UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May, 2016

---

Commission File Number: 001-36582

 

Auris Medical Holding AG

(Exact name of registrant as specified in its charter)

 

Bahnhofstrasse 21

6300 Zug, Switzerland

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F

X

Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes

No

X

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes

No

X

 

 

INCORPORATION BY REFERENCE

 

Exhibits 99.1, 99.2 and 99.4 to this Report on Form 6-K shall be deemed to be incorporated by reference into the registration statements on Form F-3 (Registration Number 333-206710) and Form S-8 (Registration Numbers 333-198037 and 333-200805) of Auris Medical Holding AG and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

 

Exhibit 99.3 to this Report on Form 6-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

			Auris Medical Holding AG
			By:	/s/ Thomas Meyer
				Name:	Thomas Meyer
				Title:	Chief Executive Officer

Date: May 11, 2016

 

EXHIBIT INDEX

 

Exhibit Number	Description
99.1	Unaudited Condensed Consolidated Interim Financial Statements
99.2	Management’s Discussion and Analysis of Financial Condition and Results of Operations
99.3	Press Release dated May 11, 2016
99.4	Form of Indemnification Agreement

 

 

 

Exhibit 99.1

 

Unaudited Condensed Consolidated Interim Financial Statements as of March 31, 2016 and December 31, 2015 and for the Three Months Ended March 31, 2016 and 2015

 

Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Loss
Condensed Consolidated Interim Statement of Financial Position
Condensed Consolidated Interim Statement of Changes in Equity
Condensed Consolidated Interim Statement of Cash Flows
Notes to the Condensed Consolidated Interim Financial Statements

 

 

Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Loss (unaudited)
For the Three Months Ended March 31, 2016 and 2015 (in CHF)

 

						THREE MONTHS ENDED
		Note				MARCH 31, 2016				MARCH 31, 2015
Research and development							-6,140,175				-6,229,896
General and administrative							-1,222,032				-929,919
Operating loss							-7,362,207				-7,159,815
Interest income							10,885				5,059
Interest expense							-2,745				-2,065
Foreign currency exchange losses, net							-1,544,845				-895,290
Loss before tax							-8,898,912				-8,052,111
Income tax expense							–				–
Net loss attributable to owners of the Company							-8,898,912				-8,052,111
Other comprehensive loss:
Items that will never be reclassified to profit or loss
Remeasurements of defined benefit liability, net of taxes of CHF 0							-260,469				-228,865
Items that are or may be reclassified to profit or loss
Foreign currency translation differences, net of taxes of CHF 0							41,820				18,361
Other comprehensive loss, net of taxes of CHF 0							-218,649				-210,504
Total comprehensive loss attributable to owners of the Company							-9,117,561				-8,262,615
Basic and diluted loss per share			6				-0.26				-0.28

 

 

Condensed Consolidated Interim Statement of Financial Position (unaudited)
As of March 31, 2016 and December 31, 2015 (in CHF)

 

			Note				MARCH 31, 2016				DECEMBER 31, 2015
ASSETS
Non-current assets
Property and equipment							198,089				222,570
Intangible assets							1,482,520				1,482,520
Other non-current receivables							38,066				38,066
Total non-current assets							1,718,675				1,743,156
Current assets
Other receivables							674,936				650,716
Prepayments							109,553				181,044
Cash and cash equivalents							41,392,616				50,237,300
Total current assets							42,177,105				51,069,060
Total assets							43,895,780				52,812,216
EQUITY AND LIABILITIES
Equity
Share capital							13,731,881				13,721,556
Share premium							112,840,677				112,662,910
Foreign currency translation reserve							-22,001				-63,821
Accumulated deficit							-90,658,603				-81,578,733
Total shareholders’ equity attributable to owners of the Company							35,891,954				44,741,912
Non-current liabilities
Employee benefits							1,868,452				1,575,833
Deferred tax liabilities							327,637				327,637
Total non-current liabilities							2,196,089				1,903,470
Current liabilities
Trade and other payables							1,207,343				1,205,522
Accrued expenses							4,600,394				4,961,312
Total current liabilities							5,807,737				6,166,834
Total liabilities							8,003,826				8,070,304
Total equity and liabilities							43,895,780				52,812,216

 

The accompanying notes form an integral part of these condensed consolidated interim financial statements

 

 

Condensed Consolidated Interim Statement of Changes in Equity (unaudited)
As of March 31, 2016 and 2015 (in CHF)

 

						Attributable to Owners of the Company
		Note				Share Capital				Share Premium				Foreign Currency Translation Reserve				Accumulated Deficit				Total Equity
As of January 1, 2015							11,604,156				93,861,171				-51,109				-52,131,426				53,282,792
Total comprehensive loss
Net loss							–				–				–				-8,052,111				-8,052,111
Other comprehensive loss							–				–				18,361				-228,865				-210,504
Total comprehensive loss							–				–				18,361				-8,280,976				-8,262,615
Transactions with owners of the Company
Share based payments			4				–				–				–				53,677				53,677
Share options exercised			3				1,500				10,500				–				–				12,000
Balance at March 31, 2015							11,605,656				93,871,671				-32,748				-60,358,725				45,085,854
As of January 1, 2016							13,721,556				112,662,910				-63,821				-81,578,733				44,741,912
Total comprehensive loss
Net loss							–				–				–				-8,898,912				-8,898,912
Other comprehensive loss							–				–				41,820				-260,469				-218,649
Total comprehensive loss															41,820				-9,159,381				-9,117,561
Transactions with owners of the Company
Share based payments			4				–				–				–				79,511				79,511
Issue of bonus shares			3				10,325				177,767				–				–				188,092
Balance at March 31, 2016							13,731,881				112,840,677				-22,001				-90,658,603				35,891,954

 

 

Condensed Consolidated Interim Statement of Cash Flows (unaudited)
For the Three Months Ended March 31, 2016 and 2015 (in CHF)

 

						THREE MONTHS ENDED
		Note				MARCH 31, 2016				MARCH 31, 2015
Cash flows from operating activities
Net loss							-8,898,912				-8,052,111
Adjustments for:
Depreciation							24,481				21,054
Unrealized foreign currency exchange losses, net							1,579,233				979,506
Net interest income							-10,885				-5,059
Share option costs			5				79,511				53,677
Employee benefits							32,151				-8,923
Changes in:
Other receivables							-24,220				41,041
Prepayments							71,491				75,133
Trade and other payables							1,821				-128,174
Accrued expenses							-172,825				687,580
Net cash used in operating activities							-7,318,154				-6,336,276
Cash flows from investing activities
Interest received							10,885				5,059
Net cash from investing activities							10,885				5,059
Cash flows from financing activities
Proceeds from exercise of options							–				12,000
Net cash from financing activities							–				12,000
Net decrease in cash and cash equivalents							-7,307,269				-6,319,217
Cash and cash equivalents at beginning of the period							50,237,300				56,934,325
Net effect of currency translation on cash							-1,537,415				-961,133
Cash and cash equivalents at end of the period							41,392,616				49,653,975

 

The accompanying notes form an integral part of these condensed consolidated interim financial statements

 

 

1.

