Otonomy Reports Second Quarter 2020 Financial Results and Provides Corporate Update
August 04 2020 - 4:23PM
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, 2020 and provided an update on its product pipeline and
corporate activities. The company will host a conference call and
webcast today at 5 p.m. ET to discuss recent highlights and
financial results.
“We have made great strides in advancing our product pipeline
and achieving our corporate objectives during the past several
months despite the challenges presented by the COVID-19 pandemic,”
said David A. Weber, Ph.D., president and CEO of Otonomy. “For our
clinical programs, we announced positive results for OTO-313 in
tinnitus, continued to progress enrollment of our ongoing OTIVIDEX
Phase 3 trial in Ménière’s disease while strengthening its
statistical analysis plan, and have nearly completed enrollment of
the OTO-413 trial in hearing loss. We also selected a product
candidate for our GJB2 gene therapy program, licensed a novel
compound for our OTO-6XX hair cell regeneration program, and
demonstrated preclinical proof-of-concept for our otoprotection
program. To support this broad and rich pipeline, we completed an
oversubscribed financing that extends our cash runway and bolsters
our shareholder base.”
Otonomy Program Updates
- OTO-313: positive top-line results reported from Phase
1/2 clinical trial in tinnitus. In July 2020, Otonomy
reported positive top-line results from the Phase 1/2 trial of
OTO-313 in patients with persistent tinnitus of at least moderate
severity. The exploratory efficacy cohort of the trial included 31
evaluable patients randomized to a single intratympanic injection
of OTO-313 or placebo (1:1 randomization) and then followed for
eight weeks. Patients reported the severity of their tinnitus
symptoms using the Tinnitus Functional Index (TFI), a
clinically-validated instrument, and by the daily reporting of
their tinnitus loudness and annoyance. The trial achieved its
objectives by demonstrating a positive clinical signal for OTO-313
based on a TFI responder analysis, with a favorable safety profile.
In particular, 43% of OTO-313 patients were responders based on the
TFI at both Day 29 and Day 57 compared to 13% of placebo patients
(p-value < 0.05). Furthermore, OTO-313 patients who were TFI
responders on both Day 29 and Day 57 also reported improvements in
tinnitus loudness and annoyance levels based on daily diaries and
reported improvement in the Patient Global Impression of Change
(PGIC), a general assessment of tinnitus status. Given these
results, Otonomy is advancing OTO-313 into full Phase 2 development
which may include evaluation of a higher dose and/or
retreatment.
- OTIVIDEX Phase 3 clinical trial in
Ménière’s disease: patient enrollment is ongoing with results
expected in the first quarter of 2021. This trial is being
conducted at approximately 60 trial sites dispersed across
different regions of the United States and multiple countries in
Europe. In July 2020, Otonomy provided an update on the statistical
analysis plan for the ongoing trial. In response to questions
received from the U.S. Food and Drug Administration (FDA), Otonomy
submitted a revised plan that uses the Negative Binomial model for
primary analysis of the daily vertigo count data reported by
patients. We believe that the Negative Binomial model provides the
best fit of the OTIVIDEX clinical data based on the Phase 2b trial,
AVERTS-2 Phase 3 trial, and integrated dataset from both trials.
The Negative Binomial model also provides increased power to detect
a treatment benefit enabling us to reduce the target enrollment to
142 patients while maintaining more than 90% power. We expect to
complete patient enrollment during the third quarter of 2020 and
announce results in the first quarter of 2021.
- OTO-413 Phase 1/2 clinical trial in hearing
loss: patient enrollment is ongoing with results
expected in the fourth quarter of 2020. This is an
ascending single dose safety and exploratory efficacy study for
OTO-413, a sustained exposure formulation of brain-derived
neurotrophic factor (BDNF). We have successfully escalated through
three dose levels totaling 24 patients and have nearly completed
enrollment of patients in the high dose cohort. We expect to enroll
approximately 16 patients in this cohort, randomized 3:1 for a
single intratympanic injection of OTO-413 or placebo. Patients
enrolled in this trial have a speech-in-noise hearing deficit
measured at baseline and can have normal up to moderately-severe
hearing loss by conventional testing. Following treatment, patients
undergo repeated testing for safety and exploratory efficacy over 3
months. We expect to announce results from this trial in the fourth
quarter of 2020.
