A California biotech focused on developing treatments for neurological ear conditions seems to be considering closing up shop.
San Diego-based Otonomy said Thursday it would “explore strategic options,” code to sell all of its assets and possibly itself, after one of its ear compounds failed to improve loss. hearing of patients during a clinical analysis. The decision comes two months after a separate program failed a Phase II test, which reduced its $OTIC share price by more than 70% at the time.
On Thursday, with Otonomy shares already at $0.26 before the open, investors ran for the hills and sent the stock down another 37% in premarket trading.
In a prepared statement, CEO David Weber noted the “challenging funding environment” as part of what led to the decision.
“We intend to explore strategic options to advance and leverage our pipeline, including OTO-413 and OTO-825, our gene therapy program for congenital hearing loss,” Weber said.
The data released Thursday deals with OTO-413, which had been the new lead program after Phase II failed in August. Otonomy said Thursday morning that after examining higher doses of OTO-413, it found that the compound did not improve patient scores from baseline on several speech-in-noise hearing tests (SIN ).
The biotech claimed to have seen a “positive clinical signal” in earlier trials, but the new assessment did not confirm those results.
Thursday’s report comes shortly after the failed Phase II in August, which showed the company’s OTO-313 candidate did not beat placebo in treating tinnitus. At the time, Otonomy said it would engage in cost-cutting measures, but had not yet made the decision to sell its programs.
And Otonomy is no stranger to failure. A Phase III flop in an inner ear disease in 2017 led to layoffs. Another late failure in the same condition, known as Ménière’s disease, occurred in 2021, with investors feeling burnt out and sending stocks down more than 45%.