Reporting entity

 

Auris Medical Holding AG (the “Company”) is domiciled in Switzerland. The Company’s registered address is at Bahnhofstrasse 21, 6300 Zug. These condensed consolidated interim financial statements comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Company is the ultimate parent of the following Group entities:

 

§

Auris Medical AG, Basel, Switzerland (100%)

§

Otolanum AG, Zug, Switzerland (100%)

§

Auris Medical Inc., Chicago, United States (100%)

§

Auris Medical Ltd., Dublin, Ireland (100%)

 

The Group is primarily involved in the development of pharmaceutical products for the treatment of inner ear disorders, in particular tinnitus and hearing loss. Its most advanced projects are in the late stage of clinical development.

 

2.

Basis of preparation

 

Statement of compliance

 

These condensed consolidated interim financial statements as of March 31, 2016 and for the three months ended March 31, 2016 and the condensed consolidated financial statements as of December 31, 2015 have been prepared in accordance with International Accounting Standard Interim Financial Reporting (“IAS 34”) and should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2015.

 

These condensed consolidated interim financial statements include all adjustments, that are necessary to fairly state the results of the interim period and the Group believes that the disclosures are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results to be expected for the full year. Management does not consider the business to be seasonal or cyclical.

 

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, have been condensed or omitted as permitted by IAS 34. The condensed consolidated statement of financial position as of December 31, 2015 was derived from the audited consolidated financial statements.

 

The interim financial statements were authorized for issuance by the Company’s Audit Committee on May 10, 2016.

 

Functional and reporting currency

 

These condensed consolidated financial statements are presented in Swiss Francs (“CHF”), which is the Company’s functional currency (“functional currency”) and the Group’s reporting currency.

 

Segment reporting

 

A segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. Management has determined that there is only one operating segment under the requirements of IFRS 8 (“Operating Segments”).

 

Significant accounting policies

 

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its audited consolidated financial statements as of and for the year ended December 31, 2015 and have been applied consistently to all periods presented in these condensed consolidated interim financial statements, unless otherwise indicated.

 

New standards, amendments and interpretations adopted by the Group

 

The Group has not early adopted any standard, interpretation or amendment that was issued, but is not yet effective.

 

A number of new standards, amendments to standards and interpretations are effective for the Group’s 2016 reporting year, and have not been applied in preparing these condensed consolidated interim financial statements. Management does not believe that the adoption of these standards, interpretations, or amendments will have a material impact on the financial statements of the Group.

3.

Capital and reserves

 

Share capital

 

The issued share capital of the Company consisted of:  

 

		Common Shares (Number)
			2016				2015
As of January 1			34,303,891				29,010,391
Common shares issued for stock option exercises with a nominal value of CHF 0.40 each			—				3,750
Common shares issued for restricted share awards with a nominal value of CHF 0.40 each			25,813				—
Total, as of March 31			34,329,704				29,014,141

 

All shares have a nominal value of CHF 0.40 and are fully paid in. As of March 31, 2016, the nominal value of the 34,329,704 issued shares amounted to CHF 13,731,881.60 (as of December 31, 2015, the nominal value of 34,303,891 issued shares amounted to CHF 13,721,556.40).

 

Issue of common shares upon exercise of options

 

During the three months ended March 31, 2015, one beneficiary of the Option Plan A exercised his right to acquire common shares of the Company at CHF 3.20 per share. This resulted in an increase in the number of outstanding common shares of 3,750 and an increase in the share capital of CHF 1,500. Total proceeds from the exercise to the Company were CHF 12,000.

 

During the three months ended March 31, 2016, no options were exercised.

 

On January 7, 2016, the Company granted 25,813 restricted shares to employees under the Equity Incentive Plan as a compensation bonus for 2015. These shares vested upon grant and have a sales restriction of 3 years. The Company recorded a corresponding payroll charge of CHF 188,092 in 2015. As a result of the grant, the share capital increased by CHF 10,325.

 

Follow-On Offering on NASDAQ Global Market

 

On May 20, 2015, the Company completed a public offering of 5,275,000 shares, yielding net proceeds after underwriting discounts of USD 23.6 million (CHF 21.7 million). Following the offering (and settlement of the aforementioned employee options) there were 34,293,891 common shares of the Company outstanding.

 

 

4.

Employee benefits

 

 

		Three months ended March 31,
		2016				2015
Salaries			808,410				603,984
Pension costs			84,779				30,642
Share based compensation expense			79,511				53,677
Other employee costs and social benefits			52,385				70,091
Total employee benefits			1,025,085				758,394

 

 

5.

Share based compensation expense

 

Share based compensation expense of CHF 79,511 was recognized for the three months ended March 31, 2016. No new options were granted in the three months ended March 31, 2016. As we do not have sufficient historical experience to estimate forfeitures for the vesting period, only effective forfeitures are recognised. The methodology for computation of share based compensation expense for the period is consistent with the methodology used in 2015.

 

6.

Loss per share

 

		Three months ended March 31,
		2016				2015
Loss attributable to owners of the Company			(8,898,912	)			(8,052,111	)
Weighted average number of shares outstanding			34,329,704				29,013,214
Basic and diluted loss per share			(0.26	)			(0.28	)

 

For the three months ended March 31, 2016 and March 31, 2015 basic and diluted loss per share are calculated based on the weighted average number of shares issued and outstanding and excludes shares to be issued under the stock option plans, as they would be anti-dilutive. As of the date hereof, the Company has 629,010 options outstanding under its stock option plans. The average number of options outstanding between January 1, 2016 and March 31, 2016 was 629,010 (463,135 for the period between January 1, 2015 and March 31, 2015).

 

 

Exhibit 99.2

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This management’s discussion and analysis is designed to provide you with a narrative explanation of our financial condition and results of operations. We recommend that you read this in conjunction with our unaudited condensed consolidated interim financial statements as of and for the three months ended March 31, 2016 and 2015 included as Exhibit 99.1 to this Report on Form 6-K, which have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting. We also recommend that you read our management’s discussion and analysis and our audited consolidated financial statements and the notes thereto, which appear in our Annual Report on Form 20-F for the year ended December 31, 2015 (the “Annual Report”) filed with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the U.S. Securities and Exchange Act of 1934, as amended.

