Q1 2022 Otonomy Inc Earnings Call
Okay.
Good day, and thank you for standing by and welcome to the economy first quarter 2022 financial results conference call. At this time, all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question you will need to press star one on your telephone keypad. If you require any further assistance. Please press star zero.
I would now like to hand, the conference over to your first speaker for today Mr. Robert.
With ICR Westlake.
Please go ahead Sir.
Thank you operator, good afternoon, and welcome to Autonomies first quarter 2022 financial results and business update conference call. Joining me on the call from Autonomous <unk> are Dr. David Weber, President and Chief Executive Officer, and Paul Cayer, 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 management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results.
Please refer to Autonomies filings with the SEC, which are available from the SEC or on the autonomy website for information concerning the risk factors that could affect the company autonomy, specifically disclaims any obligation to update any forward looking statements, except as required by law I will now turn the call over to Dave.
Weber, President and CEO of autonomy.
Thank you Robert Good afternoon, everyone and thank you for joining us on this call to discuss Autonomies recent business updates as well as our financial results for the first quarter.
Our key update that's a positive OTO 413 phase Iia results, we announced several weeks ago.
These results are important because they provide a second independent placebo controlled trial, demonstrating the treatment benefit of OTO 413, and abroad hearing loss patient population.
This core operation of the clinical benefit of OTO 413, we are excited to move forward with a phase II dose ranging efficacy trial expected to start by end of year.
I'll recap the topline results from this trial and then highlight the status of our <unk>.
Other programs, which include multiple clinical readouts coming in the second half of this year.
Fortunately, our OTO 313 phase III trial intended to is on track with topline results expected in August .
I'll keep my prepared remarks brief, including a summary of our first quarter financials and then we can open up for any questions.
Beginning with the OTO 413 Phase Iia result, this trial demonstrated that a single entered tympanic injection of <unk> three milligram of OTO 413, providing clinically meaningful treatment benefit versus placebo across multiple speech in noise hearing tests as well as the patient global impression.
A change a consecutive time points at day 57 and day 85.
The randomized double blind placebo controlled trial enrolled a total of 33 patients with self reported hearing difficulty in a noisy environment that was confirmed by speech in noise testing.
<unk> 30 of these patients were considered evaluable by a blinded reviewer including 20 patients treated with OTO 413, and 10, who received placebo.
Overall, <unk> demonstrated a treatment benefit across all of the efficacy metrics and time points evaluated consistent with the positive results from the prior phase one two trial cohort.
To this point, 40% of OTO 413 treated subjects demonstrated a clinically meaningful improvement on at least one of the three speech in noise test at both day 57, and day 85 versus 20% for placebo.
We were especially pleased to again see a clear signal for the words and noise test, which is well established and validated in hearing loss of patients.
40% of OTO 413 subjects with a valuable when test demonstrated a clinically meaningful improvement at both day 57, and day 85 versus zero percent for placebo.
One important advantage of the wind tests compared to the digit phrase test the ability to generate speech intelligibility curve for each patient at each time point.
We included these curves for the OTO 413 responders and the results slide deck posted on our corporate website. So you can see the extent of the speech intelligibility improvement from baseline to day 85 across a range of word loudness levels.
Based on our review of the data with Kols. These improvements are both clinically significant and meaningful for patients hearing function in everyday situations.
We were also very encouraged to see the treatment benefit of OTO 413 reflected in the patient global impression of change or Pgi fee.
In this trial the patient was asked the following Pgi's question during each visit.
Since the beginning of the clinical study how would you rate your ability to hear in a noisy environment.
50% of OTO 413, subject reported an improvement from baseline at both day 57, and at day 85 compared to only 10% for placebo.
Taken together with the speech in noise data. We believe these results demonstrate a clear clinical signal for OTO 413 versus placebo when evaluated and are presented in the same way as a successful phase one two trial.
Finding further strengthened by repeated observation across two independent study populations.
Based on these positive results, we intend to initiate a full dose ranging phase II trial in hearing loss patients by the end of 2022.
This trial will also incorporate learnings from the ongoing higher dose evaluations that are assessing that tolerability and treatment activity up to higher doses of OTO $413 75, milligram and one five milligram, which equate to two five and five times the dose used in the phase Iia.
Trial.
Results from these higher doses will include all of the same time points used in the phase Iia study and are expected in the second half of 2022.
We're very excited about the clinical results for OTO 413, and are actively working on next steps for the program that targets tens of millions of hearing loss of patients in the U S alone.
Turning now to the other 313 program for tentative the phase II trial is on schedule with topline results expected in August as a reminder, we randomized 153 patients with persistent unilateral tinnitus of elite moderate severity.
This was slightly above our target enrollment of 140 patients.
Patients were randomized one to one to a single engine tympanic injection of 0.32 milligram, OTO 313, or placebo and are being followed for four months.
The primary endpoint is the same as reported successful phase two trial, a responder analysis based on the proportion of patients who report a clinically meaningful improvement in the tinnitus functional index or <unk> from baseline to month, one and two following treatment.
To assess durability of the OTO 313 treatment effect, we extended the follow up period out to four months.
We're continuing to see high compliance for completion of the Tsi and daily symptom diary, which is.
Important for our analysis of the results.
We also believe this indicates the high level of commitment that patients have in supporting the trial and finding a treatment for tinnitus.
In parallel with completing the phase III trial, we are enrolling tenant to the patients in several study cohorts to evaluate the safety of bilateral as well as higher dosing for OTO 313.
This effort is important for the program since bilateral patients comprise approximately 50% of the tenant just population.
