Otonomy Tunes in to Biotech’s Sound Opportunity: Diseases of the Ear

3/6/09Follow @xconomy

Driving down Prospect Street in La Jolla one day in January 2008, Jay Lichter got so dizzy he had to pull over. After a stop in the ER, he ended up in the office of Jeff Harris, the chief of ear, nose, and throat surgery at the UC San Diego. The diagnosis: Meniere’s (Men-yay’s) disease, an inner ear fluid imbalance that leads to episodes of severe dizziness, vertigo, and gradual hearing loss.

There wasn’t much the doctor could really do, which got the patient and doctor talking. Since Lichter makes a living as a venture capitalist with San Diego-based Avalon Ventures, their discussion quickly advanced beyond the usual small talk. They kicked around ideas on how to better treat all sorts of hearing loss. A month later, a company was born—San Diego-based Otonomy.

Hearing loss is one of the great frontiers of the pharmaceutical and biotechnology business. Almost 30 million Americans have debilitating hearing loss and balance disorders. It comes from a variety of sources—occupational hazards from noisy workplaces, military veterans who get exposed to gunfire, overactive iPods, or simply age-related hearing loss. Yet there are still no drugs specifically approved by the FDA for these diseases, and Lichter says there’s not even serious research and development going on at big drugmakers. Ever since his days more than a decade ago in management at Pfizer, and long before he was diagnosed with his own ear condition, he has been on the lookout for promising new ways to tap this market. Now he’s diving in completely by getting involved in this new startup.

“The potential is to be the world leader in treatment of the ears. I like to say that we’ll be the Alcon of the ears,” Lichter says, referring to the Switzerland-based eye care company. “That’s our goal, and we can do it.”

Before diving into the nitty gritty of the company’s game plan, I had to ask Lichter to explain the name. Otonomy (pronounced Oh-TAWN-uh-me), draws its inspiration from the self-direction of the word “autonomy” and “otolaryngology” the branch of medicine that specializes in ear, nose, and throat as well as head and neck disorders.

The effort is still in its early days. Lichter is serving as the founding CEO, and recruited Harris (a past president of the American Otological Society) to join the company’s scientific advisory board. Avalon has invested $3 million to get the company going in its first year. It currently has a staff of just seven, outsources much of its work to contractors, and has poured a lot of its energy into 18 patent applications … Next Page »

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