Otonomy Reports Third Quarter 2015 Financial Results and Provides Corporate Update
November 10 2015 - 4:21PM
Otonomy, Inc. (NASDAQ:OTIC), a clinical-stage 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 September
30, 2015 and provided an update on its corporate activities and
product pipeline.
Third Quarter 2015 and Subsequent
Highlights
- Completed Successful End-of-Phase 2 Meeting with the
FDA for OTO-104 and Finalized Design of Phase 3 Clinical Program in
Ménière's Disease: In September 2015,
Otonomy announced the completion of a successful
End-of-Phase 2 meeting with the U.S. Food and Drug Administration
(FDA) for OTO-104 in the treatment of Ménière's disease. Based on
these discussions and learnings from the Phase 2b clinical trial,
the company finalized the design of the two parallel Phase 3
clinical trials. The company expects to begin a U.S. trial by the
end of 2015 and an EU trial during the first quarter of 2016.
Results from both trials are expected in the second half of 2017.
- Presented Phase 3 Data for
OTIPRIO™ (formerly known as
AuriPro™) and Phase 2b Data for
OTO-104 at 2015 AAO-HNSF Annual Meeting: In September
2015, Otonomy presented positive clinical results from its Phase 3
trials evaluating OTIPRIO in pediatric patients with middle ear
effusion undergoing ear tube placement surgery, and its Phase 2b
trial evaluating OTO-104 in patients with unilateral Ménière's
disease, at the 2015 American Academy of Otolaryngology - Head
& Neck Surgery Foundation (AAO-HNSF) Annual Meeting.
- Advanced Clinical Development of OTIPRIO in Two
Expansion Indications: In July 2015, Otonomy announced the
enrollment of the first patients in a Phase 2 clinical trial
evaluating OTIPRIO for the treatment of patients with otitis
externa, also known as swimmer's ear. During Otonomy's recent
investor and analyst day, it announced plans to initiate a second
Phase 2 trial in pediatric patients with acute otitis media with
tubes (AOMT) in the first quarter of 2016. Also in October 2015,
Otonomy announced initiation of patient enrollment in a Phase 3b
clinical trial evaluating OTIPRIO in an expanded population of
pediatric patients undergoing ear tube placement surgery.
- Received FDA Clearance of IND for OTO-311: In
October 2015, Otonomy announced that the FDA had cleared the
company's Investigational New Drug application (IND) for OTO-311, a
product candidate for patients with tinnitus. OTO-311 is a
sustained-exposure formulation of the N-Methyl-D-Aspartate (NMDA)
receptor antagonist gacyclidine. The IND clearance allows Otonomy
to initiate a Phase 1 dose escalation clinical safety trial of
OTO-311 in normal healthy volunteers which is expected to begin
before the end of 2015.
- Acquired Rights to Multiple Product Candidates for
Hearing Loss Development Program: During its investor and
analyst day, Otonomy announced the initiation of formulation and
preclinical development activities for a program addressing
sensorineural hearing loss which the company believes represents
the largest market opportunity within the otology field. This
effort is focused on several possible treatment approaches
including repair of ribbon synapses and regeneration of cochlear
hair cells.
- Appointed Ted Schroeder to Board of Directors:
In September 2015, Otonomy announced the appointment of Ted
Schroeder to its board of directors. Most recently, Mr. Schroeder
served as co-founder, president, CEO and member of the board of
directors for specialty pharmaceutical company Cadence
Pharmaceuticals from its founding in 2004 until its acquisition by
Mallinckrodt Pharmaceuticals for $1.4 billion in 2014.
"Otonomy is preparing multiple commercial initiatives in
anticipation of the expected U.S. launch of OTIPRIO in the first
quarter of 2016, assuming FDA approval on or before the December
25, 2015 PDUFA date. We are focused on building awareness of
Otonomy in the ENT community, and finalizing plans for market
access, reimbursement, pricing, and promotion," said David A.
Weber, Ph.D., president and CEO of Otonomy. "We have also made
solid progress across our entire pipeline including finalizing the
Phase 3 clinical program for OTO-104 in Ménière's disease,
advancing the clinical development of OTIPRIO in potential label
expansion indications, receiving FDA clearance to initiate a Phase
1 safety clinical trial for OTO-311, and initiating a fourth
development program focused on sensorineural hearing loss,
potentially the largest opportunity and unmet medical need in the
otology field."
Anticipated Upcoming Milestones
- OTIPRIO's PDUFA action date is December 25, 2015. Contingent on
FDA approval on or before this date, Otonomy expects to launch
OTIPRIO in the U.S. in the first quarter of 2016 with a sales force
totaling approximately 40 representatives.
