Otonomy, Inc.
Q4 2015 Earnings Call Transcript

Published: 10 Mar 2016

[Operator:]

Good day, ladies and gentlemen. Welcome to the Otonomy Fourth Quarter and Full Year 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will have a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host for today’s conference Mr. Robert Uhl with Westwicke Partners. Sir, you may begin.

[Robert Uhl:]

Thank you, operator. Good afternoon and welcome to Otonomy’s fourth quarter and full year 2015 financial results and business update conference call. Joining me on the call from Otonomy are Dr. David Weber, President Chief Executive Officer and Paul Cayer, Chief Financial Officer and Business Officer. Before I turn the call over to Dr. Weber, I would like to remind you that today’s calls will include forward-looking statements based on current expectations. Such statements represent management’s judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results. Such statements include but are not limited to Otonomy’s expectations regarding the commercial success of OTIPRIO. The timing of clinical trials for OTIPRIO and expansion indications, the timing of the OTO-104 Phase 3 clinical trials in Ménière's disease and if successful the timing of the NDA filing. The timing of the Phase 2 clinical trial for OTO-104 instance cisplatin induced hearing loss. The timing of the OTO-311 clinical trials and the financial guidance for 2016. Please refer to Otonomy’s filings with the SEC, which are available from the SEC or on the Otonomy website for information concerning the risk factors that could affect the company. I will now turn the call over to Dave Weber, President and CEO of Otonomy.

[David Weber:]

