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Auris Medical shares plunge as deafness drug trial scrapped

* Drug fails late-stage trial

* Patient subgroup shows improvement in smaller dose

* Shares plummet >50 pct to $0.38 (Adds background, details on Auris' pipeline; updates shares)

By Divya Grover

Nov 28 (Reuters) - Auris Medical Holding AG's shares hit a record low on Tuesday after it said it would end an ongoing late-stage study testing its treatment for sudden deafness, as the drug failed to improve hearing in patients in a similar trial.

The drug developer has been vying to be the first to introduce treatments that could address ear disorders associated with hearing loss and balance, which are usually treated with off-label drugs such as steroids.

Healos, the trial in which the drug failed to meet the main goal, was testing two doses of Auris Medical's AM-111 - 0.4 mg and 0.8 mg - in patients with severe and profound sudden deafness.

Despite the drug's failure, Auris Medical said it sees hope in the smaller dose, which showed improvement in some patients with profound hearing loss.

"The good news is really that we have ... exciting data in the subgroup of patients who are most in need of a treatment," Chief Executive Thomas Meyer told Reuters.

Patients taking the 0.4 mg dose of the drug showed improved hearing versus a placebo.

However, data from this study showed that AM-111 was not statistically significant in improving hearing ability in the overall patient population.

Auris Medical's CEO Meyer also said the company would discuss with health regulators the improvement seen in some patients on the lower dosage.

The drug developer said it would terminate another similar late-stage trial, Assent, earlier-than-expected as it does not make sense to continue the study with the current design.

Data from the Assent study was expected in the second half of next year.

Auris Medical is also developing treatments for a variety of inner ear disorders, including tinnitus and Meniere's disease.

Data from the company's drug to treat acute inner ear tinnitus, or persistent ringing in the ear, is expected in the first quarter of next year.

Rival Otonomy Inc said on Monday it would stop commercialization of its ear infection drug Otiprio, and shift focus on developing other drugs in its pipeline, including submission of the marketing application for its Meniere's disease drug in the United States.

Auris Medical, which had a market cap of $36.8 million as of Monday's close, lost about $20 million in value after plummeting more than 50 percent in morning trading. (Reporting by Divya Grover in Bengaluru; Editing by Martina D'Couto)