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Otonomy Raises $49M to Advance 3 Drugs for Treating Ear Diseases

Xconomy San Diego — 

Otonomy, the San Diego biopharmaceutical startup developing new treatments for diseases and disorders of the ear, has refined its strategy, raised capital, and advanced three drug candidates in the three and a half years since David Weber stepped in as CEO.

And today Otonomy says it has secured $49 million in a new Series D round of financing that strengthens the balance sheet, diversifies Otonomy’s pool of investors, and moves the six-year-old startup closer to becoming a pre-commercial specialty drug company.

The latest financing brings the total capital raised by Otonomy to $144 million since 2008, and adds some institutional investors to the mix.

The newest investors include Jennison Associates, which invested on behalf of clients, Perceptive Advisors, the Federated Kaufmann Funds, Ally Bridge Group, certain private funds advised by Clough Capital Partners, and other unnamed institutional investors. All existing investors participated as well, including OrbiMed Advisors, Novo Ventures, TPG Biotech, Avalon Ventures, Domain Associates, RiverVest Venture Partners, Aperture Venture Partners, and Osage University Partners.

David Weber

David Weber

Proceeds from the round will be used mostly to advance Otonomy’s pipeline of products, which has been shuffled around in priority (see below) since Weber took over in late 2010. At that time, Otonomy had about 11 employees, Weber said. Today the company has 35, which is a reflection of the increasing number of drug candidates as well as the late-stage nature of Otonomy’s drug development, he said.

When Weber took over, Otonomy’s lead drug candidate, OTO-104, was in an early stage trial for use in patients with Meniere’s disease, a fluid imbalance of the inner ear that can cause dizziness and gradual hearing loss. OTO-104 is a formulation of the steroid dexamethasone in a gel that can be injected into the middle ear cavity.

“The gel holds the drug in the middle ear, and allows the drug to be solubolized [and absorbed] over time,” Weber said, easing symptoms of the disease . Patient enrollment in a pivotal mid-stage clinical trial should be completed in another month or so, with top line results expected by the end of the year.

Soon after taking over, Weber changed the lineup in Otonomy’s drug pipeline to make an antibiotic designated as OTO-201 the company’s lead drug candidate. OTO-201 is formulation of the antibiotic ciprofloxacin in a gel that is intended to treat various types of inflammation of the middle ear in children who are 6 months to 5 years old, and who undergo tympanostomy tube placement surgery. Instead of asking parents or caregivers to administer antibiotic eardrops for seven days after a surgeon has inserted shunts, Weber says the surgeon would administer the long-lasting antibiotic gel (which would last seven days or longer) into the middle ear during the procedure.

OTO-201 was in pre-clinical development when Weber took over in 2010, but he said, “OTO-201 ultimately took the lead because it was a much more straightforward development process.”

Diagram of the Ear

Diagram of the Ear

The company is now close to enrolling 500 patients in two late-stage clinical trials in the United States and Canada that are running simultaneously. Top line results could be available as early as this fall, which should enable Otonomy to submit a new drug application by the first quarter of 2015, Weber said.

Meanwhile, Otomony has added a third drug candidate, OTO-311, to its pipeline. This drug is a new gel-based treatment for tinnitus—the sensation of “ringing” in the ears.

Weber said Otonomy plans to introduce its drugs in the North American market, as well as some countries in Europe. But he adds, “There are places in the world [such as Asia], where we think it makes sense to work with a strategic partner.”