Otonomy Reports Fourth Quarter and Full Year 2019 Financial Results and Provides Corporate Update
February 27 2020 - 4:15PM
Otonomy, Inc. (Nasdaq: OTIC), a biopharmaceutical company
dedicated to the development of innovative therapeutics for
neurotology, today reported financial results for the fourth
quarter and year ended December 31, 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 have positioned Otonomy for a transformational year in 2020
with three clinical trial readouts including the Phase 3 trial of
OTIVIDEX in Ménière’s disease, Phase 2 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
to these clinical-stage programs that address significant patient
populations with high disease burden and no FDA-approved drug
treatments, we are also advancing multiple preclinical programs
including a gene therapy collaboration targeting congenital hearing
loss. I am proud of the progress we have made across our pipeline,
which is the broadest in the emerging neurotology field, and look
forward to sharing updates during this catalyst rich year.”
Product Pipeline Update
- OTIVIDEX: Enrollment in Phase 3 Clinical Trial
in Ménière’s Disease is Ongoing with Results Expected by
the End of 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,
with the design and conduct of this trial based on the successful
AVERTS-2 trial. Responder rate results from the AVERTS-2 trial and
comparable patient population from the Phase 2b trial have recently
been provided. These results show good agreement between the trials
with almost 75% of patients experiencing at least a 50% reduction
in definitive vertigo days from baseline to Month 3 following a
single treatment with OTIVIDEX. Also, roughly 60% of patients had
at least a 75% reduction from baseline, and approximately 40% of
patients had no definitive vertigo days in Month 3. Furthermore,
OTIVIDEX consistently demonstrated clear separation from placebo
that was comparable across the two studies.
- OTO-313: Enrollment in Phase 1/2 Clinical Trial in
Tinnitus is Ongoing with Results Expected by the End of the Second
Quarter of 2020. OTO-313 is a
sustained-exposure formulation of the potent and selective NMDA
receptor antagonist gacyclidine. Otonomy has successfully completed
the initial safety cohort of this randomized, double-blind,
placebo-controlled trial, and is now enrolling patients in the
exploratory efficacy part of the study. For this cohort, we expect
to enroll up to 50 tinnitus patients who meet a narrow set of entry
criteria including that the tinnitus be persistent and at least a
moderate level of severity. A number of exploratory efficacy
endpoints will be assessed including the Tinnitus Functional Index,
which is a validated clinical instrument that measures tinnitus
severity and its impact on patients.
- OTO-413: Enrollment in Phase 1/2 Clinical
Trial in Hearing Loss is Ongoing with Results
Expected in the Second Half of 2020. Otonomy is enrolling
hearing loss patients in a Phase 1/2 clinical trial of OTO-413,
which is a sustained-exposure formulation of brain-derived
neurotrophic factor (BDNF). 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 up to 40 patients with speech-in-noise hearing difficulty.
Patients will receive a single intratympanic injection of OTO-413
or placebo and be followed for three months. A number of efficacy
endpoints will be evaluated including electro-physiological
measurements of hearing function and speech-in-noise hearing
tests.
- GJB2 Gene Therapy Program: Preclinical
Data Presented for Novel and Proprietary AAV Capsids.
Otonomy and Applied Genetic Technologies Corporation (AGTC) are
collaborating to co-develop and co-commercialize an AAV-based gene
therapy to restore hearing in patients with hearing loss caused by
a mutation in the gap junction beta 2 gene (GJB2) -- the most
common cause of congenital hearing loss. Preclinical results
presented at the Association for Research in Otolaryngology (ARO)
meeting in January demonstrated that a gene of interest can be
expressed in support cells of the cochlea, which are the relevant
target cells for treating GJB2 deficiency, using novel and
proprietary AAV capsids.
- OTO-510: Preclinical Data Presented for Novel and
Proprietary Class of Otoprotectant Agents. Cisplatin is a
potent chemotherapeutic agent that is widely used to treat a
variety of cancers in adults and children, however it is commonly
associated with severe adverse effects including cisplatin-induced
hearing loss (CIHL). At ARO, Otonomy presented preclinical results
demonstrating varying degrees of otoprotection against CIHL for
several classes of therapeutic agents. In particular, a novel class
of agents that potently binds to cisplatin demonstrated greater
otoprotection than anti-oxidant and anti-apoptotic molecules, and
increased potency relative to other cisplatin-binding molecules
currently in development.
- OTO-6XX: Preclinical Development
Ongoing for Regenerative Hearing Loss Program. Otonomy has
demonstrated regeneration of hair cells in a preclinical
proof-of-concept model using a class of small molecules formulated
for sustained-exposure local delivery, and has selected a lead
compound for development. The OTO-6XX program is targeting hair
cell regeneration for the treatment of severe hearing loss.
