Otonomy OTO-413 — Treatment of Hidden Hearing Loss

San Diego biotech that studied tinnitus, ear diseases is closing after failing to find a buyer

Is it part of the liquidation that any company can make an offer for the intellectual property? Are they legally required to sell if someone offers any money? If the company is dissolved and nobody buys the intellectual property, where does it go? Gone forever? Nobody can touch it?

 

What does this mean for private stockholders?

Otonomy, Inc. (Nasdaq: OTIC) today announced that it received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (Nasdaq) indicating that the company’s shares would be suspended from trading on Nasdaq effective at the open of business on December 23, 2022. Following such suspension, the company’s shares will be traded on the OTC Pink Market.​

Should we sell what we have left? Will there be some kind of automatic payout at current market price? Or will we lose everything?

 

That’s what I’m worried about. If the company is gone completely, who ends up owning OTO-413 if they haven’t sold it yet? Would it be possible to buy the IP of OTO-413 once they are shut down completely or would it be too late?

I don’t want a good drug to be shelved completely forever when it offered benefit at the 0.3 mg dose.

 

I know that there's some controversy with Hough Ear Institute, but didn't they pretty much repurpose a drug that was originally intended for Alzheimer's from a different establishment? I'm certain there's many examples like this.

I wouldn't worry about the BDNF drug. Everything should be fine. The only downside is time.

 

I hope someone buys their IP at dirt cheap and can use the savings to put into more trials/development. One thing I always wondered about the best respondents on the successful 0.3mg April Phase2A trial from last year is their lifestyle. I'd love to know about their diet, supplement intake, exercise routine, sleeping habits, and ear protection and if that was also a huge factor in their success. I wish they had gathered this information and could release it to us.

 

BDNF is being researched on so much right now. There is definitely value. I think some company will see the results as a glass half full and take the opportunity.

 

Otonomy released an SEC form today that detailed how they're selling off their assets. Here's the info related to OTO-413:

• On January 23, 2023, Otonomy entered into an asset purchase agreement with Spiral Therapeutics Inc. (“Spiral”) pursuant to which Otonomy agreed to sell and assign to Spiral (a) data related to OTO-104 (also known as OTIVIDEX), a sustained-exposure formulation of dexamethasone, (b) patent rights, data and know-how related to OTO-510, an otoprotectant, and (c) data and inventory related to OTO-413, a sustained-exposure formulation of BDNF, and all related rights and causes of action with respect to such assets. In exchange for assigning these assets to Spiral, Spiral agreed to pay Otonomy a one-time payment of two hundred fifty thousand dollars ($250,000). The parties agreed that stockholder approval of the dissolution of Otonomy is a closing condition of this asset purchase agreement.
• On January 23, 2023, Otonomy entered into an asset purchase agreement with Dompé farmaceutici S.p.A. (“Dompé”) pursuant to which Otonomy agreed to sell and assign to Dompé certain patents and patent applications related to Otonomy’s OTO-413 program and related rights and any causes of action to enforce such transferred patents. In exchange for assigning these patent rights to Dompé, Dompé agreed to pay Otonomy a one-time payment of one hundred fifty-six thousand dollars ($156,000). The parties agreed that filing a Certificate of Dissolution with the Secretary of State of the State of Delaware is a closing condition of this asset purchase agreement.

I'm not sure I understand the difference between what Dompé bought and what Spiral Therapeutics bought. Spiral seems to have had a lot of overlap with Otonomy though, so it makes sense that they'd want their assets. However, the fact this stuff sold for so cheap means it's probably viewed as not very valuable.

Interestingly Otonomy's gene therapy drug (OTO-825) netted them the most money ($5 million). I don't know a whole lot about it other than it's related to the GJB2 gene and that Decibel Therapeutics and Akouos are also is working on drugs for it.

 

So that's it, huh. The Otonomy chapter is officially closed for good. Wow. Feels sad. I always thought this would be the company to save us...

 

This honestly seems about right in terms of sale price. Consider what an asset pricing sheet for the patents / know-how would look like. They have zero projected return, since no market value was established. And, since the work is incomplete because they're selling mid-trial, more expenses/investment is needed to make any of these patents (products) marketable. I have seen sales in tech/manufacturing for patents (batteries, chip designs, mechanical designs) that end up going for $1, because the forecasted liabilities are so high to get the stuff tested and validated.

 

$156k

If this wasn’t so serious, I'd be laughing.

All these years of research and hope, and this is what it comes down to, an amount that would struggle to buy a decent apartment?

