Otonomy Closes $38.5M Round to Fund Trials of Hearing-Disorder Treatments

Follow-on funding for Otonomy that Luke presaged in June has been disclosed by the San Diego biotech, a two-year-old startup developing drug treatments for hearing loss and balance disorders.

Otonomy says today it has closed a $38.5 million Series B round of financing that was co-led by Novo Ventures and RiverVest Venture Partners, with Avalon Ventures, Domain Associates, and TPG Biotech participating. The financing follows Avalon’s $10 million Series A round in June, which converted the early stage loans that Avalon provided into equity.

The company says the new capital will be used to fund pivotal clinical studies of Otonomy’s first two drug candidates, and to expand its pipeline of locally delivered treatments for treating disorders of the ear. The startup’s lead product candidate, OTO-104, is currently in an early stage trial for patients with Meniere’s disease, a fluid imbalance of the inner ear that can cause dizziness and gradual hearing lost. Luke described the drug candidate as a long-lasting steroid gel that can be injected into the ear to suppress inflammation.

Otonomy also is developing OTO-203 for the treatment of ear infections, which is expected to enter clinical trials in 2011.

Otonomy, which has eight full-time employees, also plans to expand its team this year, according to CEO Jay Lichter. “The research team is actively working to identify a third clinical candidate,” Lichter told me by e-mail this morning. Other product candidates are expected to target acute and chronic forms of hearing loss, balance disorders, and tinnitus.

Otonomy was founded in 2008 after Lichter had his own bout with Meniere’s disease, and learned the FDA has not approved any drugs specifically to treat hearing loss. Yet almost 30 million Americans suffer from hearing loss and balance disorders.

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.