Furthermore, the higher dose for evaluating and 0.64 milligrams twice the dose used in the successful phase one two and ongoing phase II trial.
We expect results from the one month safety evaluations in the second half of 2022.
This data together with the phase II results are expected to support an end of phase II meeting with the FDA and inform the design of the phase III clinical program planned to start in the first half of 2023.
Our third development program is <unk> <unk> five gene therapy targeting <unk>, two which is the most common cause of congenital hearing loss.
Patients born with this mutation can have severe to profound deafness in both ears that is identified in screening tests now performed routinely in newborns.
Preclinical proof of concept results for <unk> five demonstrate that a single administration of OTO 825 rescues hearing loss and cochlear damage in two preclinical models, representing a range of hearing loss severity caused by <unk> deficiency.
We have completed a pre IND meeting with the FDA that provided guidance regarding non clinical study design and manufacturing requirements and clinical trial considerations and have incorporated this feedback into our IND enabling program.
These activities are ongoing and we expect to file an IND in the first half of 2023.
Our remaining two programs, our OTO 510, and OTO protect them for patients at risk for cisplatin induced hearing loss and <unk> X X a potential treatment for patients with severe hearing loss pre.
Preclinical development continues on both programs.
In summary, we are making good progress in advancing our multiple clinical programs for treating hearing loss and tinnitus, which represent large untapped markets with significant unmet medical need.
The attractive potential of these targeted indications was highlighted by multiple kols during our investor R&D event in March.
If you were not able to participate and I would encourage you to access the webcast and associated slide deck via the investors section of our website.
The presentations are informative and ease.
Even in an abbreviated words and noise tests. So you can hear for yourself, how that test works.
Switching briefly to our financials, we are on track with our guidance for 2022, we reported GAAP operating expenses totaling $13 2 million in the first quarter and non-GAAP operating expenses of $11 3 million.
The adjustment for non-GAAP expenses is the exclusion of stock based compensation as outlined in today's earnings release.
From a cash perspective, we finished the first quarter with a cash balance, including cash cash equivalents and short term investments of $62 9 million.
And we continue to expect that this cash balance will fund the company into the second half of 2023.
Going forward, we expect non-GAAP expenses for 2022 totaled 42 to 44 million and GAAP expenses to be in the range of $52 million to $54 million.
Operator, we are now ready for questions.
Thank you, ladies and gentlemen, Q&A is now open.
As a reminder to ask a question you will need to press star one on your telephone keypad.
To withdraw your question simply press the pound key.
Once again it is star one to ask a question. Please.
Please standby, while we compile the Q&A roster.
Our first question is from the line of Ken Cacciatore.
With Cowen Your line is now open.
Thanks, guys lots of progress real exciting time I know, it's still recent from the release of the $400 three data.
No we still have to wait for the higher doses as well, but I'm wondering if you've been able to do a little bit more work with outside consultants and thought leaders about whether we could move forward with.
The noise as a primary endpoint just kind of any conversations you've had any more confidence you got that that could be deep.
The primary endpoint to complement the patient global impression I think you still talk about making that a secondary end point. So just wanted to understand any more progress there and then as we wait for the higher doses and obviously, depending on that data could you talk about the fees to be potentially being powerless registrational I know youre still talking dose.
But just wondering if that study couldnt fact that depending on the data.
<unk> Registrational and then lastly, just ahead of 313 could you just remind us some of the steps that you've taken to try to minimize the placebo responses.
For the August results. Thanks, so much.
Hi, Ken. Thank you very much for your questions. I think we have continued to talk about the win and share those results with our kols as well as talk about the potential for that as a suitable.
Primary endpoint and I think we continue to be very encouraged by that what was obviously key for us and our data was seeing confirmation from both the phase one two and the phase Iia study with the wind response as you may recall, it's very consistent between the two and clearly shows the win is doing a great job of picking up the benefit.
Of OTO 413, so we do have conversations ongoing but I think as we look at both.
The <unk>.
The knowledge base of the win in the United States Audiologist are quite familiar with the wind test.
And the wind test is one that has been heavily researched and validated in the hearing loss population. We do think it is a very good endpoint and then obviously with part of our goal in looking at these three different tests.
It's really to establish and identify which of these would probably be the.
Most likely so while we are at this point still not confirming that I think we do feel that the win is very encouraging and could see that as a potential.
Primary endpoint as we move forward and Thats something were continuing to work on and talk about.
So with regard to your second question in the dose finding and potential for registration I mean, clearly I think we have to recognize that this is a step wise development. We're doing the first kind of research of its kind, where the first ever have demonstrated this kind of treatment benefit for a hearing loss population in two consecutive studies.
And so I think we do have to expect that we're going to learn a lot more as well as.
Obviously, we'd be powering on very limited data that said I think it's important to understand we always conduct our phase II trials in a registration type format. We've done that with the 313 phase III trial that will read out in August and I think you can expect us to do the same.
With regards to the phase <unk> dose.
<unk> study for 2013, we always feel it's best to run those trials very rigorously and to have them potentially prepared as registration if FDA is agreeable to the endpoints.
So I think Thats, what you can expect for us here.
And then finally I think your last question was on the placebo response for <unk>.
I think critically here is we saw a very low placebo response as you may recall in the phase one two.
And in fact, there was really only one patient that was showing that placebo response, two at the lowest level.
Part of that reason is is because of this very strong requirement to have the clinical meaningful benefit be shown at both time points month, one and two.
And.
As well as the other parameters around the study that we have including the <unk> itself. So I think we do feel that.
