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Otonomy Reports Second Quarter 2018 Financial Results and Provides Corporate Update

August 8, 2018 4:22 PM

SAN DIEGO, Aug. 08, 2018 (GLOBE NEWSWIRE) -- Otonomy, Inc. (NASDAQ: OTIC), a biopharmaceutical company dedicated to the development of innovative therapeutics for otology, today reported financial results for the quarter ended June 30, 2018 and provided an update on its corporate activities and product pipeline.

Second Quarter 2018 and Subsequent Highlights

“Initiation of the remaining Phase 3 trial for OTIVIDEX and completion of a co-promotion partnership for OTIPRIO are significant accomplishments for Otonomy. Moreover, achievement of these milestones demonstrates that we are on track to execute the business plan we implemented at the beginning of the year,” said David A. Weber, Ph.D., president and CEO of Otonomy. “I believe that the value of our broad development pipeline, which addresses the most significant unmet medical needs and largest market opportunities in the untapped neurotology field, is highly undervalued and substantially underappreciated by investors today. I am committed to addressing this disconnect through upcoming investor outreach initiatives and future informational activities.”

Anticipated Upcoming Milestones

Second Quarter Financial Highlights

Webcast and Conference Call

Otonomy management will host a webcast and conference call regarding this announcement at 4:30 p.m. EDT/1:30 p.m. PDT 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: 6977596. 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 otology. 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, the potential benefits of the co-promotion agreement and other information relating to the transaction between Otonomy and Mission, timing of top-line results and patient recruitment and enrollment plans for the Phase 3 trial for OTIVIDEX, timing of a Phase 1/2 clinical trial for OTO-313, timing of a Phase 1/2 clinical trial for OTO-413, timing of candidate selection for OTO-5XX and OTO-6XX programs, financial guidance for 2018, 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 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; 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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the "SEC") on May 9, 2018, 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 InquiriesCanale CommunicationsHeidi Chokeir, Ph.D.Senior Vice President619.849.5377[email protected]

Investor InquiriesWestwicke PartnersRobert H. UhlManaging Director858.356.5932[email protected]

Otonomy, Inc.
Condensed Balance Sheet Data
(in thousands)
As of June 30, As of December 31,
2018 2017
(unaudited)
Cash and cash equivalents$ 19,024 $ 18,456
Short-term investments 80,984 101,548
Total assets 108,191 128,364
Total liabilities 8,455 11,085
Accumulated deficit (389,827) (364,850)
Total stockholders' equity 99,736 117,279

Otonomy, Inc.
Condensed Statements of Operations
(in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(unaudited) (unaudited)
Product sales, net$ 123 $ 326 $ 424 $ 684
Costs and operating expenses:
Cost of product sales 241 397 513 860
Research and development 8,225 12,714 13,875 25,899
Selling, general and administrative 5,619 10,747 11,776 24,839
Total costs and operating expenses 14,085 23,858 26,164 51,598
Loss from operations (13,962) (23,532) (25,740) (50,914)
Interest income 409 311 763 615
Net loss$ (13,553) $ (23,221) $ (24,977) $ (50,299)
Net loss per share, basic and diluted$ (0.44) $ (0.77) $ (0.82) $ (1.66)
Weighted-average shares used to compute net loss per share,
basic and diluted 30,594,288 30,269,190 30,581,481 30,263,042

Otonomy, Inc.
Reconciliation of GAAP to Non-GAAP Operating Expenses
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
(unaudited) (unaudited)
GAAP operating expenses
Research and development$ 8,225 $ 12,714 $ 13,875 $ 25,899
Selling, general and administrative 5,619 10,747 11,776 24,839
Total GAAP operating expenses 13,844 23,461 25,651 50,738
Non-GAAP adjustments
R&D stock-based compensation expense (1,698) (1,359) (2,335) (2,344)
SG&A stock-based compensation expense (2,738) (2,126) (4,810) (4,861)
Rent abatement - (695) - (1,389)
Total non-GAAP adjustments (4,436) (4,180) (7,145) (8,594)
Non-GAAP operating expenses$ 9,408 $ 19,281 $ 18,506 $ 42,144

Otonomy, Inc.
Reconciliation of 2018 GAAP to Non-GAAP Operating Expense Guidance
(in millions)
GAAP operating expenses $52 - $57
Non-GAAP adjustments
Stock-based compensation expense 12
Non-GAAP operating expenses $40 - $45

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Source: Otonomy, Inc.

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