Q2 2020 Otonomy Inc Earnings Call
It's funny autonomy Inc. earnings conference call.
So I'm all participants Arnold listen we know.
Your presentations will be a question answer session.
The question during the second only to so I wonder how your telephone.
Your part and you find the system.
No I would now let's turn the conference over to your speaker today.
Yes, so much what I see.
Go ahead Sir.
Good afternoon, and welcome to autonomy second quarter 2020 financial results and business update conference call. Joining me on the call from Otonomy are Dr., David Weber, President and Chief Executive Officer, and poll care, Chief financial and business Officer before I turn the call over to Dr. Webber I would like.
To remind you that today's call will include forward looking statements based on current expectations such statements represent management's judgment.
As of today and May involve risks and uncertainties that could cause actual results to differ materially from expected results.
Such statements include but are not limited to statements relating to the timing of results patient enrollment and activity for and the design and conduct of ongoing clinical trials.
Statements relating to the updated statistical analysis plan for the ongoing phase three clinical trial of October Dax expectations regarding advancement of clinical trials expectations regarding preclinical programs, including potential benefits and development activities statements relating to the potential but.
Offense and opportunities of and activities under the collaboration agreement between autonomy and AGTC. The Copromotion agreement between Otonomy in Alco Belo and the license agreement between autonomy and cure.
Expectations regarding the out columns market opportunity and value potential of Otonomys clinical and preclinical programs expectations regarding operating expenses for 2020 and cash runway.
Please refer to Autonomies filings with the FCC, which are available from the FCC or on the autonomy website for information concerning the risk factors that could affect the company I will now hand, the call over to Dave Weber, President and CEO of Otonomy.
Thank you Robert Good afternoon, everyone and thank you for joining us on this call to discuss Autonomies business updates as well its financial results for the second quarter of 2020.
Well the cobot 19 pandemic has created wide spread disruption and challenges and everyone's lives I'm very proud of the focus and commitment that the entire autonomy team has displayed and continuing to advance our product pipeline and achieving our corporate objective.
At this end, we've been able to accomplish the following in the last several months.
We announced poverty phase one two clinical results for our OTO 313 program intuitive and are now moving into full phase two development.
We continue to make progress and enrolling our pivotal phase three trial in years disease.
The same time strengthen the statistical analysis plan for this trial.
We successfully advanced through multiple dose escalation cohorts in our auto for 13, it's one two trial and up nearly completed the expanded enrollment in the high dose cohort.
We selected at GGB to gene therapy product candidate and continue to make good progress in preclinical development activities.
As announced yesterday, we completed the license for a novel compound for OTO six ex Tac Heres, what regeneration program and look forward to providing more information on this program in the future.
Yeah, we completed a co promotion agreement with all cabello to provide commercial support for OTIPRIO product for the treatment of swimmers here.
Finally, we completed a successful financing that attracted new top tier biotech investors to the company significantly extended our cash runway to support continued advancement of our product pipeline, the broadest and most advanced in the Neurotechnology field.
In short we're doing the things we need to do to drive value creation and I'm very excited about your timid accident reform for 13 clinical catalyst, we still have in front of that.
Now, let me provide a brief recap updates by program.
Beginning with sort of free 13.
We completed phase one two trial in tentative patients achieved its objective by demonstrating a positive clinical signal for OTO 313, with a favorable safety profile.
The exploratory efficacy cohort of the trial included 31, you valuable patients with persistent tenant of at least moderate severity based on the tenant dysfunctional index or T.F.I. clinically validated instrument.
Patients off the reported the louder and annoyance other tentative using daily phone diaries and completed the patient global impression of change or P.G., I see which is a general assessment of tentative status.
Only a two week leasing period subjects were randomized to a single intratympanic injection of OTO 313, or placebo in a one to one randomization and then followed for eight weeks.
This trial demonstrated positive.
23.
Using of T.F. high responder analysis, I respond or the patient who cfive score decrease is 13.3 or more from their baseline score a change considered clinically meaningful based on the T.F.I. instrument validation.
In this trial, 43% of out of 313 patients where responders both day 29, and day 57 compared to only 13% a placebo patients with statistical significance a P value of lessened 0.05.