No.
It's important that we evaluate the placebo response, but we feel very good based on the phase one two I am very encouraged by that and I think that is one of the reasons you've seen us hold very strongly to that clinical trial design as well as the utilization of that responder analysis at both day 57, I'm sorry, yes.
Both month, one and two in the case of $3 13. So again, we're evaluate that but I think we're very encouraged by that early data.
Okay. Congratulations on all the progress and really an exciting moment for the company.
Thank you Ken I appreciate it.
Next we have Chris Raymond from Piper Sandler Your line is now.
Thanks, Hey, just two questions I guess first on <unk> three.
You had some variability I guess on speech in noise measures.
At baseline.
The phase one two and the phase Iia.
I guess, maybe a question going forward have you.
Thought about maybe having a hearing loss exclusion criteria going forward.
To try to ensure a bigger treatment benefit I.
I guess, that's the first question and then on mm 313 I know.
I think I remember you guys talking about FDA contributing to that four months.
Time point in terms of durability, but kind of just curious this might be sort of a how course before the <unk>.
Before the horse question here, but what sort of durability do you think youll need commercially.
Thanks.
Thank you Raymond.
So with regards to the first question on the on the variability with $4 13 in the Senate baseline.
This is one of the reasons, we're really happy to have the two studies independent studies, showing the similar benefit and that gives us a very nice data set to work from to look at some of the parameters for how we might start to create a homogeneous population I mean to your point, it's important that people recognize the treatment benefit we're seeing is us.
Across a very broad patient population.
We've set a very limited amount of criteria because thats exactly what we wanted to do with the study was also learn about the patient population and as we've reported we've seen very good effect for patients from mall to even moderate or severe hearing loss showing benefit with OTO 413.
That said Youre exactly right, we are thinking about how we can.
Additional exclusion criteria inclusion criteria that will allow us to start refining that population for the treatment benefit and I think you can consider the looking.
Looking at the initial levels of.
Speech intelligibility.
Impact that these patients have as being one of those potential criteria.
As we've done with the 313 study.
Program, where we've increased the level of tenant is required for entry I think it's a very similar here you would expect to see more treatment benefit with people that have more severity in their disease and so that is definitely something that we're looking at and I think while we're not prepared to say exactly what that will look like I think it's something you can do.
We expect us to be talking about as well as some other parameters that we're focused on as well that we think can help us refine that patient population with.
With regards to the durability.
With $3 13.
I think from a commercial standpoint, I'll, let Paul talk to this is I think it is important that the.
The most important thing we're trying to do right now is to set up the safety program for <unk> that will run in parallel to the efficacy trials and Thats really what those that extended observation and set up to do for US is to tell us what the repeat dosing scenario might be from a safety perspective, but I'll, let Paul talk to that on the commercial side as well.
Yes, thanks for the question Chris.
So just to set up the context here.
<unk> large population significant level of patient number of patients who have moderate to severe symptoms and unfortunately, there's no.
Really good treatment option for these patients.
No certainly no approved drug treatments and essentially whats used or <unk>.
Mechanisms Im hearing AIDS are are often tried but don't actually help with most patients and.
And so that will go to.
Things like.
White noise machines cognitive behavioral training basically helping the patient tend to cope with it rather than actually tamping down the severity of the tenant is so the bar is really low here in terms of what would be clinically acceptable and we do know from.
Routine use of androgen panic steroids by E&ps that Theres, no safety issues with repeat injections and there's very good tolerability.
Patients. So you couple those two things together in this very high level of disease burden and high demand level that patients have in a very kind of low level.
Any concerns about re treatment and I think we view the re treatment path is very viable.
We don't think that one size will fit all.
We will have to pick up.
Re treatment interval as Dave said from a registration standpoint, but then once they get the product gets on the market, we think that essentially patients will be treated as needed.
<unk> as shown in our phase one two.
Two trial, we will do very well just on Windows alone you had patients calling from severe levels.
Severity based upon the GSI down too.
Very minimal levels some of those patients may not need a second dose anytime soon and then you have other patients for non responders are the patients that didn't come down all the way that would likely want to be retreated. So.
Commercially that's the way we view it.
To be.
Dependent upon the patients, but we will need to further education program identifier and interval of re treatment to demonstrate safety as Dave said.
Great. Thank you very much.
Thank you Raymond.
Next we have Charles Duncan from Cantor Fitzgerald your lines now.
Hi, This is Pete stavropoulos on for Charles.
So I have.
One question on <unk>.
31 <unk>.
<unk> II study supposed to read out in August can you talk about what.
It would be viewed as clinically meaningful improvement and then also.
With regard to the second question with regard to the time since symptom onset would you anticipate that patients.
This firm for less than six.
<unk>.
Our harder or easier to treat versus patients six to 12 months.
Hi, Pete.
Thanks for the question so looking at $3 13.
As you mentioned the data is expected in August as we've announced today with regard to clinical meaningful level. The nice thing about the Tsi is it was developed when it was developed by the consortium of researchers who put the tests together and publish the test they.
They did it they did clearly state what was a clinically meaningful level of improvement, which is at 13 are greater point reduction in the in the score for the Ti.
And so clearly we see that as the primary endpoint for clinically meaningful improvement of course with the responder analysis. We're also looking for that to be a consecutive time points month, one and two now that said you will recall from our data we actually saw a patient that had quite a large improvement in fact.
Even at 15 point all of the patients that we saw a 13 point change had a greater than 15 point chain in fact, and so that obviously means that we do have some flexibility there, but I think it's very clear that the CMI level.