Thank you, Robert. Good afternoon everyone and thank you for joining us on this call for discuss Otonomy fourth quarter and full year 2015 financial results and business updates. I will start by providing an update on our corporate activities and pipeline then Paul will review our fourth quarter and full year financials and recent financing activity and we will finish with questions from call participants. 2015 was truly a banner year for Otonomy, culminating in the FDA approval of our first product OTIPRIO in December. OTIPRIO is the first and only single-dose ciprofloxacin otic suspension and the first product approved by the FDA for use during ear tube replacement surgery. We recently announced the commercial availability of OTIPRIO in the U.S. market and I’ll give more detail on our launch activities in a moment. We also made significant progress across our entire product pipeline last year. For OTIPRIO, we announced positive results from Phase 2 trials in two potential expansion indicators, acute otitis externa and acute otitis media tympanostomy tube and our actively moving forward in both of these indications. For OTO-104, our sustained exposure steroid for hearing and balance disorder, we initiated patient enrolment in the U.S. Phase 3 clinical trial and are on track to initiate the EU Phase 3 trial later this month. We also initiated a Phase 1 safety trial for OTO-311, our product candidate for Tinnitus and acquired assets and initiated development for fourth program targeting age-related hearing loss. We are very proud of the significant accomplishments we made in 2015 including our recent transition to a commercial stage company with the launch of OTIPRIO. Now I will provide more detail on both our ongoing launch and development activities. As we announced last week our sales force has initiated sales calls and initial stocking quantities of OTIPRIO have been shipped to our network of specialty distributor making it available for purchase by hospitals and ambulatory surgery center. Following the approval in December we moved quickly to hire, train and deploy a highly experienced group of 40 representatives to provide national coverage. I'm delighted by the quality of talent we were able to hire from the pool of 1,900 resume we received. The average experience is over 15 years and includes hospital based selling which we expect to leverage in gaining broad access for OTIPRIO. A subset of old reps also have experienced in the ambulatory surgical center or ASC setting and about half previous called on ENTs. While still early we are encouraged by the acceptability that our reps have been able to attain in their target account. For the launch we have prioritized approximately 2,000 physicians and 800 healthcare facility and we believe account for nearly 70% of the 1 million tube placement procedure performed each year in the U.S. Our marketing team developed a full set of promotional materials available for you via our sales rep and we have initiated advertising in the handful of ENT focused medical journals to build product awareness. We are also rolling out a peer-to-peer speakers' program and will offer a limited sampling program to encourage adoption through initial hands-on experience. On the reimbursement front we filed our application for unique C-Code prior to the March 1st deadline and expect to hear back in June. And we filed our application for J-Code in December with the final decision from CMS expected in the fall. We have a billing guide available that provides relevant coding information and have a dedicated internal resource to provide support for customer reimbursement question. We have set the WAC pricing for OTIPRIO at $283.20 per single patient vial which we believe reflects OTIPRIO's product advantages. Including the fact that OTIPRIO is the first and the only single use, physician-administered otic antibiotic and the only product approved by the FDA for use during ear tube surgery. This price is consistent with our prior guidance since we expect to be in the upper half of the 200 to 250 net sales price per vial after gross to net adjustment. We also believe that our pricing will enable OTIPRIO to gain broad access which is our primary goal during the first year of launch. We will of course be targeting facility and physicians who can quickly adopt OTIPRIO and generate early revenue, but the overarching objective of our team this year is to successfully navigate the new product review process in order to support stocking in our target facility which is essential to drive utilization. This is why we hired sales reps with strong hospital experience. We also have a strong national account team that is working at the system level by targeting group purchasing organizations and integrated delivery network. And finally we have a highly experienced team of medical science liaisons who have been in the field since the third quarter. This team is responsible for providing medical information about OTIPRIO to support discussions at both the local and the national account level. As you can see from the summary our launch program for OTIPRIO consists of a comprehensive and coordinated effort across stakeholders involved in ear tube surgery, in order to establish broad access and drive widespread adoption amongst our targeted audience. We will of course provide regular update regarding our progress in achieving these goals in future calls and presentations. In parallel with commercialization for ear tube surgery we are also actively pursuing OTIPRIO in two expansion indications, acute otitis externa and acute otitis media with tympanostomy tubes or AOMT. In December 2015 we announced results from the Phase 2 trial and patients with acute otitis externa or swimmer's ear. This study which included 75 patients across the broad age range demonstrated a clinical cure rate of greater than 80% for patients treated with the single 0.2 milliliter administration of OTIPRIO. Based on this positive result we intend to meet with the FDA to discuss the requirements for registration of OTIPRIO in this indication and then initiate the required clinical program in the first half of this year. We have also completed a Phase 2 study in pediatric patients with AOMT which is a very current middle ear infection in a patient with ear tube. This trial demonstrated the feasibility of treating AOMT with a single dose of OTIPRIO administered by an ENT in the office setting. As a next step, we announced last week the initiation of the second Phase 2 trial designed to determine whether 0.1 or 0.2 millimeter is the preferred dose for further development in AOMT. We plan to enroll approximately 125 pediatric patients in this trial with results expected in the second half of 2016. The advancement of OTIPRIO development for both otitis externa and AOMT demonstrates our commitment to actively pursue expanded indications for our lead commercial asset. OTIPRIO’s single dose physician administered profile is highly differentiated from ear drops that require multi-dose multi-day administration. We believe that approval in these additional indications