Otonomy Reports First Quarter 2016 Financial Results and Provides Corporate Update
May 09 2016 - 4:16PM
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, 2016 and provided
an update on its corporate activities and product pipeline.
First Quarter 2016 and Subsequent
Highlights
- Initiated OTIPRIO™ Commercial Launch: In March
2016, Otonomy announced the commercial availability of OTIPRIO
(ciprofloxacin otic suspension) in the United States for the
treatment of pediatric patients with bilateral otitis media with
effusion undergoing tympanostomy tube placement (TTP). OTIPRIO is a
single-dose, physician-administered antibacterial and the first
product approved by the U.S. Food and Drug Administration (FDA) for
this indication.
- Early Launch Progress: The company’s key
commercial objectives in the initial stage of the launch include
establishing awareness and interest in the use of OTIPRIO with the
approximately 2,000 physicians who account for nearly 70% of TTP
surgeries performed each year, and obtaining access in the
approximately 800 hospital and ambulatory surgery center facilities
where these physicians conduct their surgeries. Performance against
these objectives in the first two months of commercialization is as
follows.
- Otonomy’s 40 sales specialists have completed at least one
sales presentation with 85% of the top 100 target physicians, 76%
of the top 500, and 70% of the 2,000 physicians in our target
audience.
- Formulary reviews have been scheduled in over 300 facilities
and OTIPRIO has already been added to the formulary in 25
hospitals.
- Otonomy has entered into contracts with group purchasing
organizations (GPOs) and is participating in the 340B program that,
on a combined basis, covers purchasing by approximately 70% of our
target facilities.
- Otonomy has submitted an application to the Centers for
Medicare and Medicaid Services (CMS) for assignment of a C code. If
granted in June 2016, the C code would be available beginning in
July 2016 and provide for transitional pass-through payment by
Medicare and potentially other payers for use of OTIPRIO in the
hospital outpatient and ambulatory surgery center setting through
the end of 2018.
- Otonomy also submitted an early application to CMS for
assignment of a J code which would cover OTIPRIO use in all
outpatient settings including physician offices. CMS has issued a
preliminary decision against approval which is not final and is
subject to change. A presentation supporting issuance of the J code
will be made at a public meeting in mid-May. Otonomy believes that
a final decision against assigning a J code at this time would not
have a material negative effect on the OTIPRIO commercial launch
for use during ear tube surgery. If necessary, the company would
re-apply for a J code related to the approval of OTIPRIO for the
treatment of acute otitis externa since this use will predominantly
occur in the physician office setting.
- Published OTIPRIO Phase 3 Results in JAMA
Otolaryngology – Head & Neck Surgery: In January,
extensive data from clinical trials supporting FDA approval of
OTIPRIO for use during pediatric TTP surgery were published in JAMA
Otolaryngology – Head & Neck Surgery.
- Completed Successful End-of-Phase 2 Review with the FDA
Supporting Single Phase 3 Trial for OTIPRIO in Acute Otitis
Externa: In April 2016, Otonomy announced that it had
successfully completed an End-of-Phase 2 review with the FDA for
OTIPRIO in the treatment of acute otitis externa, also known as
swimmer’s ear. Based on this review, agreement was reached with the
FDA that a single randomized, multicenter, sham-controlled clinical
trial would be sufficient for registration in this indication.
Otonomy intends to initiate the Phase 3 clinical trial for OTIPRIO
in pediatric and adult patients with acute otitis externa during
the second quarter of 2016 and expects to complete this trial and
report topline results in the fourth quarter of 2016. If the
results are positive, Otonomy expects to submit a supplemental New
Drug Application (sNDA) to the FDA during the first half of
2017.
- Initiated Phase 2 Clinical Trial of OTIPRIO in
Pediatric Patients with Acute Otitis Media with Tympanostomy Tubes
(AOMT): In March 2016, Otonomy announced the initiation of
patient enrollment in a Phase 2 clinical trial evaluating a single
administration of OTIPRIO for the treatment of pediatric patients
with AOMT. Otonomy previously completed a Phase 2 trial that
successfully demonstrated the feasibility of administering OTIPRIO
to pediatric patients with AOMT in an office setting. This second
Phase 2 trial is designed to determine the appropriate dose for
further development of OTIPRIO in this indication.
- Initiated Patient Enrollment in Second Phase 3 Clinical
Trial of OTO-104 in Ménière’s Disease: In March 2016,
Otonomy initiated patient enrollment in the OTO-104 Phase 3
clinical trial in Ménière’s disease patients in the European Union
(EU) called AVERTS-2 (Alleviation of Vertigo Episodes Study). The
protocol for this trial is identical to the AVERTS-1 trial already
underway in the United States. The 16-week, prospective,
randomized, double-blind, placebo-controlled Phase 3 trial will
enroll approximately 160 patients with unilateral Ménière’s disease
at multiple clinical sites in the EU.
