Otonomy Reports Second Quarter 2020 Financial Results and Provides Corporate Update
- Positive top-line results reported for Phase 1/2 trial of OTO-313 in tinnitus patients
- Public offering completed for total gross proceeds of
- Results from Phase 3 trial of OTIVIDEX® in Ménière’s disease expected in first quarter of 2021
- Results from Phase 1/2 trial of OTO-413 in hearing loss expected in fourth quarter of 2020
Conference call and webcast today at
“We have made great strides in advancing our product pipeline and achieving our corporate objectives during the past several months despite the challenges presented by the COVID-19 pandemic,” said
Otonomy Program Updates
- OTO-313: positive top-line results reported from Phase 1/2 clinical trial in tinnitus. In
July 2020, Otonomyreported positive top-line results from the Phase 1/2 trial of OTO-313 in patients with persistent tinnitus of at least moderate severity. The exploratory efficacy cohort of the trial included 31 evaluable patients randomized to a single intratympanic injection of OTO-313 or placebo (1:1 randomization) and then followed for eight weeks. Patients reported the severity of their tinnitus symptoms using the Tinnitus Functional Index (TFI), a clinically-validated instrument, and by the daily reporting of their tinnitus loudness and annoyance. The trial achieved its objectives by demonstrating a positive clinical signal for OTO-313 based on a TFI responder analysis, with a favorable safety profile. In particular, 43% of OTO-313 patients were responders based on the TFI at both Day 29 and Day 57 compared to 13% of placebo patients (p-value < 0.05). Furthermore, OTO-313 patients who were TFI responders on both Day 29 and Day 57 also reported improvements in tinnitus loudness and annoyance levels based on daily diaries and reported improvement in the Patient Global Impression of Change (PGIC), a general assessment of tinnitus status. Given these results, Otonomyis advancing OTO-313 into full Phase 2 development which may include evaluation of a higher dose and/or retreatment.
- OTIVIDEX Phase 3 clinical trial in Ménière’s disease: patient enrollment is ongoing with results expected in the first quarter of 2021. This trial is being conducted at approximately 60 trial sites dispersed across different regions of
the United Statesand multiple countries in Europe. In July 2020, Otonomyprovided an update on the statistical analysis plan for the ongoing trial. In response to questions received from the U.S. Food and Drug Administration(FDA), Otonomysubmitted a revised plan that uses the Negative Binomial model for primary analysis of the daily vertigo count data reported by patients. We believe that the Negative Binomial model provides the best fit of the OTIVIDEX clinical data based on the Phase 2b trial, AVERTS-2 Phase 3 trial, and integrated dataset from both trials. The Negative Binomial model also provides increased power to detect a treatment benefit enabling us to reduce the target enrollment to 142 patients while maintaining more than 90% power. We expect to complete patient enrollment during the third quarter of 2020 and announce results in the first quarter of 2021.
- OTO-413 Phase 1/2 clinical trial in hearing loss: patient enrollment is ongoing with results expected in the fourth quarter of 2020. This is an ascending single dose safety and exploratory efficacy study for OTO-413, a sustained exposure formulation of brain-derived neurotrophic factor (BDNF). We have successfully escalated through three dose levels totaling 24 patients and have nearly completed enrollment of patients in the high dose cohort. We expect to enroll approximately 16 patients in this cohort, randomized 3:1 for a single intratympanic injection of OTO-413 or placebo. Patients enrolled in this trial have a speech-in-noise hearing deficit measured at baseline and can have normal up to moderately-severe hearing loss by conventional testing. Following treatment, patients undergo repeated testing for safety and exploratory efficacy over 3 months. We expect to announce results from this trial in the fourth quarter of 2020.
- GJB2 gene therapy program: preclinical results support selection of product candidate.
Otonomyand Applied Genetic Technologies Corporation (AGTC) are collaborating to co-develop and co-commercialize an AAV-based gene therapy to restore hearing in patients with hearing loss caused by a mutation in the gap junction beta-2 (GJB2) gene -- the most common cause of congenital hearing loss. Preclinical results presented at the American Society of Gene & Cell Therapy(ASGCT) meeting in May 2020demonstrated that a gene of interest can be expressed in support cells of the cochlea, which are the relevant target cells for treating GJB2 deficiency, using novel and proprietary AAV capsids. Also, consistent gene expression was observed for at least 12 weeks following a single local administration. These results supported selection of the product candidate for further development.
- OTO-510: preclinical data presented for a novel and proprietary class of otoprotectant agents. Cisplatin is a potent chemotherapeutic agent that is widely used to treat a variety of cancers in adults and children, however, it is commonly associated with severe adverse effects including cisplatin-induced hearing loss (CIHL).
Otonomyhas presented preclinical results demonstrating varying degrees of otoprotection against CIHL for several classes of therapeutic agents. In particular, a novel class of agents that potently binds to cisplatin demonstrated greater otoprotection than anti-oxidant and anti-apoptotic molecules, and increased potency relative to other molecules currently in development.
