Otonomy Reports Second Quarter 2018 Financial Results and Provides Corporate Update
August 08 2018 - 4:22PM
Otonomy, Inc. (NASDAQ: OTIC), a biopharmaceutical company
dedicated to the development of innovative therapeutics for
otology, today reported financial results for the quarter ended
June 30, 2018 and provided an update on its corporate activities
and product pipeline.
Second Quarter 2018 and Subsequent
Highlights
- Initiated Phase 3 Trial for
OTIVIDEX™ in Ménière’s
Disease: In July 2018, Otonomy announced initiation of the
additional Phase 3 trial required to support submission for U.S.
registration of OTIVIDEX in Ménière’s disease. The design and
conduct of this pivotal trial, which will enroll approximately 160
patients, is based on the successful AVERTS-2 Phase 3 trial.
Otonomy expects top-line results in the first half of 2020.
- Completed Co-Promotion Partnership for
OTIPRIO® in Acute Otitis
Externa: In August 2018, Otonomy
announced the signing of a co-promotion agreement with Mission
Pharmacal, a well-established privately held pharmaceutical
company, that provides Mission with an exclusive right to promote
OTIPRIO for acute otitis externa (AOE) in pediatrician and primary
care physician offices as well as urgent care clinics in the United
States. This agreement is expected to generate positive cashflow
for Otonomy, which retains all commercial rights for other OTIPRIO
indications and customer segments.
- Other Pipeline Development Efforts on Track:
Otonomy’s product pipeline includes multiple programs addressing
important unmet medical needs and broad patient populations in
neurotology. The company advanced all of these programs during the
second quarter of 2018.
- OTO-313 is a sustained-exposure formulation of
the NMDA receptor antagonist gacyclidine in development for the
treatment of tinnitus. A Phase 1 clinical safety trial for
gacyclidine has been completed, with no safety concerns observed.
The company expects to initiate a Phase 1/2 clinical trial in
tinnitus patients in the first half of 2019.
- OTO-413 is a sustained-exposure formulation of
brain-derived neurotrophic factor (BDNF) in development for the
repair of cochlear synaptopathy and the treatment of
speech-in-noise hearing difficulties. The company expects to
initiate a Phase 1/2 clinical trial in hearing loss patients in the
first half of 2019.
- OTO-5XX is an otoprotectant in preclinical
development for the prevention of cisplatin-induced hearing
loss.
- OTO-6XX induces hair cell regeneration;
preclinical development is ongoing for the treatment of severe
hearing loss.
- Favorable Ruling in Patent Interference Case:
Although not involving issued patents covering OTIPRIO or our
product candidates, Otonomy filed a request for interference in
April 2015 against a U.S. patent application controlled by Auris
Medical Holding in order to broadly protect our technology in the
field of sustained-exposure otic drug delivery. Otonomy appealed an
initial ruling by the Patent Trial and Appeal Board, and in August
2018, the Federal Circuit Court issued a final ruling in Otonomy’s
favor.
- Elected James Breitmeyer, M.D., Ph.D., to Board of
Directors: Dr. Breitmeyer was elected to the Otonomy board
of directors at the Annual Meeting of Stockholders in June 2018. He
has significant experience in pharmaceutical product development
acquired through senior management roles at a number of companies
including Bavarian Nordic, Cadence Pharmaceuticals, Applied
Molecular Evolution, and Serono Laboratories. Dr. Breitmeyer
currently serves as president, CEO and director of Oncternal
Therapeutics, and a director of Zogenix. He replaces George Morrow,
who did not stand for reelection to the Otonomy board of
directors.
“Initiation of the remaining Phase 3 trial for OTIVIDEX and
completion of a co-promotion partnership for OTIPRIO are
significant accomplishments for Otonomy. Moreover, achievement of
these milestones demonstrates that we are on track to execute the
business plan we implemented at the beginning of the year,” said
David A. Weber, Ph.D., president and CEO of Otonomy. “I believe
that the value of our broad development pipeline, which addresses
the most significant unmet medical needs and largest market
opportunities in the untapped neurotology field, is highly
undervalued and substantially underappreciated by investors today.
I am committed to addressing this disconnect through upcoming
investor outreach initiatives and future informational
activities.”
Anticipated Upcoming Milestones
- By the end of 2018, select a candidate for clinical development
for both OTO-5XX and OTO-6XX hearing loss programs.
- In first half of 2019, initiate a Phase 1/2 clinical trial of
OTO-313 in tinnitus patients.
- In first half of 2019, initiate a Phase 1/2 clinical trial of
OTO-413 in hearing loss patients.
Second Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $100.0 million as of June 30, 2018,
compared to $120.0 million as of December 31, 2017.
- Operating Expenses: GAAP operating expenses
were $13.8 million for the second quarter of 2018, compared to
$23.5 million for the second quarter of 2017. Non-GAAP operating
expenses, which exclude stock-based compensation and rent abatement
expense, were $9.4 million for the second quarter of 2018, compared
to $19.3 million for the second quarter of 2017.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the second quarter
of 2018 were $8.2 million, compared to $12.7 million for the second
quarter of 2017. The decrease was primarily a result of decreased
clinical trial activities for OTIPRIO and OTIVIDEX versus the prior
year period.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
second quarter of 2018 were $5.6 million, compared to $10.7 million
for the second quarter of 2017. The decrease was primarily a result
of reduced selling expenses due to the discontinuation of
promotional support for OTIPRIO.
