Phase 3 trials, a single
intraoperative administration of OTIPRIO demonstrated a
statistically significant reduction in the cumulative proportion of
study treatment failures compared to tubes alone (p-value
<0.001).
Important Safety Information for OTIPRIO
Contraindications: OTIPRIO is contraindicated
in patients with a history of hypersensitivity to ciprofloxacin, to
other quinolones, or to any of the components of OTIPRIO.
Warnings and Precautions - Potential for Microbial
Overgrowth: OTIPRIO may result in overgrowth of
nonsusceptible bacteria and fungi. If such infections occur,
institute alternative therapy.
Adverse Reactions: Adverse reactions (incidence
at least 3%) that occurred in two Phase 3 trials with OTIPRIO vs
sham were: nasopharyngitis (5% vs 4%), irritability (5% vs 3%), and
rhinorrhea (3% vs 2%).
Use in Specific Populations - Pediatric Use:
The safety and effectiveness of OTIPRIO in infants below six months
of age have not been established.
Full prescribing information can be found at
www.OTIPRIO.com.
About Otonomy
Otonomy is a biopharmaceutical company focused on the
development and commercialization of innovative therapeutics for
diseases and disorders of the ear. OTIPRIO (ciprofloxacin otic
suspension) is approved in the United States for use during
tympanostomy tube placement surgery in pediatric patients, an sNDA
has been submitted to the FDA for acute otitis externa (AOE) and a
successful Phase 2 trial has been completed in patients with acute
otitis media with tympanostomy tubes (AOMT). OTIVIDEX (formerly
OTO-104) is a steroid in development for the treatment of Ménière's
disease and other balance and hearing disorders. Two Phase 3 trials
in Ménière's disease patients are ongoing, AVERTS-1 in the United
States and AVERTS-2 in Europe, with AVERTS-1 results expected in
the third quarter of 2017 and AVERTS-2 results expected by the end
of 2017. In addition, a Phase 2 trial of OTIVIDEX is underway in
patients at risk for cisplatin-induced hearing loss. OTO-311 is an
NMDA receptor antagonist for the treatment of tinnitus that has
completed a Phase 1 clinical safety trial with a Phase 2 trial
expected to be initiated in the second half of 2017. A fourth
program targeting sensorineural hearing loss including age-related
hearing loss is in preclinical development. Otonomy’s proprietary
formulation technology utilizes a thermosensitive gel and drug
microparticles to enable single dose treatment by a physician. For
additional information please visit www.otonomy.com.
Cautionary Note Regarding Forward Looking
Statements This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements generally relate to
future events or the future financial or operating performance of
Otonomy. Forward-looking statements in this press release include,
but are not limited to, planned discussions with the FDA relating
to OTIPRIO in AOMT, the timing of Phase 3 results for OTIVIDEX, the
timing of a Phase 2 clinical trial for OTO-311, statements by
Otonomy’s president and CEO, and Otonomy’s financial guidance for
2017. Otonomy's expectations regarding these matters may not
materialize, and actual results in future periods are subject to
risks and uncertainties. Actual results may differ materially from
those indicated by these forward-looking statements as a result of
these risks and uncertainties, including but not limited to:
Otonomy's limited operating history and its expectation that it
will incur significant losses for the foreseeable future; Otonomy's
ability to obtain additional financing; Otonomy's dependence on the
commercial success of OTIPRIO and the regulatory success and
advancement of additional product candidates, such as OTIVIDEX and
OTO-311, and label expansion indications for OTIPRIO; the
uncertainties inherent in the clinical drug development process,
including, without limitation, Otonomy's ability to adequately
demonstrate the safety and efficacy of its product candidates, the
nonclinical and clinical results for its product candidates, which
may not support further development, and challenges related to
patient enrollment in clinical trials; Otonomy's ability to obtain
regulatory approval for its product candidates; side effects or
adverse events associated with Otonomy's product candidates;
competition in the biopharmaceutical industry; Otonomy's dependence
on third parties to conduct nonclinical studies and clinical
trials; the timing and outcome of hospital pharmacy and
therapeutics reviews and other facility reviews; the impact of
coverage and reimbursement decisions by third-party payors on the
pricing and market acceptance of OTIPRIO; Otonomy's dependence on
third parties for the manufacture of OTIPRIO and product
candidates; Otonomy's dependence on a small number of suppliers for
raw materials; Otonomy's ability to protect its intellectual
property related to OTIPRIO and its product candidates in the
United States and throughout the world; expectations regarding
potential market size, opportunity and growth; Otonomy's ability to
manage operating expenses; implementation of Otonomy's business
model and strategic plans for its business, products and
technology; and other risks. Information regarding the foregoing
and additional risks may be found in the section entitled "Risk
Factors" in Otonomy's Annual Report on Form 10-Q filed with the
Securities and Exchange Commission (the "SEC") on May 4, 2017, and
Otonomy's future reports to be filed with the SEC. The
forward-looking statements in this press release are based on
information available to Otonomy as of the date hereof. Otonomy
disclaims any obligation to update any forward-looking statements,
except as required by law.
