Otonomy Reports First Quarter 2020 Financial Results and Provides Corporate Update
May 07 2020 - 7:30AM
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, 2020 and provided an update on its product pipeline and
corporate activities. In lieu of a conference call today, the
company plans to host a program update call in June to review the
status and timeline to results for the three ongoing clinical
trials including the Phase 3 trial of OTIVIDEX® in Ménière’s
disease.
“As we announced several weeks ago, we have taken steps to
ensure the health and safety of our employees, patients, and study
site healthcare professionals during the COVID-19 pandemic while
also working diligently to mitigate the impact to our ongoing
clinical trials,” said David A. Weber, Ph.D., president and CEO of
Otonomy. “Collection of patient-reported symptom data continues to
be very good supporting the integrity of these trials. However,
quarantine restrictions have slowed new patient enrollment in the
OTIVIDEX trial and required us to pause enrollment in the OTO-413
trial, which has now resumed. Regarding the OTO-313 trial, we have
enrolled a sufficient number of patients to inform our next steps
in the program and have discontinued further enrollment. We look
forward to reviewing the status of these trials as well as timing
to results during a program update call in June.”
Otonomy Business Updates
- COVID-19 Pandemic: update provided in April
2020. Otonomy has taken steps to protect the health and
safety of its employees and community by generally adopting a work
from home policy in line with directives from the State of
California and guidance from the U.S. Centers for Disease Control
and Prevention (CDC). On-site activities have been restricted to
certain essential facility and laboratory support functions and
social distancing policies have been implemented. We are also
assessing our eligibility for programs under the Coronavirus Aid,
Relief, and Economic Security (CARES) Act.
- OTIVIDEX Phase 3 clinical trial in
Ménière’s disease: patient compliance for reporting vertigo
episodes is high and new patient enrollment is ongoing.
This trial is being conducted at approximately 60 trial sites
dispersed across different regions of the United States and
multiple countries in Europe. We believe there is minimal impact of
COVID-19 on the integrity of efficacy data being collected because
patients report their vertigo episodes via a daily telephone diary
and compliance continues to be high. Quarantine restrictions are
impacting the rate of new patient enrollment, which is being
managed on a country-by-country and site-by-site basis according to
local conditions.
- OTO-313 Phase 1/2 clinical trial in tinnitus: patient
enrollment in exploratory efficacy cohort has been
completed. An initial safety cohort of this randomized,
double-blind, placebo-controlled trial was successfully completed
and a second cohort designed to evaluate the activity of OTO-313
across multiple exploratory efficacy endpoints including the
Tinnitus Functional Index (TFI) questionnaire is ongoing. This
second cohort has enrolled a total of 35 patients, which Otonomy
believes is sufficient to inform next steps for the OTO-313
program. As a result, new patient enrollment has been discontinued
and the company will initiate study completion activities following
final patient visits. Timing to study results will be provided
during the program review call in June.
- OTO-413 Phase 1/2 clinical trial in hearing
loss: new patient enrollment has resumed.
This is an ascending single dose safety and exploratory efficacy
study being conducted at a limited number of trial sites in the
United States. As previously announced, we have successfully
completed several dose cohorts but temporarily paused new patient
enrollment because site visits are required for extensive hearing
assessments to evaluate both safety and exploratory efficacy. We
have resumed new patient enrollment, which is being managed on a
site-by-site basis.
- 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.
First Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $48.6 million as of March 31, 2020,
compared to $60.7 million as of December 31, 2019.
- Long-term Debt: Otonomy obtained a $15 million
term loan from Oxford Finance LLC in December 2018. The loan
provides for a 24 month interest-only repayment period, followed by
35 months of amortization.
- Operating Expenses: GAAP operating expenses
were $11.5 million for the first quarter of 2020, compared to $12.1
million for the first quarter of 2019. Non-GAAP operating expenses,
which exclude stock-based compensation, were $10.1 million for the
first quarter of 2020, compared to $10.6 million for the first
quarter of 2019.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the first quarter
of 2020 were $7.7 million, compared to $8.8 million for the first
quarter of 2019. The decrease for the quarter was primarily due to
reduced third-party development costs that were partially offset by
increased compensation expense.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
first quarter of 2020 were $3.8 million, compared to $3.3 million
for the first quarter of 2019. The increase this quarter was
primarily the result of discontinued cost reimbursement received
from OTIPRIO co-promotion partners.