 

Unless otherwise indicated or the context otherwise requires, all references to “Auris Medical” or the “company,” “we,” “our,” “ours,” “us” or similar terms refer to Auris Medical Holding AG and its subsidiaries.

 

We prepare and report our consolidated financial statements and financial information in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”). None of our financial statements were prepared in accordance with generally accepted accounting principles in the United States. We maintain our books and records in Swiss Francs. We have made rounding adjustments to some of the figures included in this management’s discussion and analysis. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them. Unless otherwise indicated, all references to currency amounts in this discussions and analysis are in Swiss Francs.

 

This discussion and analysis is dated as of May 10, 2016.

 

Overview

 

We are a clinical-stage biopharmaceutical company focused on the development of novel products for the treatment of inner ear disorders. Our most advanced product candidate, AM-101, is in Phase 3 clinical development for acute inner ear tinnitus under a special protocol assessment, or SPA, from the FDA. In two Phase 2 clinical trials, AM-101 demonstrated a favorable safety profile and statistically significant improvement in tinnitus loudness and other patient reported outcomes. We expect to have first top-line results from the first Phase 3 trial for AM-101 in the third quarter of 2016, with results for the second trial following a few months later. We are also developing AM-111 for acute inner ear hearing loss. We intend to conduct two pivotal Phase 3 trials in the treatment of idiopathic sudden sensorineural hearing loss, titled HEALOS and ASSENT. HEALOS has commenced enrollment in Europe and Asia, and we intend to initiate ASSENT in the U.S., Canada, and South Korea in mid-2016. In addition, we are planning a Phase 2 trial, entitled Efficacy and Safety of AM-111 in the Treatment of Surgery-Induced Hearing Loss (REACH) in the U.S. Provided that we obtain grant or other funding, REACH could be initiated at the earliest in the first half of 2017.

 

To date, we have financed our operations through public offerings of our common shares, private placements of equity securities and short term loans. We have no products approved for commercialization and have never generated any revenues from royalties or product sales. As of March 31, 2016, we had cash and cash equivalents of CHF 41.4 million. Based on our current plans, we do not expect to generate royalty or product revenues unless and until we obtain marketing approval for, and commercialize, AM-101, AM-111 or any of our other product candidates.

 

As of March 31, 2016, we had an accumulated deficit of CHF 90.7 million. We expect to continue incurring losses as we continue our clinical and pre-clinical development programs, apply for marketing approval for our product candidates and, subject to obtaining regulatory approval of our product candidates, build a sales and marketing force in preparation for the potential commercialization of our product candidates.

 

 

On September 1, 2015, we filed a shelf registration statement on Form F-3 (333-206710) with the SEC to register for one or more offerings of common shares, senior debt securities, subordinated debt securities, warrants, purchase contracts or units with a maximum aggregate offering price of up to US$ 100.0 million. The shelf registration statement was declared effective on September 10, 2015.

 

Sven Zimmermann, who has been our Chief Financial Officer since 2014, has decided to leave the Company for personal reasons this summer. A search for his replacement has been initiated.

 

There have been no developments in the previously disclosed patent interference involving our issued patent No. 9,066,865 and Otonomy Inc.’s patent application No. 13/848,636.

 

Collaboration and License Agreements

 

There have been no material changes to our collaboration and license agreements from those reported in “Item 5—Operating and Financial Review and Prospects–Operating results—Collaboration and License Agreements” in the Annual Report.

 

Research and Development Expense

 

Our research and development expense is highly dependent on the development phases of our research projects and therefore may fluctuate substantially from period to period. Our research and development expense mainly relates to the following key programs:

 

·

AM-101. We are conducting a Phase 3 clinical development program with AM-101 comprising two Phase 3 studies and two open label follow-on studies. We expect top-line results of the TACTT2 trial in the third quarter 2016 and the top-line results of TACTT3 a few months later. We anticipate that our research and development expenses in connection with these clinical trials will be lower in 2016 than in the preceding year, but remain at a substantial level.

 

·

AM-111. We intend to conduct two pivotal Phase 3 trials in the treatment of ISSNHL, titled HEALOS and ASSENT. HEALOS has commenced enrollment in Europe and Asia, and we intend to initiate ASSENT in the U.S., Canada, and South Korea in mid-2016. We anticipate that our research and development expenses in connection with the two AM-111 trials will substantially increase in 2016 compared to the previous year.

 

Other research and development expenses mainly relate to our pre-clinical studies with AM-102 and AM-123. The expenses mainly consist of costs for production of the pre-clinical compounds and costs paid to academic research institutions in conjunction with pre-clinical testing.

 

For a discussion of our other key financial statement line items, please see “Item 5—Operating and Financial Review and Prospects–Operating results—Financial Operations Overview” in the Annual Report.

 

Results of Operations

 

The numbers below have been derived from our unaudited condensed consolidated interim financial statements as of and for the three months ended March 31, 2016 and 2015. The discussion below should be read along with this financial information, and it is qualified in its entirety by reference to them.

 

 

Comparison of the three months ended March 31, 2016 and 2015

 

		Three months ended March 31,
		2016				2015				Change
		(in thousands of CHF)								%
Research and development			(6,140	)			(6,230	)			(1	%)
General and administrative			(1,222	)			(930	)			31	%
Operating loss			(7,362	)			(7,160	)			3	%
Interest income			11				5				120	%
Interest expense			(3	)			(2	)			50	%
Foreign currency exchange losses, net			(1,545	)			(895	)			73	%
Loss before tax			(8,899	)			(8,052	)			11	%
Income tax expense			-				-				-
Net loss attributable to owners of the Company			(8,899	)			(8,052	)			11	%
Other comprehensive loss:
Items that will never be reclassified to profit or loss
Remeasurements of defined benefits liability			(261	)			(229	)			14	%
Items that are or may be reclassified to profit or loss
Foreign currency translation differences			42				18				133	%
Other comprehensive loss			(219	)			(211	)			4	%
Total comprehensive loss attributable to owners of the Company			(9,118	)			(8,263	)			10	%

Research and development expense

 

		Three months ended March 31,
Research and development expense		2016				2015				Change
		(in thousands of CHF)								%
Clinical projects			(4,169	)			(5,298	)			(21	%)
Pre-clinical projects			(81	)			(129	)			(37	%)
Drug manufacture and substance			(401	)			(148	)			171	%
Employee benefits			(566	)			(457	)			24	%
Other research and development expenses			(923	)			(198	)			366	%
Total			(6,140	)			(6,230	)			(1	%)

 

Research and development expense of CHF 6.1 million were comparable in the three months ended March 31, 2016 and in the three months ended March 31, 2015. The variances within Research and Development expenses between the three months ended March 31, 2016 and the corresponding period in 2015 are mainly due to the following:

 

·

Clinical projects. In the three months ended March 31, 2016 we incurred lower clinical expenses than in the three months ended March 31, 2015, primarily due to lower service and milestone costs charged by contracted service providers in connection with the Phase 3 AM-101 clinical trials (TACTT2, TACTT3, AMPACT1 and AMPACT2) (related costs were CHF 4.0 million in the three months ended March 31, 2015 and CHF 2.4 million in the three months ended March 31, 2016), reflecting the near completion of enrollment in TACTT2. The decrease in AM-101 related costs was partially offset by higher AM-111 related costs mainly as a result of payments to a clinical research organization totaling CHF 1.0 million for the preparation of the Phase 3 ASSENT trial in the three months ended March 31, 2016.

