Otonomy Reports Fourth Quarter and Full Year 2018 Financial Results and Provides Corporate Update
March 04 2019 - 4:18PM
- OTIVIDEX™ Phase 3 trial
in Ménière’s disease on track for results in first half
2020
- OTO-313 Phase 1/2 trial in tinnitus
expected to start in second quarter of 2019
- OTO-413 Phase 1/2 trial in hearing
loss expected to start in third quarter of 2019
- $15 million term loan completed to extend cash runway
into 2021
Conference call and webcast today at 4:30
p.m. EST
Otonomy, Inc. (NASDAQ: OTIC), a biopharmaceutical company
dedicated to the development of innovative therapeutics for
neurotology, today reported financial results for the fourth
quarter and year ended December 31, 2018 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. EST to
discuss recent highlights and financial results.
"Our accomplishments in 2018 have positioned the company for
significant advancement in 2019 as we continue enrollment of our
Phase 3 trial of OTIVIDEX in Ménière’s disease, initiate Phase 1/2
clinical trials for OTO-313 in tinnitus and OTO-413 in hearing
loss, and work towards delivering value-creating results for all
three clinical trials in 2020," said David A. Weber, Ph.D.,
president and CEO of Otonomy. “We have also ensured that the
necessary resources are in place to both complete these trials and
continue to advance our exciting preclinical programs by carefully
managing our expenses, establishing a co-promotion partnership for
OTIPRIO®, and completing a debt financing that extends our cash
runway into 2021. I look forward to sharing our plan and upcoming
catalysts more broadly with investors during 2019."
Product Pipeline and Corporate Update
- OTIVIDEX: Phase 3 trial in Ménière’s
disease enrolling patients with results expected in the first half
of 2020. Otonomy has completed one successful Phase 3
trial and is conducting this additional pivotal trial to support a
submission for U.S. registration of OTIVIDEX in Ménière’s disease.
The company plans to enroll approximately 160 patients, with the
design and conduct of this trial based on the successful AVERTS-2
trial. Results from the AVERTS-2 trial were presented at the
American Academy of Otolaryngology - Head and Neck Surgery
Foundation (AAO-HNSF) Annual Meeting in October 2018.
- OTO-313: Phase 1/2 trial in tinnitus
patients expected to start in the second quarter of 2019 with
results in the first half of 2020. OTO-313 is a
sustained-exposure formulation of the NMDA receptor antagonist
gacyclidine. The Phase 1/2 clinical trial will include an initial
safety cohort followed by an exploratory efficacy study that will
enroll approximately 50 patients with unilateral tinnitus. An
overview of the OTO-313 program was recently presented at the
Association for Research in Otolaryngology (ARO) Annual
Meeting.
- OTO-413: Phase 1/2 trial in hearing
loss patients expected to start in the third quarter of 2019 with
results in the second half of 2020. OTO-413 is a
sustained-exposure formulation of brain-derived neurotrophic factor
(BDNF) in development for the repair of cochlear synaptopathy, an
underlying cause of hearing loss. The Phase 1/2 trial will enroll
approximately 40 patients with speech-in-noise hearing loss. A
presentation related to the OTO-413 program was recognized as a
Neuroscience 2018 Hot Topic at the Society for Neuroscience (SfN)
Annual Meeting in November 2018.
- OTO-510: IND enabling activities to be initiated for
cisplatin-induced hearing loss (CIHL) otoprotection
program. CIHL is an important unmet medical need with no
approved therapies and approximately 500,000 patients, including
5,000 children undergoing chemotherapy with ototoxic platinum-based
agents each year in the United States. OTO-510 is a
sustained-exposure formulation of an undisclosed small molecule
designed for intratympanic administration to provide otoprotection
without tumor protection.
- OTO-6XX: Development candidate
selected for regenerative hearing loss program. Otonomy
has demonstrated regeneration of hair cells in a nonclinical
proof-of-concept model using a class of small molecules formulated
for sustained-exposure local delivery, and has selected a lead
compound for development.
- OTIPRIO: Co-promotion partnership with Mission
Pharmacal in acute otitis externa (AOE) proceeding as
planned. Preparations are underway for Mission to launch
OTIPRIO to high volume pediatric and primary care physician offices
in advance of the peak summer season for treating AOE.
- $15 million Term Loan Completed to Extend Cash Runway
into 2021. In December 2018, Otonomy completed a term loan
financing with Oxford Finance LLC totaling $15 million. The loan
provides for a 24-month interest-only repayment period, which can
be extended upon successful results from the ongoing OTIVIDEX Phase
3 trial. There are no financial covenants or warrants associated
with the loan.