Embarrassing for Otonomy, heartbreaking for us.

The glimmer of hope is that these new acquirers somehow enhance the OTO-413 formula to make it work.

It's down, but not out.

 

The chapter is over but the book isn’t finished. Their work may be continued on and something may still come of it.

 

Same, especially OTO-825 :')

 

OTO-825 was picked up by Prevail Therapeutics, which is an affiliate of Eil Lilly:

On January 27, 2023, Otonomy entered into an asset purchase agreement with Prevail Therapeutics Inc., an affiliate of Eli Lilly and Company (“Prevail”), pursuant to which Otonomy agreed to sell and assign to Prevail certain patent rights, data, know-how, regulatory filings, inventory and contracts in connection with Otonomy’s GJB2 gene therapy product, OTO-825. In exchange for assigning these assets to Prevail, Prevail agreed to pay Otonomy a one-time payment of five million dollars ($5,000,000). Prevail further agreed to assume certain liabilities of Otonomy related to the transferred assets. The parties agreed that, among other things, filing a Certificate of Dissolution with the Secretary of State of the State of Delaware is a closing condition of this asset purchase agreement. On January 27, 2023, Otonomy also agreed to terminate its collaboration agreement with Applied Genetic Technologies Corporation (“AGTC”) related to OTO-825 and to acquire AGTC’s rights in certain data, know-how, patent rights and inventory, which will be included in the assets Otonomy has agreed to assign to Prevail. The termination of the collaboration agreement with AGTC and AGTC’s assignment of certain assets to Otonomy will become effective immediately prior to the closing of the asset purchase agreement between Otonomy and Prevail and in consideration for such termination and assignment by AGTC, Otonomy has agreed to make a one-time payment to AGTC of approximately one million one hundred fifty thousand dollars ($1,150,000) on the closing of the asset purchase agreement between Otonomy and Prevail.​

OTO-825 was originally a partnered program between Otonomy and AGTC, but apparently now it's going to solely under Eli Lilly. What makes this very interesting is that Eli Lilly bought Akouos a few months ago. Akouos is a small gene therapy hearing biotech, and they are working on their own drug which would be a competitor to OTO-825.

The parts of Otonomy's pipeline that weren't picked up were OTO-313 (tinnitus) and OTO-6XX (hair cell regeneration/repair). I'm a little surprised by OTO-6XX, but now I wonder if they just didn't have anything substantial after the hair cell regeneration stuff fell apart.

 

Who exactly is going to perform the OTO-413 trials if they were to restart it, Spiral Therapeutics or Dompé?

 

I want to say Spiral Therapeutics since they paid more, but I'm confused too.

 

I'm really not sure anymore but I thought OTO-6XX was licensed from Quark Pharmaceuticals.

They had some hair cell regeneration preclinical candidate called QP-HL3.

Quark Pharmaceuticals - Pipeline (archive.org)

Quark Pharmaceuticals also closed. But if you google QP-HL3 you can find a test site (in the URL it says "pipeline-2-test"), which looks like the old Quark Pharmaceuticals site:

Pipeline – Lepton Pharmaceuticals

Looks like Lepton Pharmaceuticals doesn't really have QP-HL3 in their portfolio for now.

Like I said, it's all speculation.

 

OTO-6XX was initially a joint program with Kyorin. Otonomy paid them $1M for a compound that regenerated hair cells in a preclincial model. However, further preclincial work didn't pan out. They then pivoted to hair cell repair. This was what they were working on prior to the company closing.

 

OK, so I was wrong.

 

After the FX-322 & FX-345 news, our only option is for OTO-413 to restart its Phase 2 trial at the 0.3 mg dose.

Haven’t heard any news from Spiral Therapeutics or Dompé.

@patorjk, when is the next meeting to approve the sale transaction to Spiral Therapeutics and Dompé?

Hopefully when it gets approved, either Spiral Therapeutics or Dompé will announce something about OTO-413.

 

@Lucifer, come on, we need to stop clutching at straws.

We went through this with Frequency Therapeutics (participants lied/too many injections) and it raised people's hopes. People are now distraught. It doesn't matter. Otonomy's product failed primary and secondary measures at every end point. Spectacular fail.

We have to let these companies go!

 

You're probably right that OTO-413 is a dead end but I still want them to at least do a Phase 2 trial at the 0.3 mg dose with more participants before throwing the drug in the bin. OTO-413 seemed to have better results/efficacy compared to FX-322 in the Phase 1 trials but who knows if it's placebo or not.

It would be a shame to see something that works get thrown in the bin due to increasing the dosage twice in the OTO-413 trials.