- Otonomy expects to initiate two parallel Phase 3 trials for
OTO-104 in patients with Ménière's disease, with a U.S. trial
expected to begin by the end of 2015 and an EU trial expected to
begin during the first quarter of 2016.
- Otonomy expects to begin a Phase 1 clinical safety trial for
OTO-311, a potential treatment for tinnitus, before the end of
2015.
Third Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $199.2 million as of September 30,
2015, compared to $211.9 million as of June 30, 2015.
- Operating Expenses: GAAP operating expenses
were $16.1 million for the third quarter of 2015, compared to $9.4
million for the third quarter of 2014. Non-GAAP operating expenses,
which exclude stock-based compensation expense, totaled $13.9
million for the third quarter of 2015, compared to $8.9 million for
the third quarter of 2014.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the third quarter
of 2015 were $9.6 million, compared to $7.4 million for the third
quarter of 2014. The increase was primarily a result of increased
personnel costs, including stock-based compensation expense,
increased preclinical development expenses for OTO-311 and costs
for label expansion indication studies for OTIPRIO that began
during 2015. The increase was partially offset by lower clinical
trial-related expenses for OTO-104 following the completion of
enrollment in the Phase 2b study during December 2014. Non-GAAP
R&D expenses were $8.8 million for the third quarter of 2015,
compared to $7.1 million for the third quarter of 2014.
- General and Administrative Expenses: GAAP
general and administrative (G&A) expenses in the third quarter
of 2015 were $6.5 million, compared to $2.0 million for the third
quarter of 2014. The increase was primarily attributable to
increased personnel costs, including stock-based compensation
expense, expanded operating activities and costs related to our
commercial preparation activities. Non-GAAP G&A expenses were
$5.1 million for the third quarter of 2015, compared to $1.8
million for the third quarter of 2014.
- Financial Guidance: Otonomy reaffirms its
expectation for 2015 GAAP operating expenses in the range of
$70-$75 million and non-GAAP operating expenses in the range of
$65-$70 million. In addition, as announced at its recent investor
and analyst day, the company expects 2016 non-GAAP operating
expenses to be in the range of $90-$95 million.
Non-GAAP Financial Measures
In this press release, Otonomy's financial results and financial
guidance are provided in accordance with accounting principles
generally accepted in the United States (GAAP) and using certain
non-GAAP financial measures. Non-GAAP financial results exclude
stock-based compensation expense. These non-GAAP results are
provided as a complement to results provided in accordance with
GAAP because management believes these non-GAAP financial measures
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 these non-GAAP financial
measures to establish budgets and operational goals that are
communicated internally and externally and to manage the company's
business and to evaluate its performance. A reconciliation of the
GAAP financial results to non-GAAP financial results is included in
the attached financial information.
About Otonomy Otonomy is a clinical-stage
biopharmaceutical company focused on the development and
commercialization of innovative therapeutics for diseases and
disorders of the ear. Otonomy's proprietary technology provides
sustained exposure of drugs to the ear following a single
administration. Otonomy has three product candidates in
development. OTIPRIO™ is an antibiotic that has completed Phase 3
clinical trials in pediatric patients with middle ear effusion at
the time of tympanostomy tube placement surgery, and the FDA has
assigned a PDUFA action date of December 25, 2015 for the company's
New Drug Application. OTO-104 is a steroid that has completed a
Phase 2b clinical trial in 154 patients with Ménière's disease.
Based on these results, Otonomy intends to initiate two parallel
Phase 3 trials for OTO-104 in Ménière's disease patients with at
least one trial initiated by the end of 2015. OTO-311 is an NMDA
receptor antagonist in development as a treatment for tinnitus. A
Phase 1 clinical safety trial for OTO-311 is expected to begin
before the end of 2015. 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 Otonomy's future financial or operating performance.
