Q3 2020 Otonomy Inc Earnings Call

Good afternoon, ladies and gentlemen, thank you for standing by and welcome to this he was he said he said he autonomy incorporated any school in France calls have you signed almost like it's fine I remember you said on the mode. Later, we will conduct a question and answer session and instructions will follow at this time, if anyone should be quite a few.

Since doing to find friends leaf brass side, then view on you touched on telephone as a reminder, this conference call maybe recorded I would now like to kind of conference over to speakers today you see your topic. So from Westwicke partners. Please go ahead Sir.

Thank you operator, good afternoon, and welcome to Otonomys third 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 Paul Care, Chief Financial and business Officer.

Before I turn the call over to Dr. Weber I would like to remind you that today's call will include forward looking statements based on current expectations such statements represent managements 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 activity for and conduct of ongoing clinical trials statements relating to the updated statistical analysis plan for the ongoing phase three clinical trial of hotel EBITDA X X.

Expectations regarding the negative by know me your model and statements regarding plans to submit a new drug application.

Expectations regarding advancement of clinical trials expectations regarding preclinical programs, including potential benefits and development activities.

Eight months relating to the potential benefits and opportunities of and activities under the collaboration agreement between autonomy and AGTC. The co promotion agreement between Otonomy, an l. cabello and the license agreement between autonomy and Kieran Kieran expectations regarding Otonomys business.

His plans and the outcomes market opportunity and value potential of economies clinical and preclinical programs and expectations regarding operating expenses for 2020 cash runway and autonomies ability and resources to support its product pipeline and development activities.

Please refer to Otonomys filings with the SEC, which are available from the FCC or on the Otonomy website for information concerning the risk factors that could affect the company.

I will now turn the call over to Dave Weber, President and CEO of Otonomy.

Thank you Robert.

Good afternoon, everyone and thank you for joining us all to discuss Otonomys business updates as well as financial results for the third quarter of 2020.

We continued to execute on our business plan during the third quarter, including achievement of the following milestones we.

We completed patient enrollment in the phase three trial of <unk> to the decks in the nearest disease and are on track for announcing results in the first quarter of 2021.

We announced positive phase one two clinical results for our OTO 313 program and tentative and are now moving into full phase two development.

We completed patient enrollment in our auto for 13 phase one two trial in hearing loss and expect to announce results by end of year.

We also advanced our multiple preclinical programs that extend our efforts across additional hearing loss pathology and patient population.

And we completed a successful financing that attracted new top tier biotech investors to the company and 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 are doing the things we need to do to drive value creation and I'm very excited about the activity. That's in auto for 13 clinical catalysts, we have coming up.

During this call up <unk> provide a brief update on our programs and highlight the financial results from the quarter. We can then open up the line for any questions.

Beginning with your two but ex phase three trial women years disease, we completed patient enrollment at the beginning of October and expect results in the first quarter of 2021.

We enrolled a total of 149 patients from the United States and Europe exceeding our target of 142 patients.

We appreciate the continued effort by investigators in support of our study completion activities as well as by the final randomized patients working through their three month observation period following treatment.

In July we provided an update on the statistical analysis plan for this trial.

In response to questions received from the FDA regarding use of the generalized appathon model to analyze the daily Vertigo count data reported by patients. We submitted a revised statistical analysis plan that uses a statistical test called the negative by no meal model for the primary analysis.

After an extensive review we selected the negative binomial model because we believe it provides the best fit of the activities clinical data based on the phase two b trial. This.

The successful efforts to trial.

And the integrated dataset from both trials.

Assuming positive results from this additional phase three trial, we plan to submit a new drug application to the FDA and the third quarter of 2021.

Turning to OTO 313 for tentative, we announced positive results from a phase one two trial in July.

The exploratory efficacy cohort of this trial included 31, Youve valuable patients with persistent tentative of at least moderate severity based on the tentative functional index or T.F.I., a clinically validated instrument.

Patients also reported the loudness and annoyance of their Tendonitis, you think daily phone diaries, and completed the patient global impression of change or P.G. I see.

Following a two week lead in 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 achieved its objective by demonstrating a positive clinical signal for OTO 313, using a T.F.I. responder analysis, good correlation with other endpoint metrics and a favorable safety profile versus placebo.

