Cindy McGee - Head, Investor Relations and Corporate Communications Thomas Meyer - Chairman and Chief Executive Officer Thomas Jung - Chief Development Officer Andrea Braun - Head of Regulatory and Quality Affairs.

Brett Larson - Leerink Partners LLC Serge Belanger - Needham & Company, LLC.

Good day, and welcome to the Auris’ Third Quarter 2016 Financial Results and Business Update Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Cindy McGee. Please go ahead..

Thank you, operator and thanks to everyone on the call for joining. I am Cindy McGee, Head of Investor Relations and Corporate Communications at Auris Medical. With me are Thomas Meyer, Auris Medical’s Chairman and Chief Executive Officer; Thomas Jung, Chief Development Officer and Andrea Braun, Head of Regulatory and Quality Affairs.

Earlier today, we provided a business update and announced our financial results to the third quarter ended September 30, 2016. The news release is available on our website at aurismedical.com and has been filed with the SEC.

During today’s call, we will be making forward-looking statements within the meaning of the 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 and beliefs and involve significant risks and uncertainties that could cause actual results, developments and business decisions 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 approvals, our intellectual property position and our financial position as well as those described in the Risk Factors section in our Annual Report on Form 20-F 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 view 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'll hand the call over to Thomas..

Thank you, Cindy. Good morning to our listeners in the U.S. and good afternoon to our listeners in Europe. The third quarter and recent weeks have certainly been a very busy and productive period for our company marked by progress in several areas and unfortunately also setback in our tinnitus program as previously announced.

In particular, we have completed and strengthened our management team, advanced our acute hearing loss program and took measures to enhance the probability of success for our second pivotal tinnitus trial.

We have a clear path forward for Auris Medical and we are focused on the efficient execution of our two Phase 3 programs for acute inner ear hearing loss and tinnitus. We are very proud that AM-111 for acute inner ear hearing loss was recently featured in the innovation column of Businessweek magazine.

This column highlighted the unmet needs as a multibillion-dollar market and profiled AM-111 at the top of the chart. The report is consistent with our own market research which estimates $600 million opportunity in the U.S. for this orphan drug treatment.

With our ongoing Phase 3 program we continue to make progress and expect topline results from the HEALOS trial in the third quarter of next year. In our Keyzilen program for acute inner ear tinnitus we are implementing the changes to the TACTT3 protocol that we made based on learnings from TACTT2.

We believe that we have a strong rationale for these changes and that they will enable TACTT3 to demonstrate a true and meaningful therapeutic benefit of Keyzilen against placebo. As a reminder in Phase 2 we saw good therapeutic benefits from Keyzilen in the same patient population that we are treating in Phase 3.

Therefore we have every reason to continue to believe in Keyzilen, its mechanism of action and the therapeutic concept and remain fully committed to bringing the therapeutic to patients. We very much appreciate the continued strong interest and encouragement from the tinnitus community that we have received over the past weeks.

On today's call, Thomas Jung will provide additional details on our two Phase 3 programs and Andrea Braun will summarize our regulatory interactions. Before opening the call to your questions, I will review our financials and provide an update on our management team and outline our upcoming milestones. I will now turn the call over to Thomas..

Thanks Thomas. Today I will provide an overview of our two Phase 3 assets AM-111 and Keyzilen. As Thomas mentioned already in the introduction our team is focused on efficiently executing our clinical programs so that we can deliver new treatment options addressing the unmet medical needs.

AM-111 is now our most advanced program from the date of [indiscernible]. It has the potential to become the first therapeutic indicator specifically for the treatment of acute inner ear hearing loss. For many patients sudden deafness is a very frightening experience.

It may result in chronic hearing loss and tinnitus as well as a significantly reduced quality of life. In many countries and in particularly West, oral corticosteroids are the de facto standard of care, but lack improvement benefits.

There is a clearly thought for [indiscernible] treatments that preserve the cochlear function or [indiscernible] acute damage to the point where the hearing is still [indiscernible]. AM-111 has shown how to protect this efficacy in a randomized placebo controlled Phase 2 trial in patients with severe hearing loss.

Based on these positive results, we have advanced the program to now our Phase 3 trial [indiscernible]. We are enrolling patients with severe to profound sudden deafness who were administered one single dose of AM-111. HEALOS is the first of our two clinical trials and is being conducted in Europe and Asia.

We have enrolled over half of the targets 255 patients and expect to complete enrollment in the first half of 2017. Based on the timing and the three-month followup we expect to announce topline results in the third quarter of next year as per previous guidance.

