Item 2.05 Costs Associated with Exit or Disposal Activities.

On August 3, 2022, as a result of Otonomy, Inc.'s (the "Company") previously announced plans to discontinue development of OTO-313, implement other measures to extend its cash runway and shift its clinical focus to its OTO-413 program for the treatment of hearing loss, the Company plans to reduce its workforce by approximately 55%, with the majority of the reduction expected to be completed by the end of August 2022. As a result of such reduction, the Company estimates that it will incur aggregate charges of approximately $1.5 million in cash expenditures for severance and other employee termination-related costs in the third quarter of 2022. The Company also plans to sublease its facility, which includes research and development laboratories, and then move to a smaller office-based location.

The costs that the Company expects to incur are subject to a number of assumptions, and actual results may differ from the Company's original estimate. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, these actions. If the Company subsequently determines that it will incur additional significant costs associated with these actions, it will amend this Current Report on Form 8-K to disclose such information.

Cautionary Note Regarding Forward Looking Statements

This Current Report on Form 8-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained in this Current Report on Form 8-K that are not statements of historical fact may be deemed to be forward-looking statements. Words such as "plans," "expects," estimates," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon the Company's current expectations. Actual results may differ materially from these estimates as a result of, among other things, delays in the implementation of the Company's plans, unexpected personnel-related termination or other costs, and difficulties in subleasing the facility. Information regarding additional risks may be found in the section titled "Risk Factors" in the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 25, 2022. The forward-looking statements are based on information available to the Company as of the date hereof. The Company disclaims any obligation to update any forward-looking statements, except as required by law.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

As part of the reduction in workforce described in Item 2.05 above, Robert Michael Savel II, the Company's Chief Technical Officer, will depart the Company, effective August 15, 2022. Mr. Savel is eligible to receive severance benefits under his Employment Agreement with the Company, dated April 16, 2021.

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