In particular, 43% or 313 patients were responders at both day 29, and day 57 compared to only 13% of placebo patients.

With statistical significance that P value of less than <unk> 0.05.

Furthermore, OTO 313 patients who were tier <unk> tier five responders reported improvements in tenets loudness and an audience levels based on the daily diaries as well as improvement in the P.G. I see with a high correlation coefficient between these various measures.

Finally, the trial demonstrated that a single entered tympanic injection of voter 313 was well tolerated and the incidence of your related adverse events was lower than in the placebo group.

Based on these results we are advancing other 313 into full phase two development and have submitted a type C meeting request to review aspects of the phase two clinical plan with the FDA.

Our third clinical stage program is auto for 13, a sustained exposure formulation, a brain derived neurotrophic factor or bdnf that we're developing for the repair of Coke clear Synaptics apathy.

Recent research has identified damage to synaptic connections as the underlying pathology in noise and age related hearing loss that manifests the speech and noise hearing deficit.

Neurotrophic factors, including Bdnf have potential therapeutic effects in the coakley up by promoting the survival of spiral ganglion neurons.

Increasing their right outgrowth, and reconnecting neurons with cochlear hair cells after damage.

During the third quarter, we completed enrollment in a phase one two ascending dose safety and exploratory efficacy study of OTO for 13 that enrolled 39 patients with speech in noise hearing deficit, including 15 patients in the high dose cohort.

Each dose cohort was randomized three to one for a single Intratympanic injection of OTO for 13 or placebo and then followed for three months.

This is the first clinical evaluation of Bdnf delivered to the year. The primary objective is the assessment of safety and Tolerability with multiple assessments of hearing function conducted at baseline and during follow up to evaluate signs of clinical activity.

We expect to announce top line results by end of this year for this trial.

A brief update now that about our three clinic preclinical programs that are focused on different hearing loss pathologies and patient populations.

The first of these is our gene therapy collaboration with AGTC that targets GGB to the most common cause of congenital hearing loss actions.

<unk> born with this mutation can have severe to profound deafness in both years since identified in screening tests now performed routinely in newborns.

We presented preclinical results at conferences earlier this year demonstrating that a gene of interest can be expressed in support cells of the coakley, which other relevant target cells for treating g. JB to deficiency.

Using novel and proprietary Avi Capsids.

Also consistent gene expression was observed for at least 12 weeks following a single local administration.

These results supported selection of the product candidate for further development.

We are very excited about this program and will provide additional information about the timeline in the coming months.

We also presented data earlier this year related to our auto 510 program targeting odor protection for patients at risk for us is flatten induced hearing loss or CHF out.

This plan is a potent chemotherapeutic agent that is widely used to treat a variety of cancers in adults and children.

Unfortunately, it is also commonly associated with severe adverse effects, including.

This flattening just hearing loss said its progressive bilateral and irreversible.

We've identified a novel class of agents that potently buying to flatten and provide greater odor protection in preclinical models, then known anti oxidant and anti H pop topic molecules and increased potency relative to other says flattened binding molecules currently in clinical development.

These results highlight the therapeutic potential of our locally delivered auto fight 510 product candidate to provide superior odor protection without tumor protection.

Our third preclinical program photos, six X X targets here, so regeneration as an approach to treating patients with severe hearing loss.

It is well established that damaged the cochlear hair cells through aging excessive noise or exposure to auto talk for chemical leaves to hearing loss and that these cells do not regenerate naturally.

However, we believe it is possible to regenerate new functional hair cells with drug treatment.

In July we entered an exclusive license agreement with cure and pharmaceutical company, providing us with worldwide rights to develop and commercialize novel Kieran compound for the treatment of sensorineural hearing loss.

This is a very interesting program, which is complimentary to our auto for 13 program targeting coakley were synaptics apathy.

One final program update related to our co promotion part partnership without Cabello that supports the set of Alps, and marketing of OTIPRIO.

We initiated this collaboration in June focused on acute otitis externa and recently expanded the effort to include use of a tip Rio during ear tube surgery, we will continue to record all product revenues and pay Alka Belo share proceeds from sales.