In addition, our second pivotal trial ASSENT which has a very similar design was initiated this summer and is randomized. Now, moving on to Keyzilen. Typically we outlined our plans to incorporate key findings from the TACTT2 trial and advance to TACTT3 protocol while we are still full blind to the TACTT3 results.

TACTT2 did not [indiscernible] core primary efficacy endpoint. However, active treatment patient with tinnitus following otitis media and those with severe or extreme tinnitus and face swelling demonstrate great improvements as compared to placebo in the tinnitus functional index or TFI.

Therefore we are implementing three key modifications to the protocols. First, the TFI will be elevated from a key secondary endpoint to now to the primary endpoint. Second, the [indiscernible] of the patient with the tinnitus following otitis media or severe or extreme tinnitus will be included in confirmatory testing.

And third, 60 additional patients will be recruited in each of the Stratum A and B. We consider these changes appropriate and meaningful for the project. The TFI, the value dated and diner made sure the opportunities [indiscernible] it was already selected as the primary endpoint for the TACTT2 trial.

By elevating the TFI we have alignment between the two sets. In addition, we are incorporating the testing of two relevant subgroups [indiscernible] clinically meaningful sign and you saw TACTT2.

Lastly the addition of patients will enhance the trial's mystical [ph] power, therefore it's treatment effects measured by the [indiscernible] shows similar magnitude as in TACTT2 for these subgroups. The study would be well powered to demonstrate the positive and statistically significant outcome for TACTT3.

With these modifications and the extension of TACTT3 we believe our probability of success is increased and we're looking forward to topline results in early 2018. I will now turn the call over to Andrea for an update on our regulatory activities..

Thank you, Thomas. As our AM-111 program is advancing in Phase 3 clinical trials we have started working on the preparations for the solution process. Thanks to the Orphan Drug Designation we have already benefited from frequent consultations with regulatory agencies during development.

The sampled pure tone and speech audiometry outcome measures for acute hearing loss are objective and the definition of clinically meaningful results are well accepted. Since our TACTT3 announcement a few weeks ago, we have also made significant progress on the regulatory front with regard to Keyzilen.

We have submitted the TACTT3 protocol and mentioned to regulatory agencies and ethics committees in Europe and continue to expect approvals around the end of this year. In addition, the European Medicine Agency has signed the [indiscernible] for future Keyzilen submission which would follow the [indiscernible] care.

For the year end we have submitted our operation customers for our TACTT3 meeting with the FDA whereas the outcomes from TACTT2, the plant changes to the TACTT3 protocol and the regulatory path shall be discussed. We expect the agency's written response in early December.

As a reminder, Keyzilen recently received Fast Track Designation from FDA highlighting the seriousness of the condition and important unmet medical need. In addition, we view [indiscernible] strong safety profile as a [indiscernible] factor in the risks-benefits equation.

As we move forward we will continue our constructive dialogue with the FDA and clock consultation is very important, especially in a new therapeutic indication such as Keyzilen. I will now turn back the call to Thomas..

Thank you, Andrea. Before I read you our financial results for the first nine months of 2016 would like to note that the financial statements are presented in Swiss francs as always.

Our research and development expenses decreased from CHF 20.9 million in the nine months ended September 30, 2015 to CHF 9 million in the nine months ended September 30, 2015 to CHF 19.8 million in the nine months ended September 30, 2016.

The completion of enrollment in TACTT2 and AM-111 was partially offset by higher AM-111 expenses due to the initiation of ASSENT. Employee expenses were higher in the three months ended September 30, 2016 and in the same period of 2015 due to an increased headcount and higher compensation expenses.

General and administrative expenses increased from CHF 3.2 million in the nine months ended September 30, 2015 to 4.1 million in the nine months ended September 30, 2016. Lower [indiscernible] costs were offset by higher employee expenses.

The net loss for the third quarter of 2016 was CHF 7.9 million or CHF 0.23 per share compared to CHF 5.2 million or CHF 0.51 per share for the third quarter of 2015.

The reported net loss for the first nine months of 2016 was CHF 25.2 million compared with CHF 24.2 million in the same period of 2015 corresponding to a net loss per share of CHF 0.73 versus CHF 0.76.

The net loss for the nine months ended September 30, 2016 includes interest expense of CHF 0.4 million and the net unrealized foreign currency exchange loss of CHF 1.2 million. This compares to a loss of CHF 0.1 million for interest expense and net unrealized foreign currency exchange in the same period of the previous year.

