Sustained-Exposure Treatment for Tinnitus
OTO-311 is a sustained-exposure formulation of the N-Methyl-D-Aspartate, or NMDA, receptor antagonist gacyclidine in development for the treatment of tinnitus. Tinnitus is often described as a ringing in the ear but can also sound like roaring, clicking, hissing or buzzing. People with severe tinnitus may have trouble hearing, working and sleeping. At this time, there is no cure for tinnitus and there are no FDA-approved drugs for treating this debilitating condition. Historic and emerging clinical data provide support for the use of NMDA receptor antagonists, including gacyclidine, for the treatment of tinnitus. Mechanistically, agents from this therapeutic class may act to reduce dysfunctional activity resulting from injury to the hearing organ, or cochlea, and be perceived by the patient as tinnitus. For example, Phase-2 clinical trials with several agents have demonstrated reductions in the severity of tinnitus and improvement in the functional status of treated patients. We expect that the results of these trials will be instructive in the design and implementation of our clinical development program. The goal of our program is to develop a sustained-exposure formulation of gacyclidine that will provide a full course of treatment from a single IT injection. We expect to file an Investigational New Drug application, or IND, with the FDA in order to initiate clinical development during 2015. We have global commercialization rights to with patent protection in the United States until at least 2031.
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Since our inception, most of our resources have been dedicated to the development of our product candidates, AuriPro, OTO-104 and OTO-311.In particular, obtaining regulatory approval for and commercializing AuriPro, and commencing and completing clinical trials for OTO-104 and OTO-311, will require substantial funds. We have funded our operations primarily through the sale and issuance of convertible preferred stock and convertible notes. As of June 30, 2014, we had cash of $68.1 million. We believe that we will continue to expend substantial resources for the foreseeable future for the commercialization of AuriPro and the development of OTO-104, OTO-311 and any other product candidates we may choose to pursue.
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Our proposed indication for OTO-311 is the treatment of tinnitus. Currently, physicians may attempt to treat tinnitus symptoms with the off-label use of steroids, anxiolytics, antidepressants, and antipsychotics.
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We depend on the availability of key raw materials, including poloxamer for all of our product candidates, ciprofloxacin for AuriPro, dexamethasone for OTO-104, and gacyclidine for OTO-311, from a small number of third-party suppliers. Because there are a limited number of suppliers for the raw materials that we use to manufacture our product candidates, we may need to engage alternate suppliers to prevent a possible disruption of the manufacture of the materials necessary to produce our product candidates for our clinical trials, and if approved, ultimately for commercial sale. We do not have any control over the availability of raw materials. If we or our manufacturers are unable to purchase these raw materials on acceptable terms, at sufficient quality levels, or in adequate quantities, if at all, the commercialization of AuriPro and the development of OTO-104, OTO-311 or any future product candidates, would be delayed or there would be a shortage in supply, which would impair our ability to meet our development objectives for our product candidates or generate revenues from the sale of any approved products.
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Though we currently intend to use approximately $35.0 million to fund our planned registration and commercialization of AuriPro, approximately $35.0 million to fund the costs of the clinical development of OTO-104, approximately $15.0 million to fund the costs of the clinical development of OTO-311, and the remainder for the research and development of other product candidates, working capital, capital expenditures and other general corporate purposes, we cannot specify with certainty all of the particular uses of the net proceeds that we will receive from this offering and our existing cash, or the amounts that we will actually spend on the uses set forth above.
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In addition, there was a $0.9 million increase in payroll-related expense and overhead due to an increase in the number of research and development personnel and a $0.3 million increase in preclinical development expenses associated with OTO-311, as a result of our acquisition of certain assets and rights to intellectual property from an affiliate of NeuroSystec Corporation in October 2013.
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Historic and emerging clinical data provide support for the use of NMDA receptor antagonists for the treatment of tinnitus. Mechanistically, agents from this therapeutic class may act to reduce dysfunctional activity resulting from injury to the hearing organ, or cochlea, and be perceived by the patient as tinnitus. For example, Auris Medical Holding AG reported improvement in several patient reported outcome measures, including tinnitus loudness and tinnitus severity, in a subset of patients treated in a Phase 2 clinical trial with repeat IT injections of AM-101, a formulation of the NMDA receptor antagonist esketamine, and Merz Pharmaceuticals GmbH reported an improvement in the tinnitus handicap index in a Phase 2 clinical trial with the oral NMDA receptor antagonist neramexane. We expect that the results of these and additional ongoing trials will be instructive in the design and implementation of the clinical development program for our single-administration OTO-311 product candidate.
