Otonomy Reports Third Quarter 2020 Financial Results and Provides Corporate Update
November 04 2020 - 4:16PM
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, 2020 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 continued to successfully execute our business plan by
completing patient enrollment in the OTIVIDEX Phase 3 trial in
Ménière’s disease and the OTO-413 Phase 1/2 trial in hearing loss,
as well as announcing positive results from the OTO-313 Phase 1/2
trial in tinnitus. Completion of enrollment keeps us on track for
announcing the hearing loss trial results by end of year and
results for our Phase 3 Ménière’s trial in the first quarter,” said
David A. Weber, Ph.D., president and CEO of Otonomy. “I am also
pleased with the progress we are making in our preclinical programs
that extend our efforts across additional hearing loss pathologies
and patient populations. When combined with our clinical-stage
programs, we have the broadest pipeline in the neurotology field.
And thanks to the over-subscribed financing we completed in the
third quarter, we are well-capitalized to advance our pipeline
through upcoming milestones.”
Otonomy Program
Updates
- OTIVIDEX Phase 3 clinical
trial in
Ménière’s disease: patient
enrollment completed at the
beginning of October with results expected in the
first quarter of 2021. This trial
enrolled a total of 149 patients from the United States and Europe,
exceeding the target of 142 patients. After randomization to
treatment with a single intratympanic injection of OTIVIDEX or
placebo, patients are followed for three months. 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, the AVERTS-2 Phase 3
trial, and the integrated dataset from both trials. Assuming
positive results in this additional Phase 3 trial, we plan to
submit a New Drug Application to the FDA in the third quarter of
2021.
- OTO-313:
positive 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. Patients reported the severity of their tinnitus
symptoms using the Tinnitus Functional Index (TFI), a
clinically-validated instrument, and by daily reporting of their
tinnitus loudness and annoyance. The trial achieved its objectives
by demonstrating a positive clinical signal for a single
intratympanic injection of OTO-313 using a TFI responder analysis,
with a favorable safety profile. In particular, 43% of OTO-313
patients were responders 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 also reported
improvements in tinnitus loudness and annoyance levels using daily
diaries and improvement in the Patient Global Impression of Change
(PGIC). Based on these results, Otonomy has submitted a Type C
meeting request to review aspects of the Phase 2 clinical plan with
the FDA.
- OTO-413 Phase 1/2
clinical
trial in
hearing
loss:
patient enrollment completed with
results expected by end
of year. This ascending
single dose safety and exploratory efficacy study for OTO-413, a
sustained exposure formulation of brain-derived neurotrophic factor
(BDNF), enrolled a total of 39 patients including 15 patients in
the high dose cohort. Patients were randomized 3:1 for a single
intratympanic injection of OTO-413 or placebo and then followed for
3 months. All patients have a speech-in-noise hearing deficit
measured at baseline and can have normal up to moderately-severe
hearing loss by conventional testing. In this first clinical
evaluation of BDNF delivered via intratympanic injection, the
primary objective is the assessment of safety and tolerability with
multiple assessments of hearing function also conducted at baseline
and during follow-up to evaluate signs of clinical activity. The
Company expects to announce top-line results from this trial by end
of year.
- GJB2 gene therapy program: product
candidate selected.
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 conferences earlier this year 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 otoprotection
program: preclinical development
ongoing for novel and
proprietary
molecule. 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 identified a novel series of molecules
with improved otoprotectant activity in preclinical CIHL studies
compared to other agents in development. Preclinical development
continues for a small molecule from this class formulated to
provide sustained exposure from a single intratympanic
injection.
- OTO-6XX program for severe hearing
loss: exclusive license completed
for novel 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 made an
upfront payment to Kyorin and will make 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 and
expanded with
ALK-Abelló, Inc.
(ALK). In June 2020, Otonomy entered a
co-promotion agreement that provided 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. In October 2020, this agreement was expanded to enable
ALK to also promote OTIPRIO for its second FDA-approved indication,
use during ear tube surgery, in all provider facilities including
hospitals and ambulatory surgery centers. 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.