For clinically meaningful improvement is quite large with the <unk> and I think the other thing. We're looking for there is of course that cooperation that we had and observe with the tinnitus loudness and annoyance as well as Pgi C. So I think all of those things lead us to give us very good endpoints and and the data to understand.
And the improvement that we see with <unk> and that we expect to see with this phase II study.
With regards to the time.
The time point since onset of tinnitus and its impact.
Clearly in the phase one two we looked at patients that were six months or less and we saw obviously the data that we've reported which is very clear benefit for $3 13 over placebo.
We are now extending that out to look at patients up to one year, but I think from a biological mechanism perspective, we still believe that those patients will have benefit and that's really supported by the patients that we saw up to that six months that even at six months they were still benefiting from the drug.
And so I think we do expect that we're still see benefit in that longer term population, but thats. Obviously part of what the study is designed to tell us and our Kols are consistent if you listened to our investor R&D in.
The discussions are.
Our kols had with regards to tinnitus duration.
Most kols.
Anticipate that patients that have tentative of one year or less would be amenable to the therapy and so I think all of that is what we're looking for in terms of the outcome.
Alright, Thank you very much for taking my questions. Thank you.
Yeah.
Once again to ask a question simply press star one on your telephone keypad.
Next we have a French law.
From open Hi, Ma'am your line is open.
Alright, thanks for taking the questions maybe the first one for Paul here.
I'm just wondering in terms of the expenses going forward is there maybe a reason for.
Whether it's R&D or SG&A to maybe come down or should we see the spend kind of increased throughout the year.
Hi, Frank.
Yes, I think we're expecting the expenses to continue.
Rather flat basis across the year.
We're right on our target guidance, which as we mentioned in the release again.
Is the at least on a non-GAAP basis to 42% to $44 million.
So we're tracking to that might come off a little bit towards the end of the year as we roll off of the phase III for tenet as a roll off of these higher dose trials, but then at that point, we will be.
Kind of gearing up for <unk>.
<unk> the phase III for <unk> III.
And making some prep work anticipation of starting the phase III for Tennant is next year. So I think an important point.
Is that we are on track with the guidance and importantly from a cash perspective that keeps us on track with our.
Our runway guidance, which is cash into the second half of 2023.
Okay, Great and then on the <unk> side I know, it's fresh data.
I was wondering I think there were discussions and maybe talking to the FDA.
But it wasn't set in stone so is this the thought.
And I guess to a or is the thought to.
Wait until full phase to get everything together and then discuss with the FDA just in terms of.
Really getting comfort with the endpoint of choice here.
Yes, so thanks Francois.
Regards to the two.
The FCA I mean, I think our approach here is we do expect that we will be having some level of conversations with them prior to the initiation of the phase III study I mean.
That is in part not just due to the clinical but also even on the manufacturing side. There are obviously things that we want to make sure that we're talking about with the agency as we move forward.
And so we do expect to have some some dialogue there with regards to the specifics around the endpoint I think that's something we're still evaluating and I think we'll be able to talk about that more as we move into the second half of the year and really start looking at the design of that discussion.
Clearly there is no doubt so worried and noise test is showing the best improvement in consistency in that.
And as I've already talked about with my response to it to Ken.
It shows very good attributes.
As a potential clinical endpoint and is well established in the United States.
I think I think it clearly is one that we think can be useful in our dialogues with the FDA, but I think we're going to continue working on our side, we're going to continue to work with our Kols and others consultants to flush that out and I think we can come back on that and.
We're also getting into more details of our potential discussions with the agency.
Okay, great and if I can sneak in a last one here.
Any can you just remind us of the differences between the upcoming readout.
Two for 313 versus the prior trial anything in design that might be de risking here, maybe more severe patients or whatnot and then lastly in terms of on the on the tone of the SBA here.
Why did you guys choose a responder analysis.
And why do we feel comfortable that the FDA would probably be okay. With this endpoint here for tinnitus. Thank you.
Yes, I mean, we did make a number of changes in addition to obviously expanding the population to look at patients with duration of tenant is up to one year. So beyond the original six months in the phase one two we have taken some steps.
In.
In the design of that study, where we actually did increase the level of Ti Pi.
Severity required for these patients.
To enter into the study.
And so we do think we do expect that based on our analysis to have a benefit here.
As well as then of course are we overall think the trial design is working although there is no question that the screening and baseline period is very key.
Something that we think it's very important I think others are starting to recognize that but it's something we've always done.
As well as been having the multiple time points that we have for the responder analysis with regard to the responder analysis. It is something our statistician lives.
Efficient they like to see that consistency in the outcome at multiple time points, particularly where you have something which is a biological improvement like what we would expect the mechanism to be here with $3 13.
And responder analysis is something that has been used in FDA approvals in the past.
So it is something that we think is very powerful.
And it's something we're looking forward to is looking at in our phase II trial that said I think we also have shown the data for our population.
That people can see in our slide deck available on our website that shows very clearly that there is an improvement just on the basis of mean <unk> change as well for the population. So theres no question that we have flexibility of how we want to approach the endpoint.
And if the FDA does come back and wanted to look on a mean basis I think were completely comfortable with that but we do believe the responder analysis, particularly powerful and it's something that we would like to talk with them about.
Okay. Thank you very much sure. Thank you.
And there are no further questions at this time I will now hand, the call back to Dave Weber.
Closing remarks.
Well. Thank you everyone for participating on our call today have a good evening. Thank you.
Ladies and gentlemen, this concludes today's conference call.
Thank you all for your participation you may now disconnect.
