Topline data for
Implemented changes to commercial organization to improve OTIPRIO® sales performance
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Fourth Quarter 2016 and Subsequent Highlights
- OTIPRIO Launch Update: In March 2016, Otonomy announced the commercial availability of OTIPRIO (ciprofloxacin otic suspension) in the United States for the treatment of pediatric patients with bilateral otitis media with effusion undergoing tympanostomy tube placement (TTP). During 2016,
Otonomy'scommercial efforts focused on establishing patient “access” to OTIPRIO by building product awareness and advocacy with physicians, gaining formulary approval in target facilities and establishing reimbursement. Key accomplishments from launch through February 2017include:
- Established awareness and fostered advocacy for OTIPRIO by conducting product presentations to approximately 85% of the 2,000 physicians in our target audience and providing OTIPRIO through a sample program that reached more than 630 physicians affiliated with over 800 facilities.
- Based on a survey of more than 190 physicians who participated in the sample program, we believe that clinician experience with OTIPRIO has been favorable. Greater than 90% of respondents indicated a positive overall impression of OTIPRIO after using the samples and greater than 90% indicated a likelihood to use the product in the future.
- OTIPRIO received formulary approval or has been purchased by more than 360 facilities, and reviews are in process at approximately 240 additional hospitals. Otonomy has an 88% overall success rate for formulary approvals.
- More than 200 facilities have purchased OTIPRIO and over 60% of these accounts have placed repeat orders.
- Obtained a C code for OTIPRIO that became effective as of
July 1, 2016, and a J code that became the permanent billing code for OTIPRIO as of January 1, 2017. The J code replaces the C code while retaining transitional pass-through payment status. Assignment of the J code will support patient access for use of OTIPRIO during TTP surgery as well as office-based expansion indications, if and when approved.
- Ongoing tracking of reimbursement claims by
Otonomy'sthird party vendor has confirmed separate payment for OTIPRIO in addition to the TTP procedure itself by multiple payors for both Medicaidand commercially-insured patients.
For 2017, Otonomy's commercial priority has transitioned to "pull-through" which the company defines as the purchase and utilization of OTIPRIO in facilities where the product has received formulary approval. The monthly level of pull-through has not significantly increased in the first two months of 2017 compared to the fourth quarter of 2016. As a result, the company has made the following changes to the commercial organization to increase the focus on OTIPRIO utilization and improve sales performance:
- Hired David Kaplan as vice president, sales. Mr. Kaplan previously served as vice president, sales for
Pacira Pharmaceuticals, Inc.from April 2013through March 2016. During this period, annualized sales of EXPAREL® grew significantly from less than $50 millionto more than $250 million. Mr. Kaplan is directly reporting to David A. Weber, Ph.D., president and CEO.
- Realigned the sales territories to optimize coverage of accounts with current or near-term potential for OTIPRIO utilization, enabling the company to reduce the size of the sales force from 40 to 20 sales representatives. In addition, Otonomy’s chief commercial officer has left the company.
Otonomy'scommercial team has reassessed the list of target accounts according to the presence of one or more product advocates, approved or pending formulary access and demonstrated reimbursement. Based on this assessment, the reconfigured sales force is expected to initially focus on approximately 400 priority accounts that collectively account for about one-third of the U.S. TTP market. Otonomyexpects that the number of target accounts and sales representatives, and the level of market coverage, will increase in the future as we continue to expand market access and secure reimbursement for OTIPRIO.
- Announced Positive Top-Line Results from Phase 3 Clinical Trial of OTIPRIO in Patients with Acute Otitis Externa (AOE): In
January 2017, Otonomy announced positive results from its pivotal Phase 3 clinical trial of OTIPRIO in 262 pediatric and adult patients with AOE, also known as swimmer's ear. This single administration trial of OTIPRIO met the primary endpoint by showing a statistically significant increase in clinical cure rate compared to sham (no treatment) at Day 8 (p<0.001). OTIPRIO also demonstrated a statistically significant superiority to sham in clinical cure rate at all other time points assessed including Day 4 (p=0.021), Day 15 (p<0.001) and Day 29 (p<0.001), and was well-tolerated. Based on these positive results, Otonomyexpects to submit a supplemental New Drug Application (sNDA) to the U.S. Food and Drug Administration( FDA) in the first half of 2017.
