Anne Sabine Zoller - General Counsel Thomas Meyer - Chairman and CEO Bettina M. Stubinski - Chief Medical Officer Sven Zimmermann - CFO.

Joseph P. Schwartz - Leerink Partners Chris Howerton - Jefferies.

Good day and welcome to the Auris Second Quarter 2015 Financial Results and Business Update. At this time, I would like to turn the conference over to Anne Sabine Zoller, General Counsel. Please go ahead..

Thank you, operator, and thank you everyone on the call for joining. On behalf of Auris Medical, I would like to welcome everyone to our second quarter 2015 earnings call. I am Anne Sabine Zoller, General Counsel of Auris Medical.

With me are Thomas Meyer, Chairman and Chief Executive Officer; Sven Zimmermann, Chief Financial Officer; and Bettina Stubinski, Chief Medical Officer. Earlier today we issued a press release available at aurismedical.com with our results for the second quarter of 2015 and a business update. We also filed this press release with the SEC earlier today.

During today's call, we will be making forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. These include statements that address future operating, financial, or business performance or our strategies or expectations.

Forward-looking statements are based on management's current expectations, beliefs and involve significant risks and uncertainties that could cause actual results, developments and business conditions to differ materially from those contemplated by these statements.

These risks and uncertainties include, but are not limited to, the timing and conduct of our clinical trials, the clinical utility of our product candidates, the timing or likelihood of regulatory filings and approval, our intellectual property position and our financial position, as well as those described under Risk Factors section in our Annual Report on Form 20-F, the prospectus dated May 14, 2015 relating to our Registration Statement on Form F-1 and future filings with the Securities and Exchange Commission.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change.

With that, I hand over to Thomas..

Thank you, Anne. Good morning to our listeners in the U.S. and good afternoon to our listeners in Europe. Together with Bettina and Sven, I am pleased to provide you today with a report on the second quarter of 2015 and a general business update. I will begin with a presentation of some of Auris Medical's key developments over the past few months.

First of all, I wish to highlight the recent important transformation of our Company. Three months ago, Auris Medical was essentially a company with a single ongoing Phase 3 program and a cash runway until mid-2016.

Today, thanks to our recent follow-on offering, Auris Medical is a company with two Phase 3 programs which are expected to yield first-in-class therapeutics for acute inner ear tinnitus and acute inner ear hearing loss.

In addition, we have extended our cash runway to the fall of 2017, excluding cost for the commercialization of AM-101, which puts us into a much stronger financial position. And last but not least, the follow-on offering allowed us to broaden our institutional shareholder base in the U.S.

Our AM-101 lead program has kept us busy over the past few months and still remains the primary focus of our activities. We keep progressing with the tinnitus trials towards near completion in the first half of next year.

While the majority of our focus has been on AM-101, we have been working since the time of our IPO in August 2014 on the design and preparation for our Phase 3 program with AM-111. This also included further exchanges with the U.S. and European regulatory authorities resulting in an open IND by the FDA and protocol assistance by the EMA.

By doing a follow-on offering in May 2015, we could ensure the seamless continuation of those preparations, and at the same time expand the program by adding the ASSENT trial in the U.S.

We are very excited about the potential of AM-111, which has shown to be a highly potent otoprotectant and is one of the most clinically advanced cell-penetrating peptides.

AM-111 previously received orphan drug designation by both the FDA and EMA, it is highly synergistic to AM-101, and we believe the compound represents a significant commercial opportunity.

Let me point out again that the biology of acute hearing loss is relatively well understood and that AM-111 has been successfully tested in various animal models of acute cochlear insult by several independent research groups.

The compound protected hearing in acute noise trauma, acute labyrinthitis, aminoglycosides ototoxicity, bacterial infection, cochlear ischemia and cochlear implantation surgery trauma. The acute stage of hearing loss represents a window of time in which the inner ear can be protected from permanent hearing loss.

The breadth of AM-111's therapeutic spectrum suggests a key role of the JNK stress kinase, AM-111's target, in acute inner ear hearing loss.

In our Phase 2 clinical trial, we demonstrated that one single dose of AM-111 provided for a rapid statistically significant and clinically meaningful recovery of the hearing and of speech discrimination in patients suffering from severe to profound acute inner ear hearing loss.

We consider all those accumulated preclinical and clinical results an excellent basis for our planned two pivotal clinical trials with AM-111.