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Good day, and thank you for standing by and welcome to the economy first quarter 2022 financial results conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation, there will be a question and answer session to ask a question you will need to press star one on your telephone keypad. If you require any further assistance. Please press star zero.
I would like to hand, the conference over to your first speaker for today, Mr. Robert <unk>.
Where I see our west region.
Please go ahead Sir.
Thank you operator, good afternoon, and welcome to autonomy as first quarter 2022 financial results and business update conference call. Joining me on the call from autonomy are Dr. David Weber, President and Chief Executive Officer, and Paul Cayer, 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.
Please refer to Autonomies filings with the SEC, which are available from the SEC or on the autonomy website for information concerning the risk factors that could affect the company autonomy, specifically disclaims any obligation to update any forward looking statements, except as required by law I will now turn the call over to <unk>.
Dave Weber, President and CEO of autonomy.
Yeah.
Thank you Robert Good afternoon, everyone and thank you for joining us on this call to discuss <unk> recent business updates as well as our financial results for the first quarter.
Yeah.
Our key update is a positive for <unk>.
<unk> phase Iia results, we announced several weeks ago.
These results are important because they provide a second independent placebo controlled trial, demonstrating the treatment benefit of OTO 413, and abroad hearing loss patient population.
With this core operation of the clinical benefit of OTO 413, we are excited to move forward with a phase II dose ranging efficacy trial expected to start by end of year.
I'll recap the topline results from this trial and then highlight the status of our other programs, which include multiple clinical readouts coming in the second half of this year.
Importantly, our OTO 313 phase II trial intended test is on track with topline results expected in August .
I'll keep my prepared remarks brief, including a summary of our first quarter financials and then we can open up for any questions.
Beginning with the OTO 413 Phase Iia result, this trial demonstrated that a single entrant in panic injection of 0.3 milligram of OTO 413, providing clinically meaningful treatment benefit versus placebo across multiple speech in noise hearing test as well as the patient global impression.
<unk> of change a consecutive time points at day 57 and day 85.
The randomized double blind placebo controlled trial enrolled a total of 33 patients with self reported hearing difficulty in a noisy environment that was confirmed by speech in noise testing.
30 of these patients were considered evaluable by a blinded reviewer including 20 patients treated with OTO 413, and 10, who received placebo.
Overall 2013, demonstrating the treatment benefit across all of the efficacy metrics and time points evaluated consistent with the positive results from the prior phase one two trial cohort.
To this point, 40% of OTO 413 treated subjects demonstrated a clinically meaningful improvement on at least one of the three speech in noise tests at both day 57, and day 85 versus 20% for placebo.
We were especially pleased to again see a clear signal for the words and noisy test, which is well established and validated in hearing loss patients.
40% of OTO 413 subjects with a valuable when test demonstrated a clinically meaningful improvement at both day 57, and <unk> 85 versus zero percent for placebo.
One important advantage of the wind tests compared to the digit phrased test is the ability to generate a speech intelligibility curve for each patient at each time point.
We included these curves for the OTO 413 responders and the results slide deck posted on our corporate website. So you can see the extent of the speech intelligibility improvement from baseline to day 85 across a range of worried loudness levels.
Based on our review of the data with Kols. These improvements are both clinically significant and meaningful for our patients hearing function in everyday situations.
We were also very encouraged to see the treatment benefit of OTO 413 reflected in the patient global impression of change or Pgi fee.
In this trial the patient was asked the following pgi question during each visit.
Since the beginning of the clinical study how would you rate your ability to hear in a noisy environment.
50% of OTO 413 subjects reported an improvement from baseline at both day 57, and a day 85 compared to only 10% for placebo.
Taken together with the speech in noise data. We believe these results demonstrate a clear clinical signal for OTO 413 versus placebo when evaluated and are presented in the same way as a successful phase one two trial.
Finding further strengthened by repeated observation across two independent study populations.
Based on these positive results, we intend to initiate a full dose ranging phase II trial in hearing loss patients by the end of 2022.
This trial will also incorporate learnings from the ongoing higher dose evaluation and are assessing the tolerability and treatment activity up to higher doses of OTO $413.
75, milligram and one five milligram, which equate to two five and five times the dose used in the phase Iia trial.
Results from these higher doses will include all of the same time points used in the phase Iia study and are expected in the second half of 2022.
We're very excited about the clinical results for OTO 413, and are actively working on next steps for the program that targets tens of millions of hearing loss patients in the U S alone.
Turning now to the other 313 program for tenant does the phase III trial is on schedule with topline results expected in August as a reminder, we randomized 153 patients with persistent unilateral tinnitus of at least moderate severity.
This was slightly above our target enrollment of 140 patients.
Patients were randomized one to one to a single engine tympanic injection of 0.32 milligram, OTO 313, or placebo and are being followed for four months.
The primary endpoint is the same as reported for the successful phase one two trial a responder analysis based on the proportion of patients who report a clinically meaningful improvement in the tinnitus functional index or <unk> from baseline to month, one and two following treatment.
To assess durability of the OTO 313 treatment effect, we extended the follow up period out to four months, we are continuing to see high compliance for completion of the Tsi and daily symptom diary, which is <unk>.
Important for our analysis of the results.
We also believe this indicates the high level of commitment that patients have in supporting the trial and finding a treatment for tinnitus.
In parallel with completing the phase III trial, we are enrolling tentative patients in several study cohorts to evaluate the safety of bilateral as well as higher dosing for OTO 313.
This effort is important for the program since bilateral patients comprise approximately 50% of the tenant gist population.