Forward-looking statements in this press release include, but are
not limited to, Otonomy's expectations regarding the commercial
launch of OTIPRIO in the United States, the Phase 2 clinical trial
for OTIPRIO for the treatment of patients with otitis externa, the
initiation of the Phase 2 trial in pediatric patients with acute
otitis media with tubes (AOMT), the initiation of two Phase 3
trials for OTO-104, the initiation of a Phase 1 clinical trial for
OTO-311, the formulation and preclinical development activities for
a program addressing sensorineural hearing loss, Otonomy's chief
executive officer's statements regarding the company's activities,
and estimated operating expenses for 2015 and 2016. 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 substantial additional financing; Otonomy's dependence on
the regulatory and commercial success of OTIPRIO and OTO-104 and
advancing additional product candidates, such as OTO-311; 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 preclinical and clinical results for its product
candidates, which may not support further development of product
candidates, 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 preclinical studies and clinical trials; Otonomy's
dependence on third parties for the manufacture of products;
Otonomy's dependence on a small number of suppliers for raw
materials; Otonomy's ability to protect its intellectual property
related to 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 Quarterly
Report on Form 10-Q filed with the Securities and Exchange
Commission (the SEC) on November 11, 2015, 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 September 30,
2015 |
As of December 31,
2014 |
|
(unaudited) |
|
|
|
|
Cash and cash equivalents |
$ 176,602 |
$ 139,810 |
|
|
|
Short-term investments |
22,587 |
16,223 |
|
|
|
Total assets |
208,484 |
159,164 |
|
|
|
Total liabilities |
8,867 |
5,551 |
|
|
|
Accumulated deficit |
(142,995) |
(102,469) |
|
|
|
Total stockholders' equity |
199,617 |
153,613 |
|
Otonomy,
Inc. |
Condensed Statements of
Operations |
(in thousands, except
share and per share data) |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2015 |
2014 |
2015 |
2014 |
|
(unaudited) |
Operating expenses: |
|
|
|
|
Research and development |
$ 9,589 |
$ 7,361 |
$ 25,485 |
$ 24,616 |
General and administrative |
6,492 |
2,040 |
15,345 |
5,169 |
Total operating expenses |
16,081 |
9,401 |
40,830 |
29,785 |
Loss from operations |
(16,081) |
(9,401) |
(40,830) |
(29,785) |
|
|
|
|
|
Other income (expense) |
116 |
(2,630) |
304 |
(3,298) |
Net loss |
(15,965) |
(12,031) |
(40,526) |
(33,083) |
Accretion to redemption value of convertible
preferred stock |
-- |
(7) |
-- |
(35) |
Net loss attributable to common
stockholders |
$ (15,965) |
$ (12,038) |
$ (40,526) |
$ (33,118) |
|
|
|
|
|
Net loss per share attributable to common
stockholders, basic and diluted |
$ (0.66) |
$ (1.23) |
$ (1.70) |
$ (9.83) |
|
|
|
|
|
Weighted-average shares used to compute net
loss per share attributable to common stockholders, basic and
diluted |
24,197,160 |
9,823,690 |
23,847,988 |
3,369,437 |
|
Otonomy,
Inc. |
Reconciliation of GAAP
to Non-GAAP Financial Information |
(in thousands, except
share and per share data) |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2015 |
2014 |
2015 |
2014 |
|
(unaudited) |
|
|
|
|
|
Reconciliation of GAAP to
non-GAAP operating expenses |
|
GAAP operating expenses |
$ 16,081 |
$ 9,401 |
$ 40,830 |
$ 29,785 |
Non-GAAP adjustment |
|
|
|
Stock-based compensation
expense (1) |
(2,220) |
(487) |
(5,321) |
(895) |
Non-GAAP operating expenses |
$ 13,861 |
$ 8,914 |
$ 35,509 |
$ 28,890 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to
non-GAAP net loss attributable to common stockholders |
|
GAAP net loss attributable to common
stockholders |
$ (15,965) |
$ (12,038) |
$ (40,526) |
$ (33,118) |
Non-GAAP adjustment |
|
|
|
Stock-based compensation
expense (1) |
2,220 |
487 |
5,321 |
895 |
Non-GAAP net loss attributable to common
stockholders |
$ (13,745) |
$ (11,551) |
$ (35,205) |
$ (32,223) |
|
|
|
|
|
GAAP net loss per share attributable to
common stockholders, basic and diluted |
$ (0.66) |
$ (1.23) |
$ (1.70) |
$ (9.83) |
Non-GAAP adjustment |
|
|
|
Stock-based compensation
expense |
0.09 |
0.05 |
0.22 |
0.27 |
Non-GAAP net loss attributable to common
stockholders, basic and diluted |
$ (0.57) |
$ (1.18) |
$ (1.48) |
$ (9.56) |
|
|
|
|
|
Weighted-average shares used to compute net
loss per share attributable to common stockholders, basic and
diluted |
24,197,160 |
9,823,690 |
23,847,988 |
3,369,437 |
|
|
|
|
|
(1) Includes R&D-related stock-based
compensation expense of: |
$ 819 |
$ 244 |
$ 2,094 |
$ 407 |
Includes G&A-related
stock-based compensation expense of: |
$ 1,401 |
$ 243 |
$ 3,227 |
$ 488 |
CONTACT: 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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