Otonomy Reports Third Quarter 2019 Financial Results and Provides Corporate Update
November 05 2019 - 4:13PM
Otonomy, Inc. (Nasdaq: OTIC), a biopharmaceutical company
dedicated to the development of innovative therapeutics for
neurotology, today reported financial results for the quarter ended
September 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. ET to discuss recent highlights and
financial results.
“We made significant progress in the third quarter toward our
goal of reporting results from three clinical trials in 2020: we
advanced enrollment in the Phase 3 trial of OTIVIDEX in Ménière’s
disease; we successfully completed the initial safety cohort and
initiated enrollment in the exploratory efficacy cohort in the
Phase 1/2 trial of OTO-313 in tinnitus patients; and we received
FDA clearance to initiate the Phase 1/2 trial of OTO-413 in
patients with hearing loss, an important milestone for this
innovative program,” said David A. Weber, Ph.D., president and CEO
of Otonomy. “While successful completion of these clinical trials
is our highest priority, we also continue to advance multiple
preclinical programs including the recently announced gene therapy
collaboration targeting congenital hearing loss. Importantly, we
are effectively managing our spending in order to enable our
existing capital to fund operations through the three clinical
trial readouts next year and into 2021. To this point, we are
reducing our operating expense estimate for 2019.”
Product Pipeline Update
- OTIVIDEX: Enrollment in Phase 3 Clinical Trial
in Ménière’s Disease is Ongoing with Results Expected in
the Third Quarter 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 Second Quarter of
2020. Otonomy has successfully completed
the initial safety cohort of this randomized, double-blind,
placebo-controlled trial, and has initiated enrollment of
approximately 50 patients with persistent tinnitus in the
exploratory efficacy study cohort. OTO-313 is a sustained-exposure
formulation of the potent and selective NMDA receptor antagonist
gacyclidine.
- OTO-413: Enrollment in Phase 1/2 Clinical
Trial in Hearing Loss is Ongoing with Results
Expected in the Second Half of 2020. Otonomy has initiated
a Phase 1/2 clinical trial of OTO-413, which is a
sustained-exposure formulation of brain-derived neurotrophic factor
(BDNF) in development for hearing loss. The Phase 1/2 trial is a
randomized, double-blind, placebo-controlled, single ascending dose
study designed to evaluate the safety and exploratory efficacy of
OTO-413 in patients with speech-in-noise hearing difficulty.
- Announced Strategic Collaboration to Develop and
Commercialize Gene Therapy for Congenital Hearing Loss: In
October, Otonomy and Applied Genetic Technologies Corporation
(AGTC) announced that they had entered into a strategic
collaboration to co-develop and co-commercialize an AAV-based gene
therapy to restore hearing in patients with sensorineural hearing
loss caused by a mutation in the gap junction protein beta 2 gene
(GJB2) -- the most common cause of congenital hearing loss.
Anticipated Upcoming Milestones
- Report results from the OTO-313 Phase 1/2 tinnitus trial in the
second quarter of 2020.
- Report results from the OTIVIDEX Phase 3 Ménière’s disease
trial in the third quarter of 2020.
- Report results from the OTO-413 Phase 1/2 hearing loss trial in
the second half of 2020.
Third Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $68.2 million as of September 30,
2019, compared to $97.3 million as of December 31, 2018.