Furthermore, the higher dose for evaluating and 0.64 milligrams twice the dose used in our successful phase one two and ongoing phase II trial.
We expect results from the one month safety evaluations in the second half of 2022.
This data together with the phase II results are expected to support an end of phase II meeting with the FDA and inform the design of the phase III clinical program planned to start in the first half of 2023.
Our third development program is the <unk> five gene therapy targeting <unk>, two which is the most common cause of congenital hearing loss pay.
Patients born with this mutation can have severe to profound deafness in both ears that is identified in screening tests now performed routinely in newborns.
Preclinical proof of concept results for <unk>, two five demonstrate that a single administration of OTO 825 rescues hearing loss and cochlear damage and two preclinical models, representing a range of hearing loss severity caused by <unk> deficiency.
We have completed a pre IND meeting with the FDA that provided guidance regarding non clinical study design and manufacturing requirements and clinical trial considerations and have incorporated this feedback into our IND enabling program.
These activities are ongoing and we expect to file an IND in the first half of 2023.
Our remaining two programs, our OTO 510, and OTO protect them for patients at risk for cisplatin induced hearing loss and <unk> X X a potential treatment for patients with severe hearing loss pre.
Preclinical development continues on both programs.
In summary, we are making good progress in advancing our multiple clinical programs for trading hearing loss and tinnitus, which represent large untapped markets with significant unmet medical need.
The attracting potential of these target indications was highlighted by multiple kols during our investor R&D event in March.
If you were not able to participate and I would encourage you to access the webcast and associated slide deck via the investors section of our website.
The presentations are informative and there is even an abbreviated words and noise tests. So you can hear for yourself, how that test works.
Switching briefly to our financials, we are on track with our guidance for 2022, we reported GAAP operating expenses totaling $13 2 million in the first quarter and non-GAAP operating expenses of $11 3 million.
The adjustment for non-GAAP expenses is the exclusion of stock based compensation as outlined in today's earnings release.
From a cash perspective, we finished the first quarter with a cash balance, including cash cash equivalents and short term investments of $62 9 million.
And we continue to expect that this cash balance will fund the company into the second half of 2023.
Going forward, we expect non-GAAP expenses for 2022 to totaled 42 to 44 million and GAAP expenses to be in the range of $52 million to $54 million.
Operator, we are now ready for questions.
Thank you, ladies and gentlemen, Q&A is now open.
As a reminder to ask a question you will need to press star one on your telephone keypad.
To withdraw your question simply press the pound key.
Once again it is star one to ask a question. Please.
Please standby, while we compile the Q&A roster.
Okay.
Our first question is from the line of Ken packaged tour.
With Cowen Your line is now open.
Thanks, guys lots of progress real exciting time I know, it's still recent from the release of the 401 three data.
I know, we still have to wait for the higher doses as well, but I'm wondering if you've been able to do a little bit more work with kind of outside consultants and thought leaders about whether we could move forward with words and noise as a primary endpoint just kind of any conversations you've had any more confidence you got that that could be the.
The primary endpoint to complement the patient global impression I think you still talk about making that a secondary end point. So just wanted to understand any more progress there.
And then as we wait for the higher doses and obviously, depending on that data can you talk about the fees to be potentially being powerless registrational I know youre still talking dose finding but just wondering if that study couldnt fact that depending on the data.
Registrational and then lastly, just.
The head of 313 could you just remind us some of the steps that you've taken to try to minimize the placebo responses.
For the August results. Thanks, so much.
All right Ken. Thank you very much for your questions and I think we have continued to talk about the win and share those results with our kols as well as talk about the potential for that as a suitable pri.
Primary endpoint and I think we continue to be very encouraged by data what was obviously key for us and our data was seen confirmation from both the phase one two and the phase Iia study with the wind response as you may recall, it's very consistent between the two and clearly shows the win is doing a great job of picking up the benefit.
Of OTO 413, so we do have conversations ongoing but I think as we look at both.
The <unk>.
The knowledge base of the win in the United States Audiologist are quite familiar with the wind test.
And the wind test is one that has been heavily researched and and validated in the hearing loss population. We do think it is a very good endpoint and then obviously was part of our goal in looking at these three different tests.
It is really to establish and identify which of these would probably be the.
The most likely so while we are at this point still not confirming that I think we do feel that the win is very encouraging and can see that as a potential.
Primary endpoint as we move forward and Thats something were continuing to work on and talk about.
So with regard to your second question in the dose finding and potential for registration I mean, clearly I think we have to recognize that this is a step wise development. We're doing the first kind of research of its kind, where the first ever have demonstrated this kind of treatment benefit for a hearing loss population in two consecutive studies.
And so I think we do have to expect that we're going to learn a lot more as well as <unk>.
Obviously, we'd be powering on very limited data that said I think it's important to understand we always conduct our phase III trials in a registration type format. We've done that with the 313 phase II trial that will read out in August and I think you can expect us to do the same.
With regards to the phase <unk> dose ranging study for 2013, we always feel it's best to run those trials very rigorously and to have them potentially prepared as as registration if FDA is agreeable to the endpoints.
So I think Thats, what you can expect for us here.
And then finally I think your last question was on the placebo response for $3 13.
No I think critically here.
We saw a very low placebo response as you may recall in the phase one two.
And in fact, there was really only one patient that was showing that placebo response, two at the lowest level.
I think part of that reason is is because of this very strong requirement to have the clinical meaningful benefit be shown at both time points month, one and two.
And as.
As well as the other parameters around the study that we have including the <unk> itself. So I think we do feel that.