could more than doubled the market opportunity for OTIPRIO. We also made substantial progress in development of OTO-104 for Ménière's disease during 2015 and recently announced plans to initiate a Phase 2 trial in a second indication. In the fourth quarter of 2015, we announced the initiation of the U.S. Phase 3 trial of Ménière's patients and expect to initiate to parallel EU trial by the end of this month. These trials have an identical design that we discussed with the FDA during end of Phase 2 meeting held in September. The primary endpoint is the count of definitive Vertigo Days during month three or in a single [indiscernible] administration of OTO-104 compared to placebo. The use of this endpoint is based on the 154 patients of Phase 2b trial that was completed last year, and demonstrated a statistically significant C=0.03 rejections and the counter-definitive Vertigo Days for month three which was prospectively defined secondary endpoint. We plan to enroll approximately 160 patients in each Phase 3 trial with results expected in the second half of 2017. Patients completing the Phase 3 trials will also have the opportunity to enroll an open label clinical safety trial and receive two quarterly doses OTO-104. If the Phase 3 program is successful then we expect to submit a drug application to the FDA in the first half of 2018. As a reminder, OTO-104 was granted fast track designation by the FDA for Ménière's disease. In addition to Ménière we recently announced our plan to initiate clinical development of OTO-104 for the prevention of hearing loss in patients treated with cisplatin chemotherapy. Cisplatin and other platinum based agents are routinely used in treating numerous tumor types with approximately 500,000 patients treated each year in the United States alone. While use of platinum agents have contributed to improved patient survival, OTO toxicity and associated permanent hearing loss is well documented in the clinical literature. In particularly, hearing loss has been reported in up to 90% of children and young adults treated with platinum based agents. This adversely affect speech and language development and has been associated with academic and social difficulties that can have a dramatic impact on children and their families. At this time, there is no FDA approved drug treatment to protect against platinum based OTO toxicity. In January we announced the publication of the preclinical study that demonstrated protection against OTO toxicity with the administration of OTO-104 prior to both acute and repeat administration of cisplatin. We believe that these results together with the high unmet medical need support the evaluation of OTO-104 in pediatric patients of their going cisplatin chemotherapy. We have completed a three IND review with the FDA and expect to initiate a Phase 2 trial at multiple leading oncology centers in the second half of this year. Now I will provide a brief update regarding OTO-311 and our new development program targeting age related hearing loss. OTO-311 is a sustained exposure formulation of the NNDA receptor antagonist gacyclidine that we are developing as a single intratympanic injection for the treatment of Tinnitus. Tinnitus is a ringing or buzzing noise heard when there is no outside source of the sound. This impacts the large population worldwide, can be devastating for patients and represents a high unmet medical need with no cure or FDA approved drug treatment available. Historic and emerging clinical data provide support for the potential use of NNDA receptor antagonist including gacyclidine for the treatment of Tinnitus. We have demonstrated that gacyclidine is a potent and selective NNDA receptor antagonist and we believe that formulations for sustained released delivery provides significant competitive advantage. We initiated a Phase 1 clinical safety trial in healthy subjects during the fourth quarter of 2015. This study is a dose escalation trial in which subjects receive a single unilateral intratympanic injection of OTO-311. We expect to complete this trial during the first half of 2016 and initiate a Phase 2 clinical trial in Tinnitus patients in the second half of this year. Finally, a few words about our fourth program which targets age-related hearing loss which we believe is the largest market opportunity within the otology field. In October 2015, we announced the acquisition of rights to multiple product candidates and initiation of formulation and preclinical development activities. This effort is focused on several possible treatment approaches including the repair of ribbon synapses and the regeneration of cochlear hair cells. There is now good preclinical support for both approaches in the scientific literal and we're excited to be able to bring to bear our experience, technology and researches in developing a drug treatment for this significant unmet medical needs. In summary, 2015 was a transformational year for Otonomy with the approval of our first products and our strong momentum continues into the first quarter of 2016 with the ramp up of our commercialization activity. We have built a highly experienced sales team which is supported by equally talented national accounts MSL and in-housing marketing groups. We've manufactured sufficient product supply to support a strong launch and our distribution network is in place. All of the sales, reimbursement and marketing programs will be ready for launch and are being implemented. While still very early we're encouraged by the level of support from KOL [ph] an accessibility our reps are having to their targeted accounts. That said it is important to continue to emphasize that our team is focused on first achieving access for OTIPRIO within our target audience because only then will we be able to drive broad adoption. We will provide more on our progress in future calls. I am also very proud of progress we made during 2015 with our pipeline. We move forward with evaluation of OTIPRIO in two label expansion indications, initiated Phase 3 for OTO-104 in Ménière’s disease, interclinical development for OTO-311 in Tinnitus and initiated a fourth program addressing the largest opportunity in the otology field. I expect the 2016 will be even busier as we utilize additional proceeds from our January financing to fund a registration program for OTIPRIO in otitis externa and the initiate a Phase 2 trial for OTO-104 in cisplatin inducted hearing loss. These activities are value creating and would not have been possible without this incremental financing. In closing, I would like to thank our shareholders for supporting Otonomy during our transition to a commercial company and in particular during the past few months which have been difficult to all biotech investor. We're fully committed to the successful launch of OTIPRIO and the continued advancement of our product pipeline. I believe that achieving these goals will built significant value for our shareholders throughout 2016. As this time, I'll turn the call over to Paul Cayer, our Chief Financial and Business Officer who will give you an update on our financials.