|
|
|
Otonomy, Inc. |
|
Condensed Balance Sheet Data |
|
(in thousands) |
|
|
|
|
|
|
|
As of March 31, |
|
As of December 31, |
|
|
2017 |
|
2016 |
|
|
(unaudited) |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
13,704 |
|
|
$ |
24,156 |
|
|
|
|
|
|
|
Short-term
investments |
|
154,420 |
|
|
|
172,222 |
|
|
|
|
|
|
|
Total assets |
|
180,085 |
|
|
|
208,596 |
|
|
|
|
|
|
|
Total liabilities |
|
10,760 |
|
|
|
15,859 |
|
|
|
|
|
|
|
Accumulated
deficit |
|
(301,798 |
) |
|
|
(274,720 |
) |
|
|
|
|
|
|
Total stockholders'
equity |
|
169,325 |
|
|
|
192,737 |
|
Otonomy, Inc. |
Condensed Statements of
Operations |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2017 |
|
2016 |
|
|
(unaudited) |
|
|
|
|
|
Product
sales, net |
$ |
358 |
|
|
$ |
13 |
|
Costs and
operating expenses: |
|
|
|
|
Cost of
product sales |
|
463 |
|
|
|
9 |
|
|
Research
and development |
|
13,185 |
|
|
|
13,872 |
|
|
Selling,
general and administrative |
|
14,092 |
|
|
|
12,995 |
|
Total costs
and operating expenses |
|
27,740 |
|
|
|
26,876 |
|
Loss from
operations |
|
(27,382 |
) |
|
|
(26,863 |
) |
|
|
|
|
|
Other
income (expense) |
|
304 |
|
|
|
100 |
|
Net
loss |
$ |
(27,078 |
) |
|
$ |
(26,763 |
) |
|
|
|
|
|
Net loss
per share, basic and diluted |
$ |
(0.89 |
) |
|
$ |
(0.91 |
) |
|
|
|
|
|
Weighted-average shares used to compute net loss per share, |
|
|
|
|
basic and
diluted |
|
30,256,825 |
|
|
|
29,328,804 |
|
Otonomy, Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in thousands) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2017 |
|
2016 |
|
|
(unaudited) |
GAAP
operating expenses |
|
|
|
|
Research
and development |
$ |
13,185 |
|
|
$ |
13,872 |
|
|
Selling,
general and administrative |
|
14,092 |
|
|
|
12,995 |
|
Total GAAP
operating expenses |
|
27,277 |
|
|
|
26,867 |
|
Non-GAAP
adjustments |
|
|
|
|
R&D
stock-based compensation expense |
|
(985 |
) |
|
|
(647 |
) |
|
SG&A
stock-based compensation expense |
|
(2,735 |
) |
|
|
(2,089 |
) |
|
Rent
abatement |
|
(695 |
) |
|
|
- |
|
Total
non-GAAP adjustments |
|
(4,415 |
) |
|
|
(2,736 |
) |
Non-GAAP
operating expenses |
$ |
22,862 |
|
|
$ |
24,131 |
|
Otonomy, Inc. |
Reconciliation of 2017 GAAP to Non-GAAP
Operating Expense Guidance |
(in millions) |
|
|
|
|
|
|
GAAP
operating expenses |
$103 -
$108 |
Non-GAAP
adjustments |
|
|
Stock-based compensation expense |
21 |
|
Rent
abatement |
2 |
Non-GAAP
operating expenses |
$80 - $85 |
Contacts:
Media Inquiries
Canale Communications
Heidi Chokeir, Ph.D.
Senior Vice President
619.849.5377
heidi@canalecomm.com
Investor Inquiries
Westwicke Partners
Robert H. Uhl
Managing Director
858.356.5932
robert.uhl@westwicke.com
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