Otonomy provides business update, to cut non-commercial workforce by one-third
Otonomy 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 Meniere'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 Meniere'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 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 in tinnitus patients and a Phase 3 registration trial for OTIPRIO in pediatric patients with acute otitis media with tympanostomy tubes, or 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 $7M for the remainder of 2017, net of project wind-down expenses and severance payments. Total non-GAAP operating expenses are now expected to total $73M-$78M for 2017, reduced from previous guidance of $80M-85M, while GAAP operating expenses for 2017 are expected to total $95M-$100M, reduced from $103M-$108M; The company expects its cash balance to total $120M-$125M 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, 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 acute otitis externa. The sNDA is currently under review by the FDA with a Prescription Drug User Fee Act 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.