[Paul Cayer:]

Thank you, Dave, and good afternoon everyone. In addition to our strong business performance during 2015, we also had a positive year from a financial perspective. We began 2015 with the follow-on financing that provided the resources to fully support OTIPRIO launch activities and help accelerate progress of our expanding product pipeline. We also managed to [indiscernible] carefully during 2015 with total operating expenses for the year coming in significantly below our plan and guidance. As a result, we finished the year with the strong cash position which we further enhanced with the financing we completed in January of 2016. The following summary of our financial results for 2015 will of course not reflect the $115 million we raised in January. But I will discuss how this incremental fund will support the Company going forward. For the quarter ended December 31, 2015, Otonomy reported total GAAP operating marketing expenses $21.1 million, compared to 9.9 million for the fourth quarter of 2014. Non-GAAP operating expenses which excludes stock-based compensation expense totaled $18.6 million for the fourth quarter 2015 compared to 9.1 million for the fourth quarter of 2014. GAAP Research and development expenses for the fourth quarter of 2015 were 13.3 million, compared to 7.2 million for the fourth quarter of 2014. The increase was primarily a result of increased personnel costs including stock-based compensation expense, increased preclinical and clinical development expenses OTO-311 and costs for label expansion indication studies for OTIPRIO that began during 2015. The increase was partially offset by lower clinical trial-related expenses for OTO-104 following the completion of enrollment in the Phase 2b during December of 2014. Non-GAAP R&D expenses were 12.4 million for the fourth quarter of 2015, compared to 6.9 million for the fourth quarter of 2014. GAAP general and administrative expenses in the fourth quarter of 2015 were $7.8 million, compared to 2.7 million for the fourth quarter of 2014. The increase was primarily result of increased personnel costs, including stock-based compensation expense, expanded operating activities and costs related to our commercial preparation activities. Non-GAAP G&A expenses were $6.4 million for the fourth quarter of 2015, compared to 2.2 million for the fourth quarter 2014. Now summarizing results for the full year GAAP operating expenses totaled $62 million compared to 39.6 million for 2014. Non-GAAP operating expenses totaled 54.3 million compared to 37.9 million for 2014. For the full year 2015 GAAP R&D expenses were 38.8 million compared to 31.8 million for 2014. Non-GAAP R&D expenses were 35.8 million compared to 31 million for 2014. GAAP G&A expenses for the year were $23.2 million compared to 7.8 million for 2014, non-GAAP G&A expenses were 18.5 million compared to 6.9 million for 2014. In summary operating expenses for 2015 were significantly below our guidance which is a result of efficiencies across the organization as well as timing differences for spending in several areas. We remain committed to closely managing our expenses going forward. Turning to the balance sheet our cash, cash equivalent and short term investments sold a $185 million as of December 31st, 2015 which was at the upper end of our most recent guidance. These funds together with a 107 million net proceeds from our January 2016 public offering put us in a very strong position to execute our business plan over the next several years. Finally, with regard to our financial outlook we've stated in the fourth quarter 2015 that we expected 2016 non-GAAP operating expenses of $90 million to $95 million. However, this guidance did not reflect the expansion of our development activities include a registration program for OTIPRIO in acute otitis externa or the initiation of a Phase 2 trial for OTO-104 cisplatin induced hearing loss. Both of which were made possible as a result of our recent financing. So we are currently working to the $90 million to $95 million spending level for 2016 but we'll update this plan and our guidance once we have completed end of Phase 2 meeting with the FDA and understand the scope of the registrations for OTIPRIO in otitis externa. With that I'll turn the call back over to Dave.

[David Weber:]

Thank you Paul. Operator we are now ready for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question is from Josh Schimmer with Piper Jaffray, your line is open.

[Josh Schimmer:]

First for the AOMT trial for OTIPRIO, is it safe to assume that it'll be against an active competitor in [indiscernible], if so how does that impact your thinking about likely trail design and patient number and primary endpoints. And then second for the 2,000 target physicians for the ongoing launch of OTIPRIO, do you have a sense of the per physician utilization average or median or range for the number of procedures each year that those specialists are performing? Thank you.

