Otonomy, Inc.

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[00:00:41] Thank you, operator. Good afternoon and welcome to Otonomy’s Third quarter twenty twenty financial results and business update.

Conference call. Joining me on the call from Autonomy or 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 management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results.

Such statements include, but are not limited to statements relating to the timing of results, activity for and conduct of ongoing clinical trials. Statements relating to the updated statistical analysis plan for the ongoing Phase three clinical trial of Motiva decks expectations regarding the negative binomial 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.

Statements relating to the potential benefits and opportunities and activities under the collaboration agreement between autonomy and see the promotion agreement between Autonomy and ALCA Bello and the license agreement between autonomy and keirin. Kiran.

Expectations regarding autonomies, business plans and the outcomes. Market Opportunity and value.

Potential of autonomous, clinical and preclinical programs and expectations regarding operating expenses for Twenty twenty cash, runway and autonomies, ability and resources to support its product, pipeline and development activities. Please refer to autonomies filings with the SEC, which are available from the SSA or on the Autonomy 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 Autonomy.

[00:02:56] Thank you, Robert. Good afternoon, everyone, and thank you for joining us all to discuss autonomies, business updates, as well as financial results for the third quarter of twenty twenty twenty.

We continue to execute on our business plan during the third quarter, including achievement of the following milestones, we completed patient enrollment in the Phase three trial of Otisville in the year disease and are on track for announcing results in the first quarter of twenty twenty one. We announced positive phase one to clinical results for our 023 13 program in 10 cities and are now moving into full phase two development.

We completed patient enrollment in our 413 phase one two trial in hearing loss and expect to announce results by the end of year. We also advanced our multiple preclinical programs that extend our efforts across additional hearing loss pathologies and patient populations.

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 neuropathology field. In short, we are doing the things we need to do to drive value creation.

And I am very excited about the activity in 413 clinical catalysts we have coming up. During this call up, 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 the activity phase three trial, seven years disease, we completed patient enrollment at the beginning of October and expect results in the first quarter of twenty twenty one. [00:04:55] We enrolled a total of one hundred and forty nine patients in the United States in Europe, exceeding our target of one hundred and forty two 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 PASSAN model to analyze the daily Vertigo account data reported by patients, we submitted a revised statistical analysis plan that uses a statistical test called the Negative Binomial 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 clinical data based on the Phase two trial, the successful Evertz to trial and the integrated data set from both trials, assuming positive results from this additional Phase three trial. We plan to submit a new drug application to the FDA in the third quarter of twenty twenty one.

Turning to other three for fraternities, we announced positive results from a Phase one two trial in July. The exploratory efficacy cohort of this trial included 31 evaluable patients with persistent tinnitus of at least moderate severity based on the tinnitus functional index, or TFI, a clinically validated instrument.

Patients also reported the loudness and annoyance of their tinnitus using daily phone diaries and completed the patient global impression of change, or PGC. Following a two week lead in period, subjects were randomized to a single tympanic injection of three 13 or placebo in a one to one randomization and then followed for eight weeks.

This trial achieved its objectives by demonstrating a positive clinical signal for 023 13, using a TFI responder analysis, good correlation with other endpoint metrics and a favorable safety profile versus placebo in particular. Forty three percent of other 313 patients were responders at both day twenty nine and day 57, compared to only 13 percent of placebo patients with statistical significance that p value of less than point zero five.

Furthermore, 023 13 patients who were TFI TFI responders reported improvements in tinnitus, loudness and annoyance levels based on the daily diaries, as well as improvement in the PC with a high correlation coefficient between these various measures. Finally, the trial demonstrated that a single tympanic injection of 023 13 was well tolerated and the incidence of ear related adverse events was lower than in the placebo group.

Based on these results, we are advancing 023 13 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 413, a sustained exposure formulation, a brain derived neurotrophic factor, or BDNF, that we are developing for the repair of cochlear synaptic apathy.

[00:08:40] Recent research has identified damage to synaptic connections as the underlying pathology in noise and age related hearing loss that manifests as speech and noise hearing deficit. Neurotrophic factors, including BDNF, have potential therapeutic effects in the cochlea by promoting the survival of Spyro ganglion neurons, increasing neural 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 OTRO 413, then enrolled 39 patients with speech and noise hearing deficit, including 15 patients in the high dose cohort.

Each dose cohort was randomized three to one for a single inch of tympanic injection of 413 or placebo and then followed for three months as this is the first clinical evaluation of BDNF delivered to the ear. 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 the end of this year for this trial. A brief update now about our three preclinical programs that are focused on different hearing loss pathologies and patient populations.

The first of these is our gene therapy collaboration with EPS that targets DGB to 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.