It's important that we evaluate the placebo response, but we feel very good based on the phase one two I am very encouraged by that and I think that is one of the reasons you've seen us hold very strongly to that clinical trial design as well as the utilization of that responder analysis of both day 57.
I'm sorry at both month, one and two in the case of <unk>. So again, we're evaluate that but I think we're very encouraged by that early data.
Okay. Congratulations on all the progress and really an exciting moment for the company.
Thank you Ken I appreciate it.
Sure.
Next we have Chris Raymond from Piper Sandler Your line is now open.
Thanks, Hey, just two questions I guess first on <unk> three.
You had some variability I guess on speech in noise measures it.
At baseline.
The phase one two and the phase Iia.
I guess, maybe a question going forward have you.
Thought about maybe having a hearing loss exclusion criteria going forward.
To try to ensure a bigger treatment benefit I.
I guess, that's the first question and then on mm 313 I know.
I think I remember you guys talking about FDA contributing to that four months.
Time point in terms of durability, but kind of just curious this might be sort of a house.
Of course before the <unk>.
For the horse question here, but what sort of durability do you think youll need commercially.
In that setting.
Thank you Raymond.
So with regards to the first question on the on the variability with $4 13 in the Senate baseline.
This is one of the reasons, we're really happy to have the two studies independent studies, showing the similar benefit and that gives us a very nice data set to work from to look at some of the parameters for how we might start to create a homogeneous population I mean to your point, it's important that people recognize the treatment benefit were seeing.
Is across a very broad patient population, we've actually set up very limited amount of criteria because thats exactly what we wanted to do with the study was also learn about the patient population and as we've reported we've seen very good effect for patients from MAU to even moderate or severe hearing loss showing benefit with <unk>.
That said Youre exactly right. We are thinking about how we can add additional exclusion criteria and inclusion criteria that will allow us to start refining that population for the treatment benefit and I think you can consider the looking at the initial levels of.
Speech intelligibility.
The impact that these patients have as being one of those potential criteria.
As we've done with the 313 study.
Program, where we've increased the level of tenant is required for entry I think it's a very similar here you would expect to see more treatment benefit with people that have more severity in their disease and so that is definitely something that we're looking at and I think while we're not prepared to say exactly what that will look like I think it's something you can definitely.
We expect us to be talking about as well as some other parameters that we're focused on as well that we think can help us refine that patient population.
With regards to the durability.
With 3014.
I think from a commercial standpoint, I'll, let Paul talk to this is I think it is important that the most important thing we're trying to do right now is to set up the safety program for <unk> that will run in parallel to the efficacy trials and that's really what those that extended observation is set up to do for us is to tell us what the repeat dosing scenario.
Might be from a safety perspective, but I'll, let Paul talk to that on the commercial side as well.
Thanks for the question Chris.
So just to set up the context here in Tennessee large population significant level of patient number of patients who have moderate to severe symptoms and unfortunately theres no really good treatment option for these patients.
No certainly no approved drug treatments and essentially whats used are coping mechanisms I'm hearing AIDS are.
Are often tried but don't actually help with most patients and.
And so that will go to things like <unk>.
White noise machines cognitive behavioral training basically helping the patient tend to cope with it rather than actually tamping down the severity of the tenant is so the bar is really low here in terms of what would be clinically acceptable and we do now.
From routine use of androgen panic steroids by Emts that Theres no safety issues with repeat injections and there's very good tolerability.
Patients. So you couple those two things together in this very high level of disease burden and high demand level that patients have in a very kind of low level of any concerns about re treatment and I think we view the re treatment path is very viable.
We don't think that one size will fit all.
We will have to pick up.
<unk> treatment interval as Dave said from a registration standpoint, and then once they get the product gets in the market. We think that essentially patients will be treated as needed some patients as shown in our phase one treatment.
Two trial will do very well just on one dose alone you had patients going from severe levels.
Severity based upon the <unk> down too.
Very minimal levels some of those patients may not need a second dose anytime soon and then you have other patients. The non responders are the patients that didn't come down all the way that would likely want to be retreated so commercially.
Commercially.
That's the way we view it.
To be simpler.
Dependent upon the patients, but we will need to further education program identifier and interval of re treatment tool to demonstrate safety as Dave said.
Great. Thank you very much thank you Raymond.
Yes.
Next we have Charles Duncan from Cantor Fitzgerald your lines now.
Hi, This is Pete stavropoulos on for Charles.
So I have.
One question on <unk>.
31 three.
<unk> II study supposed to read out in August can you talk about what.
It would be viewed as clinically meaningful improvement and then also.
With regard a second question with regard to the time since the symptom onset would you anticipate that patients with tinnitus for less than six.
Months.
Our harder or easier to treat versus patients six to 12 months.
Hi, Pete Thanks.
Thanks for those questions. So looking at $3 13.
As you mentioned the data is expected in August as we've announced today with regard to clinical meaningful level. The nice thing about the <unk> is it was developed when it was developed by the consortium of researchers who put the test together and published the test.
They did it they did clearly state what was a clinically meaningful level of improvement, which is at 13 are greater point reduction in the in the score for the <unk> and.
And so clearly we see that as the primary endpoint for clinically meaningful improvement of course with the responder analysis. We're also looking for that to be a consecutive time points month, one and two now that said youll recall from our data we actually saw a patient that had quite a large improvement in fact.
Even at 15 point all of the patients that we saw a 13 point change had a greater than 15 point change in fact, and so that obviously means that we do have some flexibility there, but I think it's very clear that the CMI level.