 

·

Pre-clinical projects. In the three months ended March 31, 2016, pre-clinical expenses decreased primarily due to the completion of AM-101 and AM-111 related pre-clinical projects partially offset by higher expenses for our AM-102 pre-clinical project.

 

·

Drug manufacture and substance. In the three months ended March 31, 2016, we incurred higher costs related to raw material purchases and the manufacture of supplies for AM-101 and AM-111 and related process developments than in the three months ended March 31, 2015.

 

 

·

Employee benefits. Employee expenses were higher in the three months ended March 31, 2016 than in the same period in 2015 due to a higher headcount.

 

·

Other research and development costs. Other research and development expenses were higher in the three months ended March 31, 2016 than in the same period in 2015 due to higher patent costs.

 

General and administrative expense

 

General and administrative expense was CHF 1.2 million in the three months ended March 31, 2016 compared to CHF 0.9 million in the three months ended March 31, 2015, as a result of higher administration costs (CHF 0.7 million vs CHF 0.5 million) as well as higher employee benefits due to higher headcount (CHF 0.4 million vs CHF 0.3 million).

 

We expect that general and administrative expense will increase in the future as our business expands and we continue to incur costs associated with operating as a public company and protecting our intellectual property portfolio.

 

Interest income

 

Interest income increased in the three months ended March 31, 2016 compared to the three months ended March 31, 2015, due to a higher return on short-term deposits.

 

Interest expense

 

Interest expense did not materially change in the three months ended March 31, 2016 compared to the three months ended March 31, 2015 and mainly consist of bank charges.

 

Foreign currency exchange losses, net

 

Net Foreign currency exchange losses, increased in the three months ended March 31, 2016 compared to the three months ended March 31, 2015, due to higher unrealized foreign exchange losses on the Company’s U.S. dollar denominated cash and cash equivalents.

 

Cash flows

 

Comparison of the three months ended March 31, 2016 and 2015

 

The table below summarizes our cash flows for the three months ended March 31, 2016 and 2015:

 

		Three months ended March, 31
		2016				2015
		(in thousands of CHF)
Net cash used in operating activities .			(7,318	)			(6,336	)
Net cash from investing activities			11				5
Net cash from financing activities .			—				12
Net effect of currency translation on cash .			(1,537	)			(961	)
Cash and cash equivalents at the beginning of the period .			50,237				56,934
Cash and cash equivalents at the end of the period			41,393				49,654

 

The increase in net cash used in operating activities from CHF 6.3 million in the three months ended March 31, 2015 to CHF 7.3 million in the three months ended March 31, 2015 was mainly due to higher general and administrative expenses as well as a decrease in accrued liabilities from December 31, 2015 to March 31, 2016, whereas accrued liabilities increased in the period from December 31, 2014 to March 31, 2015.

 

Net cash from investing activities was immaterial in the three months ended March 31, 2016, as well as in the three months ended March 31, 2015, and was comprised of interest received.

 

 

 

The decrease in net cash from financing activities in the three months ended March 31, 2016 compared to the three months ended March 31, 2015 reflects the proceeds from the exercise of stockoptions in the three months ended March 31, 2015 (no stock options were exercised in the period ended March 31, 2016).

 

Cash and funding sources

 

As of March 31, 2016, we had no long term debt and had no ongoing material financial commitments, such as lines of credit or guarantees that are expected to affect our liquidity over the next five years, other than leases.

 

Funding requirements

 

We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements until the fall of 2017. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Our future funding requirements will depend on many factors, including but not limited to:

 

·

the scope, rate of progress, results and cost of our clinical trials, nonclinical testing, and other related activities;

 

·

the cost of manufacturing clinical supplies, and establishing commercial supplies, of our product candidates and any products that we may develop;

 

·

the number and characteristics of product candidates that we pursue;

 

·

the cost, timing, and outcomes of regulatory approvals;

 

·

the cost and timing of establishing sales, marketing, and distribution capabilities; and

 

·

the terms and timing of any collaborative, licensing, and other arrangements that we may establish, including any required milestone and royalty payments thereunder.

 

We expect that we will require additional capital to commercialize our product candidates AM-101 and AM-111. If we receive regulatory approval for AM-101 or AM-111, and if we choose not to grant any licenses to partners, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. Additional funds may not be available on a timely basis, on favorable terms, or at all, and such funds, if raised, may not be sufficient to enable us to continue to implement our long-term business strategy. If we are not able to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

 

We may raise additional capital through the sale of equity or convertible debt securities. In such an event, your ownership interest will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect your rights as a holder of our common shares.

 

For more information as to the risks associated with our future funding needs, see “Item 3—Key Information—Risk factors” in the Annual Report.

 

Contractual Obligations and Commitments

 

There have been no material changes to our contractual obligations outside the ordinary course of our business from those reported in “Item 5—Operating and Financial Review and Prospects—Tabular disclosure of contractual obligations” in the Annual Report.

 

 

 

Off-Balance Sheet Arrangements

 

As of the date of this discussion and analysis, we do not have any, and during the periods presented we did not have any, off-balance sheet arrangements except for the Operating Lease mentioned in “Item 5—Operating and Financial Review and Prospects—Tabular disclosure of contractual obligations” in the Annual Report.

 

Significant Accounting Policies and Use of Estimates and Judgment

 

There have been no material changes to the significant accounting policies and estimates described in “Item 5—Operating and Financial Review and Prospects–Operating results—Significant accounting policies and use of estimates and judgment” in the Annual Report.

 

Recent Accounting Pronouncements

 

There are no IFRS standards as issued by the IASB or interpretations issued by the IFRS interpretations committee that are effective for the first time for the financial year beginning on or after January 1, 2016 that would be expected to have a material impact on our financial position.

