You have to admire Otonomy’s perseverance. The biotech has experienced a series of clinical failures throughout a grueling year but kept the faith in its ear disorder pipeline.
But a phase 2 failure of its hearing loss drug OTO-413 in October may have proved the final nail in the coffin. The company confirmed yesterday that it will be winding down operations and revealed that all remaining employees had already been laid off Dec. 15.
As well as continuing on in a consulting role as chief financial and business officer for the time being, the biotech has appointed Paul Cayer as president for the company’s final weeks. Plans to find buyers for Otonomy’s pipeline remain in the works, with any proceeds to be shared among the company’s shareholders where possible.
The failure of OTO-413 was only the latest in a series of clinical misses that finally scuppered the biotech’s chances. It led Otonomy to freeze drug development while it looked into last-ditch options to stay afloat including a merger, asset sale or liquidation. Evidently, the latter option proved the only viable one.
In August, the company’s other late-stage asset OTO-313 failed to demonstrate an improvement in tinnitus patients, leading the biotech to drop the therapy along with more than half of its employees. The troubles over the summer saw Otonomy’s stock crash down from $2 a share to around 40 cents. They now hover around the 11-cent mark.
Otonomy’s year hardly began on a high note, either. In February, a phase 3 clinical trial of Otividex in inner ear condition Ménière’s disease missed its primary endpoint. The setback came almost four years after the generation of mixed data from two earlier phase 3 studies persuaded Otonomy to roll the dice on another pivotal clinical trial.
Otonomy’s announcement caps off a brutal few months for the biotech sector, with dozens of companies laying off staff as they tighten belts and trim back pipelines.