- Successfully Completed Phase 2 Clinical Trial of OTIPRIO in Pediatric Patients with Acute Otitis Media with Tympanostomy Tubes (AOMT): In
October 2016, Otonomyannounced the successful completion of a Phase 2 clinical trial that evaluated a single administration of OTIPRIO for the treatment of pediatric patients with AOMT. The trial demonstrated that both OTIPRIO doses evaluated, 6 mg (0.1 mL) and 12 mg (0.2 mL), were well-tolerated and achieved higher and statistically significant (p<0.05) clinical cure rates over sham (no treatment). Otonomybelieves this trial supports the advancement of OTIPRIO into Phase 3 in AOMT and intends to discuss the requirements for such a program with the FDAin the first half of 2017.
- Enrollment in AVERTS-1 and AVERTS-2 Phase 3 Clinical Trials for
OTO-104 in Ménière’s Disease is Ongoing with Results Expected in the Second Half of 2017: Otonomy is conducting two identical, parallel Phase 3 trials for OTO-104 in patients with Ménière’s disease, AVERTS-1 in the United States and AVERTS-2 in Europe. Each trial is a 16-week, prospective, randomized, double-blind, placebo-controlled trial that is expected to enroll approximately 160 patients with unilateral Ménière’s disease.
- Initiated Patient Enrollment for Phase 2 Clinical Trial of
OTO-104 in Hearing Loss Indication: In January 2017, Otonomyinitiated enrollment of the first patients in a Phase 2 clinical trial evaluating OTO-104 for the prevention of hearing loss in cancer patients undergoing chemotherapy with platinum-based agents. This multicenter trial is designed to assess the feasibility, safety and exploratory efficacy of OTO-104 given by intratympanic administration in subjects at risk for ototoxicity from cisplatin chemotherapy.
- Completed Phase 1 Clinical Safety Trial of
OTO-311, a Potential Tinnitus Treatment: OTO-311 is a single-dose, sustained-exposure formulation of the potent and selective N-Methyl-D-Aspartate (NMDA) receptor antagonist gacyclidine that is in development for the treatment of tinnitus. A Phase 1 clinical safety trial was completed and a dose selected for evaluation in a Phase 2 clinical trial that is expected to start in the second half of 2017.
“2016 was a highly productive year for
Anticipated Upcoming Milestones
- Submission of an sNDA to the
FDAfor OTIPRIO in AOE in the first half of 2017.
- Completion of an End-of-Phase 2 meeting with the
FDAfor OTIPRIO in AOMT in the first half of 2017.
- Announcement of topline data from the AVERTS-1 and AVERTS-2 Phase 3 clinical trials for
OTO-104 in Ménière’s disease during the second half of 2017.
- Initiation of a Phase 2 clinical trial for
OTO-311 for the treatment of tinnitus in the second half of 2017.
Fourth Quarter and Full Year 2016 Financial Highlights
- Cash Position: Cash, cash equivalents, and short-term investments totaled
$196.4 millionas of December 31, 2016, compared to $184.8 millionas of December 31, 2015.
- Revenue: Net sales of OTIPRIO totaled
$0.3 millionfor the fourth quarter of 2016. For the full year, net sales totaled $0.7 million.
- Operating Expenses: GAAP operating expenses were
$26.2 millionfor the fourth quarter of 2016, compared to $21.1 millionfor the fourth quarter of 2015. For the full year 2016, GAAP operating expenses were $110.5 millioncompared to $62.0 millionfor 2015. Non-GAAP operating expenses, which exclude stock-based compensation and rent abatement expense, were $22.7 millionfor the fourth quarter of 2016, compared to $18.8 millionfor the fourth quarter of 2015. For the full year 2016, non-GAAP operating expenses were $97.7 millioncompared to $54.3 millionfor 2015.
- Research and Development Expenses: GAAP research and development (R&D) expenses for the fourth quarter of 2016 were
$14.2 million, compared to $13.3 millionfor the fourth quarter of 2015. The increase was primarily a result of increased clinical trial activities for both OTIPRIO and OTO-104 versus the prior year period. For the full year 2016, GAAP R&D expenses were $60.7 millioncompared to $38.8 millionfor 2015.
- Selling, General and Administrative Expenses: GAAP selling, general and administrative (SG&A) expenses in the fourth quarter of 2016 were
$12.0 million, compared to $7.8 millionfor the fourth quarter of 2015. The increase was primarily attributable to increased personnel expense and operating costs related to the commercial launch of OTIPRIO. For the full year 2016, GAAP SG&A expenses were $49.8 millioncompared to $23.2 millionfor 2015.
