Otonomy Reports First Quarter 2019 Financial Results and Provides Corporate Update
May 06 2019 - 4:17PM
- OTO-313 Phase 1/2
trial in tinnitus initiated; results expected in
first half of 2020
- OTIPRIO® co-promotion agreement
completed with Glenmark Therapeutics
- OTIVIDEX™ Phase 3 trial
in Ménière’s disease on track for results in first half of
2020
- OTO-413 Phase 1/2 trial in hearing
loss expected to start in third quarter of 2019; results expected
in second half of 2020
- Current capital funds operations into
2021
Conference call and webcast today at 4:30
p.m. EDT
Otonomy, Inc. (NASDAQ: OTIC), a biopharmaceutical company
dedicated to the development of innovative therapeutics for
neurotology, today reported financial results for the quarter ended
March 31, 2019 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. EDT to discuss recent highlights and
financial results, and provide an overview of the OTO-313 program.
"This quarterly update highlights the continued execution of our
business strategy including the plan to report clinical results
from three trials in 2020 -- the Phase 3 trial of OTIVIDEX in
Ménière’s disease, the Phase 1/2 clinical trial of OTO-313 in
tinnitus and Phase 1/2 trial of OTO-413 in hearing loss," said
David A. Weber, Ph.D., president and CEO of Otonomy. “In addition,
our partnership with Glenmark complements the existing co-promotion
arrangement with Mission Pharmacal and ensures that we have broad
promotional support for OTIPRIO in the peak swimmer's ear season
this summer. We expect that these efforts will contribute to our
already strong balance sheet that will fund the company's
operations through the three clinical trial results next year and
into 2021."
Product Pipeline and Corporate Update
- Initiated Patient Enrollment for Phase 1/2 Clinical
Trial of OTO-313 in Tinnitus with Results Expected in the First
Half of 2020: In April, Otonomy initiated
enrollment of the first patients in a Phase 1/2 clinical trial for
OTO-313, a sustained-exposure formulation of the NMDA receptor
antagonist gacyclidine, in tinnitus patients. The randomized,
double-blind, placebo-controlled trial includes an initial safety
cohort, which has completed enrollment, followed by an exploratory
efficacy study that is initiating enrollment of approximately 50
patients with tinnitus.
- Completed OTIPRIO Co-Promotion Agreement with Glenmark
Therapeutics Inc., USA ("Glenmark"): In May, Otonomy
announced the signing of a co-promotion agreement that provides
Glenmark with an exclusive right to promote OTIPRIO for acute
otitis externa (AOE) to ear, nose and throat (ENT) physicians in
the United States. Otonomy will receive an annual co-promotion fee
and reimbursement of a proportion of product support expenses, and
retain a share of adjusted gross profits from the sale of OTIPRIO
to Glenmark's accounts.
- Enrollment in OTIVIDEX Phase 3 Clinical Trial
in Ménière’s Disease is Ongoing with Results Expected in
the First Half of 2020: Otonomy has completed one
successful Phase 3 trial and is conducting this additional pivotal
trial to support a submission for U.S. registration of OTIVIDEX in
Ménière’s disease. The company plans to enroll approximately 160
patients in the United States and Europe.
- Conducting IND-Enabling Activities to Support
Initiation of a Phase 1/2 trial for OTO-413 in
Hearing Loss Patients in the Third Quarter of 2019:
OTO-413 is a sustained-exposure formulation of brain-derived
neurotrophic factor (BDNF) in development for the repair of
cochlear synaptopathy, an underlying cause of hearing loss. Otonomy
is conducting nonclinical testing and manufacturing activities to
support an Investigational New Drug Application Filing (IND) with
the U.S. Food and Drug Administration (FDA). The Phase 1/2 trial
will enroll approximately 40 patients with speech-in-noise hearing
loss. Results are expected in the second half of 2020.
Anticipated Upcoming Milestones
- In third quarter of 2019, initiate a Phase 1/2 clinical trial
of OTO-413 in hearing loss patients.
- In first half of 2020, complete OTO-313 Phase 1/2 clinical
trial.
- In first half of 2020, complete Phase 3 trial for OTIVIDEX in
Ménière’s disease.
- In second half of 2020, complete OTO-413 Phase 1/2 clinical
trial.
First Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $86.9 million as of March 31, 2019,
compared to $97.3 million as of December 31, 2018.
- Operating Expenses: GAAP operating expenses
were $12.1 million for the first quarter of 2019, compared to $11.8
million for the first quarter of 2018. Non-GAAP operating expenses,
which exclude stock-based compensation, were $10.6 million for the
first quarter of 2019, compared to $9.1 million for the first
quarter of 2018.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the first quarter
of 2019 were $8.8 million, compared to $5.6 million for the first
quarter of 2018. The increase was primarily due to expenses related
to the OTIVIDEX Phase 3 clinical trial and increased costs for
nonclinical and manufacturing activities to support initiation of
clinical trials for OTO-313 and OTO-413.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
first quarter of 2019 were $3.3 million, compared to $6.2 million
for the first quarter of 2018. The decrease was primarily a result
of reduced selling expenses due to the discontinuation of
promotional support for OTIPRIO.