- GJB2 gene therapy program: preclinical
results support selection of product candidate. 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 (GJB2) gene -- the most
common cause of congenital hearing loss. Preclinical results
presented at the American Society of Gene & Cell Therapy
(ASGCT) meeting in May 2020 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. Also, consistent gene expression was
observed for at least 12 weeks following a single local
administration. These results supported selection of the product
candidate for further development.
- OTO-510: preclinical data presented for a 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). Otonomy has 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 molecules currently in
development.
- OTO-6XX: exclusive license completed for novel hearing
loss compound. In July 2020, Otonomy
entered into an exclusive license agreement with KYORIN
Pharmaceutical Co., Ltd. (“Kyorin”) that provides Otonomy with
exclusive worldwide rights to develop, manufacture and
commercialize a novel compound for the treatment of sensorineural
hearing loss. Under the terms of the agreement, Otonomy will make
an upfront payment to Kyorin as well as success-based milestone
payments and pay a royalty on worldwide net sales. Otonomy is
formulating the patent-protected compound utilizing the company’s
proprietary technology to provide sustained drug exposure in the
inner ear following a single local administration. The OTO-6XX
program is targeting hair cell regeneration for the treatment of
severe hearing loss.
- OTIPRIO®:
co-promotion partnership initiated with ALK-Abelló, Inc.
(ALK). In June 2020, Otonomy entered a co-promotion
agreement that provides ALK with an exclusive right to promote
OTIPRIO for acute otitis externa (AOE) to office-based health care
professionals in the United States including ear, nose and throat
(ENT) physicians, pediatricians and primary care physicians. During
the multi-year agreement, Otonomy will receive co-promotion fees
and reimbursement of a proportion of product support costs while
also retaining a share of adjusted gross profits from the sale of
OTIPRIO for use in AOE.
Second Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $41.1 million as of June 30, 2020,
compared to $60.7 million as of December 31, 2019. In July 2020,
Otonomy completed an underwritten public offering of 17,275,000
shares of its common stock, which includes the underwriters' full
exercise of their option to purchase additional shares and
pre-funded warrants to purchase up to 4,000,000 shares of its
common stock, for total gross proceeds of approximately $69.1
million, before deducting underwriting discounts and commissions
and other offering expenses payable by Otonomy. All of the
securities were sold by Otonomy.
- Long-term Debt: Otonomy obtained a $15 million
term loan from Oxford Finance LLC in December 2018. In July 2020,
the terms of the loan were amended to extend the interest-only
repayment period from 24 months to 36 months, followed by 23 months
of amortization.
- Operating Expenses: GAAP operating expenses
were $10.6 million for the second quarter of 2020, compared to
$11.8 million for the second quarter of 2019. Non-GAAP operating
expenses, which exclude stock-based compensation, were $9.1 million
for the second quarter of 2020, compared to $10.6 million for the
second quarter of 2019.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the second quarter
of 2020 were $6.9 million, compared to $8.9 million for the second
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
second quarter of 2020 were $3.7 million, compared to $2.9 million
for the second quarter of 2019. The increase this quarter was
primarily the result of discontinued cost reimbursement received
from OTIPRIO co-promotion partners.
- Financial Update and Guidance:-
2020 Operating Expenses: Otonomy continues to expect that
non-GAAP operating expenses will be in the range of $35-$38
million, and 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’s operations for
at least two years.
Webcast and Conference Call
Otonomy management will host a webcast and conference call
regarding these program updates at 5 p.m. ET / 2 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: 3489668. 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.