They had a successful Phase 2a trial for OTO-413 at the 0.3 mg dose so I don't think we should rule out Otonomy just yet.

Otonomy Reports Positive Top-Line Results from Phase 2a Clinical Trial of OTO-413 in Patients with Hearing Loss

 

I have not followed what happened to this product. Seems like they ruined it with the dosing? There are companies other than Otonomy but none of them are in clinical trials. I don't think there will be clinical trials this year by anyone to target hearing loss at least.

 

I don't know, the liquidation has been moving along though. I honestly don't expect us to hear much for a while. I still don't understand why one company bought the assets and rights, and another bought the patents. It could be that Spiral Therapeutics has no intention of reviving the program and just wants these assets for other reasons. Looking at their website they have their own drug delivery method, maybe they want to combine BDNF with that? But if that's the case, why didn't they pick-up the patents? It's very strange.

I honestly think for now OTO-413 is a dead-end. Even if Spiral Therapeutics moves forward with it, they're not going to move forward right away. They'll need time to digest all of the data, come up with their own strategy, and make sure their own affairs are in order (they have an existing pipeline they're working on).

There are a handful of companies working on hair cell regeneration drugs in the preclinical stage. I think in a year or two we'll have something to root for, but it could also be several years. With both Otonomy and Frequency Therapeutics face planting, we're back to square one.

 

I saw that Spiral Therapeutics have their own delivery method which they may combine with OTO-413. Only downside to that is they would have to go back to Phase 1 with the new delivery method though. If only they could use the new delivery method in a Phase 2b trial without having to start from the beginning.

You would think if the actual drug was the same ingredients and dosage, that even if you were to change how the drug is delivered, it should still be allowed in a Phase 2b trial.

If they had to choose between starting OTO-413 from Phase 1 with the new delivery method or starting with Phase 2b using the current delivery method with 0.3 mg, the latter would be a lot of better. If it doesn’t work at the 0.3 mg dose in a Phase 2b trial, we can then move on.

If they were to start from scratch, we would have to wait many years for the results.

 

Are there any details on how this drug delivery works?

Exactly! Like Sound Pharmaceuticals, Acousia Therapeutics, Lineage Cell Therapeutics and Rinri Therapeutics.

 

My guess is they'll take a close look at all of the data they're given to see if they think BDNF is viable to move forward with. I assume they're not going to be using Otonomy's delivery method. There's no way to know though. They only paid $250k for it, so it's kind of like a moonshot for them. But like I said, maybe they have no intention of moving forward with it at all and they want the assets for a completely different reason - we just don't know.

 

I really think that BDNF has great potential. It shows a lot of promise for many different afflictions. I'm more hopeful that BDNF can finally be used in the market in the near future. What we have now increases BDNF production, but none are actually BDNF itself.

However this ends up, I hope that it can reach a reasonable conclusion sooner than later.

 

A little something I found about BDNF: it appears that an over abundance of it causes epilepsy and toxic neuron excitability in the brain. Multiple studies from the below link indicate it.

I was against the increased dosage that Otonomy decided to roll with for the last trial. Might have had a similar effect in the ear with too much of the BDNF molecule.

Frontiers | The Role of Brain-Derived Neurotrophic Factor in Epileptogenesis: an Update (frontiersin.org)



Now another thing with NT-3 versus BDNF. BDNF seems more prominent in the apex region and NT-3 in the Basilar region, at least for mice. I wonder what would have happened if FX-322 used NT-3 instead of BDNF, or maybe another NTF from the list here: Neurotrophic factors - Wikipedia

I remember Dr. Charles Liberman talking about it in one of his events he presented at for Hidden Hearing Loss last year. Video of it should be up maybe in this thread or on YouTube.

 

I would move on and forget it.

 

I agree that they shouldn't have done such a high dosage. In addition to what you wrote, it's insane to me that they'd do that without considering the possibility of inflammation or other issues negating the treatment. They're literally injecting a foreign substance into the ear. Aren't one of the possible causes of Meniere's Disease to be an excess build up of fluid? What sense does it make to do it so high if they're not sure if low dosage works yet?

The science behind the formulas were reasonable, and it astonishes me how they didn't respect the dosage by going through a smaller amount in full first before going up, but instead went up in the middle of things.

Growth factors have some interesting potential. I hope that they are continued to be researched on, but more logically and responsibly.

I believe Charles Liberman said that NT-3 only worked within 24 hours for the synaptic ribbons. I don't know if it could work to stimulate the progenitor cells.