Ear disease biotech Otonomy bags $100M in a booming IPO

San Diego's Otonomy ($OTIC) pulled off a $100 million Wall Street debut, lining its pockets as it works to get a late-stage ear treatment through the FDA and onto the market.

The company moved about 6.3 million shares at a top-of-the-range $16 each, earmarking another 937,500 shares to cover over-allotments and setting its maximum deal value at $115 million. Those proceeds would pile onto a $49 million Series D Otonomy closed in April, and the biotech intends to use its new cash to wrap up development of its top prospect and pour the rest into two pipeline treatments for ear-related disorders.

Otonomy quickly shot up more than 12% when its shares hit the market, trading at roughly $18 by mid-morning Wednesday.

The biotech's lead drug, AuriPro (OTO-201), is a sustained-release formulation of the antibiotic ciprofloxacin, designed to reduce postoperative complications in pediatric patients undergoing tube-placement surgery. The one-time treatment met its primary endpoints in two Phase III trials, Otonomy said last month, and the company expects to submit an FDA application in the first half of 2015, eventually launching the product on its own the following year.

Otonomy's pipeline also includes OTO-104, a steroid treatment for a rare inner ear disorder called Ménière's disease that disrupts hearing and balance. That drug is in the midst of a Phase IIb trial with data expected next year, and, if everything works out, Otonomy plans to take it into Phase III in 2015. The company's third candidate, a preclinical tinnitus treatment dubbed OTO-311, is in line for a Phase I study next year.

Key to each drug is Otonomy's proprietary delivery technology, which uses a thermosensitive polymer to mete out treatment after a single injection.

Otonomy CEO David Weber has said the global market for the biotech's products measures above $1 billion, and while the company is positioning itself to go it alone on the stateside commercial front with AuriPro, it will keep its ears open to partnerships and deeper deals for ex-U.S. marketing, Weber told FierceBiotech earlier this year.

With its high-dollar IPO success, Otonomy joins a short list of biotechs pulling off successful debuts amid some industry-wide volatility over the past few months, a group that includes Sage Therapeutics ($SAGE) and its up-sized $90 million haul; Kite Pharma ($KITE) with its $128 million debut; and Zafgen ($ZAFG), which raked in $96 million to support its obesity treatment.

Since its foundation by Avalon Ventures in 2008, Otonomy has raised about $143 million in venture funding, attracting the likes of OrbiMed Advisors, Novo, TPG Biotech and Domain Associates.

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