Hopes that a second clinical win for Otonomy Inc.'s phase III Meniere's disease candidate, Otividex, might set the stage for a third-quarter registration of the drug in the U.S. have been dashed, sending company shares (NASDAQ:OTIC) down 44.3% to $3 on Feb. 22. For the intent-to-treat (ITT) population, the trial missed its primary endpoint, the count of definitive vertigo days in month three for the sustained-exposure dexamethasone therapy vs. placebo. The trial also failed to achieve statistical significance for a per-protocol analysis. It was déjà vu for the company, which suffered a harsh reaction to an earlier setback for the program from which its stock has yet to recover, years later.

Otonomy declined to discuss the outcome with BioWorld. But in announcing the results, the San Diego-based company’s president and CEO, David Weber, said his team's focus would now turn to two other candidates, OTO-313 in tinnitus and OTO-413 in sensorineural hearing loss. "These programs provide an attractive opportunity for the company with clinical readouts anticipated in mid-2022," he said. Otonomy's existing cash balance, reported at year-end 2020 to be $86.3 million, will permit it to reach those clinical readouts as well as to advance its preclinical hearing loss programs, including OTO-825, a potential gene therapy for congenital hearing loss, he added.

Meniere's is a disease of the inner ear that causes acute vertigo, tinnitus, hearing loss and a feeling of fullness in the ear. Though about 615,000 people in the U.S. are currently diagnosed with the condition, according to the National Institute on Deafness and Other Communication Disorders, its cause isn't well understood and there is no known cure. Just one other program, Sound Pharmaceuticals Inc.'s oral formulation of ebselen, SPI-1005, is in active clinical development for Meniere's disease, according to Cortellis, with a pivotal phase III study of the candidate slated to get underway this year. Three preclinical programs are also underway.

Three swings, two misses

Prior to Monday's readout, Otonomy had completed two phase III trials in Meniere's disease in the second half of 2017. The Averts-2 trial, conducted in Europe, achieved its primary endpoint of the number of definitive vertigo days month three (p=0.029), consistent with expectations from the phase IIb trial. The U.S.-based Averts-1 trial, however, did not meet the same endpoint (p= 0.62).

In regulatory filings, the company expressed the view that Averts-1 failed "due to a significantly higher placebo response and was not attributable to a difference in patient demographics or baseline characteristics compared to Averts-2." A review of the trials, "including consultation with outside experts suggests that the higher placebo response was primarily due to increased patient expectation bias in the U.S. trial," the company said.

To address the issue, Otonomy drew up a revised statistical plan for the most recent phase III using a statistical test its team expected to best fit the trials, a move supported by the FDA in November 2020, alongside the regulator's assent that one additional successful pivotal trial (beyond Averts-2) would be sufficient to support U.S. registration of Otividex in Meniere's disease. Now that hoped-for success has been missed.

Weber said that he and his team were disappointed by the top-line results for the primary ITT population and are working to understand the difference observed with the per-protocol analysis.

Looking ahead, Otonomy said top-line results from a phase I/II trial of OTO-313 in patients with unilateral tinnitus (UT) of at least moderate severity have laid the groundwork for further testing. The phase I/II, which read out in July 2020, found a demonstrated response to a single intratympanic injection of OTO-313 using the Tinnitus Functional Index that was correlated with tinnitus loudness, tinnitus annoyance and patient global impression of change measures. As of Feb. 11, a phase II study of the NMDA receptor antagonist was expected to enroll about 140 patients with UT, starting this quarter.

During the second quarter of 2021, Otonomy is also planning an expansion of its phase I/II study of OTO-413, a sustained-release formulation of brain-derived neurotropic factor for sensorineural hearing loss. Results of that study are expected in mid-2022. The expansion, which the company said would use "a refined study protocol in preparation for phase II," follows an ascending single-dose safety and exploratory efficacy study that demonstrated that a single intratympanic injection of OTO-413 was well-tolerated across all dose cohorts.

Meanwhile, preclinical programs underway include an AAV-based gene therapy to restore hearing in patients with hearing loss caused by a mutation in the gap junction beta-2 gene; molecules with improved otoprotection for patients receiving cisplatin; an ongoing for hair cell repair and regeneration program; and a co-promotion agreement with Alk-Abelló Inc. for Otiprio (sustained-release ciprofloxacin) for acute otitis externa and use during ear tube surgery.