- Otonomy Inc. crashed on Wednesday after halting development for a main pipeline candidate due to its clear failure in late-stage testing.
- The Phase 3 AVERTS-1 trial evaluated Otonomy's Otividex against placebo as a treatment for Ménière’s disease, an ear condition that can cause vertigo and ultimately hearing loss. Results showed that Otividex didn't significantly outperform placebo across any key metric, including the number of days patients definitively experienced vertigo — the trial's primary endpoint.
- Otonomy shares opened at $3.80 apiece on Wednesday, down nearly 82% from the prior day's close. The company is now undergoing a strategic review of its pipeline, as well as commercialization activities related to its sole marketed product, Otiprio.
Patients in the experimental arm of AVERTS-1 demonstrated a 58% reduction in definitive vertigo days (DVD) after three months of treatment versus 55% for those in the control group — an outcome that is quite disparate from earlier clinical studies. In one Phase 2b investigation, for instance, Otividex (dexamethasone)-treated patients had a 73% DVD reduction compared to 43% for those on placebo.
Otonomy leadership said the AVERTS-1 results were shocking, especially in lieu of previous readouts, during an Aug. 30 investor call. Pressed by analysts as to why this latest trial ended so definitively negative, the company said it hadn't had enough time to evaluate.
"Anything that we would say at this point would be pure speculation; there is nothing in the data to indicate that there was any failure either of trial conduct or of the selection of patients based on the criteria we had set forth or with regards to clinical sites variation," CEO David Weber said on the call.
Weber added that the main difference with AVERTS-1 versus other trials was that it focused on patient-reported outcomes. But Chief Scientific Officer Kathie Bishop, also on the call, stressed that dropout rates, daily diary compliance and patient demographics were similar between the experimental and control groups, which had 83 and 82 patients, respectively.
"At this point we have no explanation for the unequivocal negative results of this trial," she said.
As Otonomy works to identify exactly what happened in AVERTS-1, it has suspended all other clinical development of Otividex, including the Phase 3 AVERTS-2 trial for patients with Meniere's disease and a Phase 2 trial for patients with cisplatin-induced hearing loss. The drugmaker announced on Wednesday it is conducting pipeline and commercialization reviews as well.
In June, Otonomy finished revamping the sales team for Otiprio (ciprofloxacin otic suspension), its only marketed product. Weber said his company will look at full-year results to see whether those changes made a difference in uptake or sales of the drug. Otonomy reported $326,000 in net product sales in the second quarter of 2017, as well as $22.3 million in cash and cash equivalents.
Otiprio appears to be Otonomy's best bet at salvaging shareholder confidence. The drug has a March target action date for the acute otitis externa (AOE) indication and is in clinical development for acute otitis media with tubes (AOMT).
"Both of those — AOE and AOMT — we view as more than doubling the market potential for Otiprio," Weber said. "Additionally, and importantly, both are indications that are in the physician's office, so they are not driven by or have involvement of facilities where, of course, you need formulary review."