- Operating Expenses: GAAP operating expenses
were $10.0 million for the third quarter of 2019, compared to $13.0
million for the third quarter of 2018. Non-GAAP operating expenses,
which exclude stock-based compensation, were $8.3 million for the
third quarter of 2019, compared to $10.1 million for the third
quarter of 2018.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the third quarter
of 2019 were $8.1 million, compared to $8.3 million for the third
quarter of 2018. A slight net decrease in expenses for this quarter
compared to a year ago resulted from a decrease in OTO-413
nonclinical and manufacturing activities partially offset by an
increase in expenses for the OTO-313 and OTO-413 clinical trials.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
third quarter of 2019 were $1.9 million, compared to $4.7 million
for the third 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 is revising
its financial guidance for 2019 to reflect reduced operating
expenses for the year. GAAP operating expenses are expected to be
in the range of $50-$55 million, a decrease from previous guidance
of $55-$60 million. Non-GAAP operating expenses are expected to be
in the range of $40-$45 million, compared to the previous estimate
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. ET/1:30 p.m. PT 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: 6045449. 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 expectations 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; timing of 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
advancement of preclinical programs; the potential benefits of and
activity under the collaboration agreement between AGTC and
Otonomy, including but not limited to development and
commercialization activity; 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 collaboration agreement between
AGTC and Otonomy; 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 therapy
benefits, 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 November 5, 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 ICRRobert H. UhlManaging
Director858.356.5932robert.uhl@westwicke.com
|
Otonomy, Inc. |
Condensed Balance Sheet Data |
(in thousands) |
|
|
|
|
|
|
|
As of September 30, |
|
|
As of December 31, |
|
|
2019 |
|
|
2018 |
|
|
(unaudited) |
|
|
|
|
Cash and cash equivalents |
$ |
16,257 |
|
|
$ |
33,633 |
|
Short-term investments |
51,897 |
|
|
63,651 |
|
Right-of-use assets |
15,792 |
|
|
— |
|
Total assets |
92,008 |
|
|
104,992 |
|
Long-term debt, net |
14,917 |
|
|
14,764 |
|
Leases, net of current |
15,673 |
|
|
— |
|
Total liabilities |
41,388 |
|
|
25,255 |
|
Accumulated deficit |
(448,968 |
) |
|
(415,218 |
) |
Total stockholders’
equity |
50,620 |
|
|
79,737 |
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Condensed Statements of Operations |
(in thousands, except share and per share
data) |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
September 30, |
|
|
September 30, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
(unaudited) |
Product sales, net |
$ |
125 |
|
|
$ |
113 |
|
|
$ |
507 |
|
|
$ |
537 |
|
Costs and operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales |
220 |
|
|
162 |
|
|
636 |
|
|
675 |
|
Research and development |
8,057 |
|
|
8,300 |
|
|
25,771 |
|
|
22,175 |
|
Selling, general and administrative |
1,903 |
|
|
4,652 |
|
|
8,065 |
|
|
16,428 |
|
Total costs and operating
expenses |
10,180 |
|
|
13,114 |
|
|
34,472 |
|
|
39,278 |
|
Loss from operations |
(10,055 |
) |
|
(13,001 |
) |
|
(33,965 |
) |
|
(38,741 |
) |
Other income, net |
16 |
|
|
455 |
|
|
215 |
|
|
1,218 |
|
Net loss |
$ |
(10,039 |
) |
|
$ |
(12,546 |
) |
|
$ |
(33,750 |
) |
|
$ |
(37,523 |
) |
Net loss per share, basic and
diluted |
$ |
(0.33 |
) |
|
$ |
(0.41 |
) |
|
$ |
(1.10 |
) |
|
$ |
(1.23 |
) |
Weighted-average shares used
to compute net loss per share, |
|
|
|
|
|
|
|
|
|
|
|
basic and diluted |
30,748,995 |
|
|
30,630,125 |
|
|
30,712,839 |
|
|
30,597,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in thousands) |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
September 30, |
|
|
September 30, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
(unaudited) |
GAAP operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Research and development |
$ |
8,057 |
|
|
$ |
8,300 |
|
|
$ |
25,771 |
|
|
$ |
22,175 |
|
Selling, general and administrative |
1,903 |
|
|
4,652 |
|
|
8,065 |
|
|
16,428 |
|
Total GAAP operating
expenses |
9,960 |
|
|
12,952 |
|
|
33,836 |
|
|
38,603 |
|
Non-GAAP adjustments |
|
|
|
|
|
|
|
|
|
|
|
R&D stock-based compensation expense |
(1,037 |
) |
|
(1,037 |
) |
|
(2,268 |
) |
|
(3,372 |
) |
SG&A stock-based compensation expense |
(651 |
) |
|
(1,770 |
) |
|
(2,165 |
) |
|
(6,580 |
) |
Total non-GAAP
adjustments |
(1,688 |
) |
|
(2,807 |
) |
|
(4,433 |
) |
|
(9,952 |
) |
Non-GAAP operating
expenses |
$ |
8,272 |
|
|
$ |
10,145 |
|
|
$ |
29,403 |
|
|
$ |
28,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of 2019 GAAP to Non-GAAP Operating Expense
Guidance |
(in millions) |
|
|
|
|
GAAP operating expenses |
$50 - $55 |
Non-GAAP adjustments |
|
Stock-based compensation expense |
$10 |
Non-GAAP operating
expenses |
$40 - $45 |
|
|
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