The greater loss in 2016 is mainly due to the interest expense payable under the Hercules loan agreement and the depreciation of the US dollar against the Swiss franc. Our cash and cash equivalent as of September 30, 2016 were CHF 37.5 million.

We continue to expect that our operating expenses for the full year 2016 will be in the range of CHF 33 million to CHF 38 million as guided earlier this year. Based on the extension of the tax retrial we now believe that our current cash position will enable us to finance operations until fall 2017.

Before opening the call to your questions, I would like to provide an update on our management team and review our upcoming milestones. I am pleased to announce that we have appointed Hernan Levett as Chief Financial Officer. Hernan will join us in early January.

He is currently Head of Group Controlling at Acino Pharma in Switzerland and previously served as VP of Finance and Administration Europe at InterMune International. In addition he spent 10 years at Novartis most recently as Chief Financial Officer of Novartis, Chile.

Hernan brings outstanding experience to our team and we are pleased to move ahead on mission together with him.

In closing, we look forward to our upcoming milestones which include feedback from the FDA on our Keyzilen program in December, resumption of enrollments of the TACTT3 trial in early 2017, completion of enrollments of the HEALOS trial in the first half of 2017, topline results from HEALOS in the third quarter 2017 and topline results from TACTT3 in early 2018.

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

Thank you. [Operator Instructions] We will now take our first question from Joseph Schwartz from Leerink Partners. Please go ahead..

Hello everyone, this is Brett Larson dialing in for Joe this morning. Thank you for the update, very helpful, I much appreciate it.

My first question is, I want to know if you measured a robust set of secondary exploratory endpoints in TACTT2 and curious if there is any additional analyses on those secondary exploratory endpoints you can share with us today or have been incorporated into the regulatory filings for their outstanding?.

Well, good morning and thank you very much for these questions.

So if I understand correctly, you would like to have some additional flavor here on the sub population analysis, is that correct?.

Yes or if you think that there is additional drivers of sort of understanding and then effecting the design going forward it is a robust set of measurements I'm looking forward to seeing how those all fall out?.

Yes, well, I think going forward here one important point is that the Tinnitus Functional Index the TFI that we are using as an ultimate primary efficacy endpoint it actually performed quite well in TACTT2. So we saw there the TFI showed good responsiveness to change.

We found also in the two sub populations of severe extreme tinnitus or otitis media that we saw good separation all from all the effects. Now the TFI will be continued here exactly in the same way as we had used it before. So there is no change to that.

I mean the only thing that is changing is really that we are elevating it to alternate primary endpoint. The other design elements, I mean we are not really changing a lot here. I mean it is the stats where we are using the Hartford [ph] procedure that was described already during the previous call.

So here the Hartford procedure controls for also inflation and it allows for testing several populations or groups without pre-specified hierarchy. So this will provide us with flexibility regarding the testing outcomes.

One point that needs to be mentioned here is that, the frequency of daily ratings of tinnitus loudness is reviewed here in TACTT3, so we expect here to have less of an impact as you may remember we have in TACTT2 an impact here from these very frequent ratings, so this is being reviewed, this is being mitigated in our TACTT3 trial.

I hope this answers your question or maybe you have some additional question related to this..

No, no, that is helpful, I appreciate that and my other question is, I know I can't expect to sort of take the odds of outcomes from upcoming regulatory meetings, but I'm curious you know, having submitted your briefing documents the FDA at this point what sort of range of possible outcomes the company is planning for at this point and ultimately whether you do see a scenario if it could transpire with a modified TACTT3 trial could be sufficient for a final trial before the filing for FDA approval?.

Okay, Andrea will take this one..

Thank you very much for the question. I mean as you know the regulatory authorities there can be different outcomes on the other hand we are confident that our [indiscernible] we submitted is a good profile and we will await the actual feedback from FDA when we get to it..

Okay, great. Thank you very much for taking my question..

We will now take our next question from Serge Belanger from Needham & Company. Please go ahead..

Hi, good morning. Just a couple of questions.

Thomas can you remind us if you looked at the change in TFI in your Phase 2 studies and if you were able to see the same kind of effects on the two subgroups, tinnitus and otitis media and the severe extreme tinnitus that you saw in TACTT2?.

Good morning, Serge. Well, as you may remember the TFI at the time of Phase 2 trials did not exist yet in its final validated version so this is why we had not used it in that Phase. However when we look at the THI-12 that we used and also the tinnitus loudness by the way, we clearly saw in otitis media here also good effects.

