Otonomy Reports Fourth Quarter and Full Year 2017 Financial Results and Provides Corporate Update
March 08 2018 - 4:24PM
Type C meeting completed with FDA for
OTIVIDEX™ in Ménière’s disease
Otonomy, Inc. (NASDAQ:OTIC), a biopharmaceutical company
dedicated to the development of innovative therapeutics for
otology, today reported financial results for the fourth quarter
and year ended December 31, 2017 and provided an update on its
corporate activities and product pipeline. The company will host a
conference call and webcast today at 4:30 p.m. EST to discuss
recent highlights and financial results.
Fourth Quarter 2017 and Subsequent
Highlights
- Announced Positive Results for the AVERTS-2 Phase 3
Trial of OTIVIDEXä in Ménière’s
Disease and Completed a Type C Meeting with FDA: In
November 2017, Otonomy announced that the AVERTS-2 trial
achieved its primary endpoint, count of definitive vertigo days
(DVD) by Poisson Regression analysis in Month 3 (p value = 0.029),
based on analysis of all 174 patients enrolled in the trial.
Previously, the company announced that the AVERTS-1 trial missed
the primary endpoint (p value = 0.62). Otonomy recently completed a
Type C meeting with the U.S. Food and Drug Administration (FDA)
that included a review of the AVERTS and other clinical trial
results. Based on FDA feedback, and consistent with the company's
prior guidance, we believe that one additional successful pivotal
trial is sufficient to support the U.S. registration of OTIVIDEX in
Ménière’s disease. Otonomy expects to initiate this trial in
mid-2018.
- Obtained FDA Approval of
OTIPRIO® for the Treatment of
Acute Otitis Externa: In March 2018, the
FDA approved OTIPRIO (ciprofloxacin otic suspension) for the
treatment of patients with acute otitis externa (AOE). Approval of
the Supplemental New Drug Application (sNDA) significantly
increases the potential market opportunity for OTIPRIO with
approximately 4 million episodes of AOE occurring each year in the
United States. In November 2017, the company announced the
discontinuation of promotional support for OTIPRIO in order to
significantly reduce operating expenses related to the product.
OTIPRIO continues to be available for purchase by customers while
Otonomy evaluates commercial partnering options for the product
including divestiture.
- Advancing Multiple Programs for Sensorineural Hearing
Loss: In January 2018, Otonomy announced the advancement
of three distinct programs for hearing loss that address different
pathologies and broad patient populations. OTO-413 is a sustained
exposure formulation of brain-derived neurotrophic factor (BDNF) in
development for the repair of cochlear synaptopathy and the
treatment of speech-in-noise hearing difficulties. The company has
initiated nonclinical studies and manufacturing for OTO-413 to
support an Investigational New Drug (IND) application, with a Phase
1/2 clinical trial expected to begin in hearing loss patients in
the first half of 2019. OTO-5XX is an otoprotectant in development
for the prevention of cisplatin-induced hearing loss. OTO-6XX
induces hair cell regeneration and is being developed for the
treatment of severe hearing loss. The company expects to select a
candidate for clinical development for both the OTO-5XX and OTO-6XX
programs in the second half of 2018.
- Developing OTO-313, an Improved Formulation of
Gacyclidine, for the Treatment of Tinnitus: Gacyclidine is
a potent and selective N-Methyl-D-Aspartate (NMDA) receptor
antagonist, a molecular class with potential for treating tinnitus
based on both nonclinical and clinical studies. A Phase 1 clinical
safety trial has been successfully completed using OTO-311, a
poloxamer-based formulation of gacyclidine, with no safety concerns
observed. Otonomy has shifted development to OTO-313, an
alternative formulation of gacyclidine that has improved properties
compared to OTO-311. The company expects to initiate a Phase 1/2
clinical trial for OTO-313 in tinnitus patients in the first half
of 2019.
- Presented Data for Hearing Loss and Tinnitus Programs
at International Otology Research Conference: In February
2018, company scientists and research collaborators delivered
multiple data presentations at the Association for Research in
Otolaryngology (ARO) Annual MidWinter Meeting. These presentations
included data supporting the therapeutic potential of OTO-413 for
the repair of cochlear synaptopathy. In addition, David A. Weber,
Ph.D., president and CEO of Otonomy, delivered an invited
presentation during the conference's Presidential Symposium.
“The fourth quarter of 2017 was a transformational period for
Otonomy as we repositioned the company to focus on advancing our
broad pipeline of development programs including OTIVIDEX for
Ménière’s disease, OTO-313 for tinnitus, and multiple programs for
hearing loss,” said Dr. Weber. “Furthermore, our recent positive
regulatory updates position us for a very productive year ahead.
