Otonomy Reports Third Quarter 2017 Financial Results and Provides Corporate Update
November 08 2017 - 4:12PM
Otonomy, Inc. (NASDAQ:OTIC), a biopharmaceutical company
focused on the development and commercialization of innovative
therapeutics for diseases and disorders of the ear, today reported
financial results for the quarter ended September 30, 2017 and
provided an update on its corporate activities and product
pipeline. Otonomy also issued a separate release today announcing
positive results from the AVERTS-2 Phase 3 trial of OTIVIDEXä in
patients with Ménière’s disease.
Third Quarter 2017 and Subsequent
Highlights
- Announced Results for the AVERTS Phase 3 Trials for
OTIVIDEX in Patients with Ménière’s Disease:
Otonomy announced today that the AVERTS-2 trial, conducted in
Europe, achieved its primary endpoint (p value = 0.029) and that
OTIVIDEX demonstrated clinically significant treatment benefit for
patients with Ménière’s disease. In August, the company announced
negative results from the AVERTS-1 trial conducted in the United
States. The company plans to review these results with the U.S.
Food and Drug Administration (FDA) and discuss clinical
requirements for registration of OTIVIDEX in patients with
Ménière’s disease during the first quarter of 2018.
- Initiated Actions to Preserve Capital, Extend Cash
Runway, and Build Shareholder Value: Following receipt of
the AVERTS-1 trial results, Otonomy announced that it had suspended
OTIVIDEX development including terminating ongoing clinical trials.
In September, Otonomy announced additional actions intended to
preserve capital and extend the cash runway. These actions included
reduction of the company's non-commercial workforce by one-third,
deferral of clinical trial initiation, and review and
prioritization of the company's pipeline. The company expects to
outline development plans for its multiple clinical and preclinical
assets in the first quarter of 2018.
- Continued to Advance Multiple Programs for
Sensorineural Hearing Loss: Preclinical development
continues on multiple programs for the prevention and/or treatment
of sensorineural hearing loss including age-related hearing loss.
These programs involve the anatomical and functional restoration of
ribbon synapses, protection of hair cells from chemotoxicity, and
regeneration of hair cells. The company believes that the multiple
hearing loss conditions targeted by these programs comprise the
largest patient populations and market opportunities in the otology
field. The company will provide a more detailed outline of these
programs and development timelines in a future investor
update.
- OTIPRIO®
(ciprofloxacin otic suspension) Commercial
and Development Update: As previously disclosed, the
company completed its commercial reorganization in the second
quarter of 2017 with the new sales team in place at the beginning
of the third quarter. End user demand for OTIPRIO in the third
quarter totaled 1,145 vials which represents a 9% decline from the
prior quarter. Based on estimates for the annual tympanostomy tube
placement (TTP) market, the third quarter represents the slowest
quarter of the year with the number of TTP surgeries totaling 34%
lower than the second quarter. The Supplemental New Drug
Application (sNDA) for OTIPRIO in acute otitis externa (AOE) is
currently under review by the FDA with a Prescription Drug User Fee
Act (PDUFA) action date of March 2, 2018. A leading market research
firm has recently completed an assessment of OTIPRIO's commercial
opportunity in AOE that supports the product's attractiveness in
this indication. Otonomy is currently evaluating potential
partnering opportunities and strategic alternatives for
OTIPRIO.
“Today's announcement of successful results for OTIVIDEX in the
AVERTS-2 trial is an important milestone for the company and renews
our excitement and commitment to continuing the registration
program for OTIVIDEX in Ménière’s disease,” said David A. Weber,
Ph.D., president and CEO of Otonomy. “We believe that the
continuation of OTIVIDEX development for Ménière’s disease and the
advancement of our other programs targeting important unmet medical
needs including hearing loss and tinnitus provide an attractive
path forward for Otonomy. We intend to use our strong balance
sheet, supported by our recent cost reduction actions, to achieve
value creation milestones in the development of our pipeline."
Anticipated Upcoming Milestones
- Meet with the FDA during the first quarter of 2018 to review
the AVERTS Phase 3 clinical trial data and discuss clinical
requirements for OTIVIDEX registration in patients with Ménière’s
disease.
- Complete the pipeline review and prioritization, and present a
development plan for multiple clinical and preclinical programs in
the first quarter of 2018.
Third Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $134.3 million as of September 30,
2017, compared to $196.4 million as of December 31, 2016.
- Revenue: Net sales of OTIPRIO totaled $0.3
million for the third quarter of 2017 and the third quarter of
2016.