- Financial Guidance:
- 2020 Operating Expenses: Otonomy expects that
GAAP operating expenses will be in the range of $45-$48 million,
and that non-GAAP operating expenses will be in the range of
$35-$38 million.
- Cash Runway: Otonomy expects that its current
cash, cash equivalents, and short-term investments will be
sufficient to fund company operations into 2021 and we are managing
spending to enable this cash runway to extend through readouts for
our three ongoing clinical trials.
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, statements relating to the timing of results,
patient recruitment and activity for, conduct of, and the impact of
COVID-19 on, ongoing clinical trials; expectations regarding
operating expenses for 2020 and cash runway; 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: delays and disruption resulting from
the COVID-19 pandemic and governmental responses to the
pandemic, including current and future impacts to Otonomy’s
operations, the manufacturing of its product candidates, the
progression of its current clinical trials, enrollment in its
current and future clinical trials and patient conduct and
compliance; 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; the
integrity of patient-reported outcomes in its current and future
clinical trials; 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, and for the
manufacture of its product candidates; Otonomy’s ability to protect
its intellectual property 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; general economic
and market conditions; 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 7, 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 March
31, |
|
As of
December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
(unaudited) |
|
|
|
Cash and
cash equivalents |
$ |
31,038 |
|
|
$ |
25,194 |
|
|
|
|
|
|
|
Short-term
investments |
|
17,568 |
|
|
|
35,476 |
|
|
|
|
|
|
|
Right-of-use
assets |
|
15,131 |
|
|
|
15,465 |
|
|
|
|
|
|
|
Total
assets |
|
70,051 |
|
|
|
83,018 |
|
|
|
|
|
|
|
Long-term
debt, current |
|
1,286 |
|
|
|
— |
|
|
|
|
|
|
|
Long-term
debt, net of current |
|
13,731 |
|
|
|
14,967 |
|
|
|
|
|
|
|
Leases, net
of current |
|
14,951 |
|
|
|
15,320 |
|
|
|
|
|
|
|
Total
liabilities |
|
40,114 |
|
|
|
42,785 |
|
|
|
|
|
|
|
Accumulated
deficit |
|
(471,656 |
) |
|
|
(459,893 |
) |
|
|
|
|
|
|
Total
stockholders’ equity |
|
29,937 |
|
|
|
40,233 |
|
|
|
|
|
|
|
|
|
|
|
|
Otonomy,
Inc. |
Condensed
Statements of Operations |
(in
thousands, except share and per share data) |
|
|
|
|
|
|
|
Three Months
Ended |
|
|
March 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
(unaudited) |
Product sales, net |
$ |
160 |
|
|
$ |
192 |
|
Costs and operating expenses: |
|
|
|
|
Cost of
product sales |
|
214 |
|
|
|
213 |
|
|
Research and
development |
|
7,672 |
|
|
|
8,795 |
|
|
Selling,
general and administrative |
|
3,836 |
|
|
|
3,278 |
|
Total costs and operating expenses |
|
11,722 |
|
|
|
12,286 |
|
Loss from operations |
|
(11,562 |
) |
|
|
(12,094 |
) |
|
|
|
|
|
Other (expense) income, net |
|
(201 |
) |
|
|
110 |
|
Net loss |
$ |
(11,763 |
) |
|
$ |
(11,984 |
) |
|
|
|
|
|
Net loss per share, basic and diluted |
$ |
(0.38 |
) |
|
$ |
(0.39 |
) |
|
|
|
|
|
Weighted-average shares used to compute net loss per share, |
|
|
|
basic and
diluted |
|
30,814,211 |
|
|
|
30,658,412 |
|
|
|
|
|
|
|
Otonomy,
Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in
thousands) |
|
|
|
|
|
|
|
Three Months
Ended |
|
|
March 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
GAAP operating expenses |
|
|
|
|
Research and
development |
$ |
7,672 |
|
|
$ |
8,795 |
|
|
Selling,
general and administrative |
|
3,836 |
|
|
|
3,278 |
|
Total GAAP operating expenses |
|
11,508 |
|
|
|
12,073 |
|
Non-GAAP adjustments |
|
|
|
|
R&D
stock-based compensation expense |
|
(568 |
) |
|
|
(659 |
) |
|
SG&A
stock-based compensation expense |
|
(841 |
) |
|
|
(834 |
) |
Total non-GAAP adjustments |
|
(1,409 |
) |
|
|
(1,493 |
) |
Non-GAAP operating expenses |
$ |
10,099 |
|
|
$ |
10,580 |
|
|
|
|
|
|
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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