Otonomy Reports Second Quarter 2019 Financial Results and Provides Corporate Update
August 01 2019 - 4:20PM
Otonomy, Inc. (NASDAQ: OTIC), a biopharmaceutical company
dedicated to the development of innovative therapeutics for
neurotology, today reported financial results for the quarter ended
June 30, 2019 and provided an update on its product pipeline and
corporate activities. The company will host a conference call and
webcast today at 4:30 p.m. EDT to discuss recent highlights and
financial results.
"We are on track in executing our business plan and focused on
reporting 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 the Phase 1/2 trial of OTO-413 in
hearing loss," said David A. Weber, Ph.D., president and CEO of
Otonomy. “We are also tracking to our financial plan and guidance
that will enable our existing capital to fund operations through
these three clinical trial results next year and into 2021."
Product Pipeline Update
- OTIVIDEX™: Enrollment in 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.
- OTO-313: Enrollment in Phase 1/2 Clinical Trial in
Tinnitus is Ongoing 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 included an initial safety
cohort, which has been successfully completed, followed by an
exploratory efficacy study that is currently enrolling
approximately 50 patients with tinnitus.
- OTO-413: Preparing to Initiate a Phase 1/2 Clinical
Trial 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 preparing to initiate a Phase 1/2
clinical trial in the third quarter of 2019 that will enroll
approximately 40 patients with speech-in-noise hearing loss.
"Additionally, I would like to take this opportunity to express
my best wishes to Dr. Kathie Bishop, chief scientific officer, who
has resigned in order to join a former colleague in an early-stage
venture," said Dr. Weber. "We appreciate the support that Kathie
provided during the last two years as we positioned the company for
our upcoming clinical milestones and look forward to her continued
involvement as a scientific advisor."
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.
Second Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $78.5 million as of June 30, 2019,
compared to $97.3 million as of December 31, 2018.
- Operating Expenses: GAAP operating expenses
were $11.8 million for the second quarter of 2019, compared to
$13.8 million for the second quarter of 2018. Non-GAAP operating
expenses, which exclude stock-based compensation, were $10.6
million for the second quarter of 2019, compared to $9.4 million
for the second quarter of 2018.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the second quarter
of 2019 were $8.9 million, compared to $8.2 million for the second
quarter of 2018. A slight net increase in expenses for this quarter
compared to a year ago resulted from an increase in expenses for
the OTIVIDEX and OTO-313 clinical trials and OTO-413 nonclinical
and manufacturing activities that were partially offset by a
decrease in stock-based compensation.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
second quarter of 2019 were $2.9 million, compared to $5.6 million
for the second quarter of 2018. The decrease this quarter was
primarily a result of reduced stock-based compensation expense
together with OTIPRIO cost reimbursement received from our OTIPRIO
co-promotion partners.
- Financial Guidance:
- 2019 Operating Expenses: 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 Operating Expenses: 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: 6634946. 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, and comments regarding submission for
U.S. registration; 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 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; expectations regarding the status, 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
co-promotion agreements; 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 August 1, 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 June 30, |
|
As of December 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
(unaudited) |
|
|
|
Cash and cash equivalents |
|
$ |
12,142 |
|
|
$ |
33,633 |
|
|
Short-term investments |
|
|
66,309 |
|
|
|
63,651 |
|
|
Right-of-use assets |
|
|
16,111 |
|
|
|
— |
|
|
Total assets |
|
|
100,815 |
|
|
|
104,992 |
|
|
Long-term debt, net |
|
|
14,869 |
|
|
|
14,764 |
|
|
Leases, net of current |
|
|
16,020 |
|
|
|
— |
|
|
Total liabilities |
|
|
41,821 |
|
|
|
25,255 |
|
|
Accumulated deficit |
|
|
(438,929 |
) |
|
|
(415,218 |
) |
|
Total stockholders’
equity |
|
|
58,994 |
|
|
|
79,737 |
|
|
|
|
|
|
|
|
Otonomy, Inc. |
|
Condensed Statements of
Operations |
|
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
(unaudited) |
|
Product sales, net |
|
$ |
190 |
|
|
$ |
123 |
|
|
$ |
382 |
|
|
$ |
424 |
|
|
Costs and operating
expenses: |
|
|
|
|
|
|
|
|
|
Cost of product sales |
|
|
203 |
|
|
|
241 |
|
|
|
416 |
|
|
|
513 |
|
|
Research and development |
|
|
8,919 |
|
|
|
8,225 |
|
|
|
17,714 |
|
|
|
13,875 |
|
|
Selling, general and administrative |
|
|
2,884 |
|
|
|
5,619 |
|
|
|
6,162 |
|
|
|
11,776 |
|
|
Total costs and operating
expenses |
|
|
12,006 |
|
|
|
14,085 |
|
|
|
24,292 |
|
|
|
26,164 |
|
|
Loss from operations |
|
|
(11,816 |
) |
|
|
(13,962 |
) |
|
|
(23,910 |
) |
|
|
(25,740 |
) |
|
Other income, net |
|
|
89 |
|
|
|
409 |
|
|
|
199 |
|
|
|
763 |
|
|
Net loss |
|
$ |
(11,727 |
) |
|
$ |
(13,553 |
) |
|
$ |
(23,711 |
) |
|
$ |
(24,977 |
) |
|
Net loss per share, basic and
diluted |
|
$ |
(0.38 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.77 |
) |
|
$ |
(0.82 |
) |
|
Weighted-average shares used
to compute net loss per share, |
|
|
|
|
|
|
|
|
|
basic and diluted |
|
|
30,703,411 |
|
|
|
30,594,288 |
|
|
|
30,694,461 |
|
|
|
30,581,481 |
|
|
|
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
|
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
(unaudited) |
|
GAAP operating expenses |
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
8,919 |
|
|
$ |
8,225 |
|
|
$ |
17,714 |
|
|
$ |
13,875 |
|
|
Selling, general and administrative |
|
|
2,884 |
|
|
|
5,619 |
|
|
|
6,162 |
|
|
|
11,776 |
|
|
Total GAAP operating
expenses |
|
|
11,803 |
|
|
|
13,844 |
|
|
|
23,876 |
|
|
|
25,651 |
|
|
Non-GAAP adjustments |
|
|
|
|
|
|
|
|
|
R&D stock-based compensation expense |
|
|
(572 |
) |
|
|
(1,698 |
) |
|
|
(1,231 |
) |
|
|
(2,335 |
) |
|
SG&A stock-based compensation expense |
|
|
(680 |
) |
|
|
(2,738 |
) |
|
|
(1,514 |
) |
|
|
(4,810 |
) |
|
Total non-GAAP
adjustments |
|
|
(1,252 |
) |
|
|
(4,436 |
) |
|
|
(2,745 |
) |
|
|
(7,145 |
) |
|
Non-GAAP operating
expenses |
|
$ |
10,551 |
|
|
$ |
9,408 |
|
|
$ |
21,131 |
|
|
$ |
18,506 |
|
|
|
|
|
|
|
|
|
|
|
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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