- Operating Expense Guidance:
- 2019: Otonomy expects that GAAP operating
expenses will be in the range of $55-$60 million, and that non-GAAP
operating expenses will be in the range of $45-$50 million.
- 2020: Otonomy expects that operating expenses
will be lower than 2019 as multiple clinical trials are
completed.
- Cash Runway: Otonomy expects that its current
cash, cash equivalents, and short term investments will be
sufficient to fund the company through completion of the OTIVIDEX
Phase 3 trial, OTO-313 Phase 1/2 trial, and OTO-413 Phase 1/2 trial
in 2020, and will support company operations into 2021.
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: 8076448. 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. 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
neurotology. 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, timing of results, patient recruitment and
enrollment plans for, and design and conduct of, the Phase 3
clinical trial for OTIVIDEX; timing of results, patient recruitment
and enrollment plans for, and design and conduct of, the
Phase 1/2 clinical trial for OTO-313; expectations regarding
IND-enabling activities to support, timing of initiation and
results, patient recruitment and enrollment plans for, and design
and conduct of, the Phase 1/2 clinical trial for OTO-413; the
activity under, and potential benefits of, the co-promotion
agreements between Otonomy and Mission and between Otonomy and
Glenmark; expectations regarding the timing and nature of upcoming
milestones; expectations regarding operating expenses for 2019 and
2020; expectations that current capital is sufficient to fund the
company through completion of the OTIVIDEX Phase 3 trial, OTO-313
Phase 1/2 trial, and OTO 413 Phase 1/2 trial, and will support
company operations into 2021; 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 accurately forecast financial results; 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; the risks of the
occurrence of any event, change or other circumstance that could
give rise to the termination of the co-promotion agreement between
Otonomy and Mission and/or the co-promotion agreement between
Otonomy and Glenmark; the risks of the occurrence of any event,
change or other circumstance that could impact Otonomy’s ability to
repay or comply with the terms of the loan provided by Oxford
Finance LLC; 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 6, 2019, 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 InquiriesSpectrum ScienceLeticia DiazVice President
202.587.2517ldiaz@spectrumscience.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, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
Cash and cash
equivalents |
|
$ |
16,276 |
|
|
$ |
33,633 |
|
|
Short-term
investments |
|
|
70,671 |
|
|
|
63,651 |
|
|
Right-of-use
assets |
|
|
16,421 |
|
|
|
— |
|
|
Total assets |
|
|
110,287 |
|
|
|
104,992 |
|
|
Long-term debt,
net |
|
|
14,822 |
|
|
|
14,764 |
|
|
Leases, net of
current |
|
|
16,359 |
|
|
|
— |
|
|
Total liabilities |
|
|
40,998 |
|
|
|
25,255 |
|
|
Accumulated
deficit |
|
|
(427,202 |
) |
|
|
(415,218 |
) |
|
Total stockholders'
equity |
|
|
69,289 |
|
|
|
79,737 |
|
|
|
|
|
|
|
Otonomy, Inc. |
Condensed Statements of
Operations |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
Product sales, net |
|
$ |
192 |
|
|
$ |
301 |
|
|
Costs and operating
expenses: |
|
|
|
|
|
Cost of
product sales |
|
|
213 |
|
|
|
272 |
|
|
Research
and development |
|
|
8,795 |
|
|
|
5,650 |
|
|
Selling,
general and administrative |
|
|
3,278 |
|
|
|
6,157 |
|
|
Total costs and
operating expenses |
|
|
12,286 |
|
|
|
12,079 |
|
|
Loss from
operations |
|
|
(12,094 |
) |
|
|
(11,778 |
) |
|
Other income, net |
|
|
110 |
|
|
|
354 |
|
|
Net loss |
|
$ |
(11,984 |
) |
|
$ |
(11,424 |
) |
|
Net loss per share,
basic and diluted |
|
$ |
(0.39 |
) |
|
$ |
(0.37 |
) |
|
Weighted-average shares
used to compute net loss per share, |
|
|
|
|
|
basic and
diluted |
|
|
30,685,412 |
|
|
|
30,568,531 |
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
GAAP operating
expenses |
|
|
|
|
|
Research
and development |
|
$ |
8,795 |
|
|
$ |
5,650 |
|
|
Selling,
general and administrative |
|
|
3,278 |
|
|
|
6,157 |
|
|
Total GAAP operating
expenses |
|
|
12,073 |
|
|
|
11,807 |
|
|
Non-GAAP
adjustments |
|
|
|
|
|
R&D
stock-based compensation expense |
|
|
(659 |
) |
|
|
(637 |
) |
|
SG&A
stock-based compensation expense |
|
|
(834 |
) |
|
|
(2,072 |
) |
|
Total non-GAAP
adjustments |
|
|
(1,493 |
) |
|
|
(2,709 |
) |
|
Non-GAAP operating
expenses |
|
$ |
10,580 |
|
|
$ |
9,098 |
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of 2019 GAAP to Non-GAAP
Operating Expense Guidance |
(in millions) |
|
|
|
|
|
|
|
GAAP operating
expenses |
$55 - $60 |
|
Non-GAAP
adjustments |
|
|
Stock-based compensation expense |
$ 10 |
|
Non-GAAP operating
expenses |
$45 - $50 |
|
|
|
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