- Financial Guidance: Otonomy reaffirms its
expectations that GAAP operating expenses for 2018 will be in the
range of $52-$57 million, and that non-GAAP operating expenses for
2018 will be in the range of $40-$45 million.
Webcast and Conference Call
Otonomy management will host a webcast and conference call
regarding this announcement at 4:30 p.m. EDT/1:30 p.m. PDT 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: 6977596. 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 dedicated to the
development of innovative therapeutics for otology. 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, the potential benefits of the co-promotion
agreement and other information relating to the transaction between
Otonomy and Mission, timing of top-line results and patient
recruitment and enrollment plans for the Phase 3 trial for
OTIVIDEX, timing of a Phase 1/2 clinical trial for OTO-313, timing
of a Phase 1/2 clinical trial for OTO-413, timing of candidate
selection for OTO-5XX and OTO-6XX programs, financial guidance for
2018, 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
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; 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 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 May 9, 2018, 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 June 30, |
|
As of December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
(unaudited) |
|
|
|
Cash and cash
equivalents |
$ |
19,024 |
|
|
$ |
18,456 |
|
|
|
|
|
|
|
Short-term
investments |
|
80,984 |
|
|
|
101,548 |
|
|
|
|
|
|
|
Total assets |
|
108,191 |
|
|
|
128,364 |
|
|
|
|
|
|
|
Total liabilities |
|
8,455 |
|
|
|
11,085 |
|
|
|
|
|
|
|
Accumulated
deficit |
|
(389,827 |
) |
|
|
(364,850 |
) |
|
|
|
|
|
|
Total stockholders'
equity |
|
99,736 |
|
|
|
117,279 |
|
|
|
|
|
|
Otonomy, Inc. |
Condensed Statements of
Operations |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
(unaudited) |
|
(unaudited) |
Product
sales, net |
$ |
123 |
|
|
$ |
326 |
|
|
$ |
424 |
|
|
$ |
684 |
|
Costs and
operating expenses: |
|
|
|
|
|
|
|
|
Cost of product
sales |
|
241 |
|
|
|
397 |
|
|
|
513 |
|
|
|
860 |
|
|
Research and
development |
|
8,225 |
|
|
|
12,714 |
|
|
|
13,875 |
|
|
|
25,899 |
|
|
Selling, general and
administrative |
|
5,619 |
|
|
|
10,747 |
|
|
|
11,776 |
|
|
|
24,839 |
|
Total costs
and operating expenses |
|
14,085 |
|
|
|
23,858 |
|
|
|
26,164 |
|
|
|
51,598 |
|
Loss from
operations |
|
(13,962 |
) |
|
|
(23,532 |
) |
|
|
(25,740 |
) |
|
|
(50,914 |
) |
|
|
|
|
|
|
|
|
|
Interest
income |
|
409 |
|
|
|
311 |
|
|
|
763 |
|
|
|
615 |
|
Net
loss |
$ |
(13,553 |
) |
|
$ |
(23,221 |
) |
|
$ |
(24,977 |
) |
|
$ |
(50,299 |
) |
|
|
|
|
|
|
|
|
|
Net loss
per share, basic and diluted |
$ |
(0.44 |
) |
|
$ |
(0.77 |
) |
|
$ |
(0.82 |
) |
|
$ |
(1.66 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net loss per
share, |
|
|
|
|
|
|
|
|
basic and diluted |
|
30,594,288 |
|
|
|
30,269,190 |
|
|
|
30,581,481 |
|
|
|
30,263,042 |
|
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
|
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
(unaudited) |
|
(unaudited) |
|
GAAP
operating expenses |
|
|
|
|
|
|
|
|
|
Research and
development |
$ |
8,225 |
|
|
$ |
12,714 |
|
|
$ |
13,875 |
|
|
$ |
25,899 |
|
|
|
Selling, general and
administrative |
|
5,619 |
|
|
|
10,747 |
|
|
|
11,776 |
|
|
|
24,839 |
|
|
Total GAAP
operating expenses |
|
13,844 |
|
|
|
23,461 |
|
|
|
25,651 |
|
|
|
50,738 |
|
|
Non-GAAP
adjustments |
|
|
|
|
|
|
|
|
|
R&D stock-based
compensation expense |
|
(1,698 |
) |
|
|
(1,359 |
) |
|
|
(2,335 |
) |
|
|
(2,344 |
) |
|
|
SG&A stock-based
compensation expense |
|
(2,738 |
) |
|
|
(2,126 |
) |
|
|
(4,810 |
) |
|
|
(4,861 |
) |
|
|
Rent abatement |
|
- |
|
|
|
(695 |
) |
|
|
- |
|
|
|
(1,389 |
) |
|
Total
non-GAAP adjustments |
|
(4,436 |
) |
|
|
(4,180 |
) |
|
|
(7,145 |
) |
|
|
(8,594 |
) |
|
Non-GAAP
operating expenses |
$ |
9,408 |
|
|
$ |
19,281 |
|
|
$ |
18,506 |
|
|
$ |
42,144 |
|
|
|
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of 2018 GAAP to Non-GAAP
Operating Expense Guidance |
(in millions) |
|
|
|
|
|
|
GAAP
operating expenses |
$52 - $57 |
Non-GAAP
adjustments |
|
|
Stock-based
compensation expense |
12 |
Non-GAAP
operating expenses |
$40 - $45 |
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