During the multiyear deal autonomy will also receive co promotion fees and reimbursement for proportion of product support costs.

Now switching gears, let me now provide a brief summary of the financial results for the third quarter and please refer to our earnings release and 10-Q for the details.

The key takeaways are that we are on track with our spending guidance for the year, which is for non-GAAP expenses of 35 to 38 million and GAAP expenses of 45 to 48 million impact.

Importantly, we finished the quarter with 94.5 million in cash cash equivalents and short term investments. Thanks to our continued careful spending and the financing we completed in July that raised gross proceeds of approximately 69 million.

This cash balance will fund the company for at least two years and enable us to achieve important milestones for our programs.

In closing we are continuing to execute on our business plan that is focused on the advancement of the broadest pipeline in neurotechnology.

We have clinical stage programs targeting the largest patient populations and market opportunities in the field, including hearing loss tentative and balance disorders.

We look forward the completion of our pivotal phase three trial Im in years disease next quarter and are ready to move to an India filing in the third quarter of 2021. Following a successful result.

Intend it to US we are building off the positive phase one two result for OTO 313, and advancing the program into full phase two development.

And in hearing loss, we are finishing up phase one two trial for OTO Fourthirteen. The first of our several programs to address multiple hearing loss pathologies and patient populations.

I'm very excited about the transformational opportunity our clinical candidate catalyst provide for the company over the next few months and look forward to keeping you updated on our progress.

Operator, we're now ready for questions.

Thank you, Sir ladies and gentlemen, if you have a question at this time please.

And then the number one on your thoughts.

Telephone if your question has seen did you receive from from <unk> basketball.

We have a question from the line.

Gruff.

From Sandler your line is open.

Hi, guys. Thanks for taking the question.

So for the OTA, Oh 13 data that's coming this quarter can you talk about what we can expect to see both for the global impression range and the electrophysiology measurements and what Kailong believes are meaningful changes for these patients.

Hi, Terra yes. Thanks for the question for the 413 data. There is numerous auditory measures that are being done for safety. Since it is first and foremost the safety study. In addition, we will be looking at those to determine if there are any measures with regards to changes in hearing loss, but given that these patients would typically be access.

Acted to have.

Almost normal I'm hearing in terms of Standers audio metric tests like for example, the pure tone average what we're really focused on to look for signs of activity are the speech and noise hearing deficit tests. So these are the ones that are word recognition our number recognition in the background of sound.

So that's the real pathology for these patients is the inability to hear in the background noise. So we believe these word in noise tasks are really going to be the primary focus for looking for signals of activity as composed to the more safety related audio metric measures.

Thank you can probably tell you that are you also asked about the patient global impression of change sorry. The P.G. I see is obviously one that also just give from the patient perspective do they do they observe and and feel that they have made changes in base.

Similarly, the impression of their hearing ability and there what we really look for is exactly like what we saw with 313, whether with a very high consistency between the patient global impression of change and actual improvements as measured by in that case for tentative the tenant as functional index, obviously, we'd be looking here more.

Again to the award and recognition Tev <unk>, where did noise recognition test conducted with the P to P. G I see outcomes.

Perfect. Thank you so much.

Thank you have a question from the line.

He I dunno.

Colin and company. Your line is open please ask your question.

Hey, guys. Thank you so much for taking my question and congratulations and all the progress. So just a couple from us. So first of all to the next Oh with enrollment.

Trial exceeding your initial target of 142 patients could you remind us of your powering assumptions are and where would that get you in terms of statistical power. You have then you are in the sense of patient compliance and dropout rates.

No.

One more follow up.

Yeah. Thank you, Georgia. Thank you for participating here yeah for the took the next trial 142 was our target and that 142 was based on a a powering of well over 90%. So with the 149, we obviously feel very very good about our powering you know we would expect to have a few dropouts.

Just natural in the course of these types of studies with long longer follow up but that said this is well within you know even the 142 incorporated our assumptions with regards to any patient drop off which again is usually low in these studies we've always seen.

Very high compliance in high participation with minimal dropout. So the 149 really gives us a very strong number as it's well above the 142.