- Financial Guidance:
Otonomyhad cash, cash equivalents and short-term investments totaling approximately $196.4 millionon December 31, 2016. Based on the commercial personnel changes noted above, Otonomyprovides guidance for GAAP operating expenses in the range of $103-$108 millionfor 2017, and Otonomyis reducing its non-GAAP operating expense guidance for 2017 from $85-$90 millionto $80-$85 million.
Webcast and Conference Call
Non-GAAP Operating Expenses
In this press release, Otonomy’s operating expenses are provided in accordance with generally accepted accounting principles (GAAP) in
OTIPRIO (ciprofloxacin otic suspension) is a fluoroquinolone antibacterial indicated for the treatment of pediatric patients with bilateral otitis media with effusion undergoing tympanostomy tube placement. OTIPRIO is administered by a physician as a single 0.1 mL (6 mg) intratympanic administration into each affected ear, following suctioning of the middle ear effusion. The thermosensitive suspension exists as a liquid at or below room temperature and gels when warmed. In two Phase 3 trials, a single intraoperative administration of OTIPRIO demonstrated a statistically significant reduction in the cumulative proportion of study treatment failures compared to tubes alone (p-value <0.001).
Important Safety Information for OTIPRIO
Contraindications: OTIPRIO is contraindicated in patients with a history of hypersensitivity to ciprofloxacin, to other quinolones, or to any of the components of OTIPRIO.
Warnings and Precautions - Potential for Microbial Overgrowth: OTIPRIO may result in overgrowth of nonsusceptible bacteria and fungi. If such infections occur, institute alternative therapy.
Adverse Reactions: Adverse reactions (incidence at least 3%) that occurred in two Phase 3 trials with OTIPRIO vs sham were: nasopharyngitis (5% vs 4%), irritability (5% vs 3%), and rhinorrhea (3% vs 2%).
Use in Specific Populations - Pediatric Use: The safety and effectiveness of OTIPRIO in infants below six months of age have not been established.
Full prescribing information can be found at www.OTIPRIO.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
|Condensed Balance Sheet Data|
|As of December 31,|
|Cash and cash equivalents||$||24,156||$||158,664|
|Total stockholders' equity||192,737||181,534|
|Condensed Statements of Operations|
|(in thousands, except share and per share data)|
|Three Months Ended||Years Ended|
|December 31,||December 31,|
|Product sales, net||$||273||$||-||$||683||$||-|
|Costs and operating expenses:|
|Cost of product sales||909||-||1,664||-|
|Research and development||14,165||13,277||60,723||38,762|
|Selling, general and administrative||12,052||7,869||49,777||23,214|
|Total costs and operating expenses||27,126||21,146||112,164||61,976|
|Loss from operations||(26,853||)||(21,146||)||(111,481||)||(61,976||)|
|Other income (expense)||281||4||898||308|
|Net loss per share, basic and diluted||$||(0.88||)||$||(0.87||)||$||(3.69||)||$||(2.57||)|
|Weighted-average shares used to compute net loss per share,|
|basic and diluted||30,215,162||24,262,874||29,962,781||23,952,562|
|Reconciliation of GAAP to Non-GAAP Operating Expenses|
|Three Months Ended||Years Ended|
|December 31,||December 31,|
|GAAP operating expenses|
|Research and development||$||14,165||$||13,277||$||60,723||$||38,762|
|Selling, general and administrative||12,052||7,869||49,777||23,214|
|Total GAAP operating expenses||26,217||21,146||110,500||61,976|
|R&D stock-based compensation expense||(781||)||(875||)||(2,996||)||(2,969||)|
|SG&A stock-based compensation expense||(2,540||)||(1,520||)||(9,574||)||(4,747||)|
|Total non-GAAP adjustments||(3,553||)||(2,395||)||(12,802||)||(7,716||)|
|Non-GAAP operating expenses||$||22,664||$||18,751||$||97,698||$||54,260|
|Reconciliation of 2017 GAAP to Non-GAAP Operating Expense Guidance|
|GAAP operating expenses||$103 - $108|
|Stock-based compensation expense||21|
|Non-GAAP operating expenses||$80 - $85|
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