Following truly abysmal results from a pivotal Phase 3 trial for its steroid candidate Otividex, Otonomy Inc. (NASDAQ:$OTIC) saw its investors parachuting out of their shares. The number? A cool 81.5% decrease.

While about 600,000 U.S. patients suffer from the incurable inner-ear affliction disease known as Meniere, they all lack effective treatment options. Otividex, a long-lasting version of dexamethasone that physicians have been using for 50 years to reduce inflammation, was thought to be the cure for this enigma. Patients that received the drug reported a reduction in vertigo frequency from baseline. That number is impressive, only if the placebo patients hadn’t reported a 55% reduction. Further, Otividex was the main value driver of Otonomy’s stock.

Due to these statistics, Otonomy will immediately suspend similar trials in Europe. This will help conserve the company’s cash balance, which totaled $150.5 million by the end of June. The next goal is to minimize the giant gap between revenues and expenses.

Let’s take a closer look:

• Otonomy’s expected adjusted operating expenses to be between $80 million and $85 million
• Sales figures for the company’s first approved drug, Otipro, were disappointing, generating a mere $700,000 in sales during the first half of the year
• An application that could shift Otipro’s user to those with swimmer’s ear could boost Otonomy’s top line next year
• Even if that is the case, it’s difficult to see Otonomy escape Otividex’s trial failures  

Featured Image: twitter