Background on gacyclidine
Gacyclidine is a potent and selective NMDA receptor antagonist. Receptor binding studies have demonstrated potency and selectivity against the NMDA receptor subtype believed to be relevant for tinnitus, and biological activity has been demonstrated in a preclinical model of tinnitus. In addition, studies in preclinical models of neuroprotection have demonstrated a broad therapeutic window for activity versus neurotoxicity. Finally, binding studies indicate that gacyclidine's dissociation kinetics are slower than some other NMDA receptor antagonists which could be beneficial in achieving sustained drug levels in the inner ear following a single IT injection. Although never approved or commercialized, gacyclidine has been evaluated in clinical trials that we believe will be helpful to our development of OTO-311. The molecule was originally developed for the treatment of traumatic brain and spinal cord injury in the late 1990s. These clinical trials evaluated systemic dosing of gacyclidine in over 300 patients from which they established a maximum tolerated dose, or MTD. Although we expect limited systemic exposure with IT injection of OTO-311, we believe the reported MTD provides a useful upper limit for our dose selection activities. Recent third-party pilot clinical trials with local administration of gacyclidine delivered using a micro-pump and indwelling catheter have been conducted in patients with tinnitus. While not sized to demonstrate efficacy, we believe based on published results from one study conducted by Wenzel et al. in Germany and data from a second study that we have acquired from NeuroSystec that the trials provide evidence of clinical activity for gacyclidine in modulating aspects of the tinnitus symptoms experienced by patients. Based partly on these prior clinical efforts, we acquired assets and patent rights related to gacyclidine which we intend to leverage in our development of OTO-311 for tinnitus. From an affiliate of the NeuroSystec Corporation, we acquired data and intellectual property generated during their development program. In a related transaction, we completed a license agreement with DURECT Corporation, or Durect, that gives us exclusive rights to a patent directed to the use of gacyclidine for the treatment of tinnitus. This patent has issued in the United States and is being prosecuted in several other jurisdictions. We also have our own patent applications directed to a sustained-exposure gacyclidine product that we expect will lengthen and broaden the coverage for OTO-311 provided by the licensed patent.
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We [– Auris Medical Holding AG –] believe that our key competitors are Otonomy, Inc., or Otonomy, and Sound Pharmaceuticals, Inc., or Sound Pharma, both U.S. companies developing pharmaceutical treatments for ear disorders. In October 2013, Otonomy announced the launch of a development program for the treatment of tinnitus, OTO-311, which may directly compete with our AM-101 product candidate. For OTO-311 the company acquired certain assets and rights to intellectual property related to the use of the NMDA receptor antagonist gacyclidine for the treatment of tinnitus from NeuroSystec Corporation. NeuroSystec was founded in 2004 and sought to develop a drug-device combination product that could provide sustained delivery of gacyclidine (NST-001) to the inner ear. A 2010 article in European Archives of Otorhinolaryngology by Wenzel et al. described how in a compassionate use study in Europe four out of six tinnitus patients receiving a constant perfusion of gacyclidine onto their round window membrane for 40 to 63 hours reported temporary relief, and one among them lasting relief. NeuroSystec initiated a Phase 1b trial with NST-001 in January 2009, but never published outcomes thereof and ceased activities in 2013. We expect Otonomy to reformulate gacyclidine in a poloxamer gel formulation targeting single dose administration. It has been reported that Otonomy targets an IND for OTO-311 in 2015. OTO-311's competitive strength will ultimately depend on the demonstration of clinical efficacy and safety and its comparison with AM-101.
As we plan to test AM-111's efficacy in Meniere's Disease, an inner ear disorder that affects balance and hearing, we will enter into competition with an Otonomy project, OTO-104, which is currently in a Phase 2b clinical trial in the United States and Canada. OTO-104 is a poloxamer-based gel formulation of micronized dexamethasone which is injected intratympanically in a single dose into the middle ear for the treatment of Meniere's Disease. Results from a 44-patient Phase 1b clinical trial with OTO-104 were reported by Lambert et al. in a 2012 article in Otology and Neurotology. The trial enrolled patients with unilateral Meniere's Disease who had experienced at least two vertigo episodes during a 28-day lead-in period (with an average of seven to eight vertigo episodes during that period). In the three months following the treatment, the frequency of vertigo episodes decreased in all treatment groups, ranging from -3.6 episodes in the placebo group to -4.2 episodes in the 3 mg treatment group and -3.9 episodes in the 12 mg treatment group. Although the article did not provide a definition of clinically meaningful change, it stated that the clinical trial demonstrated a clinically meaningful reduction for the active treatment groups because, after three months, there was a larger decrease in the number of vertigo episodes, relative to baseline, in the 12 mg group than in the placebo group.
In June 2006, Sound Pharma began clinical testing of an oral treatment for hearing loss (SPI-1005, ebselen). Its active substance mimics and prompts production of the glutathione peroxidase enzyme. In February 2014, Sound Pharma announced positive outcomes from a placebo-controlled Phase 2 clinical trial with SPI-1005 in the prevention and treatment of temporary inner ear hearing loss from listening to loud music with a mobile digital media player. Although AM-111 targets permanent rather than transient hearing loss, SPI-1005 may become a competing product if Sound Pharma seeks and manages to demonstrate clinical efficacy also in the prevention and treatment of permanent inner ear hearing loss.
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