A little more than two years ago, San Diego-based Otonomy $OTIC tried to explain why it was taking its failed Phase IIb drug for a disease called Ménière’s disease — with frequent episodes of vertigo — into a pivotal study with two Phase III trials.
While Otividex flunked the primary endpoint in reducing vertigo frequency, it did just barely hit a mark for reducing counted vertigo days at month 3. So they changed up the endpoints to go after vertigo days and went into Phase III.
It didn’t work.
This morning the biotech reported that the drug flopped badly on all primary and secondary endpoints. The p values in the trial were terrible, running from 0.89 to 0.99, with high placebo responses — though the researchers had also recorded a relatively high placebo response in the failed Phase IIb trial.
That setback is forcing the company to punt the drug out of its pipeline and scrap all work on the drug — including the ongoing companion Phase III trial.
Otonomy’s shares were eviscerated by the news, cratering 80%.
And it’s not likely going to stop with that. CEO David Weber — who led the company to a $100 million IPO in 2014 — made it clear that he’s hunkering down to conserve cash. His statement:
Based on these results, we are immediately suspending all development activities for OTIVIDEX including the ongoing AVERTS-2 trial. In addition, the company is undertaking a review of its product pipeline and commercial efforts to identify opportunities to extend its cash runway and build shareholder value.
Otonomy had about $150 million in cash and equivalents at the end of June.
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