If you have kids, odds are you’ve suffered through an ear infection right along with them. Middle ear infections are the most common medical problem for kids, particularly pre-school age children, with 3 out of 4 youngsters having at least one ear infection by the time they’re 3 years old.

Unfortunately for everyone involved, a lot of children have the misfortune of suffering from chronic ear infections, making a busting eardrum an uncomfortably common occurrence.

The most common treatment for ear infections is antibiotic drops, which can be uncomfortable. That makes administrating the drops a two-person, three-times-daily ordeal, with one parent tackling the kid while the other actually puts the drops in the ear. Interestingly enough, those drops aren’t actually approved for the treatment of ear infections since it’s so tough for the medicine to actually soak through the eardrum.

For about a million American kids each year, those infections become so common (and the antibiotic drops so futile) that their doctor will ultimately end up putting a small tube in their eardrum to keep it from bursting. There’s where Otonomy (NSDQ: OTIC) comes in.

Otonomy is a relatively new company, having just completed its initial public offering in mid-August. It has developed a way of administering antibiotics for ear infections where the doctor actually puts them into the middle ear when he inserts places tubes into the eardrum, then slowly releases over time using a heat-sensitive polymer.

Called AuriPro, the medication reduces the risk of ear infections developing after surgery. The medication recently had extremely positive results in Phase 3 trials, the final phase before submission to the Food and Drug Administration (FDA), which makes it very likely the government will approve the product for use.

The company is attractive for a few reasons. Obviously, it has a product that appears to be extremely effective, and anything that makes kids more comfortable is usually a big hit with parents.

It’s also benefiting from the fact that relatively few companies are involved in developing antibiotics. In fact, there are so few that Congress passed the “Generating Antibiotic Incentives Now Act of 2012” to actually encourage companies to do just that. Getting past the shock of Congress approving anything, the law extends patent exclusivity for some new antibiotics for five additional years before generic versions can enter the market.

In addition to AuriPro, the company also has two other products, OTO-104 and OTO-311, in development.

OTO-104 is an extended release form of steroids which is meant to be used in the treatment of Ménière’s disease, a rare condition which affects the inner ear and causes a loss of both hearing and balance. There aren’t many effective medications for the treatment of the disease, so the FDA has put it on a fast track for approval, meaning that it gets put at the front of the government’s line.

OTO-311 is a medication that will be used in the treatment of tinnitus, that ringing sound in your ears which becomes an ongoing problem for some people.

Despite its fast track designation, OTO-104 is only beginning safety studies so it isn’t likely to be approved for at least two-, if not three-, years. A new drug application for OTO-311 is likely to be filed until sometime next year, so it is still probably about four- to five-years from market. AuriPro, on the other hand, is likely to be approved by the middle of next year.

On top of that, Otonomy is flush with cash, having just raised a $100 million in its August IPO. Before that, it raised $49 million in a bond offering in April. Right now it probably has about $70 million in cash on the balance sheet, with no net debt.

The company doesn’t have any earnings yet and, based on its initial filings, it’s probably about $4.50 per share in the hole over the trailing year. But it is well capitalized with more than enough cash to see it through getting its first product approved by the FDA by the middle of next year and funding the ongoing research on its other two in the meantime. It’s also likely that a bigger pharmaceutical company will step in and either partner with Otonomy to market the drug when it’s approved, helping to reduce costs for a share of the profit, or simply buy it outright.

A higher risk play for more speculative investors, Otonomy is a buy up to $27 for investors who can afford to bet that its first drug will be a hit.