San Diego-based Otonomy, which was working on treatments for middle and inner ear diseases, is shutting down after failing to find a buyer over the past few months.
The struggling publicly traded company said Tuesday that its board of directors had approved a liquidation plan and laid off remaining employees. The move comes after disappointing results in August from a late-stage clinical trial involving a therapy for tinnitus — or ringing in the ears.
At that time, Otonomy cut its workforce by 55 percent — laying off about 30 people — while it focused on another treatment aimed at preventing hearing loss. But that therapy also failed to show meaningful improvement for patients in speech-in-noise hearing tests.
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In October, Otonomy’s board paused all remaining operations to conserve cash and pivoted to exploring strategic alternatives, including the possible sale of the company. By then, the pullback in financial markets made finding additional capital challenging.
The company hoped to generate buyer interest for its remaining pipeline of prospective treatments, including a gene therapy for congenital hearing loss. Now, however, the board has opted to liquidate the remaining assets. The company expects to call a special meeting of shareholders early next year to seek approval for the dissolution plan.
According to a spokesman, only a small number of workers stayed on after operations paused. He didn’t know how many were let go in the final layoff, which became effective on Dec. 15. Otonomy estimates it will pay $5 million in severance and other worker-termination-related costs in the fourth quarter.
The company has five years remaining on its lease of a 62,000-square-foot building in University City, according to filings with financial regulators. Otonomy put a portion of its space up for sublease last year.
Founded in 2008, Otomony was the brainchild of scientist and Avalon BioVentures partner Jay Lichter, who was diagnosed with Ménière’s disease and was experiencing hearing loss, tinnitus and episodes of acute vertigo. He teamed up with the doctor who treated him, UC San Diego’s Jeffrey Harris, to launch the company.
Otonomy went public in 2014, raising $100 million. It pulled in another $34.7 million in a second stock sale in April 2021. But its shares sank after the disappointing clinical trial results this summer. They closed Tuesday at 9 cents.
This content was originally published here.
