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Otonomy Taps New Investors in Latest $49M Round of Financing

Otonomy Inc. is raking in investment after investment.

The San Diego-based company just secured a $49 million Series D round from a bevy of new investors to further advance its treatments for diseases of the ear. The company has raised nearly $145 million since its launch six years ago, including a Series C round in September for $45.9 million.

Otonomy was co-founded by San Diego venture capital veteran Jay Lichter, a managing partner at Avalon Ventures, when he was diagnosed with Ménière’s disease — a condition of the inner ear that causes vertigo, hearing loss and tinnitus. When Lichter found there were few treatments available for his disorder, he formed a company to investigate new treatments. He handed the reins over to CEO David Weber in late 2010, and the company has advanced at a rapid pace since.

Otonomy has two drug candidates in clinical development that are advancing to late-stage trial: a steroid that was fast-tracked by the Food and Drug Administration to treat vertigo in patients with Ménière’s disease and an antibiotic for children undergoing ear tube placement surgery. For the latter, which is completing phase 3 trials, the company plans to use the funding to file for regulatory approval by first quarter 2015. Otonomy will also use the financing to advance its gel-based injection that treats tinnitus, which causes ear ringing, into clinical trials.

Weber said the financing strengthens Otonomy’s balance sheet as it works to advance its three product candidates and prepare for commercialization.

“This is something we see ourselves commercializing on our own in the U.S., but there’s opportunity to find partners in Asia and Europe,” Weber said in a December interview. He projects the market for the company’s drugs exceeds $1 billion.

The newest investors in the oversubscribed round include Jennison Associates LLC, Perceptive Advisors, Federated Kaufmann Funds, certain private investment funds advised by Clough Capital Partners LP, Ally Bridge Group and other undisclosed institutional investors. All previous investors also participated in this most recent financing round.

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