Anticipated Upcoming Milestones
- Report results from the OTO-313 Phase 2 tinnitus trial by the
end of the second quarter of 2020.
- Report results from the OTIVIDEX Phase 3 Ménière’s disease
trial by the end of the third quarter of 2020.
- Report results from the OTO-413 Phase 1/2 hearing loss trial in
the second half of 2020.
Board of Directors Updates
- Appointment of Ciara Kennedy, Ph.D. to Board of
Directors: Otonomy appointed Ciara Kennedy to the board of
directors and to the corporate governance and nominating committee
effective as of March 1, 2020. Dr. Kennedy currently serves as
president, chief executive officer, and a member of the board of
directors of Amplyx Pharmaceuticals, a clinical-stage company
developing innovative drug therapies for debilitating and
life-threatening diseases in patients with compromised immune
systems. Prior to Amplyx, she served as chief operating officer at
Lumena Pharmaceuticals, until the company’s acquisition by Shire
Pharmaceuticals, and then continued as vice president, head of
cholestatic liver disease at Shire post acquisition. Previously,
Dr. Kennedy held several positions at Cypress Bioscience where she
played a key role in the company’s FDA approval and launch of
Savella® for fibromyalgia, and also held several positions in
program and alliance management at Biogen Idec where she managed
multiple development projects spanning the drug discovery and
development continuum. She is a founder of Reneo Pharmaceuticals
and Mirum Pharmaceuticals, and also serves as a member of the board
of directors of privately held Aristea Therapeutics. Dr. Kennedy
received her doctorate at the Queen’s University of Belfast,
Northern Ireland, her Master of Business Administration from the
Rady School of Management at UCSD, and Bachelor of Science from
University of Cork, Ireland.
- Resignation of Heather Preston, M.D. from Board of
Directors: Dr. Heather Preston has notified the company of
her intention to resign from Otonomy’s board of directors and from
her position on the corporate governance and nominating committee
effective as of February 28, 2020 in order to devote additional
attention to her responsibilities as a managing partner at Pivotal
bioVenture Partners. The decision of Dr. Preston to resign is not
the result of any disagreement with the company on any matter
relating to its operations, policies or practices.
“I am delighted to welcome Ciara to the board and believe that
Otonomy will benefit greatly from her experience in drug
development, operations, patient advocacy management and corporate
development for biopharmaceutical companies across multiple
therapeutic areas,” added Dr. Weber. “I would also like to take
this opportunity to express my sincere gratitude and appreciation
for the long term service and significant contributions made by
Heather. Since joining the board with our first syndicated venture
financing, Heather’s active participation and thoughtful guidance
to the company and its board throughout have been greatly
appreciated.”
Fourth Quarter and Full Year 2019 Financial
Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $60.7 million as of December 31,
2019, compared to $97.3 million as of December 31, 2018. The cash
balance includes proceeds from a $15.0 million term loan provided
by Oxford Finance LLC that was completed in December
2018.
- Operating Expenses: GAAP operating expenses
were $10.7 million for the fourth quarter of 2019, compared to
$13.2 million for the fourth quarter of 2018. For the full year
2019, GAAP operating expenses were $44.5 million compared to $51.9
million for 2018. Non-GAAP operating expenses, which exclude
stock-based compensation, were $10.2 million for the fourth quarter
of 2019, compared to $10.8 million for the fourth quarter of 2018.
For the full year 2019, non-GAAP operating expenses were $39.6
million compared to $39.5 million for 2018.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the fourth quarter
of 2019 were $7.0 million, compared to $9.7 million for the fourth
quarter of 2018. The decrease was primarily due to reduced spending
for nonclinical and manufacturing activities to support initiation
of clinical trials for OTO-313 and OTO-413 and decreased
stock-based compensation expense. For the full year 2019, GAAP
R&D expenses were $32.8 million compared to $31.8 million for
2018.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
fourth quarter of 2019 were $3.6 million, compared to $3.6 million
for the fourth quarter of 2018. For the full year 2019, GAAP
SG&A expenses were $11.7 million compared to $20.0 million for
2018. The year-to-year decrease was primarily a result of lower
stock-based compensation expense and reduced OTIPRIO® selling
expenses as a result of payments from co-promotion
partners.