Please note that outcome measures and efficacy endpoints in hearing loss trials are well established and objective, relying on classic pure tone audiometry in the first place and speech audiometry in the second phase. Our focus for Phase 3 is clearly on idiopathic sudden sensorineural hearing loss, ISSNHL, or in short 'sudden deafness'.

This suddenly occurring loss of hearing can be rather frightening experience and represents based on market research the most frequent type of ASNHL. Also, there is usually a high level of spontaneous recovery.

This rarely occurs in cases of severe to profound intensity, leaving many of those patients, and they are affected most, with permanent loss of functional hearing. Even if vaso-dilators, or in particular glucocorticoids, are frequently used off-label for the treatment of sudden deafness, there is no proof of their efficacy.

For example, in a well-designed Swedish trial by [indiscernible], we saw results for prednisolone that were no better than for the placebo-controlled. We are confident that the Phase 3 trials will confirm the strong otoprotectant effect of AM-111 in idiopathic sudden deafness patients.

Furthermore, with the planned REACH Phase 2 trial, we are seeking to test AM-111 also in surgery-induced hearing loss. Here we seek to protect sensory structures inside the cochlear that are at risk during surgery for cochlear implantation. Also the annual number of cochlear implant surgeries in the U.S.

is smaller than the incidents of sudden deafness. We consider this a very interesting application. The CI market is expected to continue its growth and may grow even more, thanks to protective strategies, such as the one we are considering with AM-111 to address the risk of suffering from a loss of residual hearing due to surgery.

In addition, by administering AM-111 prior to the insertion of the cochlear implant electrode, AM-111 can exert its protective effect prior to the actual trauma. We know from preclinical studies that the compound is most effective when it's applied early.

As announced previously, Auris Medical and Cochlear Limited have agreed to collaborate on the planned REACH trial. Cochlear Limited is the global leader in implantable hearing solutions and will support preparations for REACH and provide expertise in cochlear implants and hearing preservation.

We are very excited by the opportunity to collaborate with Cochlear whose Nucleus Hybrid L24 device is the only CI that has been approved by the FDA specifically for so-called Hybrid Hearing which is used for patients with residual hearing and speech frequencies.

As the preparations and the launch of the three mentioned trials with AM-111 will keep us quite busy for some time, we decided not to move forward with our plans for trial in Meniere's Disease at this point.

We continue to believe that AM-111 has the potential to be effective in attenuating some of the symptoms and long-term outcomes of many years such as progressive sensorineural hearing loss. However, we simply want to set our priorities where we have the most data and where we are the most advanced with AM-111.

Following these comments on AM-111, let me turn to the progress that we achieved with regards to our IP portfolio. As announced previously, the U.S. Patent and Trademark Office granted U.S. Patent 9,072,662 titled 'Methods for the Treatment of Tinnitus Induced by Cochlear Excitotoxicity'.

This patent's key claim is directed to the use of pharmaceutical composition comprising Ketamine for reducing the perception of tinnitus. This is the third issued U.S. patent covering the use of AM-101 for the treatment of tinnitus. In addition, the USPTO issued U.S.

Patent 9,066,865 relating to methods of treating inner or middle ear diseases with intratympanic injections of poloxamer-based compositions. Subsequently, the USPTO declared a patent interference involving Auris Medical's issued patent and Otonomy's patent application 13/848,636.

We do not expect the proceedings to impact the Company's IP portfolio relating to AM-101 and AM-111 as the 865 patent covers the use of fluoroquinolones and not our two lead compounds. I would like to conclude by highlighting the continuous development of our internal organization and the recent expansion of our leadership team.

Over the past 18 months, we have grown significantly in headcount and added important new skills to our team. As of August 1, we promoted Anne Sabine Zoller to the newly created position of General Counsel. She joined also the executive management committee, which now comprise of four members, the CEO, CFO, CMO and General Counsel.

We are very pleased to have Anne on-board with us. Bettina will provide you now with an update on our clinical programs. Sven will then conclude the presentation by walking you through the financial results. With that, let me pass over the call to Bettina..

Thank you, Thomas. As you can see on this slide, we have two broadly similar Phase 3 clinical studies in ISSNHL in preparation, HEALOS and ASSENT.

In both studies, we test the AM-111 0.4 mg/mL dose in a confirmatory manner, as in Phase 2 it has shown statistically significant and clinically meaningful improvement for the primary as well as the co-primary endpoints in patients with severe to profound acute sensorineural hearing loss compared to placebo.

