Otonomy Rips 90% After Meniere's Disease Drug Achieves Primary Endpoint

Otonomy Inc OTIC, a biopharmaceutical company that focuses on therapies related to diseases and disorders of the ear, reported its third-quarter results and announced an encouraging update to a phase 2 trial.

What You Need To Know

Otonomy lost 69 cents in its third quarter on revenue of $282,000; Wall Street analysts were expecting the company to lose 76 cents per share on revenue of $330,000.

The company ended the quarter with cash, cash equivalents, and short-term investments of $134.3 million versus $196.4 million as of the end of 2016. During the quarter, R&D expenses were $10.8 million versus $15.9 million in the same quarter a year ago.

In conjunction with the earnings report, Otonomy announced that its AVERTS-2 trial in patients with Meniere's Disease achieved its primary endpoint. The company's therapy called OTIVIDEX demonstrated clinically significant treatment benefit for patients.

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Why It's Important

The successful results of Otonomy's AVERTS-2 trial marks an "important milestone for the company and renews our excitement and commitment to continuing the registration program for OTIVIDEX," CEO David Weber, Ph.D., said in a press release.

The company now plans to proceed with a Phase 3 trial of AVERTS and will be meeting with the U.S. Food and Drug Administration in the first quarter of 2018 to discuss and review clinical requirements.

In addition, management will undertake a pipeline review and prioritization to present a development plan for multiple clinical and preclinical programs in the first quarter of next year.

"We believe that the continuation of OTIVIDEX development for Ménière's disease and the advancement of our other programs targeting important unmet medical needs including hearing loss and tinnitus provide an attractive path forward for Otonomy," Weber said. "We intend to use our strong balance sheet, supported by our recent cost reduction actions, to achieve value creation milestones in the development of our pipeline."

Stock Reaction

Shares of Otonomy were trading higher by around 112 percent Thursday morning at $5.95, but are still lower by more than 60 percent since the start of 2017 and well-off its 52-week high of $21.15.