 

JOBS Act Exemption

 

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company”. As an emerging growth company, we are not required to provide an auditor attestation report on our system of internal controls over financial reporting. This exemption will apply for a period of five years following the completion of our initial public offering (2019) or until we no longer meet the requirements of being an “emerging growth company,” whichever is earlier. We would cease to be an emerging growth company if we have more than US$1.0 billion in annual revenue, have more than US$700 million in market value of our common shares held by non-affiliates or issue more than US$1.0 billion of non-convertible debt over a three-year period.

 

Cautionary Statement Regarding Forward Looking Statements

 

Forward-looking statements appear in a number of places in this discussion and analysis and include, but are not limited to, statements regarding our intent, belief or current expectations. Many of the forward-looking statements contained in this discussion and analysis can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified under the section entitled “Item 3—Key Information—Risk factors” in the Annual Report. These risks and uncertainties include factors relating to:

 

·

our operation as a development stage company with limited operating history and a history of operating losses;

 

·

our need for substantial additional funding before we can expect to become profitable from sales of our products;

 

·

our dependence on the success of AM-101 and AM-111, which are still in clinical development and may eventually prove to be unsuccessful;

 

·

the chance that we may become exposed to costly and damaging liability claims resulting from the testing of our product candidates in the clinic or in the commercial stage;

 

·

the chance our clinical trials may not be completed on schedule, or at all, as a result of factors such as delayed enrollment or the identification of adverse effects;

  

 

 

·

uncertainty surrounding whether and when any of our product candidates will receive regulatory approval, which is necessary before they can be commercialized;

 

·

if our product candidates obtain regulatory approval, our being subject to expensive ongoing obligations and continued regulatory overview;

 

·

enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval and commercialization;

 

·

the chance that we do not obtain orphan drug exclusivity for AM-111, which would allow our competitors to sell products that treat the same conditions;

 

·

dependence on governmental authorities and health insurers establishing adequate reimbursement levels and pricing policies;

 

·

our products may not gain market acceptance, in which case we may not be able to generate product revenues;

 

·

our reliance on our current strategic relationships with INSERM or Xigen and the potential failure to enter into new strategic relationships;

 

·

our reliance on third parties to conduct our nonclinical and clinical trials and on third-party single-source suppliers to supply or produce our product candidates; and

 

·

other risk factors discussed under “Item 3—Key Information—Risk factors” included in the Annual Report.

 

  Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

 

Exhibit 99.3

 

 

 

Auris Medical News Release

 

Auris Medical Provides Business Update and Reports First Quarter 2016 Financial Results

 

·

Key Opinion Leader meeting focused on AM-101 scheduled for June 14 in New York City

·

Top-line results from pivotal TACTT2 trial of AM-101 in acute inner ear tinnitus expected in August

·

Conference call today at 8 am Eastern Time / 2 pm Central European Time

 

Zug, Switzerland, May 11, 2016 – Auris Medical Holding AG (NASDAQ: EARS), a clinical-stage company dedicated to developing therapeutics that address important unmet medical needs in otolaryngology, today provided a business update and announced financial results for the first quarter ended March 31, 2016.

 

“We are focused on the continued progress of our two Phase 3 development programs evaluating AM-101 for acute inner ear tinnitus and AM-111 for acute inner ear hearing loss,” commented Thomas Meyer, Auris Medical’s founder, Chairman and Chief Executive Officer. “In preparation for the upcoming data readout of the TACTT2 trial in August, we look forward to hosting a Key Opinion Leader meeting next month.”

 

Development Program Updates

 

AM-101 for Acute Inner Ear Tinnitus

 

·

Completed enrollment of over 330 patients in the Phase 3 TACTT2 trial. The TACTT2 trial is being conducted primarily in North America under a Special Protocol Assessment (SPA) with the US Food and Drug Administration. Top-line results from this trial are expected in August 2016.

 

·

Progressing toward completion of enrollment in the Phase 3 TACTT3 trial. The TACTT3 trial is being conducted in Europe and enrollment of approximately 630 patients (300 in the acute stage and 330 in the post-acute stage) is expected to be completed by the end of the second quarter of 2016. Top-line results from this trial are expected in the fourth quarter of 2016.

 

·

Continued with the preparation of regulatory submissions for the marketing authorization of AM-101 in the US and Europe, as well as pre-commercial activities in preparation for the planned future launches of AM-101.

 

AM-111 for Acute Inner Ear Hearing Loss

 

·

Advanced enrollment into the Phase 3 HEALOS trial. The HEALOS trial is being conducted in several European and Asian countries and began recruiting in November 2015. The trial aims to enroll approximately 255 patients with severe to profound idiopathic sudden sensorineural hearing loss.

 

·

Moved toward initiation of the Phase 3 ASSENT trial. The ASSENT trial will be conducted in the US, Canada and South Korea and is scheduled to initiate in the upcoming months. The trial is set to enroll approximately 300 patients with severe to profound idiopathic sudden sensorineural hearing loss.

 

Other Developments

 

·

Elected Armando Anido as a member of the Board of Directors and Chairman of the Compensation Committee. Mr. Anido is the Chairman and Chief Executive Officer of Zynerba Pharmaceuticals. Prior to joining Zynerba, he served as Chief Executive Officer of NuPathe, Inc., and Auxilium Pharmaceuticals, Inc. Prior to Auxilium, Mr. Anido held commercial leadership roles at MedImmune, Glaxo Wellcome and Lederle Labs. Mr. Anido holds a BS in Pharmacy and an MBA, both from West Virginia University.

 

 

Auris Medical Holding AG · Bahnhofstrasse 21 · CH-6300 Zug · Tel. +41 41 729 71 94 · www.aurismedical.com

  

 

 

·

Welcomed Andrea Braun as Head of Regulatory and Quality Affairs and member of the Executive Management Committee. In this newly created position, Ms. Braun is leading the Company’s regulatory affairs, quality and pharmacovigilance activities. Prior to Auris Medical, she served in various regulatory affairs positions, including as Head of EU Regulatory Affairs at Roche and Head of Global Regulatory Affairs Biologics at Alvotech. Ms. Braun received her state examination in pharmacy from the University of Heidelberg, Germany, and holds a PhD in immunology from the University of Basel, Switzerland.

 

·

Sven Zimmermann, who has served as Auris Medical’s Chief Financial Officer since 2014, has decided to leave the Company for personal reasons this summer. A search for his replacement has been initiated.

 

First Quarter 2016 Financial Results

 

•

Cash and cash equivalents totaled CHF 41.39 million at March 31, 2016.

 

•

Total operating expenses for the first quarter of 2016 were CHF 7.36 million compared to CHF 7.16 million for the first quarter of 2015.