- OTO-6XX: exclusive license completed for novel hearing loss compound. In
July 2020, Otonomyentered into an exclusive license agreement with KYORIN Pharmaceutical Co., Ltd.(“Kyorin”) that provides Otonomywith exclusive worldwide rights to develop, manufacture and commercialize a novel compound for the treatment of sensorineural hearing loss. Under the terms of the agreement, Otonomywill make an upfront payment to Kyorin as well as success-based milestone payments and pay a royalty on worldwide net sales. Otonomyis formulating the patent-protected compound utilizing the company’s proprietary technology to provide sustained drug exposure in the inner ear following a single local administration. The OTO-6XX program is targeting hair cell regeneration for the treatment of severe hearing loss.
- OTIPRIO®: co-promotion partnership initiated with ALK-Abelló, Inc. (ALK). In
June 2020, Otonomyentered a co-promotion agreement that provides ALK with an exclusive right to promote OTIPRIO for acute otitis externa (AOE) to office-based health care professionals in the United Statesincluding ear, nose and throat (ENT) physicians, pediatricians and primary care physicians. During the multi-year agreement, Otonomywill receive co-promotion fees and reimbursement of a proportion of product support costs while also retaining a share of adjusted gross profits from the sale of OTIPRIO for use in AOE.
Second Quarter Financial Highlights
- Cash Position: Cash, cash equivalents, and short-term investments totaled
$41.1 millionas of June 30, 2020, compared to $60.7 millionas of December 31, 2019. In July 2020, Otonomycompleted an underwritten public offering of 17,275,000 shares of its common stock, which includes the underwriters' full exercise of their option to purchase additional shares and pre-funded warrants to purchase up to 4,000,000 shares of its common stock, for total gross proceeds of approximately $69.1 million, before deducting underwriting discounts and commissions and other offering expenses payable by Otonomy. All of the securities were sold by Otonomy.
- Long-term Debt:
Otonomyobtained a $15 millionterm loan from Oxford Finance LLCin December 2018. In July 2020, the terms of the loan were amended to extend the interest-only repayment period from 24 months to 36 months, followed by 23 months of amortization.
- Operating Expenses: GAAP operating expenses were
$10.6 millionfor the second quarter of 2020, compared to $11.8 millionfor the second quarter of 2019. Non-GAAP operating expenses, which exclude stock-based compensation, were $9.1 millionfor the second quarter of 2020, compared to $10.6 millionfor the second quarter of 2019.
- Research and Development Expenses: GAAP research and development (R&D) expenses for the second quarter of 2020 were
$6.9 million, compared to $8.9 millionfor the second quarter of 2019. The decrease for the quarter was primarily due to reduced third-party development costs that were partially offset by increased compensation expense.
- Selling, General and Administrative Expenses: GAAP selling, general and administrative (SG&A) expenses in the second quarter of 2020 were
$3.7 million, compared to $2.9 millionfor the second quarter of 2019. The increase this quarter was primarily the result of discontinued cost reimbursement received from OTIPRIO co-promotion partners.
- Financial Update and Guidance:
- 2020 Operating Expenses:
Otonomycontinues to expect that non-GAAP operating expenses will be in the range of $35-$38 million, and GAAP operating expenses will be in the range of $45-$48 million.
- Cash Runway:
Otonomyexpects that its current cash, cash equivalents, and short-term investments will be sufficient to fund the company’s operations for at least two years.
Webcast and Conference Call
Cautionary Note Regarding Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or the future financial or operating performance of
|Condensed Balance Sheet Data|
|Cash and cash equivalents||$||32,045||$||25,194|
|Long-term debt, net||15,069||14,967|
|Leases, net of current||14,594||15,320|
|Total stockholders’ equity||20,249||40,233|
|Condensed Statements of Operations|
|(in thousands, except share and per share data)|
|Three Months Ended||Six Months Ended|
|Product sales, net||$||10||$||190||$||170||$||382|
|Costs and operating expenses:|
|Cost of product sales||511||203||725||416|
|Research and development||6,935||8,919||14,607||17,714|
|Selling, general and administrative||3,684||2,884||7,520||6,162|
|Total costs and operating expenses||11,130||12,006||22,852||24,292|
|Loss from operations||(11,120||)||(11,816||)||(22,682||)||(23,910||)|
|Other (expense) income, net||(334||)||89||(535||)||199|
|Net loss per share, basic and diluted||$||(0.37||)||$||(0.38||)||$||(0.75||)||$||(0.77||)|
|Weighted-average shares used to compute net loss per share,|
|basic and diluted||30,873,488||30,703,411||30,843,850||30,694,461|
|Reconciliation of GAAP to Non-GAAP Operating Expenses|
|Three Months Ended||Six Months Ended|
|GAAP operating expenses|
|Research and development||$||6,935||$||8,919||$||14,607||$||17,714|
|Selling, general and administrative||3,684||2,884||7,520||6,162|
|Total GAAP operating expenses||10,619||11,803||22,127||23,876|
|R&D stock-based compensation expense||(628||)||(572||)||(1,196||)||(1,231||)|
|SG&A stock-based compensation expense||(906||)||(680||)||(1,747||)||(1,514||)|
|Total non-GAAP adjustments||(1,534||)||(1,252||)||(2,943||)||(2,745||)|
|Non-GAAP operating expenses||$||9,085||$||10,551||$||19,184||$||21,131|
|Reconciliation of 2020 GAAP to Non-GAAP Operating Expense Guidance|
|GAAP operating expenses|| $45 -
|Stock-based compensation expense|
|Non-GAAP operating expenses|| $35 -
Source: Otonomy, Inc.