- Actions taken to reduce costs following suspension of OTIVIDEX™ development
- Non-commercial workforce reduced by one-third
- Current cash balance expected to fund company into 2020
- Review underway to prioritize the company's pipeline which includes multiple clinical and preclinical stage assets
SAN DIEGO, Sept. 13, 2017 (GLOBE NEWSWIRE) -- Otonomy, Inc. (NASDAQ:OTIC), a biopharmaceutical company focused on the development and commercialization of innovative therapeutics for diseases and disorders of the ear, today announced a set of immediate actions to preserve capital, extend its cash runway, and build shareholder value following the recent negative AVERTS-1 Phase 3 trial results for OTIVIDEX in Ménière’s disease.
The immediate steps the company is taking include the following:
- As previously announced, all development activities for OTIVIDEX have been suspended including termination of ongoing clinical trials and pre-registration support efforts. Data collected from the clinical trials will be reviewed to better understand the AVERTS-1 trial failure, advise any future development efforts in indications other than Ménière’s disease, and support potential monetization of the asset.
- Following the suspension of OTIVIDEX development, the company has implemented a workforce reduction totaling approximately one-third of personnel not involved in OTIPRIO® (ciprofloxacin otic suspension) commercial support.
- Additionally, no clinical trials will be initiated during the remainder of this year. Timing for initiation of a Phase 2 clinical trial of OTO-311 (gacyclidine) in tinnitus patients and a Phase 3 registration trial for OTIPRIO in pediatric patients with acute otitis media with tympanostomy tubes (AOMT) will be evaluated as part of the pipeline review and prioritization effort now underway.
- Cost savings from these actions are expected to total approximately $7 million for the remainder of 2017, net of project wind-down expenses and severance payments. Total non-GAAP operating expenses are now expected to total $73-$78 million for 2017 (reduced from previous guidance of $80-85 million) while GAAP operating expenses for 2017 are expected to total $95-$100 million (reduced from $103-$108 million).
- 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 expects its cash burn to total less than $45 million in 2018, and that its current cash balance will fund the company into 2020.
As discussed in the second quarter 2017 financial results news release and conference call (August 3, 2017), the company has recently completed its commercial reorganization, and efforts are underway to leverage the new sales team's pre-existing ENT relationships and familiarity with the hospital operating room setting to increase OTIPRIO utilization during ear tube surgery. In addition, the company continues to support review of the Supplemental New Drug Application (sNDA) filed for acute otitis externa. The sNDA is currently under review by the U.S. Food and Drug Administration (FDA) with a Prescription Drug User Fee Act (PDUFA) action date of March 2, 2018.
Preclinical development continues on multiple product candidates for the prevention and/or treatment of sensorineural hearing loss. This set of programs targets key mechanisms involved in the pathophysiology of hearing loss including age-related hearing loss. The company believes that these multiple acute and chronic indications collectively comprise the largest population of patients and market opportunity in the otology field.
"We moved quickly following the disappointing AVERTS-1 trial results to focus our efforts in order to reduce costs. I am deeply grateful to the talented individuals dedicated to developing OTIVIDEX for the treatment of Ménière’s disease, and we wish the best for those impacted by the workforce reduction," said David A. Weber, Ph.D., president and CEO of Otonomy.
"The changes we are making give us the cash runway we need to build shareholder value by focusing on key assets in our product pipeline which we believe is still the broadest in the otology field. We have a tremendous opportunity to utilize our experience, expertise, and resources to address important unmet medical needs such as hearing loss and tinnitus, and I look forward to outlining our plans in future business updates," added Dr. Weber.
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). OTIVIDEX™ is a sustained-exposure formulation of the steroid dexamethasone. OTO-311 is an NMDA receptor antagonist for the treatment of tinnitus that has completed a Phase 1 clinical safety trial. A set of programs targeting sensorineural hearing loss including age-related hearing loss are in preclinical development. Otonomy’s proprietary formulation technology utilizes a thermosensitive gel and drug microparticles to enable single dose treatment by a physician. 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 for a Phase 3 clinical trial for OTIPRIO in AOMT and a Phase 2 clinical trial for OTO-311, Otonomy’s financial guidance for 2017 and 2018, the estimate of how long Otonomy’s cash balance will fund operations, 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 commercial success of OTIPRIO and the regulatory success and advancement of additional product candidates, 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 August 3, 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.
Heidi Chokeir, Ph.D.
Senior Vice President
Robert H. Uhl