We presented preclinical the results at conferences earlier this year, demonstrating that a gene of interest can be expressed in support cells of the cochlea, which are the relevant target cells for treating Jabe to deficiency using novel and proprietary Aive Capsis. 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 we'll provide additional information about the timeline in the coming months. We also presented data earlier this year related to our five 10 program targeting data protection for patients at risk for cisplatin induced hearing loss, or CHF Cisplatin 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 cisplatin induced hearing loss that is progressive, bilateral and irreversible. We have identified a novel class of agents that potentially bind to cisplatin and provide greater protection in preclinical models, then known antioxidant and anti apoptotic molecules, and the increased potency relative to other cisplatin binding molecules currently in clinical development.

These results highlight the therapeutic potential of our locally delivered five 10 product candidate to provide superior protection without tumor protection. Our third preclinical program, 026 x x, targets hair cell regeneration as an approach to treating patients with severe hearing loss.

[00:12:32] It is well-established that damage to cochlear hair cells through aging, excessive noise or exposure to toxic chemical leads 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 Kirin Pharmaceutical Company, providing us with worldwide rights to develop and commercialize a novel kiren compound for the treatment of sensory neural hearing loss. This is a very interesting program which is complementary to our 413 program.

Targeting Cochlear snapped off apathy. One final program update related to our co promotion part partnership with Al Calvello that supports the sales and marketing of ATIP REO, we initiated this collaboration in June, focused on acute otitis extern and recently expanded the effort to include use of materials during EBITDA surgery.

We will continue to record all product revenues and pay ALCA below a share of proceeds from sales during the multi-year deal of autonomy. We'll 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 intenta for the details, the key takeaways are that we are on track with our spending guidance for the year, which is for non-cash expenses of thirty five to thirty eight million and gap expenses of forty five to forty eight million. Importantly, we finished the quarter with ninety four point five 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 sixty nine million. This cash balance will fund the company for at least two years and enable us to achieve important milestone 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 neurobiology, we have clinical stage programs targeting the largest patient populations and market opportunities in the field, including hearing loss, tinnitus and balance disorders. We look forward to the completion of our activities, Phase three trial and then Eustace's next quarter and are ready to move to an NDA filing in the third quarter of twenty twenty one following a successful result in tinnitus.

We are building off the positive phase one two results for 023 13 and advancing the program into full phase two development. And in hearing loss we are finishing a phase one to trial for 413, the first of our several programs to address multiple hearing loss pathologies and patient populations.

I am very excited about the transformational opportunity our clinical candidate, Catullus, provides for the company over the next few months and look forward to keeping you updated on our progress. Operator, we are now ready for questions.

[00:16:28] Hi, guys. Thanks for taking the question.

So for the otha 413 data that's coming this quarter, can we talk about what we can expect to see both for the global impression range and the electrophysiology measurements and what Calil believe are meaningful changes for these patients?

[00:16:49] Hi, Tara. Yes, thanks for the question.

For the 413 data, there is the numerous other TORRI measures that are being done for safety since it is first and foremost a 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 expected to have almost normal hearing in terms of standards, radiometric tests like, for example, the Peotone 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 or no recognition in the background of sound KORVETTES for real pathology for these patients is the inability to hear in the background of noise.

So we believe these word in noise tests are really going to be the the primary focus for looking for signals of activity as opposed to the more safety related audio metric measures.

[00:17:56] Thank you.

[00:17:56] Obviously that you also asked about the patient global impression of change, sorry, the PGC is obviously one that also just give from a patient perspective. Do they do they observe and feel that they have made changes in basically the impression of their hearing ability?

And their what we really look for is exactly like what we saw with 313, whether it was a very high consistency between the patient global impression of change and actual improvements as measured by, in that case, for tinnitus, functional index. Obviously, we'd be looking here more again to the word and recognition tests where the voice recognition test connected with those PGC outcomes.

[00:18:43] Perfect. Thank you so much.

[00:18:56] Hey, guys, thank you so much for taking my question and congratulations on the progress. So just a couple from us.

So, first of all, to the next, with enrollment in the trial exceeding your initial target of one hundred forty two patients, could you remind us of your powering assumptions? And where would this get you in terms of statistical power?

Do you have any early sense of patient compliance and dropout rates? And then I'll have one more follow up.

[00:19:25] Yeah, thank you, George. Thank you for participating here.

Yeah. For the next trial.

One forty two was our target and that one, 42 was based on a powering of well over 90 percent. So with the 149, we obviously feel very, very good about our powering.

You know, we would expect to have a few drop outs is 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 one forty to incorporated our assumptions with regards to any patient drop off, which again, is usually low in these studies, which has always been very high compliance and high participation with minimal drop out.