- Operating Expenses: GAAP operating expenses
were $21.3 million for the third quarter of 2017, compared to $27.8
million for the third quarter of 2016. Non-GAAP operating expenses,
which exclude stock-based compensation and rent abatement expense,
were $17.4 million for the third quarter of 2017, compared to $24.5
million for the third quarter of 2016.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the third quarter
of 2017 were $10.8 million, compared to $15.9 million for the third
quarter of 2016. The decrease was primarily a result of decreased
clinical trial activities for OTIPRIO versus the prior year period.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
third quarter of 2017 were $10.5 million, compared to $11.9 million
for the third quarter of 2016. The decrease was primarily related
to reduced commercial personnel costs.
- Financial Guidance: Otonomy reaffirms its
expectations that GAAP operating expenses for 2017 will be in the
range of $95-$100 million, and that non-GAAP operating expenses for
2017 will be in the range of $73-$78 million for 2017. The company
expects its cash balance (defined as cash, cash equivalents, and
short-term investments) to total $120-$125 million at the end of
2017. The company is not providing any financial guidance for 2018
at this time.
Webcast and Conference Call
Otonomy management will host a webcast and conference call
regarding the AVERTS-2 clinical trial results and other updates in
this announcement at 4:30 p.m. EST/1:30 p.m. PST 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: 4495749. 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 and rent
abatement expense. 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 focused on the
development and commercialization of innovative therapeutics for
diseases and disorders of the ear. OTIPRIO® (ciprofloxacin otic
suspension) is approved in the United States for use during
tympanostomy tube placement surgery in pediatric patients, an sNDA
has been accepted for filing by the FDA for acute otitis externa
(AOE) and a successful End-of-Phase 2 review has been completed
with the FDA for acute otitis media with tympanostomy tubes (AOMT).
OTIVIDEXTM is a steroid in development for the treatment of
Ménière’s disease. OTO-311 is an NMDA receptor antagonist for the
treatment of tinnitus that has completed a Phase 1 clinical safety
trial. Multiple programs targeting sensorineural hearing loss
including age-related hearing loss are in preclinical development.
These programs involve the anatomical and functional restoration of
ribbon synapses, protection of hair cells from chemotoxicity, and
regeneration of hair cells. 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, plans to meet with the FDA regarding the clinical
development requirements for OTIVIDEX and the timing of any such
meeting, timing of future pipeline updates from Otonomy, statements
by Otonomy’s president and CEO, and Otonomy’s financial guidance
for 2017. 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 obtain additional financing; Otonomy's dependence on the
commercial success of OTIPRIO and the regulatory success and
advancement of additional product candidates, such as OTIVIDEX and
OTO-311, and label expansion indications for OTIPRIO; 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; side effects or
adverse events associated with Otonomy's product candidates;
competition in the biopharmaceutical industry; Otonomy's dependence
on third parties to conduct nonclinical studies and clinical
trials; the timing and outcome of hospital pharmacy and
therapeutics reviews and other facility reviews; the impact of
coverage and reimbursement decisions by third-party payors on the
pricing and market acceptance of OTIPRIO; Otonomy's dependence on
third parties for the manufacture of OTIPRIO and product
candidates; Otonomy's dependence on a small number of suppliers for
raw materials; Otonomy's ability to protect its intellectual
property related to OTIPRIO and its product candidates in the