Approval of OTIPRIO for AOE is an important accomplishment that
will support our ongoing commercial partnering discussions, and the
recent FDA feedback on OTIVIDEX provides clarity on our path
forward for registration in Ménière’s disease."
Anticipated Upcoming Milestones
- Initiate Phase 3 clinical trial for OTIVIDEX in Ménière’s
disease in mid-2018.
- Complete commercial partnership or divestiture of OTIPRIO in
mid-2018.
- In second half of 2018, select a candidate for clinical
development for both OTO-5XX and OTO-6XX hearing loss
programs.
- In first half of 2019, initiate a Phase 1/2 clinical trial of
OTO-313 in tinnitus patients.
- In first half of 2019, initiate a Phase 1/2 clinical trial of
OTO-413 in hearing loss patients.
Fourth Quarter and Full Year 2017 Financial
Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $120.0 million as of December 31,
2017, compared to $196.4 million as of December 31, 2016.
- Revenue: Net sales of OTIPRIO totaled $0.3
million for the fourth quarter of 2017 and the fourth quarter of
2016. For the full year 2017, net sales totaled $1.2 million
compared to $0.7 million for 2016. Despite the discontinuation of
promotional support in the fourth quarter of 2017, OTIPRIO monthly
shipments for the first two months of 2018 have continued at
approximately the same monthly level as during the prior two
quarters.
- Operating Expenses: GAAP operating expenses
were $17.5 million for the fourth quarter of 2017, compared to
$26.2 million for the fourth quarter of 2016. For the full year
2017, GAAP operating expenses were $89.5 million compared to $110.5
million for 2016. Non-GAAP operating expenses, which exclude
stock-based compensation and rent abatement expense, were $14.3
million for the fourth quarter of 2017, compared to $22.7 million
for the fourth quarter of 2016. For the full year 2017, non-GAAP
operating expenses were $73.8 million compared to $97.7 million for
2016.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the fourth quarter
of 2017 were $6.0 million, compared to $14.2 million for the fourth
quarter of 2016. The decrease was primarily a result of decreased
clinical trial activities for OTIPRIO and OTIVIDEX versus the prior
year period. For the full year 2017, GAAP R&D expenses were
$42.7 million compared to $60.7 million for 2016.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
fourth quarter of 2017 were $11.5 million, compared to $12.0
million for the fourth quarter of 2016. For the full year 2017,
GAAP SG&A expenses were $46.8 million compared to $49.8 million
for 2016.
- Financial Guidance: Otonomy reaffirms its
expectations that GAAP operating expenses for 2018 will be in the
range of $52-$57 million, and that non-GAAP operating expenses for
2018 will be in the range of $40-$45 million.
Webcast and Conference Call
Otonomy management will host a webcast and conference call
regarding this announcement at 4:30 p.m. EST/1:30 p.m. PST 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: 1898244. 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 Otonomy
Otonomy is a biopharmaceutical company dedicated to the
development of innovative therapeutics for otology. The company
pioneered the application of drug delivery technology to the ear in
order to develop products that achieve sustained drug exposure from
a single local administration. This approach is covered by a broad
patent estate and is being utilized to develop a pipeline of
products addressing important unmet medical needs including
Ménière’s disease, hearing loss, and tinnitus. 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, the market size for OTIPRIO in AOE, the company’s
expectations regarding its commercial partnering options for
OTIPRIO, including divestiture and timing of any such transaction,
timing of a Phase 3 trial for OTIVIDEX, timing of a Phase 1/2
clinical trial for OTO-413, timing of candidate selection for
OTO-5XX and OTO-6XX programs, timing of Phase 1/2 clinical trial
for OTO-313, financial guidance for 2018, and statements by
Otonomy’s president and CEO. 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 regulatory success and advancement of its product
candidates; 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; Otonomy's ability to successfully
commercialize its product candidates, if approved; competition in
the biopharmaceutical industry; Otonomy's dependence on third
parties to conduct nonclinical studies and clinical trials;
Otonomy's dependence on third parties for the manufacture of its
product candidates; Otonomy's dependence on a small number of
suppliers for raw materials; Otonomy's ability to protect its
intellectual property related to 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-K filed with the
Securities and Exchange Commission (the "SEC") on March 8, 2018,
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.