So the 149 really gives us a very strong number as it's well above the 140 to the other part in terms of powering. So that so that basically would tell us that we're well into the the you know, into the 90 percent 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 S.R.O. with regard to patient compliance throughout the not only the trial, but obviously the more recently this year, the covid pandemic and compliance have remained extremely high, again, very consistent with what we've seen in prior studies with Moneris.

These patients are highly motivated, given the lack of any therapy and therefore are highly compliant. And that's exactly what we've continued to see, even despite covid.

[00:21:02] Thank you. And he won three.

I was just wondering, have you received a response 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 about the options to pursue a higher dose or slightly change to the clinical trial enrollment criteria, if you could just talk about your decision making process in this and what would you be expecting from the FDA?

[00:21:41] Yeah, thank you. So once we submitted the type C meeting request, the FDA has 75 days in which to respond to the ad for that media 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.

The primary purpose of that Type C meeting request was with the question of dose. As you know, the three 13 results that we observed, we saw very strong safety for 023 13.

In fact, there were fewer Azeez, including specifically IR related adverse events with the treatment group relative to the placebo. And as a result of that plussing, coupled with the the strong clinical efficacy signals that we saw both in the TFI and 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 agency to respond to. We think it still is meets our 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, Jorgy, that importantly, we will continue to look at the current dose as well. [00:23:06] The current doses clearly showing very good activity.

And so as we look at our clinical trial design for phase two, we will definitely include the current dose. It will just be a matter of adding an additional dose at a higher level with regards to initiation and more details in terms of the inclusion exclusion criteria.

We're going to be talking about that more in the coming months. We are trying as soon as we hear from the agency that we would be we are working very quickly to be ready to initiate a trial in the early part of twenty twenty one.

And as part of that, we're currently going through a very rigorous analysis, both with our statisticians as well as with colleagues to talk about 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 such things, for example, as the level of disease entering into the study.

What level of TFI would we require, as well as the duration of the tinnitus is something that we want to look at and expanding out the duration from within six months of onset, probably to nine months, possibly up to one year. So we're be looking at those things and talking about them more in the months, months to come here shortly.

[00:24:36] This is great. Thank you so much.

[00:24:37] Thank you, Georgie.

[00:24:41] Thank you. Our next question is from the line of audience, not from EPS Wainwright.

Your line is open. Please answer your question.

Thanks. I have a couple of questions.

Just quickly regarding the four 13 program. I'm sorry I already mentioned it.

Can you just remind us, 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 a result do you think you'll get out of this small sample? And do you think the FDA has a view already in this field as to what the right sort of tests are in this area?

I have a follow up. Thanks.

[00:25:30] Ok, thanks. Yeah, we can take this and then talk to your next question.

So with regard to the 413 program, really, we're looking at all the cohorts. Clearly, we started off very low for safety reasons.

We started off at a very low exposure. But we will be looking and contrasting all the different cohorts to look for the activity, you know, given that it is 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 regards 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 it's different than the tentative three 13 program where we had a very established, clinically validated, validated clinical instrument with the TFI. That was clearly our primary here.

This is really the first study of its kind using these word recognition measures, which we have multiples to in order to to answer those very questions. Which kind of variability would we expect to see in clinical trials and what kind of changes could we detect?

So that's the important part about this trial. It will also allow us to not only expand 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 as we continue to move on not only for this program, but for hearing loss programs in general, because word recognition is another important measure of hearing function with regard to the FDA, 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 there's other work going on in the field as well.

It's 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 we're doing that we can also share with them our learnings and show the data that support what we're viewing is being important measures to understand both cochlear synaptic apathy as well as overall hearing loss changes.

[00:27:44] Ok, and I guess you kind of segue into my next question. I'm sure you don't want to comment too much about anyone else's program, but you did mention there are some other work going on up there.

And it's not like there's another public company with 800 million dollar market cap and a early stage maybe phase to a hearing loss program with a mechanism not totally unlike one of yours. And I'm just wondering, that's the frequency therapeutics.

And I'm just wondering if you can comment just to what extent your knowledge is there anything different that you're doing? Is there any difference in the end points or thresholds that you've studied to date and are looking at going forward that you think will differentiate your program and and based on what the data you've seen to date from theirs back?

[00:28:28] Yeah, I mean, I think from the from what I know obviously of their program publicly, 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 radiometric type tests as well as word in noise hearing tests. We have multiple, as I've talked about, multiple, where the noise study testing that we're doing here, which I think others are more focused on, on a very narrow set.

So I think we will obviously be a very important learnings that we will have understanding how these different measures compare. I think one of the things that's important to remember is our drug delivery technology, which we've now shown not only with the active IDEX previously with totipotent, but now even with auto free 13 and single administration that's improving tinnitus in those patients.