For patients who were responders at both day 29, and day 57, OTO 313 demonstrated a higher responder rate than placebo. That's all T.F.I. improvement levels considered clinically meaningful with statistical significance versus placebo also achieved for the 15 and 20.5 levels.
Furthermore, or 313 patients who work you have five responders on both day 29, and day 57 reported improvements and tentative loudness Anand audience levels based on the daily diaries as wells improvement and the P.G. I see.
There was a very strong relationship demonstrated been there between the improvement in T.F.I. score and these other endpoints calculated coalition correlation coefficient of greater than or equal to 0.8.
We believe that consistency across multiple independent tenants, it's endpoints across two months a follow up indicates a robust treatment benefit for a single intratympanic injection about EUR 313.
This can also be seen a safety data only was a single intratympanic injection of other 313, well tolerated, but the incidence of your related adverse events, including worsening of tentative, we're actually lower than in the placebo group.
Given these results we're advancing OTO 313 into full phase two development and look forward to providing an outline of our plans later this fall.
Now turning to the October that phase three trial in many years disease. We are on track to complete patient enrollment in the third quarter and announced results and the first quarter of 2021.
We appreciate the ongoing efforts of our investigators and patients across multiple countries as well as the diligence for clinical team to work towards enrollment completion, while supporting on study patients who continue to have high compliance for their daily diary.
In July we provided an update on the statistical analysis plan for this trial.
In response questions received from the FDA regarding youth the generalize the phone model to analyze the daily Vertigo data reported by patients. We submitted a revised statistical analysis plan that uses a statistical method called the negative by no meal model for the primary analysis.
After an extensive review we selected the negative by no meal model because we believe it provides the best fit of <unk> clinical data.
Based on its safe to be true the successful averts two phase three trial and the integrators dataset from both trials.
The improved fit of the negative binomial model also provides increased powered to detect a treatment benefit enabling us to reduce the target enrollment in the ongoing trial from 160 to 142 patients while maintaining more than 90% power.
We look forward to completing patient enrollment this quarter and announcing the topline results in the first quarter of 2021.
Our third clinical stage program, it's auto for 13, a sustained exposure formulation, a bright brain derived neurotrophic factor or bdnf that we are developing for the repair of Coke, we're synaptics sympathy.
Recent research has identified damage to synaptic connections as the underlying pathology in noise and age related spring loss that manifests speech and noise hearing deficit.
Neurotrophic factors, including Bdnf have potential therapeutic effects in the coakley, yeah, I promoting the survival of spiral ganglion neurons, increasing neuro right outgrowth and reconnecting neurons with cochlear hair cells after damage.
We're currently conducting a phase one two ascending dose safety an exploratory efficacy study of auto for 13 that will enroll approximately 40 patients with speech adenoids hearing deficit.
We have successfully dosed escalated three three dose levels totaling 24 patients and have Nick nearly completed enrollment for the high dose cohort.
We expect to enroll approximately 60 16 patients in this cohort randomized three to one for a single engine to panic injection of auto for 13 or placebo.
Following treatment patients undergo repeated testing safety and exploratory efficacy over three months.
A number of ethics efficacy endpoints will be evaluated including electrophysiological measurements of hearing function and speech and noise hearing tough.
We are on track to announce results from this trial in the fourth quarter up 2020.
In addition to our three clinical stage programs that have upcoming read outs, we continue to advance multiple preclinical programs addressing different pathology for hearing loss treatment and OTA protection.
The first of these is our gene therapy collaboration with AGTC that targets. The most common cause some congenital hearing loss.
The goal of this program is to develop in the Avi based gene therapy to restore hearing in patients with <unk> with loss caused by mutations in the gap junction beta to gene otherwise known as JB too.
Mutations in this gene are the most common cause of congenital hearing loss accounting for approximately 30% of all genetic hearing loss cases.
Patience born with this mutation can have severe to profound deafness in both fears that is identified in screening test now perform routinely in newborns.
The collaboration Leverages, the expertise technology and capabilities have each partner, allowing each of us to do what we do best.