We are also testing the 0.8 mg/mL dose in an exploratory manner. Both studies are placebo-controlled and whereas HEALOS is predominantly European and Asian, ASSENT will run in North America and also with a few sites in South Korea. ASSENT differs from HEALOS in that we will allow for background oral corticosteroids therapy to be given.

These agents have not proven clear efficacy in this indication but are de facto used in the countries where we are running the ASSENT Study. Because of this, we have built in an interim analysis in ASSENT to allow to adjust the sample size should we see that the effects rise assumption differ in this treatment setting.

In both studies, the primary efficacy variable will be the change in hearing threshold. Based on assumptions following data from Phase 2 results, we have powered these studies so as to have a very good margin of error.

In terms of timelines, the HEALOS Study has advanced well with approvals from several ethics committees and competent authorities so that we can expect to enrol our first patient in early Q4. The ASSENT Study preparations are also underway and here we expect enrollment start in the first half of next year.

Regarding REACH, the third study that we are planning with AM-111 and which Thomas mentioned earlier, preparations are also underway and these include an application for grant submission to NIH. REACH is expected to start in Q3 2016. For AM-101, we are now at approximately 60% enrollment in both trials.

As expected, there was a slowdown in recruitment rate due to the summer vacation season. Its magnitude however was larger than we had originally anticipated. In addition, the MERS scare in South Korea interrupted enrollment in that country for some time. Enrollment has been picking up again recently and we expect the trial readouts in Q2 next year.

We have continued to raise Auris Medical's profile within the international ENT community through a significant presence at the 3rd Congress of European ORL-HNS in Prague, Czech Republic, one of the largest events of its kind.

Our corporate symposium entitled 'Towards Novel Tinnitus Treatments' featured presentations by leading experts on the pathophysiology of tinnitus, on the outcome measures, health economics as well as clinical development.

We're excited to also be present at the Annual Meeting of the American Academy of Otolaryngology - Head and Neck Surgery in Dallas in September. We will have a booth and have also organized a symposium. Last year, our symposium at this meeting focused on tinnitus.

This year the title is, 'Rational Pharmacotherapy for Acute Hearing Loss - Recent Advances and Perspectives'. The symposium will be chaired by Dr. Larry Lustig of Columbia University. And we have some of the top experts in the field to talk, starting with Dr.

Adrien Eshraghi from the University of Miami addressing the pathophysiology with his research on hearing preservation following acute cochlear stress injury in animal model. Dr. Hinrich Staecker, University of Kansas, will talk about drug delivery to the inner ear. Dr. Steve Rauch and Dr.

Chris Halpin, both of Harvard Medical School, will speak about clinical trials and outcome measures in hearing loss trials to play the leading role in the landmark NIH trial that tested oral versus intratympanic prednisolone for ISSNHL. And with that, let me pass the word to Sven for the financial update..

Thank you, Bettina. So with regard to the financials, let me first remind you that the financial information has been prepared using the same accounting policies and methods of computation as compared with the most recent annual financial statements.

The financial statements are presented in Swiss francs, which is our functional and presentation currency. All amounts stated here are in Swiss francs, unless otherwise specified. Our research and development expenses increased from CHF8.4 million in the six months ended June 30, 2014, to CHF14.9 million in the six months ended June 30, 2015.

The increase is mainly due to higher clinical expenses due to the progression of our AM-101 Phase 3 clinical development program, as explained by Bettina. In particular, we had several trial milestones in relation to TACTT2 and TACTT3, triggering substantial payments to our principal CRO for AM-101 studies.

And in addition, we continue to prepare our late-stage AM-111 clinical program and to incur cost for this. General and administration expenses decreased from CHF2.6 million in the six months ended June 30, 2014 to CHF1.9 million in the six months ended June 30, 2015.

The decrease was primarily related to higher legal and auditing expenses in relation to the IPO preparations in Q1 2014, partially offset by the expenses related to our follow-on offering for May this year and higher public listing expenses.

Net financial income decreased to a loss of CHF2.1 million in the first six months of 2015, as we recorded higher unrealized foreign exchange losses. Since the majority as you know of our cash and cash equivalents are held in U.S. dollars, in the first six months of 2015, the net depreciation of the U.S.

dollar against the Swiss franc had a negative impact. The reported net loss for the first six months of 2015 was CHF19 million, compared with CHF10.9 million in the same period in 2014, corresponding to a net loss per share of CHF0.62 versus CHF0.59.

