Otonomy, Inc.

Good day, and thank you for standing by. Welcome to the second quarter 2022 Autonomy, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Robert Wu with ICR Westwick. The floor is yours.

Thank you, Carmen, and good afternoon, and welcome to Autonomy's second quarter 2022 financial results and business update conference call. Joining me on the call from Autonomy are Dr. David Weber, President and Chief Executive Officer, and Paul Kerr, Chief Financial and Business Officer. Before I turn the call over to Dr. Weber, I would like to remind you that today's call will include forward-looking statements based on current expectations. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results. Please refer to Autonomy's filings with the SEC, which are available from the SEC or on the Autonomy website. for information concerning the risk factors that could affect the company. Autonomy specifically disclaims any obligation to update any forward-looking statements except as required by law. Now I will turn the call over to Dave Weber, President and CEO of Autonomy.

Thank you, Robert. Good afternoon, everyone, and thank you for joining us on this call to discuss Autonomy's recent business updates as well as our financial results for the second quarter. The key message from this update is that we continue to execute well on our operational plan. Most importantly, we are on track with our announcement of Phase II tinnitus results for OTO 313 in August. We have also completed patient enrollment in the safety evaluation of higher and bilateral dosing of OTO 313. and have completed patient enrollment for the evaluation of higher dosing of OTO 413 in hearing loss patients. I'll briefly review these activities, provide a summary of our financial results for the quarter, and then we can open up the call for any questions. Beginning with the OTO 313 program for tinnitus, we're excited to be approaching the availability of phase two results in the next month. As a reminder, We randomized 153 patients with persistent unilateral tinnitus of at least moderate severity. This was above our target enrollment of 140 patients. Patients were randomized one-to-one to a single intratempanic injection of 0.32 milligram Oto313 or placebo and followed for four months. The primary endpoint is the same as reported for the successful Phase I-II trial. a responder analysis based on the proportion of patients who report a clinically meaningful improvement in the Tinnitus Functional Index, or TFI, from baseline to months one and two following treatment. To assess durability of the OTO313 treatment effect, we extended the follow-up period out to four months, and we will have data for all time points to report in August. All patients have completed their study visits, and I can report that we had excellent compliance in the trial, with completion of the TFI exceeding 98% across all randomized subjects and visits. In parallel, with completing the Phase II trial, we have also fully enrolled several study cohorts to evaluate the safety of bilateral as well as higher dosing for OTO313. This effort is important for the program since bilateral patients comprise approximately 50% of the tinnitus population, and the higher dose we're evaluating is 0.64 milligrams, twice the dose used in the Phase I-II and Phase II trials. As planned, we enrolled 12 tinnitus patients randomized 3-to-1 to Oto313 or placebo in each of the three dose cohorts, 0.6.4 milligram unilateral, 0.32 milligram bilateral, and then after a safety review of the first two cohorts, 0.64 milligrams bilateral. While this is primarily a safety evaluation with a broader enrollment criteria than in our Phase II trial, we will have a TFI assessment one month after dosing to look for potential differences in response from baseline versus placebo. We expect top line results from these cohorts in the third quarter of 2022. This data, together with the phase two results, are expected to support an end of phase two meeting with the FDA and inform the design of the phase three clinical program planned to start in the first half of 2023. Moving to our next program, OTO 413 for hearing loss, I summarize the positive results from our phase two A trial during our last quarterly call. This trial corroborated findings in the previous study, demonstrating that a single intratempanic injection of 0.3 milligram Oto413 provided clinically meaningful treatment benefit versus placebo across multiple speech and noise hearing tests, as well as the patient global impression of change at consecutive time points of day 57 and day 85. In particular, we were pleased to see a clear signal with the words and noise test which is our preferred test because it is well regarded by audiologists and extensively validated in hearing loss patients. 40% of OTO 413 subjects demonstrated a clinically meaningful improvement at both day 57 and day 85 with the WIN test versus 0% for placebo. Another important attribute of this test is its ability to generate a speech intelligibility curve for each patient at each time point. The case studies that we have included in our corporate slide deck provide a nice demonstration of the hearing improvement following a single treatment with 0.3 milligrams of Oto 413. Similar to our approach with Oto 313, we have also been evaluating higher doses for Oto 413. In this case, we are conducting full clinical evaluations of two higher doses, 0.75 milligram and 1.5 milligram, which equate to 2.5 and 5 times the dose used in the Phase IIa trial. We have completed enrollment of 19 patients in each of these dose cohorts, randomized 2 to 1 to OTO413 or placebo. Patient enrollment criteria, the three-month follow-up period, and endpoints are all the same as the Phase IIa trial. We expect to have results from these higher-dose cohorts in the fourth quarter of 2022, which will support our initiation of a dose-ranging Phase II efficacy trial planned to start in the first quarter of 2023. Our third development program is OTO825, a gene therapy targeting GJB2, which is the most common cause of congenital hearing loss. Patients born with this mutation can have severe to profound deafness in both ears that is identified in screening tests now performed routinely in newborns. Preclinical proof of concept results for the OTO825 demonstrate that a single administration of OTO825 rescues hearing loss and cochlear damage in two preclinical models representing a range of hearing loss severity caused by GJB2 deficiency. We have completed a pre-IND meeting with the FDA that provided guidance regarding nonclinical study design, manufacturing requirements, and clinical trial considerations and have incorporated this feedback into our IND enabling program. These activities are ongoing and we expect to file an IND in the first half of 2023. Our remaining two programs are OTO 510, an OTO protective for patients at risk for cisplatin-induced hearing loss, and OTO 6XX, a potential treatment for patients with severe hearing loss. Preclinical development continues on both of these programs. In summary, we are making good progress in advancing our multiple clinical programs for treating hearing loss and tinnitus, which represent large untapped markets with significant unmet medical need. We are looking forward to our Phase 2 tentative results for OTO 313 in August. Additionally, we have clinical readouts for higher and bilateral dosing for OTO 313 expected in the third quarter and results from evaluation of higher dosing of OTO 413 in the fourth quarter. These multiple readouts will inform our next steps for both programs which are expected to include initiation of a dose-ranging Phase II efficacy trial for OTO 413 in the first quarter of 2023 and initiation of the Phase III program for OTO 313 in the first half of 2023. Finally, a brief update on our financials. We are on track with our spending guidance for 2022, which is GAAP operating expenses of $52 to $54 million and non-GAAP expenses of $42 to $44 million. For the second quarter, we reported GAAP operating expenses totaling $12.8 million and non-GAAP expenses of $11 million. The adjustment for non-GAAP expenses is the exclusion of stock-based compensation. From a cash perspective, we finished the second quarter with a cash balance including cash, cash equivalents, and short-term investments of $53.1 million. We expect that this current cash balance will fund the company through our multiple upcoming clinical readouts. Operator, we are now ready for questions.