Ownership Submission
FORM 4
Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
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(Print or Type Responses)
1. Name and Address of Reporting Person *
Avalon Ventures VIII LP
  2. Issuer Name and Ticker or Trading Symbol
Otonomy, Inc. [OTIC]
5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
_____ Director __X__ 10% Owner
_____ Officer (give title below) _____ Other (specify below)
(Last)
(First)
(Middle)
1134 KLINE STREET
3. Date of Earliest Transaction (Month/Day/Year)
08/18/2014
(Street)

LA JOLLA, CA 92037
4. If Amendment, Date Original Filed(Month/Day/Year)
6. Individual or Joint/Group Filing(Check Applicable Line)
___ Form filed by One Reporting Person
_X_ Form filed by More than One Reporting Person
(City)
(State)
(Zip)
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)
2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code
(Instr. 8)
4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)
5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4)
6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)
7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code V Amount (A) or (D) Price
Common Stock 08/18/2014   C   740,057 A (2) 748,589 D (1)  
Common Stock 08/18/2014   C   660,580 A (3) 1,409,169 D (1)  
Common Stock 08/18/2014   X   91,011 A $ 8.79 1,500,180 D (1) (7)  
Common Stock 08/18/2014   S   50,001 D $ 16 1,450,179 D (1) (7)  
Common Stock 08/18/2014   C   705,598 A (3) 705,598 I See footnote (4)
Common Stock 08/18/2014   P   109,375 A $ 16 814,973 I See footnotes (4) (8)

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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)
2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (Month/Day/Year) 3A. Deemed Execution Date, if any (Month/Day/Year) 4. Transaction Code
(Instr. 8)
5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)
6. Date Exercisable and Expiration Date
(Month/Day/Year)
7. Title and Amount of Underlying Securities
(Instr. 3 and 4)
8. Price of Derivative Security
(Instr. 5)
9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 4)
10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)
11. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares
Series A Preferred Stock (2) 08/18/2014   C     337,432   (2)   (2) Common Stock 740,057 $ 0 0 D (1)  
Series B Preferred Stock (3) 08/18/2014   C     175,889   (3)   (3) Common Stock 175,889 $ 0 0 D (1)  
Series C Preferred Stock (3) 08/18/2014   C     484,691   (3)   (3) Common Stock 484,691 $ 0 0 D (1)  
Series C Preferred Stock (3) 08/18/2014   C     568,828   (3)   (3) Common Stock 568,828 $ 0 0 I See footnote (4)
Series D Preferred Stock (3) 08/18/2014   C     136,770   (3)   (3) Common Stock 136,770 $ 0 0 I See footnote (4)
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 11/04/2018 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 11/04/2018 Common Stock 14,106 $ 0 14,106 D (1)  
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 12/08/2018 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 12/08/2018 Common Stock 14,106 $ 0 14,106 D (1)  
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 01/14/2019 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 01/14/2019 Common Stock 14,106 $ 0 14,106 D (1)  
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 04/13/2019 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 04/13/2019 Common Stock 14,106 $ 0 14,106 D (1)  
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 07/01/2019 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 07/01/2019 Common Stock 14,106 $ 0 14,106 D (1)  
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 10/08/2019 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 10/08/2019 Common Stock 14,106 $ 0 14,106 D (1)  
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 12/15/2019 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 12/15/2019 Common Stock 14,106 $ 0 14,106 D (1)  
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 01/22/2020 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 01/22/2020 Common Stock 14,106 $ 0 14,106 D (1)  
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 04/01/2020 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 04/01/2020 Common Stock 14,106 $ 0 14,106 D (1)  
Series A Preferred Stock Warrant (right to buy) $ 31.092 08/18/2014   C     6,432 (2)   (5) 05/28/2020 Series A Preferred Stock 6,432 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 14.1773 08/18/2014   C   14,106 (2)     (5) 05/28/2020 Common Stock 14,106 $ 0 14,106 D (1)  
Series C Preferred Stock Warrant (right to buy) $ 8.79 08/18/2014   C     91,011 (6)   (5) 08/18/2014 Series C Preferred Stock (3) 91,011 $ 0 0 D (1)  
Common Stock Warrant (right to buy) $ 8.79 08/18/2014   C   91,011 (6)     (5) 08/18/2014 Common Stock 91,011 $ 0 91,011 D (1)  
Common Stock Warrant (right to buy) $ 8.79 08/18/2014   X     91,011   (5) 08/18/2014 Common Stock 91,011 $ 0 0 D (1) (7)  

Reporting Owners

Reporting Owner Name / Address Relationships
 Director  10% Owner  Officer  Other
Avalon Ventures VIII LP
1134 KLINE STREET
LA JOLLA, CA 92037
    X    
Avalon Ventures X, L.P.
1134 KLINE STREET
LA JOLLA, CA 92037
    X    

Signatures

 /s/ Douglas Downs, a managing member of Avalon Ventures VIII GP, LLC, the General Partner of Avalon Ventures VIII, L.P.   08/18/2014
**Signature of Reporting Person Date

 /s/ Douglas Downs, a managing member of Avalon Ventures X GP, LLC, the General Partner of Avalon Ventures X, L.P.   08/18/2014
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1) Avalon Ventures VIII GP, LLC ("Avalon VIII GP"), the general partner of Avalon Ventures VIII, L.P. ("Avalon VIII LP"), has sole voting and dispositive power with respect to the securities held by Avalon VIII LP. Kevin Kinsella, Stephen Tomlin, Richard Levandov, Braden Bohrmann, Douglas Downs and Jay Lichter, one of our directors, are the managing directors of Avalon VIII GP. Such persons and entities disclaim beneficial ownership of the securities held by Avalon VIII LP except to the extenet of any pecuniary interest therein.
(2) The Series A Convertible Preferred Stock automatically converted into Common Stock on a 2.193204365 to one basis immediately prior to the completion of the Issuer's initial public offering of common stock and had no expiration date.
(3) Each of the Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and Series D Convertible Preferred Stock automatically converted into Common Stock on a one to one basis immediately prior to the completion of the Issuer's initial public offering of common stock and had no expiration date.
(4) The reported securities are held of record by Avalon Ventures X, L.P. ("Avalon X LP"). Avalon Ventures X GP, LLC ("Avalon X GP"), the general partner of Avalon X LP, has sole voting and dispositive power with respect to the securities held by Avalon X LP. Kevin Kinsella, Stephen Tomlin, Richard Levandov, Braden Bohrmann, Douglas Downs and Jay Lichter, one of our directors, are the managing directors of Avalon X GP. Such persons and entities disclaim beneficial ownership of the securities held by Avalon X LP except to the extenet of any pecuniary interest therein.
(5) The warrants are immediately exercisable.
(6) The Series C Preferred Stock Warrants automatically converted into Common Stock Warrants on a one to one basis immediately prior to the completion of the Issuer's initial public offering of common stock.
(7) Avalon VIII LP exercised the warrants to purchase 91,011 shares of Issuer Common Stock for $8.79 per share immediately prior to the completion of the Issuer's initial public offering of common stock. Avalon VIII LP paid the exercise price on a cashless basis, resulting in Issuer's withholding of 50,001 of the warrant shares to pay the exercise price and issuing to Avalon VIII LP the remaining 41,010 shares. The shares issued pursuant to such exercise remain subject to a 180-day lock-up restriction.
(8) Avalon X LP purchased 109,375 shares of Issuer Common Stock in the Issuer's initial public offering.

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