[David Weber:]

Thanks Josh and good to speak with you. So I think you were asking to be sure here about AOMT or AOM?

[Josh Schimmer:]

Yes, AOMT.

[David Weber:]

With regard to AOMT, the Phase 2 trial will really be a dose comparison trial. You will note that our acute otitis externa study, we evaluated 0.2 mil in that study with a greater than 80% activity that we observed. And that was because we were putting the product in the outer ear canal, and also treating a very broad range of ages here with that indication. What we learned from that is that 0.2 mil is easily applied into the outer ear canal and given that we decided to look in the AOMT indication as actually dose ranging. So comparing 0.1 which is the dosage given for the approved indication during ear tube surgery, but we think that it might actually be beneficial to take that up to 0.2 mils. And so that's why we're doing the comparison so given that that is only just comparing the two doses there will be no active comparator in that study.

[Josh Schimmer:]

Got it, but then as you move into Phase 3 ultimately will you need to evaluate it against an active control?

[David Weber:]

You know I think there's two things to this Josh with regard to active comparators. One is, is that obviously we will be in discussion with the FDA, we have observed that many of the antibiotics trials recently have been against a placebo or sham comparison, not against active control in fact the FDA has been wanting to build up a database with regards to comparisons to a sham or placebo versus active. The other thing I think is, that we've got to look at what our product's advantage is. Our product's advantage is single use, physician administered product which clearly defines that product. I mean they're both in comparison to ear drops and to it's an antibiotic, what we are concerned about is that in registration type trial, this is a situation and which you’re encouraging and doing everything you can to ensure a well-run clinical trials for the FDA, you’re encouraging therefore compliance and so we actually do not believe that registration trials are the best place to run competitive trial to active competitor that involved multiple day, multiple dose administrations because fairly the advantage we see for OTIPRIO is that single use physician administered benefit. And so I think our view is, as with the approved indication is that, it would be compared to sham and -- for the registration trial. And we would look post marketing, post approval [ph] I should say, to see if we need to run an actual comparative trial. And if so, that would be ran in a real world condition, where the issues of compliance that we know exist and are well documented in the literature for multiple, multi-dose, multi-day administration of ear drops occur. So I think that’s more the way that we look at it. I would say that with what we are initially seeing with OTIPRIO, is what we expected from our market research, which is that clinicians quickly perceive the benefit of OTIPRIO in that single-use product that they administer, it's clearly observed quickly without comparison. And obviously we’re looking at that more as we go through the launch of OTIPRIO for the approved indication.

[Josh Schimmer:]

Got it.

[David Weber:]

I think for the second one, I'm going to let Paul take the second question with regard for the target audience?

[Paul Cayer:]

So Josh your question was, I think what the average volume is on our target audience. So if you actually do the math, the 2,000 target accounts for about 70% to the 1 million tubes surgery. So, that works out to be on a mean basis of about 350 procedure per target. But clearly there is a range there. What I would tell is that of the 2,000 targets they clearly are deciles further. So we have our top 250, our top 500, our top 1,000 and those are the ones that we're visiting first. And just to remind you the way that we had done our targeting was say, not only on the volume of their procedures, which clearly is important, but also we have a sense for what their level, their current level of CIPRODEX use is and so we rolled out into the targeting. So on the mean level, it’s about 350 procedures per year, which is a healthy volume, but clearly the target that we’re focusing on initially are above that and are higher deciles.

[Josh Schimmer:]

And are you seeing that kind of average or mean of 350 per year per specialist kind of correlated with the real world experience?

[Paul Cayer:]

You mean that in our initial discussions we’re validating or targeting, are we in fact confirming that our pre-launch information was correct, and if that's the question then, yes. Part of what the reps are doing is profiling, getting further refinements of that. But I think we feel very comfortable that if ENTs are showing up with high volume in the targeting data that we have, then they have high volume. I think what we expect to learn out there is, there may be some sites that are just off the radar screen for the data sources that we access, and I can tell you we access all that are available. So we’re likely to actually identify some additional targets that are worthwhile, but certainly everybody that’s on there, on the list now, has good volume.