The other part in terms of powering and so that so that basically would tell us that we're well into the the you know into the 90% plus power range in terms of compliance I'm very happy and very delighted with the efforts of the patients the investigators and our staff and CRM, So with regard to patient compliance throughout.

So.

The only the trial, but obviously the more recently this year the cobot pandemic and compliance has remained extremely high again very consistent with what we've seen in prior studies with many years. These patients are highly motivated given the lack of any therapy.

And and therefore are highly compliant and that's exactly what we've continued to see even despite cobot.

Thank you and on Q1 three I was just wondering have you received there is problems regarding the timing of the type of.

The type C meeting for the phase two trial from the FDA.

Do you have any idea for the initiation of the phase two program and I guess, just if you could talk.

Talk about the option to pursue a higher ddos or slightly changed to.

Clinical trial enrollment criteria. If you could just talk about your I guess decision, making process and this and what would you be expecting from the FDA.

Yeah. Thank you there. So once we submitted the type C meeting request. The FDA has 75 days in which to respond to the <unk> and for that meeting request. So we do have a date that will be coming up.

But we have not reached that yet so we have not heard a response from them <unk>. The primary purpose of that type C. Meeting request was with the question of dose as you know the 313 results that we observed we saw very strong safety for OTO 313. In fact, there were fewer a ease including as specifically.

Related adverse events with the treatment group relative to the placebo.

And as a result of that plus and coupled with the strong clinical efficacy signals that we saw both in the T.F.I. at the loudness and annoyance and patient global impression of change measures. It really made sense to us to try a higher dose given that good safety profile. So that's the primary question that we've asked for the.

The agency to respond to.

We think it it's still is meets our levels that we observed in the preclinical animal so we're still well within a good safety margin there and we do expect to to have a favorable outcome.

In response to the option to go to a higher dose now I will say Georgie that its importantly, we will continue to look at the current dose as well the current dosing clearly showing very good activity and so as we look at our clinical trial design for phase II. We will definitely include the current dose it will just be a matter of adding.

And an additional dose at a higher level.

With regards to initiation and more details in terms of the inclusion exclusion criteria were going to be talking about that more in the coming months. We are trained as soon as we hear from the agency that we would be we are working very quickly to be ready to initiate a a trial in the early.

The part of 2021 and as a part of that we're currently going through a very rigorous analysis, both with our statisticians as well as with Kale wells to talk about a potential changes to our inclusion exclusion criteria basically refinements.

Based on the data that we have I think there will be a number that we will be looking at and such things for example, as the level of disease entering into the study what level of T. F. I would we require as well as the duration of the Tendonitis, if something that we want to look at and expanding out the duration.

From within six months of unfair probably to nine months, possibly up to one year. So we'll be looking at those things and talking about that more in the month or months to come here shortly.

This is great. Thank you so much.

Thank you George.

Thank you. Our next question from the line of Matt from each C. Wainwright. Your line is open. Please ask your question.

Thanks, I have a couple of questions I just quickly regarding the Fourthirteen program.

I am sorry, I already mentioned it can you just remind us it is it just primarily the higher dose and 15 patients that you're focused on for the upcoming efficacy Readouts and just do you have any more color on the efficacy endpoints using in terms of what sort of variability one would tend to even see across these you know how robust.

The result, do you think you'll get out of this small sample and down do you think the FDA has that have you already in this field as to what the right sort of tests are in this area and I have a follow up thanks.

Okay. Thanks, Oren Yeah, we can take this and then and then talk to your next question. So with regard to the Fourthirteen program really we're looking at all the cohorts clearly weird we've started off very low for safety reasons, we started off at a very low exposure.

But we will be looking at contrasting all the different cohorts to look for the activity.

You know given that it is a a dose ranging both for safety, but we are going to higher doses. So I think we would expect potentially to see some changes as we go through the dose levels with regard to the variability that's exactly one of the things that we are looking at I mean to be fair and I think this is where.

Different than that and then tentative 313 program, where we had a very established clinically battled validated clinical instrument with the T. a fire that was clearly our primary here. This is really the first kind of study of its kind using these word recognition measures, which we have multiple to in order to to answer those.

Very questions, which kind of variability we expect to see in clinical trials.