In May we made a joint presentation at the American Society of gene and cell therapy meeting demonstrating that a gene can be expressed in support cells of the CLIA, which other relevant target cells for treating DJ GGB to deficiency.
These studies identified several novel proprietary Avi Capsids with favorable tropism and gene expression level and support cells compared to previously reported capsids used in the field.
Additionally, we have now shown in a non human primate model that consistent gene expression can be observed in support sells for at least 12 weeks following a single local administration.
These results support the selection of a product candidate and continued preclinical development of this exciting program.
We also presented data earlier this year related to our OTO 510 program targeting OTA protection for patients at risk for since flatten induced hearing loss our Cie gel.
It's just flatten the potent chemotherapeutics agent that it's widely were used to treat a variety of cancers in adults and children.
Unfortunately, it is also commonly associated with severe adverse effects, including despite induced hearing loss said its progressive bilateral irreversible.
Our presentation at the association for research and O'leary Gallucci meeting demonstrating varying degrees of other protection against <unk> for several different classes of therapeutic agents.
In particular, you have identified a novel class of agent Sept, Potently buying stuff it's flattened.
Agents from this novel class provide greater odor protection in preclinical models, then known anti oxidant and anti apoptotic molecules and increase potency relative to others flatten finding all verticals currently in clinical development.
These results highlight the therapeutic potential of our locally delivered auto 510 product candidate to provide superior OTA protection without tumor protection.
Our third preclinical program photos, six X X targets air fell regeneration as an approach to treating patients with severe hearing loss.
Cookware hair color play a central role and hearing by converting sound waves into electrical signals that are transmitted to the brain via auditory nerves.
It is well established damage to herself through aging excessive noise or exposure to OTA toxic compounds leaves to hearing loss.
Unfortunately for humans, we cannot naturally regenerate hair cells like nominal U.S.P.C.S, such as birds and chickens. However, it is possible to activate proliferation and trans differs differentiation pathways via drug intervention, thereby providing an approach to treat this pathology.
As we announced yesterday, we have entered into a license agreement with Kieran Pharmaceuticals that provides us with exclusive worldwide rights to develop manufacturing commercialize a novel compounds for this program.
Disagreement stems from a successful research collaboration with Karen, but identified a potent compound hockey's been preclinical models of cookware her sell regeneration.
Under the terms of this agreement, we will make an upfront payment to Kieran as well as successful as success based milestone payments and payer royalty on worldwide net sales.
We are formulating.
The patent protected compound utilizing our proprietary technology to provide sustained drug exposure in the in the inner ear. Following a single Intratympanic administration.
Importantly, the autos six X X program is complementary to our auto for 13 program as the former addresses hearing loss, resulting from lots of hair cells or the latter part of this law Cincinnati connections between the hair cells and the auditory nerves.
Together these two programs to address the key pathologies underlying acquired hearing loss.
I only in June 2020, we announced the completion of co promotion agreement with Alka Belo to promote OTIPRIO for acute otitis externa.
This is a great fit for Alco, Belo, which has established commercial presence in the U.S. to support their bulk allergan and growing immunotherapy businesses.
They will be our full partner for acute otitis externa, because they cover high volume targets across all the key audiences, including E N teas, pediatricians and primary care physicians.
As with our prior partnerships autonomy will continue to record all product revenues and pay a cabello a share proceeds from acute otitis externa cells.
During the multiyear deal autonomy will also receive co promotion fees and reimbursement for proportion of product support costs.
We are excited to have such a strong and capable partner to establish support for a tip radio in the physician office setting.
In summary, we have been very productive in advancing our product pipeline during and since the last quarter. Despite the challenges of cobot 19.
Our pipe pipeline is the broadest in neuro taught me with clinical stage programs targeting targeting the largest patient populations and market opportunities in the field, including acquired hearing loss tentative imbalance disorders.
We will build off of our positive initial result for two or 313, a tentative to advance into full phase two development, what continuing to focus on the successful completion of the auto for 13 phase one two trial in hearing loss and whatever the phase three trial in many years disease.
Our recent financing gives us the resources to support our development activities, including advancement of our gene therapy program.
