Otonomy Hears Wall Street Ovation as Some Life Sciences IPOs Dim

Auris Medical, the Swiss biotech focused on diseases and disorders of the ear, got the catchy ticker symbol (NASDAQ: [[ticker:EARS]]) when it went public last week. But San Diego’s Otonomy (NASDAQ: [[ticker:OTIC]]) got a better valuation yesterday when the biotech ear specialist priced its stock in the upper range at $16 a share.

Otonomy traded to over $17 a share today in the company’s first day of trading. The company priced 6.25 million shares, 1 million more than initially predicted, and raised total proceeds of $100 million. In a short statement, Otonomy says it also granted its underwriters a 30-day option to purchase up to 937,500 additional shares, which would raise an additional $15 million. The company provided all shares in the common stock offering.

Auris Medical had to boost its share count and cut its price when the company priced its IPO on August 5. T2 Biosystems also lowered the terms of its IPO last week, and two other biotechs (Tobira Therapeutics and Microlin Bio) cited poor market conditions when they postponed their IPOs, collectively raising a question about how well Otonomy’s IPO would fare.

A spokesman for Otonomy said CEO David Weber would not discuss the offering; the company is still under a SEC-mandated quiet period. Otonomy’s lead drug candidate is a sustained-release form of the antibiotic ciprofloxacin that’s intended to reduce infections in children undergoing ear tube placement surgery.

The San Diego biotech was founded in 2008 by Jay Lichter, a partner at the La Jolla venture capital firm Avalon Ventures, after he was stricken by Meniere’s disease, an inner ear fluid imbalance that leads to episodes of severe dizziness, vertigo, and gradual hearing loss. The company initially began development of a drug intended to treat the rare inner-ear disorder, but Weber re-ordered Otonomy’s drug development pipeline when he took over for Lichter in 2010.

Avalon provided early stage funding, and was later joined by RiverVest Venture Partners, OrbiMed Advisors, Novo Ventures, TPG Biotech, Domain Associates, Aperture Venture Partners, Osage University Partners, Jennison Associates, Perceptive Advisors, the Federated Kaufmann Funds, Ally Bridge Group, and certain private funds advised by Clough Capital Partners.

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.