Forty three percent of patients at the high dose, you know, for eight weeks that delivery technology, the ability to deliver high concentrations of drugs 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 ontology space that need to retreat and undergo multiple treatments, as opposed to our practice of doing a single tympanic objection 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 aspect that is currently away in work among any other company in hearing loss. But in addition to hearing loss, we have tended to some in years as well.

So I think the extensive, both clinical and preclinical program obviously sets us apart from others.

[00:30:49] All right, thanks. Appreciate the call.

Thank you. [00:30:54] Thank you, sir.

Again, everyone, if you would like to ask questions, you will need to brasses Starwind and the number one on your thoughts doing telephone. We do have another question from the line of Franzblau Bryzgalov from Oppenheimer.

Your line is open to question.

[00:31:16] Hi, thanks for taking the question. Just quickly here, in terms of the type C meeting, you talked about upping the dose, talked about maybe the duration, the patients that maybe up to nine months that have had tinnitus.

But I was wondering anything in terms of repeat dose and also in terms of the end point on the TFI, which which seems to be very clear, the thirteen point is a responder. Is the FDA OK with with you expect them to be OK as a primary endpoint with responders only, or is this all patients put together that they might want to see?

[00:31:54] Yeah, thanks, François. With regard to the type C, in addition to the upper dose and the duration, we did consider, you know, really our approach on repeat dosing is more from a safety perspective of if patients need to be treated.

I think that is still something we're trying to understand in this condition with tinnitus, because if you look at the patients who improve the 43 percent 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 where keep the eight weeks of primary.

But we are going we are planning to extend 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 very mild tinnitus.

And so the question is, do they even need another administration? And so that's something that may vary by patient and where they start off in tinnitus.

And that's something we 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, it's really how we tried to handle it in Manure's disease, which is a chronic condition where patients wax and wane in terms of their Vertigo Episodes IV to look at repeat dosing more from a safety aspect than a therapeutic need.

And so that is possible what we're be looking at here with tinnitus. But again, I think what we need to do is look at the longer observation period to see how these patients do and whether there is any need to do any long duration of treatment.

[00:33:45] But I can't tell that yet based on the great results we had from the from the phase one to trial here where every one of those patients was better at the end of the study and was their 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 TFI and the thirteen point responder we have had discussions with, one of the reasons we chose the TFI is preliminary discussions with the agency, both in the Prii and for three 13, but also in connection with our MANYAS program, because tinnitus is a is a symptom of manures. And as a result of that, we feel good about the TFI.

Clearly, again, this is really the you know, some of the most data the FDA will have seen as they look at our TFI data. And so it is something that as we're conducting our phase two trial, part of what we're doing is collecting data that I think we can even see in our phase one to trial that support the TFI as an outcome.

And that is really looking at those correlations to other endpoints like loudness and annoyance, as well as the patient global impression of change. And I think that's what really for me is very important, is that correlation really helps establish the TFI as a very practical and effective measure of not only the hearing function for these patients, but their 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.

[00:35:31] I just I just in terms of responders to that forty three percent versus 13 percent that you saw with the P value, lower than ten point five was was for just the responders. But I'm wondering any discussions with that, a primary endpoint, just responders that you do you think you can go forward with in the next trials, or are they going to be looking at all patients?

[00:35:54] That we've not had those discussions since this is not a registration trial at this point and we do not have the interface to media, we haven't had a full discussion about statistical analysis plans and what would be the ultimate primary endpoint. I will say that as our statisticians and colleagues and regulatory people look at potential endpoints, this is one that we think could be a potential endpoint based on looking at other programs and other areas that have 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 changes in the population as well.

So at the eight week time, patients, the overall population treated with three, 13, was almost almost achieved that thirteen point change even on that small subset, a small subset 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 something that we would end up talking with the FDA.

[00:37:14] Great. Thank you for clarifying that, and I think that was the two new slides in the very helpful to get a feel for that and it is trending the same way.

And then just lastly, there's so much data in that three one three that I'm sure you're going through. And I think The Daily Diaries is extremely interesting to see every day because it does seem like it's working more and more as time goes on.

But for the data we've talked about in the past, conferences aren't quite at the level in neurobiology as they might be an ophthalmologist. 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 just a lot of work to be done before that?

[00:38:02] No, we have plans to present. We have submitted for potential presentation, upcoming meetings.

Unfortunately, as you know, many of us are virtual and at this time and some of them have even been planned and they have been 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.

[00:38:26] Excellent. That's it for me.

Thank you. And congrats on the progress.

[00:38:29] Thank you, Francois.

[00:38:42] Thank you, everyone, for participating in our call today. We will be attending the Piper Sandler and the Evercore ISI virtual health care conferences in December and hope to speak with many of you then.

Have a good evening, everyone. Thank you.