Third Quarter Financial
Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $94.5 million as of September 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 the Company sold 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 $15.0 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 $10.4 million for the third quarter of 2020, compared to $10.0
million for the third quarter of 2019. Non-GAAP operating expenses,
which exclude stock-based compensation, were $8.8 million for the
third quarter of 2020, compared to $8.3 million for the third
quarter of 2019.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the third quarter
of 2020 were $7.0 million, compared to $8.1 million for the third
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
third quarter of 2020 were $3.4 million, compared to $1.9 million
for the third 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 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: 5179918. 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 OtonomyOtonomy 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, 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 and expectations regarding the Negative Binomial
model; statements regarding plans to submit a New Drug
Application for OTIVIDEX; 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, cash runway, and Otonomy’s
ability to advance its pipeline; 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 and site 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, 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, conduct and compliance 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 (SEC)
on November 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
President404.865.3601cramsey@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, |
|
2020 |
|
2019 |
|
(unaudited) |
|
|
Cash and cash equivalents |
$ |
54,235 |
|
|
$ |
25,194 |
|
|
|
|
|
Short-term
investments |
|
40,250 |
|
|
|
35,476 |
|
|
|
|
|
Right-of-use
assets |
|
14,434 |
|
|
|
15,465 |
|
|
|
|
|
Total
assets |
|
115,312 |
|
|
|
83,018 |
|
|
|
|
|
Long-term
debt, net |
|
15,114 |
|
|
|
14,967 |
|
|
|
|
|
Leases, net
of current |
|
14,229 |
|
|
|
15,320 |
|
|
|
|
|
Total
liabilities |
|
40,187 |
|
|
|
42,785 |
|
|
|
|
|
Accumulated
deficit |
|
(493,977 |
) |
|
|
(459,893 |
) |
|
|
|
|
Total
stockholders’ equity |
|
75,125 |
|
|
|
40,233 |
|
|
|
|
|
Otonomy,
Inc. |
Condensed
Statements of Operations |
(in
thousands, except share and per share data) |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
(unaudited) |
Product sales, net |
$ |
50 |
|
|
$ |
125 |
|
|
$ |
220 |
|
|
$ |
507 |
|
Costs and
operating expenses: |
|
|
|
|
|
|
|
Cost of product sales |
|
189 |
|
|
|
220 |
|
|
|
914 |
|
|
|
636 |
|
Research and development |
|
7,016 |
|
|
|
8,057 |
|
|
|
21,623 |
|
|
|
25,771 |
|
Selling, general and administrative |
|
3,363 |
|
|
|
1,903 |
|
|
|
10,883 |
|
|
|
8,065 |
|
Total costs
and operating expenses |
|
10,568 |
|
|
|
10,180 |
|
|
|
33,420 |
|
|
|
34,472 |
|
Loss from
operations |
|
(10,518 |
) |
|
|
(10,055 |
) |
|
|
(33,200 |
) |
|
|
(33,965 |
) |
|
|
|
|
|
|
|
|
Other
(expense) income, net |
|
(349 |
) |
|
|
16 |
|
|
|
(884 |
) |
|
|
215 |
|
Net
loss |
$ |
(10,867 |
) |
|
$ |
(10,039 |
) |
|
$ |
(34,084 |
) |
|
$ |
(33,750 |
) |
|
|
|
|
|
|
|
|
Net loss per
share, basic and diluted |
$ |
(0.22 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.92 |
) |
|
$ |
(1.10 |
) |
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net loss per share, basic
and diluted |
|
49,220,921 |
|
|
|
30,748,995 |
|
|
|
37,014,253 |
|
|
|
30,712,839 |
|
|
|
|
|
|
|
|
|
Otonomy,
Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in
thousands) |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
(unaudited) |
GAAP
operating expenses |
|
|
|
|
|
|
|
Research and development |
$ |
7,016 |
|
|
$ |
8,057 |
|
|
$ |
21,623 |
|
|
$ |
25,771 |
|
Selling, general and administrative |
|
3,363 |
|
|
|
1,903 |
|
|
|
10,883 |
|
|
|
8,065 |
|
Total GAAP
operating expenses |
|
10,379 |
|
|
|
9,960 |
|
|
|
32,506 |
|
|
|
33,836 |
|
Non-GAAP
adjustments |
|
|
|
|
|
|
|
R&D stock-based compensation expense |
|
(628 |
) |
|
|
(1,037 |
) |
|
|
(1,824 |
) |
|
|
(2,268 |
) |
SG&A stock-based compensation expense |
|
(945 |
) |
|
|
(651 |
) |
|
|
(2,692 |
) |
|
|
(2,165 |
) |
Total
non-GAAP adjustments |
|
(1,573 |
) |
|
|
(1,688 |
) |
|
|
(4,516 |
) |
|
|
(4,433 |
) |
Non-GAAP
operating expenses |
$ |
8,806 |
|
|
$ |
8,272 |
|
|
$ |
27,990 |
|
|
$ |
29,403 |
|
|
|
|
|
|
|
|
|
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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