For clinically meaningful improvement is quite large with the <unk> and I think the other thing. We're looking for there is of course that cooperation that we had and observe with the tinnitus loudness and annoyance as well as pgi.
So I think all of those things lead us to give us very good endpoints and and the data to understand the improvement that we see with $3 13, and that we expect to to see with this phase III study.
With regards to the time.
The time point since onset of tinnitus and its impact.
Clearly in the phase one two we looked at patients that were six months or less and we saw obviously their data that we've reported which is very clear benefit for $3 13 over placebo.
Now extending that out to look at patients up to one year, but I think from a biological mechanism perspective, we still believe that those patients will have benefit and that's really supported by the patients that we saw up to that six months that even at that six months they were still benefiting from the drug.
And so I think we do expect that we're still see benefit in that longer term population, but thats. Obviously part of what the study is designed to tell us and our Kols are consistent if you listen to our.
Investor R&D in.
The discussions are.
Our kols had with regards to tentative duration.
Most kols.
We anticipate that patients that have tentative of one year or less would be amenable to the therapy and so I think all of that is what we're looking for in terms of the outcome.
Alright, Thank you very much for taking our questions.
Thank you Pete.
Once again to ask a question simply press star one on your telephone keypad.
Next we have a French wine Mr. Blunden.
From open Hi, Ma'am your line is open.
Alright, thanks for taking the questions maybe the first one for Paul here.
Just wondering in terms of the expenses going forward is there maybe a reason for.
Whether it's R&D or SG&A to maybe come down or.
Should we see the spend kind of increased throughout the year.
Hi, Frank.
Yes, I think we're expecting the expenses to continue.
Or rather flat basis across the year.
We're right on our target guidance, which as we mentioned in the release again.
At least on a non-GAAP basis to <unk> $42 million to $44 million.
So we're tracking to that might come off a little bit towards the end of the year as we roll off the phase III tenant is a roll off of these higher dose trials, but then at that point, we will be sort of gearing up for initiating the phase III for fall <unk> III and.
And making some prep work in anticipation of starting the phase III for Tinnitus next year. So I think the important point is that we are on track with the guidance and importantly from a cash perspective that keeps us on track with our runoff.
<unk> guidance, which is cash into the second half of 2023.
Okay, Great and then on the <unk> side I know, it's fresh data.
I was wondering I think there were discussions that may be talking to the FDA.
I mean, it wasn't set in stone. So is this the thought.
And I guess phase two a or is the thought to.
Wait until full phase to get everything together and then discuss with the FDA just in terms of.
Really getting comfort with the endpoint of choice here.
Yeah. So thanks Francois.
<unk> to the to the FCA I mean, I think our approach here is we do expect that we will be having some level of conversations with them prior to the initiation of the phase III study.
That is in part not just due to the clinical but also even on the manufacturing side. There are obviously things that we want to make sure that we're talking about with the agency as we move forward.
And so we do expect to have some some dialogue there with regards to the specifics around the endpoint I think that's something we're still evaluating and I think we'll be able to talk about that more as we move into the second half of the year and really start looking at the design of that discussion.
Clearly there is no doubt so worried and noise test is showing the best improvement in consistency in that.
And as I've already talked about with my response to it to Ken.
It shows very good attributes.
As a potential clinical endpoint and is well established in the United States.
I think I think it clearly is one that we think can be useful in our dialogues with the FDA, but I think we're going to continue working on our side, we're going to continue to work with our Kols and others.
<unk> two to flush that out and I think we can come back on that end.
We're also get into more details of our potential discussions with the agency.
Okay, great and if I can sneak in a last one here.
Any can you just remind us of the differences between the upcoming readout the phase II <unk> III versus the prior trial anything in design that might be derisking here, maybe more severe patients or whatnot and then lastly in terms of on the on the tone of the SBA here.
Why did you guys choose a responder analysis.
Why do we feel comfortable that the FDA would probably be okay. With this endpoint here for tinnitus. Thank you.
Yes, I mean, we did make a number of changes in addition to obviously expanding the population to look at patients with duration of tenant is up to one year. So beyond the original six months in the phase one two we have taken some steps.
In in.
In the design of that study, where we actually did increase the level of Ti Pi.
Severity required for these patients.
To enter into the study.
And so we do think we do expect that based on our analysis to have a benefit here.
As well as and of course are we overall think that trial design is working although there is no question that the screening and baseline period is very key and something that we think it is very important and I think others are starting to recognize that but it is something we've always done.
As well as been having the multiple important time points that we have for the responder analysis with regard to the responder analysis. So it is something our statistician lives.
Efficient they like to see that consistency in the outcome at multiple time points, particularly where you have something which is a biological improvement like what we would expect the mechanism to be here with $3 13.
And responder analysis is something that has been used in FDA approvals in the past.
So it is something that we think is very powerful.
And it's something we're looking forward to it looking at in our Phase II trial that said I think we also have shown the data for our population.
That people can see in our slide deck available on our website that shows very clearly that there is an improvement just on the basis of mean <unk> change as well for the population. So there is no question that we have flexibility of how we want to approach the endpoint.
And if the FDA does come back and want to look on a mean basis I think were completely comfortable with that but we do believe the responder analysis, particularly powerful and it's something that we would like to talk with them about.
Yes.
Okay. Thank you very much sure. Thank you.
And there are no further questions at this time I will now hand, the call back to the weather.
Closing remarks.
Well. Thank you everyone for participating in our call today have a good evening. Thank you.
Ladies and gentlemen, this concludes today's conference call.
Thank you all for your participation you may now disconnect.