- Announced Plan to Conduct Phase 2 Clinical Trial of
OTO-104 in Hearing Loss Indication: In January 2016,
Otonomy published the results of a preclinical proof-of-concept
study which demonstrated that intratympanic administration of
OTO-104 protected against ototoxicity observed following both acute
and repeat administration of the chemotherapeutic agent cisplatin.
These results provide support for the clinical evaluation of
OTO-104 in the prevention of hearing loss in cancer patients
undergoing chemotherapy with platinum-based agents. The company has
completed a pre-IND review by the FDA and expects to initiate a
Phase 2 clinical trial in pediatric patients receiving cisplatin
treatment in the second half of 2016.
- Phase 1 Clinical Safety Trial of OTO-311 is
Ongoing: OTO-311 is a 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. Several dose cohorts in a Phase 1 clinical safety trial
have been completed without concerns of patient tolerability. The
trial will remain open into the second half of 2016 pending the
potential evaluation of additional dose levels.
- Raised $115 Million in Gross Proceeds from Public
Offering of Common Stock: In January 2016, Otonomy
completed an underwritten public offering of 5,750,000 shares of
its common stock (including 750,000 shares sold pursuant to the
underwriters' full exercise of their option to purchase additional
shares) at a price to the public of $20.00 per share. Total gross
proceeds were $115 million before deducting underwriting discounts,
commissions and other offering expenses.
“While still in the first days of the OTIPRIO U.S. launch, we
are encouraged by the success that our sales specialists are having
in meeting with physicians, the high level of interest in the
product, and the positive feedback following initial usage. This is
important since physician interest and support are key to gaining
formulary acceptance which is required for access in most hospitals
and hospital-affiliated ambulatory surgery centers,” said David A.
Weber, Ph.D., president and CEO of Otonomy. “In parallel to the
commercial launch, we continue to execute well on our product
development plans as evidenced by the initiation of the second
Phase 3 trial for OTO-104 in Ménière’s disease and the Phase 2
trial for OTIPRIO in AOMT, as well as the very positive outcome of
our recent End-of-Phase 2 meeting with the FDA which confirmed that
a single Phase 3 trial is sufficient to support registration of
OTIPRIO in acute otitis externa. In summary, with the completion of
our public offering in January, we are well positioned to progress
the commercial launch of OTIPRIO and advance our product
pipeline.”
Anticipated Upcoming Milestones
- Determination by CMS regarding the assignment of a unique C
code for OTIPRIO is expected in June 2016; if assigned, the C code
will be effective as of July 2016.
- Initiation of a Phase 3 registration trial of OTIPRIO in acute
otitis externa in the second quarter of 2016 with topline results
expected in the fourth quarter of 2016.
- Completion of a Phase 2 clinical trial of OTIPRIO in AOMT with
topline results expected in the second half of 2016.
- Initiation of a Phase 2 feasibility trial for OTO-104 in
pediatric patients undergoing cisplatin chemotherapy treatment is
expected in the second half of 2016.
First Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $266.0 million as of March 31, 2016,
compared to $184.8 million as of December 31, 2015.
- Operating Expenses: GAAP operating expenses
were $26.9 million for the first quarter of 2016, compared to $12.1
million for the first quarter of 2015. Non-GAAP operating expenses,
which exclude stock-based compensation and depreciation expense,
were $24.0 million for the first quarter of 2016, compared to $10.7
million for the first quarter of 2015.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the first quarter
of 2016 were $13.9 million, compared to $8.6 million for the first
quarter of 2015. The increase was primarily a result of clinical
expenses for OTO-104 related to the AVERTS-1 and AVERTS-2 trials,
increased personnel costs, including stock-based compensation
expense, and clinical expenses for OTIPRIO due to the initiation of
an open-label Phase 3b clinical trial in late 2015. R&D-related
stock-based compensation expense was $0.6 million for the first
quarter of 2016, compared to $0.5 million for the first quarter of
2015.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
first quarter of 2016 were $13.0 million, compared to $3.5 million
for the first quarter of 2015. The increase was primarily
attributable to increased personnel costs, including stock-based
compensation expense, expanded operating activities and costs
related to the commercial launch of OTIPRIO. SG&A-related
stock-based compensation expense was $2.1 million for the first
quarter of 2016, compared to $0.8 million for the first quarter of
2015.
- Financial Guidance: Otonomy’s development plan
for 2016 has been expanded to include initiation and completion of
a single Phase 3 registration trial for OTIPRIO in acute otitis
externa and initiation of a Phase 2 trial for OTO-104 in
cisplatin-induced hearing loss. The company expects that non-GAAP
operating expenses for 2016 will total $100-$105 million versus the
previous guidance totaling $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 and depreciation 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. It is not
feasible to provide GAAP operating expense guidance since
stock-based compensation expense is a significant component of GAAP
operating expenses and stock-based compensation expense is
difficult to predict and estimate due to its dependence on
Otonomy’s future stock price. A reconciliation of the GAAP
financial results to non-GAAP financial results is included in the
attached financial information.