 

•

Research and development expenses for the first quarter of 2016 were CHF 6.14 million compared to CHF 6.23 million for the first quarter of 2015.

 

•

General and administrative expenses for the first quarter of 2016 were CHF 1.22 million compared to CHF 0.93 million for the first quarter of 2015.

 

•

Net loss for the first quarter of 2016 was CHF 8.90 million, or CHF 0.26 per share, compared to CHF 8.05 million, or CHF 0.28 per share, for the first quarter of 2015. The net loss includes a net unrealized foreign currency exchange loss of 1.54 million in the first quarter of 2016 compared to a loss of 0.89 million in the first quarter of 2015.

 

AM-101 Key Opinion Leader Meeting & Webcast Scheduled for June 14, 2016

 

Auris Medical will host a Key Opinion Leader breakfast focused on the Phase 3 program and market opportunity of AM-101 and the treatment of acute inner ear tinnitus on Tuesday, June 14, 2016, at 8:00 am Eastern Time in New York City. The meeting will feature a keynote presentation by Hinrich Staecker, MD, PhD, who serves as Professor of Otolaryngology at the University of Kansas Medical Center and a principal investigator in the TACTT2 trial.

 

To reserve a seat, please contact Cindy McGee via e-mail at investors@aurismedical.com. A live webcast of the event will be available in the Investor Relations section of the Auris Medical website at www.aurismedical.com and a replay of the presentation will be available following the event.

 

Today’s Conference Call & Webcast Information

 

Auris Medical will host a conference call and webcast to discuss the first quarter 2016 financial results and to provide a general business update today, May 11, 2016, at 8:00 am Eastern Time (2:00 pm Central European Time). To participate in this conference call, dial 1-855-217-7942 (USA) or +1-646-254-3374 (International), and enter passcode 9629643. A live webcast of the conference call will be available in the Investor Relations section of the Auris Medical website at www.aurismedical.com and a replay of the conference call will be available following the live call.

 

About Auris Medical

 

Auris Medical is a Swiss biopharmaceutical company dedicated to developing therapeutics that address important unmet medical needs in otolaryngology. The Company is currently focusing on the development of treatments for acute inner ear tinnitus (AM-101) and for acute inner ear hearing loss (AM-111) by way of intratympanic injection with biocompatible gel formulations. In addition, Auris Medical is pursuing early-stage research and development projects. The Company was founded in 2003 and is headquartered in Zug, Switzerland. The shares of the parent company Auris Medical Holding AG trade on the NASDAQ Global Market under the symbol "EARS".

 

 

Forward-looking Statements

 

This press release may contain statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements other than historical fact and may include statements that address future operating, financial or business performance or Auris Medical’s strategies or expectations. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” and other comparable terminology. 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 clinical trials of Auris Medical’s product candidates, the clinical utility of Auris Medical’s product candidates, the timing or likelihood of regulatory filings and approvals, Auris Medical’s intellectual property position and Auris Medical’s financial position, including the impact of any future acquisitions, dispositions, partnerships, license transactions or changes to Auris Medical’s capital structure, including future securities offerings. These risks and uncertainties also include, but are not limited to, those described under the caption “Risk Factors” in Auris Medical’s Annual Report on Form 20-F and future filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and Auris Medical does not undertake any obligation to update them in light of new information, future developments or otherwise, except as may be required under applicable law. All forward-looking statements are qualified in their entirety by this cautionary statement.

 

Contact: Cindy McGee, Head of Investor Relations and Corporate Communications, +41 61 201 13 50, investors@aurismedical.com

 

 

Auris Medical Holding AG

Condensed Consolidated Interim Statement of Loss and Other Comprehensive Loss (unaudited)

(in CHF thousands, except per share data)

 

		Three Months Ended March 31,
		2016				2015
Research and development expenses			(6,140	)			(6,230	)
General and administrative expenses			(1,222	)			(930	)
Operating loss			(7,362	)			(7,160	)
Interest income			11				5
Interest expense			(3	)			(2	)
Foreign currency exchange gains/(losses), net			(1,545	)			(895	)
Loss before tax			(8,899	)			(8,052	)
Income tax expense			-				-
Net loss attributable to owners of the Company			(8,899	)			(8,052	)
Other comprehensive income:
Items that will never be reclassified to profit or loss:
Remeasurements of defined benefits liability, net of taxes			(261	)			(229	)
Items that are or may be reclassified to profit or loss:
Foreign currency translation differences, net of taxes			42				18
Other comprehensive income			(219	)			(211	)
Total comprehensive loss attributable to owners of the Company			(9,118	)			(8,263	)
Loss per share, basic and diluted			(0.26	)			(0.28	)
Weighted average common shares outstanding, basic and diluted			34,329,704				29,013,214
Currency rate CHF / USD			0.9936				0.9613

 

Auris Medical Holding AG

Condensed Consolidated Interim Statement of Financial Position (unaudited)

(in CHF thousands)

 

		March 31, 2016				December 31, 2015
Assets
Non-current assets
Property and equipment			198				223
Intangible assets			1,483				1,483
Other non-current receivables			38				38
Total non-current assets			1,719				1,744
Current assets
Current financial assets and other receivables			675				651
Prepayments			109				181
Cash and cash equivalents			41,393				50,237
Total current assets			42,177				51,069
Total assets			43,896				52,813
Equity and Liabilities
Equity
Share capital			13,732				13,722
Share premium			112,841				112,663
Foreign currency translation reserve			(22	)			(64	)
Accumulated deficit			(90,659	)			(81,579	)
Total shareholders’ equity attributable to owners of the Company			35,892				44,742
Non-current liabilities
Employee benefits			1,868				1,576
Deferred tax liabilities			328				328
Total non-current liabilities			2,196				1,904
Current liabilities
Trade and other payables			1,208				1,206
Accrued expenses			4,600				4,961
Total current liabilities			5,808				6,167
Total liabilities			8,004				8,071
Total equity and liabilities			43,896				52,813
Currency rate CHF / USD			0.9619				1.0014

 

 

Exhibit 99.4

 

 

 

 

Indemnification Agreement

 

 

dated as of [day] [month] [year]

 

 

by and between

 

Auris Medical Holding AG

(the Company)

Bahnhofstrasse 21, 6300 Zug, Switzerland

 

 

and

 

[name] [last name]

(the Indemnitee)

[address]

 

 

regarding

 

 

 

Indemnification

 

Preamble

 

A.

The Company is a corporation (Aktiengesellschaft) organized under the laws of Switzerland, having its registered seat in the Canton of Zug, Switzerland; the Company’s shares are listed on the NASDAQ Global Market, USA.

 

B.

The Indemnitee is a member of the board of directors and/or a member of the management team of the Company.

