Hernan Levett - Chief Financial Officer Thomas Meyer - Chairman and Chief Executive Officer.

James Malloy - AGP Briana Warschun - Edison Group.

Good morning, and welcome to Auris Medical's Conference Call. On today's call, Thomas Meyer, Auris Medical's Chairman and Chief Executive Officer and Hernan Levett, Auris Medical's Chief Financial Officer will present the company's financial results for the Third Quarter 2018 and provide a Business Update.

The accompanying slides can be found on our website in the Investors section. Earlier today Auris Medical issued a news release of the third quarter 2018 results as well as a business update. The release is available on the company's website aurismedical.com and 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 filing 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'll hand the call over to Thomas Meyer..

Thank you, operator. Good morning to our U.S. listeners and good afternoon to our listeners in Europe. Welcome to our third quarter earnings and business update call. I would like to start the call with a brief overview of recent key developments at Auris Medical, which I will go into more detail on the following slides.

First, we have continued to make great progress with our intranasal betahistine program and recently reached a major milestone for the second Phase 1 clinical trial showed exciting results.

These positive outcomes include the confirmation of the superior bioavailability provided by the intranasal delivery route over the currently used oral administration route, which is the cornerstone of the program. In addition, the trial confirmed that intranasal betahistine is safe and well tolerated even when taken in multiple doses.

We look forward to advancing the development of this program with the initiation of our planned proof-of-concept studies in acute vertigo and olanzapine-induced weight gain early next year. Another highlight has been the initiation of a structured partnering process for our late stage program with AM-111 in acute inner hearing loss.

Following feedback from both the FDA and the European Medicines Agency on the planned Phase 3 trial, we have a comprehensive dossier to show to interested parties. I'm also pleased to say that going forward AM-111 will be branded as Sonsuvi for which we have received conditional approval from both the FDA and EMA.

Moving to Sli1de 3 and 4, let me begin the program update with a brief review of the results we recently announced from the second Phase 1 trial in the intranasal betahistine program. The results showed a significantly higher bioavailability of betahistine when delivered through the nose rather than taken orally.

We are very excited about this and consider it quite impressive but the same amount of betahistine results in around 30 times higher concentrations of betahistine in human blood plasma when administered with a nasal spray rather than being swallowed in form of a tablet.

Orally the drug gets metabolized very quickly allowing for only low quantities to reach the bloodstream and act on its target the histamine receptors in the brain or in the inner ear. These data shown nicely how intranasal betahistine effectively addresses and overcomes betahistine's principal limitation.

Importantly, the study also demonstrated suitability, safety, and good tolerability of repeated dosing of intranasal betahistine. Based on local tolerability, independent data and Safety Monitoring Board have set the maximum tolerated dose for repeated dosing at 40 mg.

The trial data as well as data from a recent one month's toxicology study in dogs as well as other sources provide a complete safety package that supports the next development step which is the clinical assessment of intranasal betahistine over four weeks.

On to Slide 5 and Slide 6 with project AM-125 we are progressing well towards initiating a Phase 2 clinical trial called traverse in acute vertigo. The TRAVERS trial will enroll 138 patients suffering from acute vertigo following surgical removal of a vestibular schwannoma.

This is a slow growing tumor growing behind the inner ear which is also known as acoustic neuroma. With certain types of this tumor the surgery will result in immediate and complete loss of vestibular function on the operated site as the vestibular nerve gets cut.

As a result, patients are unable to walk or stand and they have symptoms of acute vertigo, postural instability, nausea or vomiting. In the weeks and months thereafter, they usually recover at least part of their vestibular function through central vestibular compensation. This is a very good model to assess a treatment for vertigo such as AM-125.

The trigger for the vertigo is well known and proper baseline measures can be established. In addition, these are scheduled patients facilitating planning and trial conduct.

The primary objective with the treatment is to improve and accelerate vestibular recovery so that patients are back in control of their balance sooner and to improve the quality of life.

I'm pleased to announce that in a recent scientific advice procedure the EMA endorsed the use of the vestibular schwannoma resection model for demonstrating proof-of-concept with intranasal betahistine in the treatment of acute vertigo. The TRAVERS trial will be conducted in several European countries, in potentially Canada, involving 12 to 15 sites.

The site selection process is ongoing and we recently selected CRO to help us with the conduct of this study. We are expected to start recruitment during the first quarter of 2019. On to Slide 7, the TRAVERS trial will have two parts.

In Part A five ascending doses of AM-125 or placebo administered three times daily over a total four weeks will be tested in a total of 50 patients. In addition oral betahistine 48 mg will be tested in 16 patients under open label conditions for reference.

The primary efficacy endpoints will be the time standing on foam and the tandem Romberg test which is pictured on the current slide. At the end of Part A efficacy results will be assessed in an interim analysis to determine dose-response curve and we will select two assess doses and reassess the sample size and powering assumption for Part B.

For the second part of the trial we estimate that 72 patients will be required. Following this update on the AM-125 program I will move on to an update on the AM-201 program on Slide 9.

In parallel with Project AM-125 we have advanced preparations for a pharmacokinetic/pharmacodynamic trial with AM-201 in the indication of antipsychotic -induced weight gain. This trial will be conducted in European country and enroll 50 healthy volunteers who will receive either AM-201 or placebo concomitantly with olanzapine over four weeks.

The recruitment start is also planned for the first quarter of next year. In this trial the primary objective will be to reduce the weight gain associated with the treatment of olanzapine. It is well-known that histamine plays a key role in the brain's regulation of food intake and energy expenditure.

It is also well-known that olanzapine acts as a potent antagonist at the H1 histamine receptor. Betahistine counteracts olanzapine's effect at this receptor through competitive inhibition. The secondary objective for treatment with betahistine will be the reduction in daytime sleepiness.

The H1 histamine neuron receptor plays also a key role in regulating wakefulness. You may know that antihistamine drugs which cross the blood-brain barrier tend to make individuals drowsy. Betahistine has the opposite effect. Olanzapine as an H1 receptor antagonist is also known to provoke sleepiness.

Last but not least, the trial will also test the potential interaction between olanzapine and betahistine. Overall, we expect the trial to provide proof-of-concept for AM-201’s ability to reduce antipsychotic induced weight gain and somnolence and important information for the design of further clinical development.

On Slide 10 the trial will enroll normal weight, healthy male and female volunteers, olanzapine doses will be titrated up during the first week, and then maintained over the following three weeks. Concomitant with olanzapine study participants will receive either intranasal betahistine or placebo.

As in the TRAVERS trial, betahistine doses will be escalated in five steps. Subjects who do not tolerate olanzapine or who experience a clinically relevant increase in weight gain or hypoglycemia will be discontinued during the first week they will be replaced by new participants. If all goes well we expect the trial to read out in summer 2019.

Moving on to Slide 11, with the AM-201 program it is important to note that we are not starting from scratch. There is already ample evidence from preclinical and clinical studies that betahistine does reduce weight gain induced by olanzapine. A recent publication has now provided further evidence for this.

Smith and colleagues reported the results from a study where oral betahistine was administered at 36 mg to 48 mg per day or placebo over 12 weeks, total of 51 adolescents and adults undergoing antipsychotic drug treatment.

They found that in a subgroup of patients being treated with olanzapine or clozapine, another antipsychotic drug, which comprised 26 subjects betahistine was significantly better than placebo in preventing increases in weight body mass index and waist circumference. On average there was 3.1 kg less weight gain than in placebo treated patients.

Also the study was smaller in size. These results are very encouraging especially when considering that intranasal betahistine provides for significantly higher plasma concentrations than oral betahistine. With that, I have concluded the update on AM-201 and I will move to Slide 12 and further to Slide 13 for an update on the AM-111 program.

As a reminder, we are developing this intracellular peptide for the treatment of acute sensorineural hearing loss. We received orphan drug designation for AM-111 in the U.S. and in Europe and also obtained Fast Track designation from the FDA. As mentioned earlier, AM-111 will be branded as Sonsuvi.

We believe that this name fits well with the product's therapeutic aim, to enable patients who suffered from acute hearing loss to hear sound again. The brand name has been endorsed conditional by both the FDA and EMA subject to final review at the time of an NDA filing. The trademark has already been registered in major markets.

The proprietary name review follows a type C meeting with the FDA to discuss the development and regulatory path forward with AM-111. In a written response the FDA endorsed the proposed choice of primary and secondary efficacy endpoints, the safety endpoints, as well as the planned sample size and statistical methodology.

In addition, the FDA provided important guidance on the regulatory path forward. We have previously obtained scientific advice from the EMA, which included endorsement of the proposed design for a single pivotal trial with AM-111 0.4 mg/mL in patients suffering from acute profound hearing loss.

Now on Slide 14, as part of our refocusing of development activities around the intranasal betahistine programs we are seeking to partner or tap other sources of non-dilutive funding for our late stage development programmes.

In this context, we recently mandated JSB Partners, an international transaction advisory firm, to identify potential partners for the Sonsuvi program and to provide some more support for partnering discussions and negotiations.

We look forward to going through a structured partnering process that will allow us to realise Sonsuvi’s full potential as first in class treatment for acute hearing loss. Now to Slide 16 and I hand the call over to Hernan Levett..

Thank you, Thomas. The company’s net loss decreased from a CHF 6 million or CHF 1.36 per share, in the third quarter of 2017 to CHF 3.0 million, or CHF 0.14 per share in the third quarter of 2018. Our research and development expenses decreased from CHF 4.2 million in the third quarter of 2017 to CHF 1.7 million in the third quarter of 2018.

The reduction in research and development expenses was mainly driven by the completion of the several Keyzilen and AM-111 trials, lower employee related expenses, and lower expenses related to drug manufacturing and regulatory affair activities.

General and administrative expenses decreased also from CHF 1.3 million in the third quarter of 2017 to CHF 1.2 million in the third quarter 2018. Over the past few quarters we have managed to reduce the level of operating expenses significantly and aligned it with our strategy of focusing on our intranasal betahistine projects.

We expect that our operating expenses in 2018 will be in the range of CHF 10 million to CHF 12.9 million. Our cash and cash equivalent at the end of the third quarter of 2018 were CHF 5.3 million.

In addition to our cash position at the end of the third quarter of 2018 the exercise of warrants from the July 2018 offering as well as the sale of shares under the equity line with Lincoln Park Capital has further increased the company’s cash and cash equivalence position by approximately CHF 2.7 million.

We believe that the addition of these proceed to our existing cash position will enable the funding of operations into the second quarter of 2019. With that, I would like to now turn the call back to Thomas to conclude our presentation and open the line for questions..

Thank you Hernan, we are now Slide 18, we have several important milestones ahead of us. For the AM-201program, we expect to receive the FDA’s feedback from the pre-IND shortly. This will allow us to incorporate relevant guidance into the planned pharmacodynamic/ pharmacokinetic trial.

Before the end of the year, we also plan to submit our request for approval of the two proof-of-concept trials which will initiate in the first quarter of next year. We then expect the Phase 1 trial with AM-201 to read out during summer of 2019.

Based on these results as well as additional preclinical data, we plan to file for an IND in the indication of antipsychotic-induced weight gain. During the summer, we also anticipate interim data from the Phase 2 trial in vertigo. In conclusion, we feel that we made great progress with our intranasal betahistine programs.

We are getting close to initiating two proof-of-concept studies notably in two indications where betahistine is already approved and has been widely used as in the case of vertigo where our independent preclinical and clinical data have already demonstrated the compound's effects.

As for Sonsuvi, we look forward to the next steps in the partnering process especially now that we have defined to design for the next pivotal trial which is endorsed by the two key regulatory agencies. Last but not least, we will continue to work on our tinnitus programs.

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] Our first question is from Jim Malloy with AGP. Please proceed with your question..

Hi, guys. Thanks for taking my questions.

I had a question on AM-125 for vertigo, are you guys on the Phase 2a, I think it’s 72 for the Phase 2b was the end, is it what's the add on the Phase 2a and have you guys discussed, disclosed sort of the thinking on the arms for the doses you're going to look at?.

Yes. Hello Jim. So thank you for the question. Well, the Phase 2 trial that we are planning here as you pointed out it has actually two components. One is a Phase 2a and one is a Phase 2b, so the first part will be 10 patients for each dose.

So we will have five doses starting with the low dose and then going up and we will have eight active and two placebos per cohort. We will then analyze these data, define the dose response and while this interim analysis is running well, we will have 16 patients receiving in an open label part oral Betahistine 48 mg.

So that will provide us then also some reference data. And with that, well we will then move into the Phase 2b, that is with two doses that we tested in this first part which is a kind of 2a study.

We will then test those against placebo at a ratio 1:2:1:2:1 and we currently estimate that it will be 72 patients that is 24 for each group, and we will analyze the data by combining the Part A with Part B. Now as part of this interim analysis we will check whether our assumptions are still valid are still correct.

That's the way it is this study is planned..

Thank you very much. And then on AM-111 you retained a group to structure a way to find a program for that.

Could you talk about or has anyone, who has been any folks who sat in the data rooms, signed the MDRs or can you talk a little bit about the thinking on timing and I know partnerships are very hard to put a timing on, but is there a time frame that you're looking for or hoping for?.

Well, we have initiated this process here after having assembled a dose here that clearly maps out the regulatory path forward. So we have, wanted to wait for the FDA feedback. We had the kick off with JSB Partners and now this will be done in a classic structured way with a reach out.

Now clearly we had already some contacts in the past and then also quite recently with a number of parties that have shown interest here in the space in the ear space. Of course it's difficult to forecast here or to plan for any concrete date.

I mean these processes depending on the number of parties that are in there and also on their strategic focus that can go fast or it may take a little bit more time we will see, I mean clearly we look forward here to use in 2019. But at this point it's a little bit premature to already talk about the timelines..

All right, great, thank you. And then final question I guess on 201 for mental health supportive care. You say in Phase 1 data anticipated third quarter 2019.

How soon following that would you anticipate potentially being able to start Phase 2 and then what's the thinking on the timeline for the Phase 2?.

Yes, so we expect to have data in summer that is in Q3. This would then be the last element needed actually to submit an IND. If the IND is open according to plan, it is possible that we would start towards the end of next year with a Phase 2 trial.

The current expectation is that such a Phase 2 trial, it would enroll patients for an assessment over approximately three months with a one month treatment free follow up period, so no betahistine treatment afterwards to check for reversal. So that is the current plan.

We believe that it is realistic, but of course we will be happy to update on the overall timelines. As we progress here further, as mentioned in the first quarter we will start enrollment into that PKPD study. It will be a single site. It is healthy volunteers, so therefore this is not the usual type of enrollment or recruitment.

This means that, it could go relatively fast. We have seen other trials here notably one conducted a couple of years ago by AudioCure an Israeli company from which we have acquired certain data. They are no longer in operation and they managed to enroll a similar number of healthy volunteers relatively quickly.

So that is very encouraging and we believe that this is a sound assumption to expect data for the summer..

Thank you very much for taking the questions..

You're welcome..

Our next question is from Briana Warschun with Edison Group. Please proceed with your question..

Hi, thank you so much for taking my question. My one question is on Slide 4 regarding the bioavailability of intranasal betahistine. On this presentation it looks like the 10 mg was a little bit better than 5 mg.

And then on your previous presentation it was actually inversed with – because of an adverse event, did you remove one of the patients who did not respond well?.

Yes. Hello Briana. Well you're correct in pointing this out. Well, actually the last time we showed the PK curves from the single dose and it was up to 60 mg and there was no 5 mg dose included because we did not test that in a single dose. So here this is from the multiple dose and here we have included the 5 mg but no 60 mg dose was tested.

So this time we wanted to show also the other part actually of the Phase 1.

So actually if you would show them side-by-side you could see that well you get the very similar curves here profiles as mentioned during the previous call in October when we just released the first data there have been an inversion between 10 and 20 mg that was because of some intolerance in one singular volunteer who had to sneeze quite a lot and that had an impact on the overall number.

So here in this we didn't have any such effects. And I mean as expected you can see that this is very nicely dose dependent..

Yes, this chart looks great. Thank you so much for taking my question..

You're welcome..

[Operator Instructions] There are no more questions at this time. I would like to turn the call back over to management for closing remarks..

Well, thank you very much operator and thanks to everyone for joining the call today and your interest in our company. Have a great day and as always take care of your ears. Thank you and good bye..

Thank you. This concludes today’s conference. You may disconnect your lines at this time and thank you for your participation..