Otonomy plans to dissolve

The neurotology biopharma Otonomy (Nasdaq:OTIC) is planning to liquidate and dissolve its business. It plans to distributing any remaining cash to shareholders after its operations have been suspended and its pipeline assets have been sold.

The company also announced that it had terminated all of its employees effective December 15.

In 2017, Otonomy announced that a Phase 3 clinical study of its pipeline drug Otividex missed its primary endpoint in treating Ménière’s disease. Otividex was an extended-release form of dexamethasone.

In August 2022, it announced disappointing data from a Phase 2 study focused on testing OTO-313 in tinnitus.

At that point, the company laid off 55% of its staff and shifted its focus to OTO-413, a brain-derived neurotrophic factor agonist OTO-413 that yielded a clinically meaningful improvement in a Phase 2a hearing loss study.

Otonomy said it expected to pay roughly $5 million in severance and other employee-related challenges in the fourth quarter of 2022.

The company plans to hold a special meeting of its stockholders in the first quarter of 2023.

Otonomy’s stock is currently trading at $0.11. It hit an all-time high of $39.36 on March 13, 2015.

According to its website, the company had five drugs in its pipeline with OTO-313 (gacyclidine) having reached Phase 2 for tinnitus and OTO-413 (BDNF) having reached Phase 2a. OTO-825 for congenital hearing loss was a gene therapy that was the focus of a pre-IND study. The other two pipeline candidates were at the preclinical stage.

San Diego–based Otonomy was founded in 2008. It raised $458 million in funding over nine funding rounds, according to CrunchBase.

There are few companies focused on neurotology. Decibel Therapeutics and Frequency Therapeutics are two companies active in the space.

By November, a number of prominent shareholders of the company had announced their plans to decrease their portfolio allocation of OTIC. Ra Capital Management closed their position in the company.