 

C.

The Company desires to attract and retain the services of highly qualified individuals such as the Indemnitee to serve the Company and companies directly or indirectly controlled by it or under common control with it (each, an Affiliate and collectively, the Affiliates).

 

D.

The Company and the Indemnitee recognize the substantial increase in corporate litigation in general, subjecting individuals such as the Indemnitee to expensive litigation risks.

 

E.

It is reasonable, prudent and necessary for the Company to contractually indemnify the Indemnitee to the fullest extent permitted by applicable law in accordance with, and subject to the terms of, this indemnification agreement (the Agreement).

 

Now, therefore, the Company and the Indemnitee (each, a Party and collectively, the Parties) agree as follows:

 

1.

Qualified Position of Indemnitee

 

As further described herein, the Agreement serves, inter alia, to cover Expenses and Payments (each, as defined below) that may arise out of the performance of the Indemnitee’s function

 

(a)

as a member of the board of director, employee or agent of the Company; and/or

 

(b)

as a member of the board of director, employee or agent of any Affiliate; and/or

 

(c)

as a consultant, agent, affiliate or employee of the Company or any Affiliate for which the Indemnitee conducts or conducted business at the request of the Company or any Affiliate, and for which actions or omissions the Indemnitee may

 

be held liable, pursuant to applicable law, as a de facto corporate body (faktisches Organ), shadow director and the like; and/or

 

(d)

as a member of the board of director, consultant, agent, affiliate, employee or participant of another corporation, partnership, trust or other enterprise for which the Indemnitee conducts or conducted business at the request of the Company or any Affiliate, and for which actions or omissions the Indemnitee may be held liable pursuant to applicable law

 

(any of these positions set out under Section ‎1(a) through ‎1(d) above, a Qualified Position).

 

2.

Indemnification Right

 

 

2.1.

Qualified Claim

 

To the extent permitted pursuant to Swiss and other applicable laws and subject to the limitations set out in Section ‎3 and Section ‎4, the Company hereby agrees to indemnify the Indemnitee for, and to hold the Indemnitee harmless from, any Expenses and Payments (each, as defined below) that are arising out of, or have incurred in connection with, claims raised or threatened by third parties (whether private parties or governmental, regulatory authorities or other authorities) for any actions and/or omissions that have occurred on, before or after the date of the Agreement, against the Indemnitee as a result of the Indemnitee holding or having held a Qualified Position (any such claims, a Claim).

 

Expenses shall be broadly construed and shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, telephone charges, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in an administrative, regulatory or litigation proceeding, action or investigation, whether civil, criminal, administrative or other (the Proceeding), or responding to, or objection to a request to provide discovery in any Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for and other costs relating to any cost bond or other appeal bond or its equivalent. Payments shall include any judgments, fines, penalties or amounts paid in settlement.

 

2.2.

Indemnification Proceeding

 

Should the Indemnitee become aware of any Claim or Proceeding or any other claim, action which may give rise to any entitlements under the Agreement, the Indemnitee shall

 

(a)

as promptly as practicable (but in no event later than 45 calendar days of becoming so aware), notify the Company in writing of the existence of such a Claim, giving reasonable details relating to the Claim, including the person(s) making (or threatening to make) the respective Claim, the circumstances leading to such a Claim, the cause of action for the aim and the possible costs associated with the Claim;

 

(b)

give to the Company and its professional advisers upon the Company’s request information and access to premises, documents and records as the Company may reasonably request, unless such access would result in a loss of privilege or where the Indemnitee is prevented by law from providing such access. In this connection, the Company shall be entitled to require the Indemnitee to take such actions and provide such information and assistance as the Company in its sole discretion deems necessary to avoid, mitigate, settle or defend the Claim;

 

(c)

allow the Company upon its request to assume the defense of any Claim and take such actions as the Company may deem appropriate. The Indemnitee shall assist the Company as the Company may reasonably require in the conduct of such actions (unless such action could be adverse to the Indemnitee’s personal interests);

 

(d)

make no admission of liability or enter into settlement discussions with any person in relation to any Claim without the prior written consent of the Company (which shall not be unreasonably withheld);

 

(e)

take all necessary actions as instructed by the Company to comply with the terms of any D&O Insurance (as define below).

 

The Company or the relevant Affiliate designated by the Company shall be entitled to settle any Claim but shall not do so before notifying the Indemnitee of its intention and consulting with the Indemnitee as to the terms of the proposed settlement. The Company shall not settle any Claim where the terms of the settlement would impose any Expense or Payment on the Indemnitee without the Indemnitee’s prior written consent. The Indemnitee and the Company shall take all actions as may be necessary or advisable to effect such a settlement.

 

Any Expenses and Payments falling under the scope of Section ‎2.1 shall be paid within 30 calendar days by the Company (or by an Affiliate designated by the Company to the extent permitted by Swiss or other applicable laws) upon the Indemnitee’s written request, after having provided reasonable documentation evidencing the Claim, and shall not be refundable except as set out in Section ‎3.

 

Notwithstanding any provision of the Agreement to the contrary, and subject to reimbursement pursuant to Section ‎3, the Company shall advance any Expenses actually and reasonably incurred by the Indemnitee in connection with any Claim within 30 calendar days after the receipt by the Company of each statement requesting such advance from time to time and reasonable documentation evidencing the respective Expenses and Payments, whether prior to or after final disposition of any Claim. Advances shall be unsecured and interest free.

 

In making any determination as to Indemnitee's entitlement to indemnification under Section ‎2, the Indemnitee shall be entitled to a presumption that he or she is entitled to such if the Indemnitee has submitted a request for indemnification in accordance with Section ‎2.2(a), and the Company shall have the burden of proof in making of any determination contrary to such presumption.

 

2.3.

Indemnity in Proceedings by or in the Name of the Company

 

The Indemnitee shall also be entitled to the rights provided in Section ‎2 if he or she was or is a party or is threatened to be made a party to any Proceeding brought by or in the name of the Company to procure a judgment in its favor by reason of the fact that the Indemnitee holds or held a Qualified Position.

 

3.

Exceptions

 

The entitlement to indemnification under Section ‎2 shall not apply, and any prepaid Expenses and Payments shall be reimbursed by the Indemnitee to the Company or the relevant Affiliate, if:

 

(a)

a competent court holds, and such ruling being final or enforceable, the Indemnitee to be liable and concludes that the relevant actions or omissions giving rise to the Claim constitute an intentional or grossly negligent breach of the Indemnitee’s statutory duties under applicable law;

 

(b)

absent a judgement by a competent court as set forth under Section ‎3(a), it is prima facie apparent, as that the relevant actions or omissions giving rise to the Claim constitute an intentional or grossly negligence breach of the Indemnitee’s statutory duties under applicable law.