- Financial Guidance:• Operating
Expenses: Otonomy expects that non-GAAP operating expenses
for 2020 will be in the range of $35-$38 million, and that GAAP
operating expenses will be in the range of $45-$48
million.• 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: 2048824. 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 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 Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the "SEC") on February 27,
2020, 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 ScienceChloé-Anne RamseyVice
President404.865.3601 cramsey@spectrumscience.com
Investor InquiriesWestwicke ICRRobert H. UhlManaging
Director858.356.5932robert.uhl@westwicke.com
Otonomy,
Inc. |
Condensed
Balance Sheet Data |
(in
thousands) |
|
|
|
|
|
As of
December 31, |
|
As of
December 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
Cash and
cash equivalents |
$ |
25,194 |
|
|
$ |
33,633 |
|
|
|
|
|
Short-term
investments |
|
35,476 |
|
|
|
63,651 |
|
|
|
|
|
Right-of-use
assets |
|
15,465 |
|
|
|
— |
|
|
|
|
|
Total
assets |
|
83,018 |
|
|
|
104,992 |
|
|
|
|
|
Long-term
debt, net |
|
14,967 |
|
|
|
14,764 |
|
|
|
|
|
Leases, net
of current |
|
15,320 |
|
|
|
— |
|
|
|
|
|
Total
liabilities |
|
42,785 |
|
|
|
25,255 |
|
|
|
|
|
Accumulated
deficit |
|
(459,893 |
) |
|
|
(415,218 |
) |
|
|
|
|
Total
stockholders’ equity |
|
40,233 |
|
|
|
79,737 |
|
|
|
|
|
Otonomy,
Inc. |
Condensed
Statements of Operations |
(in
thousands, except share and per share data) |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Years
Ended |
|
December 31, |
|
December 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
Product
sales, net |
$ |
93 |
|
|
$ |
208 |
|
|
$ |
600 |
|
|
$ |
745 |
|
Costs and
operating expenses: |
|
|
|
|
|
|
|
Cost of product sales |
|
276 |
|
|
|
271 |
|
|
|
912 |
|
|
|
946 |
|
Research and development |
|
7,034 |
|
|
|
9,669 |
|
|
|
32,805 |
|
|
|
31,844 |
|
Selling, general and administrative |
|
3,625 |
|
|
|
3,580 |
|
|
|
11,690 |
|
|
|
20,008 |
|
Total costs
and operating expenses |
|
10,935 |
|
|
|
13,520 |
|
|
|
45,407 |
|
|
|
52,798 |
|
Loss from
operations |
|
(10,842 |
) |
|
|
(13,312 |
) |
|
|
(44,807 |
) |
|
|
(52,053 |
) |
|
|
|
|
|
|
|
|
Other
(expense) income, net |
|
(83 |
) |
|
|
467 |
|
|
|
132 |
|
|
|
1,685 |
|
Net
loss |
$ |
(10,925 |
) |
|
$ |
(12,845 |
) |
|
$ |
(44,675 |
) |
|
$ |
(50,368 |
) |
|
|
|
|
|
|
|
|
Net loss per
share, basic and diluted |
$ |
(0.36 |
) |
|
$ |
(0.42 |
) |
|
$ |
(1.45 |
) |
|
$ |
(1.65 |
) |
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net loss per share, basic
and diluted |
|
30,768,174 |
|
|
|
30,646,951 |
|
|
|
30,726,786 |
|
|
|
30,610,244 |
|
|
|
|
|
|
|
|
|
Otonomy,
Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in
thousands) |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Years
Ended |
|
December 31, |
|
December 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
operating expenses |
|
|
|
|
|
|
|
Research and development |
$ |
7,034 |
|
|
$ |
9,669 |
|
|
$ |
32,805 |
|
|
$ |
31,844 |
|
Selling, general and administrative |
|
3,625 |
|
|
|
3,580 |
|
|
|
11,690 |
|
|
|
20,008 |
|
Total GAAP
operating expenses |
|
10,659 |
|
|
|
13,249 |
|
|
|
44,495 |
|
|
|
51,852 |
|
Non-GAAP
adjustments |
|
|
|
|
|
|
|
R&D stock-based compensation expense |
|
183 |
|
|
|
(1,075 |
) |
|
|
(2,085 |
) |
|
|
(4,447 |
) |
SG&A stock-based compensation expense |
|
(628 |
) |
|
|
(1,375 |
) |
|
|
(2,793 |
) |
|
|
(7,955 |
) |
Total
non-GAAP adjustments |
|
(445 |
) |
|
|
(2,450 |
) |
|
|
(4,878 |
) |
|
|
(12,402 |
) |
Non-GAAP
operating expenses |
$ |
10,214 |
|
|
$ |
10,799 |
|
|
$ |
39,617 |
|
|
$ |
39,450 |
|
|
|
|
|
|
|
|
|
Otonomy,
Inc. |
Reconciliation of 2020 GAAP to Non-GAAP Operating Expense
Guidance |
(in
millions) |
|
|
GAAP
operating expenses |
$45 -
$48 |
Non-GAAP
adjustments |
|
Stock-based compensation expense |
$10 |
Non-GAAP
operating expenses |
$35 - $38 |
|
|
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