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Otonomy (OTIC) Suspends Development of Lead Drug After Phase III Flop, Stock Plunges

8/30/2017 5:55:50 AM

Otonomy Suspends Development of Lead Drug After Phase III Flop, Stock Plunges
August 30, 2017
By Alex Keown, Breaking News Staff

SAN DIEGO – Shares of Otonomy, Inc. have plunged more than 80 percent this morning after the company announced its late stage Ménière’s disease treatment failed to meet its primary and secondary endpoints.

In addition to missing the primary endpoint, Otonomy said Otividex, OTO-104, also failed to show statistical significance for any key secondary endpoints after three months of use. Otonomy said it was suspending all developmental activities for Otividex, including a planned European Phase III trial that had not begun patient recruiting.

David Weber, president and chief executive officer of Otonomy, said the company was dismayed by the results. Weber said they were also surprised by both the higher placebo response and lower improvement provided by Otividex that researchers saw in earlier trials.

Otividex was being developed to treat patients with unilateral Ménière’s disease, an inner ear disorder characterized by attacks of vertigo. In the 16-week Phase III trial, researchers were hoping that the drug would reduce the number of vertigo days a patient experiences as measured by Poisson Regression analysis. Patients in both the Otividex and placebo groups showed similar reductions in the number and severity of vertigo episodes during the three month observation period. Patients taking Otividex, a sustained exposure formulation of the steroid dexamethasone, reported a 58 percent reduction from baseline in vertigo frequency by the third month of the trial. Patients taking placebo reported a 55 percent reduction, Otonomy said in its announcement.
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“Based on these results, we are immediately suspending all development activities for Otividex including the ongoing AVERTS-2 trial. In addition, the company is undertaking a review of its product pipeline and commercial efforts to identify opportunities to extend its cash runway and build shareholder value,” Weber said in a statement.

As of June 30, Otonomy had cash, cash equivalents, and short-term investments totaling $150.5 million with prior non-GAAP operating expense guidance of $80 to $85 million for 2017, the company said. As a result of the Phase III failure the company is withdrawing the spending guidance for the year pending the above-mentioned review.

In July, the U.S. Food and Drug Administration (FDA)accepted Otonomy’s New Drug Application for Otiprio, a treatment acute otitis externa (AOE). 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. The FDA is expected to make a decision on that treatment by March 2, 2018.

Shares of Otonomy closed at $20.80 on Tuesday. This morning, share prices fell below $4 to $3.68. As of 11 a.m. shares are trading at $4.20.

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