Our cash and cash equivalents as of June 30, 2015 was CHF61 million compared to CHF56.9 million at the end of December 2014. The increase in cash is due to the cash inflow from our follow-on offering in May 2015, which was partially offset by operating expenses during the first half of 2015.

As mentioned before, in May this year, we completed our follow-on offering placing 5.275 million shares, thereby raising further gross proceeds of US$25 million.

So from today's perspective and with an operating loss of CHF16.9 million for the first half of 2015, we are pretty much on track to meet our previously issued operating loss guidance for the full year of between CHF30 million and CHF35 million, including the Phase 3 cost related to AM-111.

With that, I would now like to turn the call back to the operator who will open the line for questions..

[Operator Instructions] Our first question today comes from Joseph Schwartz of Leerink Partners..

Congratulations on all the progress.

I just wanted to ask a little bit more, if you could talk about the impact of the summer slowdown on the enrollment rate, if that had any impact on the patient selectivity that you are seeking in the TACTT2 and TACTT3 studies, how has the enrollment rate compared to your original expectations, if you can give us a little bit more granularity, since I see that you're pushing out the data readouts to second quarter from the first quarter, should we think about that as like a three-month impact or any incremental information that you can provide us with on that front?.

Absolutely. So first of all, obviously we also saw a slowdown last year in recruitment, but at that stage we were still in the ramp-up phase, so it was difficult to predict from the small numbers we had then how that would impact during the summer months. Now your first point that you made is important.

We are focusing on the quality of the study, even if that may be at the expense of timing by a quarter or so. The quality is important. We're focusing on acute patients.

We are making sure that there is documentation of the tinnitus triggering factor, that medical records for documenting the tinnitus triggering are available, and so that is our principal focus. We expect this shift by a quarter, as you've noticed.

We've been talking to investigators and we've seen that many of them are on vacation, not only the investigators but also the patients themselves. So that's really what's happening. Now we will be able to have a better prediction as we come back out of that period over the next few weeks..

That makes sense.

Do you have any information on how baseline criteria in these studies compares to your goals, and who you believe is likely to respond best to treatment both on an average basis and also any information on the variability across the patients that you are enrolling, is that information available on a blinded basis?.

Right. What we've seen in terms of blinded data at this stage is very much in line with what we were expecting. I don't think we can really say much more to that point at this stage..

Right. Okay. Thanks for taking my questions..

Our next question comes from Chris Howerton of Jefferies..

I just had a couple of questions, I guess on 101 and then 111.

First for 101, what about the enrollment or the crossover rate to the AMPACT trials, has that been in line with your expectation?.

So we've seen a rollover rate from the TACTT to the AMPACT studies of around 80%, slightly higher in the U.S. compared to the European study but on average 80% rollover. And, yes, it is in line with expectations as we've planned the studies, so nothing really to note there of any relevance..

Okay, and will we see any data from the AMPACT trials when the expected top line data from the TACTT trials are readout?.

The AMPACT studies are still going to be blinded and ongoing at that stage. We will have blinded safety data that we are collecting and will also be submitting to the agencies together with the registration dossier for TACTT, but we will not be seeing any efficacy data..

Got you.

And I guess just the last question on the REACH trial, if you could give us any more information in terms of what the expected cost for that trial will be and whether or not your potential grant funding could fully fund that study?.

The REACH trial, as it will be a Phase 2 trial, will have certainly lower costs than the Phase 3 trials. Also this will be a trial conducted in its entirety in the U.S. There will be a number of sites that is also comfortably lower. We can deal with scheduled patients. So the overall budget here will be several million dollars.

Now we have here also quite some synergies that we can provide as we are using the same concentrations as in the other trials. So, for us, the incremental cost will be relatively small.

We consider that this project has a high interest here in the medical and scientific community and we are confident that we will be able to obtain the grant funding from the NIH in the first place, but we are also planning to submit to other funding bodies if needed..

Okay. Thanks for taking the questions..

[Operator Instructions] As there are no further questions at this time, I'd like to hand the call back to the speakers for any additional or closing remarks..

Okay, thank you very much, operator, and thanks to everyone for joining the call today and your interest in Auris Medical. Have a great day and please remember to take care of your ears. Thank you..

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect..