Cindy McGee - Head Investor Relations and Corporate Communications Thomas Meyer - Chief Executive Officer Hernan Levett - Chief Financial Officer.

Sa'ar Yaniv - ROTH Capital Partners, LLC.

Good day and welcome to Auris Medical first quarter 2017 financial results and business update conference call. 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’m Cindy McGee, Head Investor Relations and Corporate Communications at Auris Medical. With me are Thomas Meyer, Auris Medical’s Chairman and Chief Executive Officer, and Hernan Levett, Chief Financial Officer.

Earlier today, we provided a business update and announced our financial results for the first quarter 2017. The news release is available on our website at aurismedical.com and has been filed with the SEC. In addition, we have posted the slides for this call in the Investors section of our website under Events.

During today’s call, we will be making forward-looking statements within the meaning 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 risks, 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 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 the call over to Thomas..

hearing loss, tinnitus and vertigo. In February, AM-111, our cell penetrating peptide for the treatment of acute inner ear hearing loss, received fast track designation from the FDA. This highlights the seriousness of the condition as well as the unmet medical need.

With AM-111, we're making great progress and expect to complete enrollment of the Phase III HEALOS trial in the upcoming weeks. For Keyzilen, our small molecule NMDA receptor antagonist for the treatment of acute inner ear tinnitus, we continued to enroll the Phase III TACTT3 trial.

In addition, we recently announced results from the AMPACT open label extension studies. They confirm the long-term safety of Keyzilen, provide further support for our therapeutic concept of treating tinnitus early and suggest benefits of repeated treatment.

We are pleased and feel very encouraged by these positive outcomes, which give us additional confidence in the therapeutic potential of Keyzilen. With AM-125 for vertigo, we are busy preparing a second Phase I trial to further evaluate the safety, tolerability and pharmacokinetics of intranasal betahistine.

Data show that intranasal administration of betahistine substantially increases plasma levels of betahistine, a key element of improving the efficacy profile of this compound. Let me now provide you with a more detailed update on our three clinical-stage development programs. As you know, AM-111 is our most advanced program from a readout perspective.

This compound has the potential to become the first therapeutic, indicated specifically for the treatment of acute inner ear hearing loss. We consider AM-111 to offer several interesting product features.

It is administered as a single-dose treatment, provides for rapid and substantial recovery of hearing and helps to eliminate the tinnitus that frequently accompanies acute hearing loss. In a randomized placebo-controlled Phase II trial in patients with severe to profound hearing loss, AM-111 showed compelling otoprotective effects.

Currently, two Phase III trials are ongoing. We’re enrolling patients again with severe to profound deafness, who receive one single dose of AM-111 or placebo. HEALOS is the first of two pivotal trials and is being conducted in Europe and Asia.

We are on track to announce the completion of enrollment into HEALOS this quarter, which is consistent with our previous guidance. Given the three-month follow-up period, topline data are expected to become available in the fall of this year. In addition, we continue to ramp up our second pivotal trial ASSENT, which has a very similar design.

ASSENT is being conducted in the US, Canada and South Korea and expected to complete in the second half of 2018. Lastly, we recently produced videos featuring patients and physicians to discuss their experiences with sudden hearing loss and the importance of early treatment. The videos are available for viewing on our website.

Now, turning to Keyzilen, enrollment into the extended TACTT3 trial is progressing. We expect to complete enrollment in the third quarter of this year and announce topline results in early 2018 as per previous guidance.

As a reminder, we plan to enroll 60 additional patients in each of Stratum A, which includes patients with tinnitus onset within three months, and Stratum B, which includes patients with tinnitus onset within three to six months.

Furthermore, we have recently completed our two open label extension studies – AMPACT 1 and 2 – which evaluated the long-term safety of Keyzilen. The studies were conducted at the request of the FDA to generate safety data from chronic intermittent use of Keyzilen for up to 12 months.

More than 700 patients from both TACTT2 and TACTT3 participated in these extension studies, in which participants could receive up to three additional treatment cycles with Keyzilen. In total, AMPACT 1 and 2 provide safety and local tolerability data from about 4,500 intratympanic drug administrations.

Both studies confirm the positive safety profile of Keyzilen. The primary safety end point was the incidence of clinically relevant hearing deterioration five weeks after the start of the treatment cycle, in line with the results from previous trials with Keyzilen. Such incidence was low, 6% and 8% respectively, and considered unrelated to treatment.

Overall, during the course of two studies, the patient hearing threshold was essentially stable. In both AMPACT 1 and 2, the vast majority of adverse events that were considered related to the study drug or treatment procedure were rated as either mild or moderate in intensity.

Confirming previous data, 93% and 97% respectively of tympanic membranes were already closed at the time of the first follow-up visit. AMPACT 1 and 2 also included some exploratory efficacy analysis. By definitions, all patients entering into AMPACT were already in the post-acute tinnitus stage.

Previous preclinical and clinical data showed that there is very little to no spontaneous improvement to be expected once tinnitus is no longer in the acute stage. In AMPACT 2, we found that on average, the tinnitus impact and severity improved and that the rate of improvement the older the tinnitus was at the time of treatment initiation.

For Stratum A patients, for example, the tinnitus functional index, or TFI, decreased on average by 7.6 points to the last follow-up visit. For Stratum B patients, the TFI decreased on average by 3.5 points when enrolled in TACTT3 between three and six months from onset and by 2.5 points when enrolled between 6 and 12 months from onset.

Now, we have further confirmation with AMPACT for Keyzilen’s therapeutic time window and support for our therapeutic approach of treating tinnitus during the acute stage. From AMPACT 1, which enrolled patients at the same tinnitus stage as those in Stratum A of AMPACT 2, we found in similar decrease in the TFI of about 8 points.

Interestingly, the more treatment cycles the study participants receive, the larger the reduction in the TFI was. With one cycle, the mean reduction was 5.5 points; with two cycles, 8.1 points; and with three cycles, 14.8 points. The difference between three cycles and one cycle reached statistical significance.

Hence it appears that if the treatment is initiated during the early tinnitus stage, more treatment cycles could provide more benefit. Similar results….

Ladies and gentlemen, please standby as we’re expecting a momentary interruption in today's conference. Thank you for your patience and please continue to hold. Please go ahead..

Okay. So, similar results as with the TFI were achieved on subjective tinnitus loudness and tinnitus annoyance based on items two and three of the TFI. This is important since we saw in TACTT2 that a high frequency of data collection on loudness and annoyance every day at that time led to patient fatigue and increased focus on the symptoms.

In AMPACT, data were collected only during study visits. Looking at combined data from TACTT2 and AMPACT 1, it is great to see that 53% of patients experienced a decrease in the subjective severity of the tinnitus by at least one great, for example, from severe down to moderate or mild.

Among those who receive three cycles in AMPACT, this was the case for 69% of patients. Overall the TFI score decreased by 18 points or 34% from TACTT baseline to the last follow-up visit and 22 points or 43% for those completing three cycles.

In summary, we are pleased that the AMPACT results confirm the long-term safety of Keyzilen and that the exploratory efficacy analysis further support early treatment and suggests potential benefits of repeating treatment cycles.

Moving beyond our Phase III assets, we recently announced the addition of AM-125 intranasal betahistine for the treatment of vertigo to our pipeline. Since then, we have already made quite a lot of progress. We have set up a dedicated project team and enlisted support from outside experts, including the establishment of an advisory board.

In addition, we have performed pharmacokinetic modeling studies that delivered further insight into the superior bioavailability provided by the intranasal administration route. We will discuss the path forward with regulatory agencies in Europe and the US within the next few months.

A repeated dose Phase I study is expected to start in the fourth quarter of this year. With that, I will now turn the call over to Hernan Levett, our Chief Financial Officer, for a financial update..

Thank you, Thomas. Before reviewing our financial results for the first quarter of 2017, I would like to note that the financial statements are presented in Swiss francs. The net loss for the first quarter of 2017 was CHF 8.4 million or CHF 0.22 per share compared to CHF 8.9 million or CHF 0.26 per share for the first quarter of 2016.

Our research and development expenses decreased from CHF 6.1 million in the first quarter 2016 to CHF 6 million in the first quarter of 2017. The reduction in research and development expenses was mainly driven by the completion of TACTT2 and the AMPACT studies, partially offset by our Phase III AM-111 trials.

General and administrative expenses increased from CHF 1.2 million in the first quarter of 2016 to CHF 1.4 million in the first quarter of 2017. The increase was mainly due to higher employee expense and a one-time effect related to capital tax.

In addition to our operating expenses, the net loss for the first quarter of 2017 includes interest expense for CHF 400,000 under the loan agreement with Hercules, a net1 foreign currency exchange loss of CHF 300,000, a reevaluation gained from our derivative financial instruments of CHF 200,000 – this is related to the decrease in value of the warnings issued in connection with the Hercules loan and the February 2017 public offering – and transaction cost of CHF 500,000 related to the public offering.

Going forward, further evaluation gain or losses from the derivative financial instruments may have to be recorded due to fluctuations in the value of the outstanding warrants. Under International Financial Reporting Standards, the warrants are recognized as liabilities and we therefore have to determine their value regularly.

The magnitude and direction of such fluctuations will depend on the share price, share price volatility and the level of risk interest rate. Our cash and cash equivalents as of March 31, 2017 were CHF 33.8 million.

And as previously announced, we expect our operating expenses for the full year of 2017 to be in the range of CHF 28 million to CHF 32 million. And our cash runway will extend into the first quarter of 2018. With that, I would like to turn the call back to Thomas..

Thank you, Hernan. As we move towards key development milestones, we look forward to providing an overview and update on our pipeline at a key opinion leader event scheduled for June 16 in New York City. The event will feature a keynote presentation by Dr.

Elias Michaelides who serves as the Associate Professor of Surgery, Otolaryngology and Director of the Hearing and Balance Program at Yale School of Medicine. Cindy will communicate the event details and we look forward to your participation. In addition to the KOL meeting, we will continue the productive year with the following upcoming events.

This month, we are planning to present at the 18th Annual BioEquity Europe Conference in Paris and the World Tinnitus Congress and the International Tinnitus Seminar in Warsaw. We will also have a booth and host Scientific Symposium at the 21st IFOS ENT World Congress next month in Paris.

The symposium will focus on recent advances in the treatment of acute hearing loss and features several experts in the field of hearing loss research. We also look forward to the following milestones for our development stage programs. In the upcoming weeks, we expect to complete enrollment in the Phase III AM-111 HEALOS trial.

In the third quarter, we expect to complete enrollment of the Phase III Keyzilen TACTT3 trial. This fall, we expect to announce top line results for HEALOS. And the fourth quarter, we plan to initiate a second Phase I trial with AM-125. And early next year, we expect to announce results from TACTT3 and the AM-125 Phase I trial.

In summary, we are now covering all of the big three neurotology disorders as we aim to continue leading the way in this category of significant medical need. We are progressing towards important data readouts and look forward to delivering meaningful results for patients. Thank you for joining us today.

I look forward to seeing you all at our KOL event next month. And with this, I would now like to turn the call back to the operator, who will open the line for questions..

Thank you. [Operator Instructions] We shall take our first question from Sa'ar Yaniv from ROTH Capital. Your line is open. Please go ahead..

Hi. Good afternoon, guys. Thank you so much for taking my call. Just had a couple of quick questions. I wanted to first know if you have any anecdotes from the HEALOS on patients.

Hello?.

Hi, Sa'ar. Thank you.

Anecdotal, what kind?.

Of how the patients are responding to the drugs – to the treatment..

So, I think here in this setting, with acute hearing loss, on average, since this really early in the acute stage, most patients do recover, so there is already some natural recovery at work. And therefore, while this is placebo-controlled, double-blinded, we do not know what is going on.

But as per previous clinical trial experiences, the expectation clearly is here that we are seeing, on average, a significant improvement. In the end, well, once it will be unblinded, we will see how treatment effects will separate the two groups..

Okay. Okay, great. Thanks. What about the TACTT3 study. It seems like you were – you had two statements. I think in the presentation, you said that you are enrolling, but on your oral remarks, you mentioned that you will be enrolling. So, I just wanted to know what the status of the additional patients.

Is that actually ongoing or have you started enrolling patients or will that be sometime in the near future?.

Yes. We have been enrolling patients into the extend TACTT3 trial since the second half of January. And as per previous guidance, we expect to conclude, complete enrollment in the summer. .

Okay.

Will you make an announcement when you complete the enrollment?.

Yes. We typically do this. So, we will do this for HEALOS and we’ll also do this for TACTT3..

Okay. When looking at AMPACT, the AMPACT studies, you mentioned that the eardrums closed after about five to seven days, I believe.

Has there been any patients who had eardrums didn’t close for any particular reason? And if so, why?.

Well, among the more than 700 patients who participated in AMPACT 1 or AMPACT 2, there was one patient who had an open eardrum or an opening in the eardrum at the end of study participation. However, that single case was a special one because there was a pre-existing issue with the eardrum.

So, we can say eardrum closure rates here, they are perfectly in line what we have seen before. The eardrum closes very rapidly and actually in all the patients..

Okay. Okay, great.

And then finally, just a quick question about your development strategy, what do you see in AM-102 when you’re looking at the preclinical data compared with Keyzilen?.

In AM-102, we are developing a non-NMDA receptor antagonist, so also a small molecule. And based on what we have seen now so far from quite many preclinical studies, in vivo studies, AM-102 seems to be more potent than AM-101. So, we are pretty confident about this molecule.

This is something that was started many years ago and has involved quite a team of scientists from various institutions. So, we very much look forward to this. As you know, we are collaborating with King’s College in London here on the improvement of certain properties, in particular also the solubility and selectivity further to optimize this.

We expect to have here some lead candidate or candidates by the end of the year..

So, what do you mean when you say that it’s more potent? And also, will you have any kind of data for 102 any time in the future?.

Well, more potent, that means it's not, let’s say, just marginally more potent, but it’s clearly more potent. Now, of course, in the end, we will see this in clinical trials.

If all goes well, once we have dates [ph], then the lead candidate and the lead molecule will take us through a standard battery of safety talks, preclinical studies and then take it into the clinic. So, we believe this is a second-generation tinnitus treatment. We believe AM-101 Keyzilen is already a very promising compound.

With AM-102, we think that we can definitely achieve substantial additional strategic benefit. .

Okay, great.

Will you have any data on that soon? Any preclinical data?.

Well, we will present the AM-102 program as soon as we will have fixed our lead compound and fully secured the IP. We already have started to generate some IP, but this will be further completed and then will be the time to provide more insight into this..

Okay. Okay, great. Thanks so much for taking my questions. .

Okay. You’re welcome. Thanks..

[Operator Instructions]. As there are no further questions in the queue, that will conclude today's question-and-answer session. I would now like to turn the call back over to Thomas Meyer for any additional or closing remark..

Thank you, operator. And thanks to everyone for joining the call today. My apologies that we had an interruption. And thanks for your continued interest in Auris Medical. Have a great day. And as is always, 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..