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 potential benefits,
development activity and advancement of clinical trials; statements
relating to the timing of results, patient enrollment activity for,
and conduct of, ongoing clinical trials; statements relating to the
updated statistical analysis plan for the ongoing Phase 3 clinical
trial of OTIVIDEX; expectations regarding the Negative Binomial
model; the potential benefits and opportunities of, and
activities under the collaboration agreement between Otonomy and
AGTC, the co-promotion agreement between Otonomy and ALK, and the
license agreement between Otonomy and Kyorin; expectations
regarding preclinical programs, including the potential benefits
and development activities; 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 give rise to the termination of
the collaboration agreement between Otonomy and AGTC, the
co-promotion agreement between Otonomy and ALK, or the license
agreement between Otonomy and Kyorin, or 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 and to ensure compliance
with various laws and regulations in countries in which it conducts
clinical trials; 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 August 4, 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 June 30, |
|
As of December 31, |
|
|
2020 |
|
|
|
2019 |
|
|
(unaudited) |
|
|
Cash and cash equivalents |
$ |
32,045 |
|
|
$ |
25,194 |
|
|
|
|
|
Short-term investments |
|
9,021 |
|
|
|
35,476 |
|
|
|
|
|
Right-of-use assets |
|
14,787 |
|
|
|
15,465 |
|
|
|
|
|
Total assets |
|
61,228 |
|
|
|
83,018 |
|
|
|
|
|
Long-term debt, net |
|
15,069 |
|
|
|
14,967 |
|
|
|
|
|
Leases, net of current |
|
14,594 |
|
|
|
15,320 |
|
|
|
|
|
Total liabilities |
|
40,979 |
|
|
|
42,785 |
|
|
|
|
|
Accumulated deficit |
|
(483,110 |
) |
|
|
(459,893 |
) |
|
|
|
|
Total stockholders’
equity |
|
20,249 |
|
|
|
40,233 |
|
|
|
|
|
Otonomy, Inc. |
Condensed Statements of Operations |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(unaudited) |
Product sales, net |
$ |
10 |
|
|
$ |
190 |
|
|
$ |
170 |
|
|
$ |
382 |
|
Costs and operating
expenses: |
|
|
|
|
|
|
|
Cost of product sales |
|
511 |
|
|
|
203 |
|
|
|
725 |
|
|
|
416 |
|
Research and development |
|
6,935 |
|
|
|
8,919 |
|
|
|
14,607 |
|
|
|
17,714 |
|
Selling, general and administrative |
|
3,684 |
|
|
|
2,884 |
|
|
|
7,520 |
|
|
|
6,162 |
|
Total costs and operating
expenses |
|
11,130 |
|
|
|
12,006 |
|
|
|
22,852 |
|
|
|
24,292 |
|
Loss from operations |
|
(11,120 |
) |
|
|
(11,816 |
) |
|
|
(22,682 |
) |
|
|
(23,910 |
) |
|
|
|
|
|
|
|
|
Other (expense) income,
net |
|
(334 |
) |
|
|
89 |
|
|
|
(535 |
) |
|
|
199 |
|
Net loss |
$ |
(11,454 |
) |
|
$ |
(11,727 |
) |
|
$ |
(23,217 |
) |
|
$ |
(23,711 |
) |
|
|
|
|
|
|
|
|
Net loss per share, basic and
diluted |
$ |
(0.37 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.75 |
) |
|
$ |
(0.77 |
) |
|
|
|
|
|
|
|
|
Weighted-average shares used
to compute net loss per share, |
|
|
|
|
|
|
|
basic and diluted |
|
30,873,488 |
|
|
|
30,703,411 |
|
|
|
30,843,850 |
|
|
|
30,694,461 |
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
GAAP operating expenses |
|
|
|
|
|
|
|
Research and development |
$ |
6,935 |
|
|
$ |
8,919 |
|
|
$ |
14,607 |
|
|
$ |
17,714 |
|
Selling, general and administrative |
|
3,684 |
|
|
|
2,884 |
|
|
|
7,520 |
|
|
|
6,162 |
|
Total GAAP operating
expenses |
|
10,619 |
|
|
|
11,803 |
|
|
|
22,127 |
|
|
|
23,876 |
|
Non-GAAP adjustments |
|
|
|
|
|
|
|
R&D stock-based compensation expense |
|
(628 |
) |
|
|
(572 |
) |
|
|
(1,196 |
) |
|
|
(1,231 |
) |
SG&A stock-based compensation expense |
|
(906 |
) |
|
|
(680 |
) |
|
|
(1,747 |
) |
|
|
(1,514 |
) |
Total non-GAAP
adjustments |
|
(1,534 |
) |
|
|
(1,252 |
) |
|
|
(2,943 |
) |
|
|
(2,745 |
) |
Non-GAAP operating
expenses |
$ |
9,085 |
|
|
$ |
10,551 |
|
|
$ |
19,184 |
|
|
$ |
21,131 |
|
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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