It's an exciting time to be in this field and we look forward to leading the way with new treatment options for patients.
With that I'll turn the call over to Paul care, our Chief financial and business Officer, who will provide a financial update.
Thank you day and good afternoon, everyone.
The key financial takeaway side that we are on track with our spending guidance for the year and significantly strengthen our balance sheet with the successful financing last month.
Let me briefly review these results for you.
Regarding spending our GAAP operating expenses for the second quarter of 2020 totaled 10.6 million.
Which has reduced from 11.8 million for the second quarter of 2019.
Non-GAAP operating expenses, which excludes stock based compensation totaled 9.1 million for the second quarter 2020, compared to 10.6 million in 2019.
He's spending levels are on track with our financial guidance for the year.
GAAP operating expenses at 45, 48 million and non-GAAP operating expenses of 35 to 38 million.
Our cash cash equivalents and short term investments totaled 41.1 million as of June Thirtyth Tony.
When combined with estimated net proceeds from our financing $64 million, our pro forma cash balance totals approximately 105 billion.
This eliminates any potential concerned of financial overhang as we approach our upcoming clinical trial Readouts Frodo for 13 into tip attacks.
Provides the resources to advance our pipeline programs.
And funds the company's operations for at least two years.
In addition to the incremental funds. This oversubscribed financing was also very successful and strengthening our shareholder base.
As you will see from the quarterly filings, we attracted a number of top tier biotech investors, who were not already ODAC shareholders.
Together with our existing investors. We believe we now have a very strong and supportive investor base for the company going forward.
Well, let's update regarding our term loan with Oxford finance.
Following the positive OTA 313 results in financing, we're able to amend the terms of this loan and extend the interest only payment period for an extra 12 months, reducing our multi payments during 2021.
With that I'll turn the call back over to Dave.
Thank you Paul.
In closing we are continuing to execute on our business plan that will leverage our recent positive results for OTA 313, a tentative focus on the timely and successful completion of our upcoming clinical Readouts for auto for 13 initiative it acts and advance our multiple preclinical programs.
Each of these novel product candidates addresses significant unmet medical needs and Neurotechnology for which there is no ft approved drug treatment.
I'm very excited about the transformational opportunity our multiple clinical catalyst provide for the company over the next few quarters and look forward to keeping you updated on our progress.
Operator, we're now ready for questions.
As a reminder.
Good question, you'll need to press star one on your telephone.
As Jim Please press the pound.
Your first question comes from the line.
From Cowen and company. Please go ahead.
Hi, Thanks for taking my questions and congratulations on the quarter.
Now that we're in Q3 and to try to ask a question about the patients enrolled for it.
And if you're not willing to answer that.
Hi. This is the difference is geographically.
And the current ongoing phase two trial.
Yeah. Thank you Stacy, yes, I mean, I think one other things I just want to point out as a we have been a very very careful with our enrollment on a tip. It acts and been held very tightly to our criteria.
Even through Cobot 19, yeah, we feel that that was the important thing to do with it really ensure that we have the highest quality multi years patients that are well defined and.
I'm also working closely with our clinical investigators and trial site staff to ensure that we.
Take all the steps necessary to ensure that we've minimize any placebo response.
The third is as you mentioned the geographical.
Differences.
The current trial versus averts too and the other prior phase three trial and that really is that this is the trial that is conducted both in the U.S. and in Europe.
Roughly a quarter of the site or in the U.S. spread across geographic regions in the U.S. and the rest are in European sites.
And with that we expect the majority of patients will come.
From Europe, given their 60 centers overall with them at the three force in Europe.
So I think that we'll be at least three fourths of patience and actually probably closer to 80% to 85% will be from Europe with the remainder in the U.S. that said I think we've been very happy and impressed by by both clinical site investigator staff and their patients in terms of.
Of the continued commitment to the trial through cobot 19 restrictions as well as ensuring the quality of the study. So we've been able to ensure that our daily diary compliance remains quite high and patients have been following up with ER visits more importantly.
Clinical site staff have also continued their enrollment efforts.
And as we've shown over the past months, we've continued to enroll them make good progress a two to bring ourselves to completion of enrollment in the third quarter with result in the first quarter of 2021.