 

(c)

A majority vote of the board of directors of the Company who are not and were not party to the Claim in respect of which indemnification is sought by the Indemnitee (the Disinterested Directors) shall determine whether it is prima facie apparent – pursuant to Section ‎3(b) – that the relevant actions or omissions giving rise to the Claim, constitute an intentional or grossly negligent breach of the statutory duties of the Indemnitee. If there are not at least 3 Disinterested Directors, the matter shall be referred to a partner of a reputed Swiss law firm (appointed by the Company) who has not been involved in any respect in such matter and who has not advised the Company or any party involved in the Claim.

 

4.

D&O Insurance

 

The Company will arrange for customary directors' and officers' liability insurance (D&O Insurance) covering the actions and omissions of the Indemnitee in or incidental to the performance of the Indemnitee function(s) for the Company or any Affiliate. The costs for such D&O Insurance will be borne by the Company. The Indemnitee will, as and when such insurance is procured, be informed of the scope of the respective insurance coverage.

 

If the Company receives notice from any source of a Claim as to which the Indemnitee is a party or a participant (as a witness or otherwise), it shall give prompt notice of any proceedings to the insurers in accordance with the procedures set forth in the respective D&O Insurance. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Claim in accordance with the terms of such policies.

 

Any of the Indemnitee’s rights and entitlements to be indemnified and hold harmless in accordance with the Agreement apply if and to the extent no or only partial coverage is available under any D&O Insurance policy (the No/Partial Coverage Event). A No/Partial Coverage Event shall be is deemed to have occurred if and when (i) it is prima facie apparent that the D&O Insurance provides no or only partial coverages (which shall be determined as set forth in Section ‎3(c)); or (ii) the insurer has notified the Company or the Affiliate in writing within 30 calendar days following filing of the necessary documentation with the respective insurer that no or only partial coverage exists; or (iii) the relevant insurer failed to confirm within 60 calendar days following filing of the

 

necessary documentation with the respective insurer whether or not any coverage exists. If the Indemnitee is entitled under any D&O Insurance for some or a portion of any Expenses or Payments as a result of a Claim but not for all of the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion thereof to which Indemnitee is entitled in accordance with this Agreement.

 

The Company shall indemnify the Indemnitee for Expenses incurred by Indemnitee in connection with any successful claim brought by Indemnitee for recovery under any D&O Insurance and shall advance any Expenses actually and reasonably incurred by the Indemnitee in connection with such claim.

 

5.

Subrogation

 

In the event of any payment under the Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

6.

Other Rights to Indemnification

 

The Indemnitee’s rights provided by the Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may now or in the future be entitled under any provision of the articles of association of the Company or an Affiliate, vote of the Company’s shareholders and/or board of directors, provision of law (including, but not limited to, article 402 and/or article 327a of the Swiss Code of Obligations), agreement or otherwise.

 

7.

Waiver of Liability Claim

 

To the extent permitted under Swiss and other applicable laws, the Company waives, and undertakes to cause its Affiliates to waive, any claims it may have against the Indemnitee for loss, damage or costs however caused to the Company or any Affiliates arising out of or in connection with the performance of the Indemnitee’s functions for the Company or an Affiliate in a Qualified Position, unless such loss, damage or cost has been caused by actions or omissions which, as determined by a competent court or as would be prima facie apparent, constitute an intentional or grossly negligent breach of the Indemnitee’s statutory duties.

 

8.

Miscellaneous

 

8.1.

Continuation of Indemnity

 

All agreements and obligations of the Company contained in the Agreement shall continue during the period the Indemnitee holds a Qualified Position and shall continue thereafter so long as Indemnitee may be subject to any possible Proceeding by reason of the fact that Indemnitee held a Qualified Position.

 

8.2.

Successors; Binding Agreement

 

The Agreement shall be binding on and shall inure to the benefit of and be enforceable by the Company’s successors and assigns and by the Indemnitee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. The Company shall require any successor or assignee (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance reasonably satisfactory to the Company and to the Indemnitee, expressly to assume and agree to perform the Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place.

 

8.3.

Severability

 

To the extent any undertakings of the Agreement are or become illegal, invalid or unenforceable under applicable law (i) the remaining provisions of the Agreement shall not be affected by such provisions of the Agreement shall not be affected by such illegality, invalidity or lack of enforceability and (ii) the illegal, invalid or unenforceable provisions shall be construed in a manner that to the fullest extent possible gives effect to the commercial intentions of the Parties as set out herein.

 

8.4.

Amendments and Waiver

 

No amendment, modification, termination or cancellation of the Agreement will be effective unless it is in writing signed by both Parties. No waiver of any of the provisions of the Agreement will be deemed to be or will constitute a waiver of any other provisions hereof (whether or not similar), nor will such waiver constitute a continuing waiver.

 

8.5.

Legal Fees and Expenses

 

Without limiting the generality or effect of any other provision under the Agreement, if it should appear to the Indemnitee that the Company has failed to comply with any of its obligations under the Agreement or in the event that the Company or any other person takes or threatens to take any action to declare the Agreement void or unenforceable or institutes any litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, the Company irrevocably authorizes Indemnitee from time to time to retain counsel of Indemnitee's choice, at the expense of the Company as hereafter provided, to advise and represent Indemnitee in connection with any such interpretation, enforcement or defense, including the initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, stockholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to Indemnitee's entering into an attorney-client relationship with such counsel, and in that connection the Company and Indemnitee agree that a confidential relationship shall exist between Indemnitee and such counsel. Without respect to whether Indemnitee prevails, in whole or in part, in connection with any of the foregoing, the Company will pay and be solely financially responsible for any and all attorneys' and related fees and expenses incurred by Indemnitee in connection with any of the foregoing.

 

8.6.

Governing Law and Jurisdiction

 

The Agreement shall be construed in accordance with and governed by Swiss law (without giving effect to the principles of conflicts of law).

 

Any dispute, controversy or claim arising out of or in connection with the Agreement, including the validity, invalidity, breach or termination thereof, shall be exclusively submitted to and determined by the ordinary courts of the city of Zug, Switzerland.

 

8.7.

Execution

 

The Parties have duly executed the Agreement in two originals, each Party receiving one original.

 

[rest of page intentionally left blank]

 

Signatures

 

 

 

Auris Medical Holding AG

 

 

 

Place, date	By: [name] [last name]
	Title: [function or title]

 

 

Place, date	By: [name] [last name]
	Title: [function or title]

 

 

[name and last name of Indemnitee]

 

 

Place, date	By: [name] [last name]
	Title: [function or title]