Contacts:
Media InquiriesCanale CommunicationsHeidi Chokeir, Ph.D.Senior
Vice President619.849.5377heidi@canalecomm.com
Investor InquiriesWestwicke PartnersRobert H. UhlManaging
Director858.356.5932robert.uhl@westwicke.com
|
|
|
Otonomy, Inc. |
|
Condensed Balance Sheet Data |
|
(in thousands) |
|
|
|
|
|
|
|
As of December 31, |
|
As of December 31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
18,456 |
|
|
$ |
24,156 |
|
|
|
|
|
|
|
Short-term
investments |
|
101,548 |
|
|
|
172,222 |
|
|
|
|
|
|
|
Total assets |
|
128,364 |
|
|
|
208,596 |
|
|
|
|
|
|
|
Total liabilities |
|
11,085 |
|
|
|
15,859 |
|
|
|
|
|
|
|
Accumulated
deficit |
|
(364,850 |
) |
|
|
(274,720 |
) |
|
|
|
|
|
|
Total stockholders'
equity |
|
117,279 |
|
|
|
192,737 |
|
|
|
|
|
|
Otonomy, Inc. |
Condensed Statements of
Operations |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
Product
sales, net |
$ |
270 |
|
|
$ |
273 |
|
|
$ |
1,236 |
|
|
$ |
683 |
|
Costs and
operating expenses: |
|
|
|
|
|
|
|
|
Cost of
product sales |
|
1,948 |
|
|
|
909 |
|
|
|
3,098 |
|
|
|
1,664 |
|
|
Research
and development |
|
6,041 |
|
|
|
14,165 |
|
|
|
42,701 |
|
|
|
60,723 |
|
|
Selling,
general and administrative |
|
11,451 |
|
|
|
12,052 |
|
|
|
46,838 |
|
|
|
49,777 |
|
Total costs
and operating expenses |
|
19,440 |
|
|
|
27,126 |
|
|
|
92,637 |
|
|
|
112,164 |
|
Loss from
operations |
|
(19,170 |
) |
|
|
(26,853 |
) |
|
|
(91,401 |
) |
|
|
(111,481 |
) |
|
|
|
|
|
|
|
|
|
Other
income |
|
337 |
|
|
|
281 |
|
|
|
1,271 |
|
|
|
898 |
|
Net
loss |
$ |
(18,833 |
) |
|
$ |
(26,572 |
) |
|
$ |
(90,130 |
) |
|
$ |
(110,583 |
) |
|
|
|
|
|
|
|
|
|
Net loss
per share, basic and diluted |
$ |
(0.62 |
) |
|
$ |
(0.88 |
) |
|
$ |
(2.97 |
) |
|
$ |
(3.69 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net loss per share, |
|
|
|
|
|
|
|
|
basic and diluted |
|
30,375,053 |
|
|
|
30,215,162 |
|
|
|
30,304,158 |
|
|
|
29,962,781 |
|
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
GAAP
operating expenses |
|
|
|
|
|
|
|
|
Research
and development |
$ |
6,041 |
|
|
$ |
14,165 |
|
|
$ |
42,701 |
|
|
$ |
60,723 |
|
|
Selling,
general and administrative |
|
11,451 |
|
|
|
12,052 |
|
|
|
46,838 |
|
|
|
49,777 |
|
Total GAAP
operating expenses |
|
17,492 |
|
|
|
26,217 |
|
|
|
89,539 |
|
|
|
110,500 |
|
Non-GAAP
adjustments |
|
|
|
|
|
|
|
|
R&D
stock-based compensation expense |
|
(597 |
) |
|
|
(781 |
) |
|
|
(3,763 |
) |
|
|
(2,996 |
) |
|
SG&A
stock-based compensation expense |
|
(2,592 |
) |
|
|
(2,540 |
) |
|
|
(9,878 |
) |
|
|
(9,574 |
) |
|
Rent
abatement |
|
- |
|
|
|
(232 |
) |
|
|
(2,084 |
) |
|
|
(232 |
) |
Total
non-GAAP adjustments |
|
(3,189 |
) |
|
|
(3,553 |
) |
|
|
(15,725 |
) |
|
|
(12,802 |
) |
Non-GAAP
operating expenses |
$ |
14,303 |
|
|
$ |
22,664 |
|
|
$ |
73,814 |
|
|
$ |
97,698 |
|
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of 2018 GAAP to Non-GAAP
Operating Expense Guidance |
(in millions) |
|
|
|
|
|
|
GAAP
operating expenses |
$52 - $57 |
Non-GAAP
adjustments |
|
|
Stock-based compensation expense |
12 |
Non-GAAP
operating expenses |
$40 - $45 |
|
|
|
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