Here's The News That Sent Otonomy Shares Crashing

Shares of Otonomy Inc OTIC plummeted more than 80 percent Wednesday morning after the biopharmaceutical company, which focuses on diseases and disorders of the ear, provided a disappointing update to an ongoing clinical trial.

Otonomy has been overseeing a Phase 3 trial called AVERTS-1 for the treatment of patients with Ménière's disease. Unfortunately, the company announced its trial that examined its OTIVIDEX therapy and enrolled 165 patients failed to meet its primary endpoint, which was the count of definitive vertigo days by Poisson Regression analysis.

Patients who received the OTIVIDEX therapy showed similar reductions in the number and severity of vertigo episodes as those who received a placebo. As such, the company will immediately suspend all development activities for OTIVIDEX and will conduct a review of its product pipeline plans and commercial efforts to identify opportunities moving forward.

As of the end of June, the company's cash and cash equivalents totaled $150.5 million.

Management also said it will withdraw its spending guidance for the year pending its business review.

"We are greatly disappointed by these results, and surprised by both the higher placebo response and lower OTIVIDEX improvement than observed in our previous trials. I would like to thank the many patients and investigators who participated in our Ménière's clinical program," said David A. Weber, Ph.D., president and CEO of Otonomy. "Based on these results, we are immediately suspending all development activities for OTIVIDEX including the ongoing AVERTS-2 trial. In addition, the company is undertaking a review of its product pipeline and commercial efforts to identify opportunities to extend its cash runway and build shareholder value."