Otonomy Reports First Quarter 2018 Financial Results and Provides Corporate Update
May 09 2018 - 4:20PM
Otonomy, Inc. (NASDAQ:OTIC), a biopharmaceutical company
dedicated to the development of innovative therapeutics for
otology, today reported financial results for the quarter ended
March 31, 2018 and provided an update on its corporate activities
and product pipeline.
First Quarter 2018 and Subsequent
Highlights
- Completed a Type C Meeting with FDA for
OTIVIDEX™ in Ménière’s
Disease: In March 2018, Otonomy completed a Type C meeting
with the U.S. Food and Drug Administration (FDA) that confirmed the
requirement for one additional successful pivotal trial to support
a submission for 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). This approval
significantly increases the potential market opportunity for
OTIPRIO with approximately 4 million episodes of AOE occurring each
year in the United States. 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 expects to initiate a Phase 1/2 clinical
trial 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.
- Developing OTO-313 for the Treatment of
Tinnitus: Gacyclidine is a potent and selective
N-Methyl-D-Aspartate (NMDA) receptor antagonist that has been
evaluated in a Phase 1 clinical safety trial, with no safety
concerns observed. The company expects to initiate a Phase 1/2
clinical trial for OTO-313, an improved formulation of gacyclidine,
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.
“We completed a productive first quarter by obtaining clarity
from FDA on the registration requirements for OTIVIDEX in Ménière’s
disease, receiving approval for OTIPRIO in acute otitis externa,
and advancing our multiple development programs for hearing loss
and tinnitus,” said David A. Weber, Ph.D., president and CEO of
Otonomy. “We are on track with our efforts to initiate the
remaining pivotal trial for OTIVIDEX and are making good progress
towards the completion of a partnering transaction for
OTIPRIO."
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 $110.2 million as of March 31, 2018,
compared to $120.0 million as of December 31, 2017.
- Revenue: Net sales of OTIPRIO totaled $0.3
million for the first quarter of 2018.
- Operating Expenses: GAAP operating expenses
were $11.8 million for the first quarter of 2018, compared to $27.3
million for the first quarter of 2017. Non-GAAP operating expenses,
which exclude stock-based compensation and rent abatement expense,
were $9.1 million for the first quarter of 2018, compared to $22.9
million for the first quarter of 2017.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the first quarter
of 2018 were $5.6 million, compared to $13.2 million for the first
quarter of 2017. The decrease was primarily a result of decreased
clinical trial activities for OTIPRIO and OTIVIDEX versus the prior
year period.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
first quarter of 2018 were $6.2 million, compared to $14.1 million
for the first quarter of 2017. The decrease was primarily a result
of reduced selling expenses due to the discontinuation of
promotional support for OTIPRIO.
- 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. 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: 3689458. 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 OtonomyOtonomy 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-313, timing of a Phase 1/2 clinical trial
for OTO-413, timing of candidate selection for OTO-5XX and OTO-6XX
programs, 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 Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission (the "SEC") on May 9, 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 March 31, |
|
As of December 31, |
|
2018 |
|
2017 |
|
(unaudited) |
|
|
Cash and cash
equivalents
|
$ |
23,217 |
|
|
$ |
18,456 |
|
|
|
|
|
Short-term
investments |
|
87,007 |
|
|
|
101,548 |
|
|
|
|
|
Total assets |
|
118,472 |
|
|
|
128,364 |
|
|
|
|
|
Total liabilities |
|
9,868 |
|
|
|
11,085 |
|
|
|
|
|
Accumulated
deficit |
|
(376,274 |
) |
|
|
(364,850 |
) |
|
|
|
|
Total stockholders'
equity |
|
108,604 |
|
|
|
117,279 |
|
Otonomy, Inc. |
Condensed Statements of
Operations |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2018 |
|
2017 |
|
|
|
(unaudited) |
|
Product
sales, net |
$ |
301 |
|
|
$ |
358 |
|
|
Costs and
operating expenses: |
|
|
|
|
|
Cost of product
sales |
|
272 |
|
|
|
463 |
|
|
|
Research and
development |
|
5,650 |
|
|
|
13,185 |
|
|
|
Selling, general and
administrative |
|
6,157 |
|
|
|
14,092 |
|
|
Total costs
and operating expenses |
|
12,079 |
|
|
|
27,740 |
|
|
Loss from
operations |
|
(11,778 |
) |
|
|
(27,382 |
) |
|
|
|
|
|
|
|
Interest
income |
|
354 |
|
|
|
304 |
|
|
Net
loss |
$ |
(11,424 |
) |
|
$ |
(27,078 |
) |
|
|
|
|
|
|
|
Net loss
per share, basic and diluted |
$ |
(0.37 |
) |
|
$ |
(0.89 |
) |
|
|
|
|
|
|
|
Weighted-average shares used to compute net loss per
share, basic and diluted |
|
30,568,531 |
|
|
|
30,256,825 |
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in thousands) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2018 |
|
2017 |
|
|
|
(unaudited) |
GAAP
operating expenses |
|
|
|
|
|
Research and
development |
$ |
5,650 |
|
|
$ |
13,185 |
|
|
|
Selling, general and
administrative |
|
6,157 |
|
|
|
14,092 |
|
|
Total GAAP
operating expenses |
|
11,807 |
|
|
|
27,277 |
|
|
Non-GAAP
adjustments |
|
|
|
|
|
R&D stock-based
compensation expense |
|
(637 |
) |
|
|
(985 |
) |
|
|
SG&A stock-based
compensation expense |
|
(2,072 |
) |
|
|
(2,735 |
) |
|
|
Rent abatement |
|
- |
|
|
|
(695 |
) |
|
Total
non-GAAP adjustments |
|
(2,709 |
) |
|
|
(4,415 |
) |
|
Non-GAAP
operating expenses |
$ |
9,098 |
|
|
$ |
22,862 |
|
|
|
|
|
|
|
|
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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