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, and
commercial launch commenced in March 2016. OTO-104 is a steroid in
development for the treatment of Ménière's disease and other severe
balance and hearing disorders. Two Phase 3 trials in Ménière's
disease patients are underway, with results expected during the
second half of 2017. OTO-311 is an NMDA receptor antagonist for the
treatment of tinnitus that is in a Phase 1 clinical safety trial.
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 future financial or operating performance of Otonomy.
Forward-looking statements in this press release include, but are
not limited to, the statements regarding a C code and J Code, the
timing of initiation, completion and results of the OTIPRIO Phase 3
clinical trial for acute otitis externa, the timing of the
submission of the sNDA to the FDA for OTIPRIO for acute otitis
externa, enrollment in the Phase 3 trial for Ménière’s disease, the
timing of initiation of the OTO-104 Phase 2 clinical trial for
cisplatin-induced hearing loss, the Phase 1 clinical safety trial
of OTO-311 for treatment of tinnitus, the completion and timing of
results of the OTIPRIO Phase 2 clinical trial for AOMT, and
financial guidance for 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 additional financing; Otonomy's
dependence on the commercial success of OTIPRIO and the regulatory
success and advancement of additional product candidates, such as
OTO-104 and 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, 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; 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 Quarterly
Report on Form 10-Q filed with the Securities and Exchange
Commission (the "SEC") on May 9, 2016, 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, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
244,285 |
|
|
$ |
158,664 |
|
|
|
|
|
|
Short-term
investments |
|
|
21,730 |
|
|
|
26,172 |
|
|
|
|
|
|
Total assets |
|
|
275,462 |
|
|
|
193,030 |
|
|
|
|
|
|
Total liabilities |
|
|
10,210 |
|
|
|
11,496 |
|
|
|
|
|
|
Accumulated
deficit |
|
|
(190,900 |
) |
|
|
(164,137 |
) |
|
|
|
|
|
Total stockholders'
equity |
|
|
265,252 |
|
|
|
181,534 |
|
Otonomy, Inc. |
Condensed Statements of
Operations |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
(unaudited) |
|
|
|
|
|
Product
sales, net |
$ |
13 |
|
|
$ |
- |
|
Operating
expenses: |
|
|
|
|
Cost of product
sales |
|
9 |
|
|
|
- |
|
|
Research and
development |
|
13,872 |
|
|
|
8,607 |
|
|
Selling, general and
administrative |
|
12,995 |
|
|
|
3,501 |
|
Total
operating expenses |
|
26,876 |
|
|
|
12,108 |
|
Loss from
operations |
|
(26,863 |
) |
|
|
(12,108 |
) |
|
|
|
|
|
Other
income (expense) |
|
100 |
|
|
|
91 |
|
Net loss
and comprehensive loss |
$ |
(26,763 |
) |
|
$ |
(12,017 |
) |
|
|
|
|
|
Net loss
per share, basic and diluted |
$ |
(0.91 |
) |
|
$ |
(0.52 |
) |
|
|
|
|
|
Weighted-average shares used to compute net loss per share, |
|
|
|
|
basic and diluted |
|
29,328,804 |
|
|
|
23,196,011 |
|
Otonomy, Inc. |
Reconciliation of GAAP to Non-GAAP Financial
Information |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
(unaudited) |
Reconciliation of GAAP to non-GAAP operating
expenses |
|
|
|
GAAP
operating expenses |
$ |
26,876 |
|
|
$ |
12,108 |
|
Non-GAAP
adjustments |
|
|
|
|
R&D stock-based
compensation expense |
|
(647 |
) |
|
|
(552 |
) |
|
SG&A stock-based
compensation expense |
|
(2,089 |
) |
|
|
(791 |
) |
|
Depreciation
expense |
|
(152 |
) |
|
|
(60 |
) |
Total
non-GAAP adjustments |
|
(2,888 |
) |
|
|
(1,403 |
) |
Non-GAAP
operating expenses |
$ |
23,988 |
|
|
$ |
10,705 |
|
|
|
|
|
|
Reconciliation of GAAP to non-GAAP net loss |
|
|
|
GAAP net
loss |
$ |
(26,763 |
) |
|
$ |
(12,017 |
) |
Non-GAAP
adjustments |
|
2,888 |
|
|
|
1,403 |
|
Non-GAAP
net loss |
$ |
(23,875 |
) |
|
$ |
(10,614 |
) |
|
|
|
|
|
Reconciliation of GAAP to non-GAAP net loss per
share |
|
|
|
GAAP net
loss per share, basic and diluted |
$ |
(0.91 |
) |
|
$ |
(0.52 |
) |
Non-GAAP
adjustments |
|
0.10 |
|
|
|
0.06 |
|
Non-GAAP
net loss per share, basic and diluted |
$ |
(0.81 |
) |
|
$ |
(0.46 |
) |
|
|
|
|
|
Weighted-average shares used to compute net loss per share, |
|
|
|
|
basic and diluted |
|
29,328,804 |
|
|
|
23,196,011 |
|
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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