Otonomy on Monday announced plans to shut down after nearly a decade of research into hearing loss treatments that, over the years, came up short several times in testing.
The decision follows two clinical trial failures in recent months. In October, a study testing its drug candidate OTO-413 for hearing loss failed to show any meaningful improvement in multiple speech-in-noise hearing tests, compared with placebo.
After these setbacks, the company in November began a strategic review to determine its future. On Monday, Otonomy said it had let go all of its remaining employees as of Dec. 15.
The San Diego-based company had $40.1 million in cash on hand at the end of the third quarter, for which it reported a net loss of $12 million. It estimates severance and other employee termination-related expenses will cost $5 million.
While the board has decided to dissolve Otonomy’s remaining assets and distribute any remaining cash to shareholders, the plan must be approved by shareholders in a meeting that will be held sometime in the first quarter of 2023.
The company previously restructured in 2017, reducing staff and discontinuing commercial support for a drug known as Otiprio, an antibiotic to treat ear infections.
Otonomy’s announcement comes a week after another biotech, Sio Gene Therapies, said it had decided to dissolve. Scores of other small drugmakers have had to lay off employees or cut spending this year as a market downturn has limited funding options.