[Josh Schimmer:]

Okay. Thank you very much.

[Operator:]

Thank you. [Operator Instructions] Our next question is from Bruce Rogovin with Wells Fargo. Your line is open.

[Bruce Rogovin:]

This is Bruce Rogovin. I have a personal interest on how the drug score, Ménière’s are going?

[David Weber:]

So the OTO-104 for Ménière’s disease is in Phase 3 trial. We initiated the U.S. trial in the last part of 2015 and we expect as we said to initiate the Phase 3 trial for the EU before the end of this month. And we are on track with the timing that we had given prior with regard to the second half of 2017 to have data.

[Bruce Rogovin:]

Okay. Is there anything else in the works [Multiple Speakers]?

[David Weber:]

Well in addition to those, the Phase 3 trials of course, we are also doing an open-label component for patient who roll out of the Phase 3 trials, they would be eligible for two additional doses. And then as we’ve said in the past, we have a repeat dose study that was being conducted in the United Kingdom, that is a study that completed enrollment in 2015 and we expect to have data, which will be just safety based data later this year.

[Bruce Rogovin:]

Okay, as my doctor, because he's familiar with you guys, I hope you are successful. Thank you very much.

[David Weber:]

Thank you.

[Operator:]

Thank you. Our last question is from Sumant Kulkarni with Bank of America Merrill Lynch. Your line is open.

[Sumant Kulkarni:]

The first one is approximately how long will it take for you to target all 2,000 physicians and 800 facilities at least once using your sales force that you have in place currently?

[David Weber:]

I don't think -- clearly they're out activity working this, I think that we're obviously looking to make a dramatic impact this year. I obviously can't sit here and say that we will actually have visited with all 2,000 clinicians, although that is definitely their goal and in fact they would hope to reach out to some additional as Paul mentioned may not have been in our targeting list. Although we do not think there will be any major numbers there. So, I don't think we've set up in terms of providing guidance, on actually targeting, I can tell you however that our sales force and the commercial team has set up very clear internal efforts in terms of the approach to the targeting, clearly they're going to be as we said, the biggest accounts from those accounts that we believe would be the fastest adopter's to start with and then spread out from there.

[Sumant Kulkarni:]

These are very early days in the launch of OTIPRIO, so as the launch ramps up what types of metrics do you plan on providing for us to gauge the launch of just the -- I guess the launch ramp of the product as it gets more widely adopted?

[David Weber:]

Sure, well again because we've said that this year is really about access, that's the real effort that we've put in front of the team is to maximize that access because that will obviously drive adoption and particularly given that the timing of this year works very well for us because clearly the fall and later part of the year are the biggest seasons for ear tubes. So, in terms of what you can expect from us is we will be talking about ENT approvals in the target hospitals, we'll be talking about adoption in the ambulatory surgery centers because we believe that there should be the ability to get more rapid adoption in the ASCs and we'll be talking about ENT awareness, we have established what's the baseline is for ENT awareness and that'll be something that we share as we continue to go forward and build that awareness. So, I think those are some of the keys which are really around how we are doing in terms of getting adoption and getting access into those target facilities. The other is we'll also talk reimbursement, now this will be further on down, I doubt that we'll have any information on this early on here as we're just getting into the launch but I think in the second half of the year we would like to also provide some input with regards to reimbursement because obviously I think -- we think that people want to know not only is the product being taken up but then are they getting reimbursed for -- it is obviously a key metric that people want. So, we'll talk about the reimbursement side of this as well. So, it will obviously take a while for us to be able to gather meaningful data, but those are the pieces of information that we're looking after 2016.

[Sumant Kulkarni:]

And now that the product is being launched, very early phases, do you see pockets of exceptional strength or any types of push back in terms of ability to use the product?

[David Weber:]

I think again, I’ll qualify this by saying, this is early in the launch. But I think as we said in the overview we're very happy with the access that we're seeing with our team with the target audience, that has obviously been something that we have believed would be there, there's not -- it's not a frequent time -- call point currently and we're seeing that we're getting good access there. I think the other is that we are seeing very good KOL support. It's an area that Dean Hakanson, our Chief Medical Officer and he’s going to tell, have been very focused on and we're seeing very good excitement there that we believe will help translate as we continue to push the launch. Also I think we'll see that in the speaker-to-speaker programs that we intend to have, that are actually actively being pursued.