Okay sounds good and then just to follow up just a follow up question.
Products, so given that we're expecting results for Fort worth 13 in Q4.
How should we be thinking about to be thoughts and what might be the expected threshold or we should be be focusing on the high dense.
Well I think we will look clearly at all the doses we have escalated through fourq dose cohorts now I see we did start at very low levels given the the biologic nature of brings right Trophy factor to ensure safety, but now that we've gone to the highest dose we will be looking at all the dose.
As for activity, but clearly expect the highest stuff to be the most likely to show us activity and as a result to that we chose to expand that cohort was always of our plan to get to the highest supported dose cohort for safety and then expand or for exploratory efficacy, which we've done.
Here and and the target is to enroll 16 patients in this final fourth cohort in terms of what we're looking for its clearly a we will be looking at electrophysiological changes, but more importantly, it's really the speech and noise hearing test. So we have a number of tests, we've done that on purpose as there have been a number of tough develop.
Let them, we're trying to understand relative sensitivity.
Between those tev and and that should allow us a good ability to detect a exploratory activity.
With the molecule in those patients. So we will definitely be looking and as I've mentioned, it's a three to one vacation. So we have.
A higher number of patients on for 13.
Then on placebo, which should allow us to really look for efficacy signals.
Thank you.
Thank you Stacy.
Your next question comes from line.
Kraft paper Sandler. Please go ahead.
Yes.
Hi, guys and thanks for taking the question.
Yes, that's what I want to focus on the preclinical pipeline is there's a ton of potential there, but now that you've collected a candidate for the GGB two program.
What's supposed to do for the I, Andy enabling studies and and more so on that can you offer any points as a differentiation from other GGB two programs such as the closest.
Other than vector selection.
Well I think there's a number of thank you Tara and I think you're right I think we believed that our preclinical programs represent a tremendous amount of potential upside or for that company in for investors and happy to be talking about these programs and the new it, particularly if we continue to move forward for the GGB two program.
One of the important things to do was to identify a vector a capsid that really provided the transfection rate that we were looking for in supporting sells the reason for that is most of the vector work that had been done in the field has really focused on the hair cells as the field has been very hair fell centric really.
And as we've learned now that there is much more involved and that's just a hair cells and even including in hearing loss such as with our fourth 13 program.
With here, what we are targeting in supporting sell says there the cells that need to express the the product to the GGB to gene.
The GAAP junction base to protein and that is really to allow the environment to be established for hair cells to function.
And as result of that we needed to see high transfection, which is the work that we've recently wrote it on showing that we've identified a capsid that really gives us a high transfection rate and expression rate in.
In the supporting cells.
What I think is the advanced of working for US working with a company like AGTC is not only do they have proven manufacturing, which is important here, but also of course the their knowledge in terms of building.
Construct of the vector the cab said and the promoter sequence with the gene and so all those are things that we've worked together to refine in if identification of the product candidate for advancing into clinical so one of the that's really what we've seen is very powerful working with AGTC is that.
Accumulated knowledge and capability that they've demonstrated through multiple programs that they have what we're focused on now is the work going on to support a pre I N D and getting progress toward the high end D, which we'll be updating more as we move towards later this year starting to provide perspective in terms of art.
Signing.
Stations of approaching a clinical work and so we are actively working in areas <unk> D work manufacturing as well as a expression studies that will be used to support that I and the effort.
Thanks, so much for that.
Thank you Todd.
Once again to ask your question, Please press star and the number one.
Thank you Todd.
Your next question comes on line.
Oh.
Please go ahead.
Hey, guys. Thanks for taking the question I'm just wondering on the Oh.
Three.
Hey, you might have had a chance to analyze the data little further is there still data to analyze anything to you might have seen that can change your plan going forward and in terms of what to expect in the fall here. You know is there anything specific that we should be looking forward to.
In terms of your update on that design or whatnot.
Yes. Thanks, Thank francoise I think with regard to 313, we do continue to analyze the data and we will be reporting on that in the future. We do plan to make.
Submit for presentation at upcoming meetings.
Both in terms of the data we've already presented as well as additional data.