And what kind of changes could we detect so that all the important part about this trial. It will also allow us to not only new stand the variability of the of the measures, but also be able to compare them and and understand how they relate to one another so I think these will be very important that we continue to move on not only for this program but for here.

During last programs in general.

Because word recognition is eight and other important measure of hearing function.

With regard to the F.D.A. I don't think the FDA at this point is really familiar with these different measures again. This is the first study of its kind.

And Theres other work going on in the field as well this very early stage and so the FDA has not to our knowledge really seen this kind of data and that is one of the things of why we're doing the work were doing that we can also share with them, our learnings and and show the data that support what we're viewing as being important measure.

Just to understand both cookware synaptics sympathy as well as overall hearing loss changes.

Okay, and I guess it kind of segue into my next question I I'm sure you don't want to comment too much about anyone else's program. Like you did mentioned there is some other work going on out there and it's not lost I mean, there's another public company with an $800 million market cap and a early stage maybe phase two a hearing loss program.

With a mechanism not totally unlike one of yours and I'm just wondering that's frequency therapeutics I'm. Just wondering if you can comment just to what extent.

Near knowledge is there anything different that you're doing is there any difference in the end point or threshold that you studied to date and are looking at going forward do you think will differentiate your program and and based on what the data youve seen to date from theirs. Thanks, Yeah, I mean, I think from that from what I know obviously of their program public.

Really I mean, I think one of the things that we can say is we have an extensive amount of testing going on here both for classic audio metric type tests as well as word in noise hearing tests, Oh, we have multiple as I've talked about multiple award and noise study testing that we're doing here, which I think others are more focused on.

On on a very narrow set so I think you know we.

That'll obviously be a very important learnings that we will have understanding how these different measures to compare I think one of the things. It's important to remember is our drug delivery technology, which we've now show not only with a pivot x. previously with a tip REO, but now even without a free 13, a single administration, that's improving tentative and those pace.

43% of patients at the high dose you know for eight weeks that delivery technology, the ability to deliver high concentrations of drug for an extended period. The hallmark of that why that is so important to us is the ability to drive efficacy that you're getting enough drug in and I think.

This is one of the things you're seeing about our program that compares differently to other companies in the field and I mean multiple companies that have been working in the otology space that need to retreat and undergo multiple retreatments as opposed to our practice of doing a single inch to panic injection to cover a broad.

Patch of time is inherent to our technology and strong IP position around drug delivery to the ear and that really we believe drives efficacy. So while it's very convenient for the physician and for the patient and will aid in the commercialization of a product importantly, we think it's an important determinant of.

Efficacy and so I think that's probably the most important and then I think the final comparison, obviously of us to others in the field is our broad pipeline. We have a program addressing every AFE act that is currently away.

And in work amongst any other company in hearing loss, but in addition to hearing loss, we have tended to come in near the well. So I think the extent seek both clinical and preclinical program, obviously sets us apart from others.

All right. Thanks appreciate the color.

Thank you our.

Thank you again, everyone. If you would like to question you will need to wrap this time.

Number one on your thoughts on the phone.

We do have another question from the line of France.

<unk> from Oppenheimer. Your line is open.

Hi, Thanks for taking the question just quickly here in terms of the type C meeting you talked about upping the dose that's about maybe the duration that patients maybe up to nine months that have had 10 at this but I was wondering anything in terms of repeat dose and also.

In terms of the endpoint on the Tia Fi, which seems to be very clear 13 point is a responder is yet.

Okay would you expect them to be okay. In terms of primary endpoint with responders only or is this all patients put together that they might want to see.

Yeah. Thanks, Francoise with regard to the type C. On in addition to the upper dose and the duration. We did consider you know we really our approach on repeat dosing is more from a safety aspect of of if patients need to be retreated I think that is still something we're trying to understand in this case.

Addition, with tenant just because if you look at the patients who are improved 43% of patients they were still improving.

At the end of the eight week study so one of the things that we will be looking at in our phase two program is extending the observation period out we're keep the eight weeks its primary.

But we are going we are planning to extend the out for a longer period of time to look to understand whether those patients continue to improve some of them have actually improved to the point that they are now a very mild tentative and so the question is do they even need and.