[Sumant Kulkarni:]

My last question is at what point do you think things could get more ripe for xU.S. partnering and how's interest level on that front?

[David Weber:]

I think now this is when we -- this is really the year that we really focus on that. And that we really felt that having the approval would let us take that in to the EU authorities and have productive conversations with them about those OTO -- OTIPRIO I should say and as well as OTO-104. So, now that we have the approval in the U.S. behind us, we're marching well to our all of our other goals with regards to development including the expansion indications, this is another area that we intend to work this year, is really looking at the European and I would say even beyond Europe, into Asia and looking at what we think is the best step forward. But we're talking more about that later in the year, we do want to talk to regulatory authorities in Europe, we think that we're the best to go talk to them about what might be the appropriate indication or if the approval here in the U.S. might have an impact of how we would go about Europe.

[Operator:]

Our next question is from Paul Orlin with Amici Capital. Your line is open.

[Paul Orlin:]

I had a question and some discussions with other companies in the hearing space. [Indiscernible] brought up using a gel as a delivery mechanism into the ear, for some of their products, I was just wondering if you could go over some of your IP there, and some of the advantages you have with the technique you’re using.

[David Weber:]

Well, I mean, I think I would say that the term gel is a very broad term. And so clearly what our founders recognized and as people can see that via our patent estate with over 75 branched patented, approaching a 100 patent application underway and having for example OTIPRIO has four now patents in the Orange Book and that takes us through 2035. Clearly, our founders thought about drug delivery to the ear before many people were even thinking about the ear. And so we believe that our patent estate is very broad, when we talk about gels, yes there are multiple ways of making gel, with multiple ways of potentially getting sustained delivery to the ear. And I think you can look back at some of our early applications when the Company was founded, so look at the breadth of that estate. And so, again we feel very strongly about our position. We feel that now with the approval of OTIPRIO we proved that our delivery formulation works, and obviously it's based in the youngest of patients. And I think that it's easy to talk about gels but I guess the question is what’s the true formulation and is that or is that not covered from the applications and granted patents that we have.

[Paul Cayer:]

And just to sort of jump in here with a couple of other facts to provide some comfort around this. We know it's not just about the gel. And so I think if you look at our -- and tell probably in the way that we talk about it, you will see that we talk about the combination of thermo-sensitive gel together with these micro-particulars of the drug. And we found that in fact it's really the combination of those two that are required and you can clearly see from some of the work of others that what they said is really the case, that it's not just about the gel. If you look at what Oris Medical is doing in their Phase 3 trial where they have a hyaluronic acid which is a viscous material, some would call it a gel, they require three injections given over three to five day period for a course of treatment. Clearly, to us, that doesn’t seem to be sustained exposure. There is also a company working on the antibiotic side with a foam material it's a little bit better than drops because it's single daily administration, but their otitis externa trial are done with seven daily administration. Our Phase 2 trial we had over 80% clinical cure rate was with a single administration. So I think, Paul, that gives you a sense that we’ve shown the path and there is going to be interest in what we’re doing, but it's not simple and it's not just about the gel. And as Dave described, we’ve being first to the field have the first mover advantages and have the benefit of all of those different foams and gels and materials that we claimed in our patent. But it's also from a technical perspective not as [indiscernible] gels have described. It's the entire formulation that makes the difference in order to be get sustained exposure in either the middle or the inner ear.

[Operator:]

Thank you. And I am now showing any further questions at this time. I’ll now turn the call back over to Dr. Weber for closing remarks.

[David Weber:]

Thank you everyone for participating in our call today. We will be at the Cowen Conference in Boston on Wednesday this week and hope to see many of you there. If you have any additional questions please feel free to contact us. Have a good evening everyone.

[Operator:]

Ladies and gentlemen, this does conclude the program, and you may all disconnect. Everyone, have a great evening.