United States and throughout the world; expectations regarding
potential 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 8, 2017,
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 InquiriesCanale CommunicationsHeidi Chokeir, Ph.D.Senior
Vice President619.849.5377heidi@canalecomm.com
Investor InquiriesWestwicke PartnersRobert H. UhlManaging
Director858.356.5932robert.uhl@westwicke.com
| |
|
| |
Otonomy, Inc. |
| |
Condensed Balance Sheet Data |
| |
(in thousands) |
| |
|
|
|
|
| |
|
As of September 30, |
|
As of December 31, |
| |
|
2017 |
|
2016 |
| |
|
(unaudited) |
|
|
| |
|
|
|
|
| |
Cash and cash
equivalents |
$ |
16,877 |
|
|
$ |
24,156 |
|
| |
|
|
|
|
| |
Short-term
investments |
|
117,431 |
|
|
|
172,222 |
|
| |
|
|
|
|
| |
Total assets |
|
146,003 |
|
|
|
208,596 |
|
| |
|
|
|
|
| |
Total liabilities |
|
13,565 |
|
|
|
15,859 |
|
| |
|
|
|
|
| |
Accumulated
deficit |
|
(346,017 |
) |
|
|
(274,720 |
) |
| |
|
|
|
|
| |
Total stockholders'
equity |
|
132,438 |
|
|
|
192,737 |
|
| |
|
|
|
|
| |
| Otonomy, Inc. |
| Condensed Statements of
Operations |
| (in thousands, except share and per share
data) |
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
Nine Months Ended |
| |
|
September 30, |
|
September 30, |
| |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
| |
|
(unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Product
sales, net |
$ |
282 |
|
|
$ |
321 |
|
|
$ |
966 |
|
|
$ |
410 |
|
| Costs and
operating expenses: |
|
|
|
|
|
|
|
| |
Cost of product
sales |
|
290 |
|
|
|
351 |
|
|
|
1,150 |
|
|
|
755 |
|
| |
Research and
development |
|
10,761 |
|
|
|
15,944 |
|
|
|
36,660 |
|
|
|
46,558 |
|
| |
Selling, general and
administrative |
|
10,548 |
|
|
|
11,884 |
|
|
|
35,387 |
|
|
|
37,725 |
|
| Total costs
and operating expenses |
|
21,599 |
|
|
|
28,179 |
|
|
|
73,197 |
|
|
|
85,038 |
|
| Loss from
operations |
|
(21,317 |
) |
|
|
(27,858 |
) |
|
|
(72,231 |
) |
|
|
(84,628 |
) |
| |
|
|
|
|
|
|
|
|
| Other
income |
|
319 |
|
|
|
286 |
|
|
|
934 |
|
|
|
617 |
|
| Net
loss |
$ |
(20,998 |
) |
|
$ |
(27,572 |
) |
|
$ |
(71,297 |
) |
|
$ |
(84,011 |
) |
| |
|
|
|
|
|
|
|
|
| Net loss
per share, basic and diluted |
$ |
(0.69 |
) |
|
$ |
(0.91 |
) |
|
$ |
(2.35 |
) |
|
$ |
(2.81 |
) |
| |
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net loss per
share, |
|
|
|
|
|
|
|
| |
basic and diluted |
|
30,314,155 |
|
|
|
30,173,915 |
|
|
|
30,280,267 |
|
|
|
29,878,040 |
|
| |
|
|
|
|
|
|
|
|
| |
| Otonomy, Inc. |
| Reconciliation of GAAP to Non-GAAP Operating
Expenses |
| (in thousands) |
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
Nine Months Ended |
| |
|
September 30, |
|
September 30, |
| |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
| |
|
(unaudited) |
| GAAP
operating expenses |
|
|
|
|
|
|
|
| |
Research and
development |
$ |
10,761 |
|
|
$ |
15,944 |
|
|
$ |
36,660 |
|
|
$ |
46,558 |
|
| |
Selling, general and
administrative |
|
10,548 |
|
|
|
11,884 |
|
|
|
35,387 |
|
|
|
37,725 |
|
| Total GAAP
operating expenses |
|
21,309 |
|
|
|
27,828 |
|
|
|
72,047 |
|
|
|
84,283 |
|
| Non-GAAP
adjustments |
|
|
|
|
|
|
|
| |
R&D stock-based
compensation expense |
|
(823 |
) |
|
|
(790 |
) |
|
|
(3,167 |
) |
|
|
(2,215 |
) |
| |
SG&A stock-based
compensation expense |
|
(2,424 |
) |
|
|
(2,501 |
) |
|
|
(7,285 |
) |
|
|
(7,034 |
) |
| |
Rent abatement |
|
(695 |
) |
|
|
- |
|
|
|
(2,084 |
) |
|
|
- |
|
| Total
non-GAAP adjustments |
|
(3,942 |
) |
|
|
(3,291 |
) |
|
|
(12,536 |
) |
|
|
(9,249 |
) |
| Non-GAAP
operating expenses |
$ |
17,367 |
|
|
$ |
24,537 |
|
|
$ |
59,511 |
|
|
$ |
75,034 |
|
| |
|
|
|
|
|
|
|
|
| |
| Otonomy, Inc. |
| Reconciliation of 2017 GAAP to Non-GAAP
Operating Expense Guidance |
| (in millions) |
| |
|
|
| |
|
|
| GAAP
operating expenses |
$95 - $100 |
| Non-GAAP
adjustments |
|
| |
Stock-based
compensation expense |
20 |
| |
Rent abatement |
2 |
| Non-GAAP
operating expenses |
$73 - $78 |
| |
|
|
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