That we've continued to build on as we further analyze the data. So you can expect more from us in terms of additional data I think we're probably discuss later this fall as well as then in presentations to commit future meetings I think one of the things that we've been very focused on is starting to look now at the subset so that is to.
Both look for our there characteristic set up that really help us predict responder patients are there for example, subscales of the T.F. by that appear to be very sensitive to changes.
Perhaps more sensitive than other parts of that sub scale. So pieces really try to understand both sensitivity and also help us identifying enriched potential rich enriched population. We're also be looking at things and importantly, like duration of the tentative and whether there was any relationship to out.
Hum in that as well.
I think the other piece that we're doing is really now starting to work on the phase two trial designs. So at this point we are looking at a number of approaches we can take in that it will be informed by the statistical work. We're currently doing to see what we feel is the best approach into additional clinic.
A phase two clinical work and that's really what we're look forward to talking more about in the fall is really our approach on the clinical side.
Both in terms of expanding perhaps the duration of the tentative.
In the present trial it was up to six month, we may likely expand that to start looking at eight to 12 months as well.
Just to get a longer cohort of patients.
And also we will be looking at whether we would progress into bilateral patients. We think that is doable. Obviously, we've seen great response and unilateral patient. So there's no question that we can continue with unilateral, but we may want to explore by bilateral patients as well. So I think what your see from US if his discussion about how we intend.
To approach.
These different areas and refine the phase two work in order to then designed the best Phase three program.
Okay, Great now it's very helpful. And then lastly on the can you talk about tentative and the patient population in terms of market of who you're you're targeting I'm thinking maybe prevent a you know prevent somebody subjectivity that's related to tenants. It's obviously its a.
Each market, but can you talk about your targeted approach to the commercial opportunity here.
Yeah, Paul would you like to take that.
Yeah sure so weve, a slide slide deck that views the population.
I mean overall, it's a large percentage of the adult population then the U.S. and expect this is true in markets outside the U.S. as well about 10% of patients actually report.
Some level of tenant is about 8 million patients actually record levels that are moderate to severe and would warrant a treatment clearly what we are expecting out in the clinical design is.
Capturing patients early in the onset of of their tenant is so if you look at yeah, we kind of a different metric based upon time to onset there about a million in half patients, we believe who art sort of newly diagnosed with would tend to so.
I think the plan would be too as we've done with the nearest defined for the clinical trials a population that is straightforward I in terms of demonstrating a treatment benefit and then in those studies as well as then once we get to the market sort of expanding the popular.
Patients from there so even though.
We may.
Continue to look at less than six months or as Dave said expanding that a bit.
We likely will not go into.
Patients that have had tenant is for much more than a year that said, we would expect that once the product where available.
Physicians would likely expand use from there so just to sort of recap from a population standpoint will likely be focused on the million half newly diagnosed tenant is patients per year.
The next group that we would target broaden to the 8 million that have moderate to severe tend to us and then you know expand from there from a pricing standpoint.
Clearly a lot depends on.
How the clinical trials play out as a single dose sufficient or.
Is a retreat and necessary.
It's a is that the course of therapy or to patients to be a retreated you know in the future as well those will weigh on on the pricing, but the opportunity for a premium priced product here is significant because there is no therapeutic alternate.
For these patients the only available options for physicians today is essentially are coping strategies.
And what we're talking about here is actually a treatment that changes they kind of the clinical profile. The disease. So are we seeing from pricing standpoint, we have a lot of flexibility, but the ultimate sort of clinical paradigm will will factor into that.
The answer your question sorry.
No that does that's great. Thank you. Thank you very much congrats on the progress.
Thank you Frank.
Oh I'm currently showing no other questions at this time I will turn the call back over to Mr., David Roberts CEO. Please go ahead Sir.
Thank you operator, and thank you everyone for participating in our call today, we will be virtually attending multiple investor healthcare conferences during September including those sponsored by city.
C. Wainwright, Cantor and Oppenheimer and hope to speak with many of you then.
Have a good evening everyone. Thank you.
This concludes today's conference call. Thank you for your participation.
<unk>.
And now disconnect.
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