Anticipated Upcoming Milestones
- In second quarter of 2019, initiate a Phase 1/2 clinical trial
of OTO-313 in tinnitus patients.
- In third quarter of 2019, initiate a Phase 1/2 clinical trial
of OTO-413 in hearing loss patients.
- In first half of 2020, complete OTO-313 Phase 1/2 clinical
trial.
- In first half of 2020, complete Phase 3 trial for OTIVIDEX in
Ménière’s disease.
- In second half of 2020, complete OTO-413 Phase 1/2 clinical
trial.
Fourth Quarter and Full Year 2018 Financial
Highlights
- Cash Position: Cash, cash equivalents, and
short-term investments totaled $97.3 million as of December 31,
2018, compared to $120.0 million as of December 31, 2017. The cash
balance for 2018 includes proceeds from a $15.0 million term loan
provided by Oxford Finance LLC that was completed in December
2018.
- Operating Expenses: GAAP operating expenses
were $13.2 million for the fourth quarter of 2018, compared to
$17.5 million for the fourth quarter of 2017. For the full year
2018, GAAP operating expenses were $51.9 million compared to $89.5
million for 2017. Non-GAAP operating expenses, which exclude
stock-based compensation and rent abatement expense, were $10.8
million for the fourth quarter of 2018, compared to $14.3 million
for the fourth quarter of 2017. For the full year 2018, non-GAAP
operating expenses were $39.5 million compared to $73.8 million for
2017.
- Research and Development Expenses: GAAP
research and development (R&D) expenses for the fourth quarter
of 2018 were $9.7 million, compared to $6.0 million for the fourth
quarter of 2017. The increase was primarily due to increased costs
for nonclinical and manufacturing activities to support initiation
of clinical trials for OTO-313 and OTO-413. For the full year 2018,
GAAP R&D expenses were $31.8 million compared to $42.7 million
for 2017.
- Selling, General and Administrative Expenses:
GAAP selling, general and administrative (SG&A) expenses in the
fourth quarter of 2018 were $3.6 million, compared to $11.5 million
for the fourth quarter of 2017. The decrease was primarily a result
of reduced selling expenses due to the discontinuation of
promotional support for OTIPRIO. For the full year 2018, GAAP
SG&A expenses were $20.0 million compared to $46.8 million for
2017.
- Operating Expense Guidance:--
2019: Otonomy expects that GAAP operating expenses will be
in the range of $55-$60 million, and that non-GAAP operating
expenses will be in the range of $45-$50 million.--
2020: Otonomy expects that operating expenses will be
lower than 2019 as multiple clinical trials are
completed.
- Cash Runway: Otonomy expects that its current
cash, cash equivalents, and short term investments will be
sufficient to fund the company through completion of the OTIVIDEX
Phase 3 trial, OTO-313 Phase 1/2 trial, and OTO-413 Phase 1/2 trial
in 2020, and will support company operations into 2021.
Webcast and Conference Call
Otonomy management will host a webcast and conference call
regarding 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: 9989017. 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 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, timing of results, patient recruitment and
enrollment plans for, and design and conduct of, the Phase 3
clinical trial for OTIVIDEX; timing of initiation and results,
patient recruitment and enrollment plans for, and design and
conduct of, the Phase 1/2 clinical trial for OTO-313; timing
of initiation and results, patient recruitment and enrollment plans
for, and design and conduct of, the Phase 1/2 clinical trial for
OTO-413; expectations regarding IND enabling activities for
OTO-510; expectations regarding OTO-6XX development; the activity
and timing of launch under, and potential benefits of, the
co-promotion agreement between Otonomy and Mission; the benefits of
the loan provided by Oxford Finance LLC and the potential extension
of the interest-only period; expectations regarding the timing and
nature of upcoming milestones; expectations regarding operating
expenses for 2019 and 2020; expectations that current capital is