So this is very much consistent with the TACTT2 outcome. So we have here aligned and actually in both Phase 2 trials and we also saw in our Phase 2 trials that severity, higher severity of baseline was correlated here with the outcomes.

So TACTT2 sub population outcomes here are in line with previous findings not necessarily with the precise magnitude, but with the direction and the type of response..

Okay.

And then again just to, I know it is difficult to gauge what the outcome of the upcoming FDA meeting will be, but is one possibility that they will comment on some of these proposed protocol amendments to TACTT3 and they could be modified between now and I guess early 17 when you plan on recruiting additional patients?.

Well, we certainly are looking forward all hearing or receiving also some feedback on the TACTT3 protocol and the plan changes. No, of course if there is any material suggestion or request we will carefully evaluate that and see whether this can be incorporated in what form.

I mean we still have of course the possibility if needed to change the protocol or incorporate more modification in the statistical analysis plan. So at this point it is a little bit difficult to guess already what we will hear back from the FDA.

I think we have relatively straightforward dossier that was submitted and so we believe it's well thought through and it is nothing that is exotic. So we expect here to receive relatively straightforward responses. However, let's not forget that there may also be some matters that will be for review for latter review as a function of actual outcomes.

So that's I think a realistic consideration here when talking about outcome scenarios..

Okay great, thank you for the update..

[Operator Instructions] We will now take our next question from Liisa Bayko from JMP Securities. Please go ahead..

Hi good morning. This is John on for Liisa. Thanks for taking the questions, I have a few.

Assuming that FDA and EMA accept the protocol what are the steps do you need on your end before restarting enrollment?.

Well, good morning.

Maybe Andrea, do you want to take this one, so with regards to EMA?.

Yes, Again as we said we expect a feedback from EMA and 26:15 in December and then we would want to swiftly move forward with the clinical trial restart.

A – Thomas Meyer Thomas, anything to add?.

Actually, not much. We are currently in discussions with the investigators from the TACTT3 trial and we discussed the way forwards, how we basically continue enrollment in January once we have a couple of regulatory approval.

So we will meet with the investigators here in December on a face-to-face basis, will go through some of the America in detail and that all makes us actually quite confident that we can start recruitment in January in that we can keep the timelines as we communicate it..

Yes, and I can just add that the vast majority of investigators they are happy to continue so we have seen very good supports here for the planned measures..

Got it and you mentioned before the frequency of the daily readings will be reduced.

For the patient's already enrolled, have they been on the same protocol as in TACTT2 and will they now be having reduced frequency of readings or how should we think about the patients that are already in the trial?.

Well, the trial as it is, I mean we have, at the last patient, the last visit. So there will be no changes here retroactively. So we went into the TACTT3 trial with exactly the same frequency as in TACTT2 so that was daily, now these patients that will be added here.

They will have the reduced number of ratings, so there is no change to the calculation of endpoints. So we're using exactly the same data around the visits. So this is totally comparable. However, there is a net reduction in ratings in between study visits..

Got it and then can you walk me through one more time how you are defining success in TACTT3 I believe you need significance on either one of the co-primaries now, but would it also be considered success if either stratum A or stratum B here or do you have to be successful on one of the endpoints in both of the stratums? Thanks..

Yes I can get this question. Certainly, so the procedure we have introduced during amendment actually the [indiscernible] procedure, Tom has mentioned already a few minutes ago, actually allows for multiple happening of a not pre-certified items.

So we will look at the entire patient population and then the two major subgroups otitis media and the patients who have severe tinnitus.

We have then introduced and then as you know we have basically elevated the TFI to automate the primary endpoint which actually means that either tinnitus loudness or the tinnitus functional index either of these two should make it and then the study can be considered.

The criteria for success that went into the statistical considerations are actually devised from data, two from the data -- and so with regards to the effect size we saw there for the - or the TFI and for the TOQ also derived from the Phase 2 study.

So that is all based on previous experience from type 2 and from Phase 2 and that all over makes us very confident that amendment of these changes ultimately help us for –give us a higher chance of success of having a positive study..

And just to add regarding the strata. So we will have separate testing so stratum A will be tested on its own and stratum B will be tested on its own. So these two are independent..

Got it, terrific. Thanks for the update and for taking the questions. I appreciate it..

As there are no further questions in the queue, that would conclude today's question-and-answer session. I would now like to turn your call back to your host for any additional or closing remarks..

Okay, thank you very much operator and thanks to everyone for joining the call today and your continued interest in Auris Medical. Have a great day and you know as always take care of your ears. Thanks..