The other administration and so that's something that may vary by patient and where they start off in tentative and that's something we'll be able to look at in our phase. Two is we will ultimately show with the design of the trial and these additional observation period.

So I think the question really with repeat of its really how we've tried to handle it in mid years disease, which is a chronic condition where patients.

Wax and wane in terms of their vertigo episodes is to look at repeat dosing more from a safety aspect.

In a therapeutic need.

And so that is possible what we'll be looking at here with tentative, but again I think what we need to do is look at the longer observation period see how these patients do and whether there is any need to do any long duration of treatment, but I can't tell that yet based on the great results. We had from the from the phase one too.

Trial here, where every one of those patients with better at the end of the study and was there their best outcome. So clearly is suggesting that at least in those patients that they are continuing to improve over the full duration.

In regard to the T.F.I. and a 13 point respond or we have had discussions with one of the reasons. We chose the T.F.I. is preliminary discussions with the agency both in the pre AI and deep for 313, but also in connection with our multi years program because tentative is.

Is a a symptom of of many years and as a result of that we feel good about the T.F.I. I'm clearly.

Clearly again this is the really the the <unk>.

You know some of the most data the FDA will have seen as they look at our T.F.I. data and so it is something that as we're conducting our phase two trial part of what we're doing it's collecting data that I think we can even see in our phase one two trial that supports the Ti Fi as an outcome and that is really looking at those correlation.

And the other endpoints like loudness, an annoyance as well as the patient global impression of change and I think that's what really for me. It's very important that correlation really helps establish the Ti Fi as they're very practical and effective measure of not only the hearing function for these patients but they are over.

Overall quality of life changes and impression of change and so I think that's a very important piece that will be very helpful. With us as we ultimately talk to the FDA in the in the end of phase two meeting.

Understood I, just and just in terms of responding to that 43% versus 13% that you saw.

With the P value lowered and 0.05, what was for just the responders, but I'm wondering any discussions but is that a primary endpoint. Just responded that you do you think you can go forward with in the next trials or are they going to be looking at all patients.

That we've not had those discussions since this is not a registration trial at this point, a and we've not had the interface to BD. We havent had a a full discussion about a statistical analysis plans and what would be the ultimate primary endpoint I will say that as our statisticians and care wells and regulatory people.

We'll look at potential endpoints. This is one that we think could be a potential endpoint based on looking at other programs in other areas that had been approved based on a responder type analysis. So that is something that.

We will look at I think importantly, as you know from the data we've more recently shown from that study. If we were actually seeing overall change within the population as well so out the eight week time patience. The overall population treated with OTA 313.

It was almost almost achieved that 13 point change.

Even on that small subset of small set of patients. So I think from the standpoint of is it very possible for us to do a full patient analysis, yes, we could from what I've seen of this data we could definitely size for that but I think the responder analysis is very powerful here and it is.

Nothing that we would end up talking with the FDA.

Great. Thank you for clarifying that and I think yeah that was continued slide in the deck are very helpful to get a feel for that and is trending the same way and then just lastly, there's so much data in that 313 that I'm sure you're going through and I think the daily diaries extremely interesting to see every day because it doesn't seem like it's working more and more as time goes.

As on but.

For me the data we've talked about in the past.

The conference is aren't quite at the level in their intelligence they might be in ophthalmology.

Is there any any thoughts about getting all this data and the extensive and you know to what extent would you show details of this potentially at a conference upcoming or is that still and just.

Just a lot of work to be done before that.

No we have plans to present, a we have submitted for potential presentation upcoming meetings. Unfortunately as you know many of those are virtual and at this time and and some of them have even been plans and then subsequently canceled.

But we do have plans to present this data in upcoming meetings and hopefully we'll be doing that in the early part of next year.

Excellent that's it for me, thank you and congrats on the progress. Thanks.

Thank you France while.

Thank you say there are no further questions at this time I will now turn back the call to me today.

That feels autonomy.

Thank you everyone for participating in our call today, we will be attending the Piper Sandler and the Evercore ISI virtual healthcare conferences in December and hope to speak with many of you then have a good evening everyone. Thank you.

Ladies and gentlemen. This concludes today's conference call you may now disconnect. Thank you for that.

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