sufficient to fund the company through completion of the OTIVIDEX
Phase 3 trial, OTO-313 Phase 1/2 trial, and OTO 413 Phase 1/2
trial, and will support company operations into 2021; 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
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; Otonomy’s ability to obtain
regulatory approval for its product candidates; the risks of the
occurrence of any event, change or other circumstance that could
give rise to the termination of the co-promotion agreement between
Otonomy and Mission; 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;
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 Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the "SEC") on March 4, 2019,
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 ScienceLeticia DiazVice President
202.587.2517ldiaz@spectrumscience.com
Investor InquiriesWestwicke PartnersRobert H. UhlManaging
Director858.356.5932robert.uhl@westwicke.com
|
Otonomy, Inc. |
|
Condensed Balance Sheet Data |
|
(in thousands) |
|
|
|
|
|
|
|
As of December 31, |
|
As of December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
33,633 |
|
|
$ |
18,456 |
|
|
|
|
|
|
|
Short-term
investments |
|
63,651 |
|
|
|
101,548 |
|
|
|
|
|
|
|
Total assets |
|
104,992 |
|
|
|
128,364 |
|
|
|
|
|
|
|
Long-term debt,
net |
|
14,764 |
|
|
|
- |
|
|
|
|
|
|
|
Total liabilities |
|
25,255 |
|
|
|
11,085 |
|
|
|
|
|
|
|
Accumulated
deficit |
|
(415,218 |
) |
|
|
(364,850 |
) |
|
|
|
|
|
|
Total stockholders'
equity |
|
79,737 |
|
|
|
117,279 |
|
Otonomy, Inc. |
Condensed Statements of
Operations |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
Product
sales, net |
$ |
208 |
|
|
$ |
270 |
|
|
$ |
745 |
|
|
$ |
1,236 |
|
Costs and
operating expenses: |
|
|
|
|
|
|
|
|
Cost of product
sales |
|
271 |
|
|
|
1,948 |
|
|
|
946 |
|
|
|
3,098 |
|
|
Research and
development |
|
9,669 |
|
|
|
6,041 |
|
|
|
31,844 |
|
|
|
42,701 |
|
|
Selling, general and
administrative |
|
3,580 |
|
|
|
11,451 |
|
|
|
20,008 |
|
|
|
46,838 |
|
Total costs
and operating expenses |
|
13,520 |
|
|
|
19,440 |
|
|
|
52,798 |
|
|
|
92,637 |
|
Loss from
operations |
|
(13,312 |
) |
|
|
(19,170 |
) |
|
|
(52,053 |
) |
|
|
(91,401 |
) |
|
|
|
|
|
|
|
|
|
Other
income, net |
|
467 |
|
|
|
337 |
|
|
|
1,685 |
|
|
|
1,271 |
|
Net
loss |
$ |
(12,845 |
) |
|
$ |
(18,833 |
) |
|
$ |
(50,368 |
) |
|
$ |
(90,130 |
) |
|
|
|
|
|
|
|
|
|
Net loss
per share, basic and diluted |
$ |
(0.42 |
) |
|
$ |
(0.62 |
) |
|
$ |
(1.65 |
) |
|
$ |
(2.97 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average shares used to compute net loss per share, |
|
|
|
|
|
|
|
|
basic and diluted |
|
30,646,951 |
|
|
|
30,375,053 |
|
|
|
30,610,244 |
|
|
|
30,304,158 |
|
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of GAAP to Non-GAAP Operating
Expenses |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
operating expenses |
|
|
|
|
|
|
|
|
Research and
development |
$ |
9,669 |
|
|
$ |
6,041 |
|
|
$ |
31,844 |
|
|
$ |
42,701 |
|
|
Selling, general and
administrative |
|
3,580 |
|
|
|
11,451 |
|
|
|
20,008 |
|
|
|
46,838 |
|
Total GAAP
operating expenses |
|
13,249 |
|
|
|
17,492 |
|
|
|
51,852 |
|
|
|
89,539 |
|
Non-GAAP
adjustments |
|
|
|
|
|
|
|
|
R&D stock-based
compensation expense |
|
(1,075 |
) |
|
|
(597 |
) |
|
|
(4,447 |
) |
|
|
(3,763 |
) |
|
SG&A stock-based
compensation expense |
|
(1,375 |
) |
|
|
(2,592 |
) |
|
|
(7,955 |
) |
|
|
(9,878 |
) |
|
Rent abatement |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,084 |
) |
Total
non-GAAP adjustments |
|
(2,450 |
) |
|
|
(3,189 |
) |
|
|
(12,402 |
) |
|
|
(15,725 |
) |
Non-GAAP
operating expenses |
$ |
10,799 |
|
|
$ |
14,303 |
|
|
$ |
39,450 |
|
|
$ |
73,814 |
|
|
|
|
|
|
|
|
|
|
Otonomy, Inc. |
Reconciliation of 2019 GAAP to Non-GAAP
Operating Expense Guidance |
(in millions) |
|
|
|
|
|
|
GAAP
operating expenses |
$55 - $60 |
Non-GAAP
adjustments |
|
|
Stock-based
compensation expense |
$10 |
Non-GAAP
operating expenses |
$45 - $50 |
|
|
|
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