Transaction to create NASDAQ-listed
pharmaceutical company focused on the development and
commercialization of ear, nose, and throat (ENT) products
Gregory J. Flesher to be Named President and
Chief Executive Officer of the Combined Company
Tokai Pharmaceuticals Inc. (NASDAQ:TKAI) and Otic Pharma Ltd., a
privately-held, clinical-stage pharmaceutical company focusing on
the development and commercialization of products for disorders of
the ear, nose, and throat (ENT), today announced that the two
companies, together with the shareholders of Otic Pharma, have
entered into a definitive share purchase agreement under which the
shareholders of Otic Pharma will become the majority owners of
Tokai.
The transaction will result in a NASDAQ-listed company focused
on the development and commercialization of products for ENT
disorders, including Otic Pharma’s lead candidate which is a
nasally-administered, combination drug product (OP-02) intended to
address the underlying cause of otitis media and Eustachian tube
dysfunction (OM/ETD), a condition that affects more than 700
million people around the world every year. The company will
operate under the name OticPharma, Inc., and will be led by Gregory
J. Flesher, current Chief Executive Office of Otic Pharma Ltd.
Current President and Chief Executive Officer of Tokai, Jodie
Morrison, will remain as a member of the board of directors.
“Over the last several months, Tokai has conducted an extensive
review of strategic alternatives aimed at maximizing value for our
shareholders over the long-term,” said Jodie Morrison, President
and CEO of Tokai Pharmaceuticals. “We believe the proposed
transaction with Otic Pharma, a company that has both a promising
pipeline and an experienced leadership team with a track record of
creating significant shareholder value in public pharmaceutical
companies, advances this goal.”
“Our lead program in otitis media, OP-02, has significant
potential,” said Gregory J. Flesher, Chief Executive Officer of
Otic Pharma. “OP-02 is an investigational drug product designed to
break the cycle of recurrent and chronic otitis media which affect
millions of people around the world. We expect to have phase 1
clinical pharmacodynamic data in the first half of 2017 and, with
this transaction, to have the capital needed to be able to move
directly into phase 2 development to explore the product’s ability
to prevent otitis media in children.”
Share Purchase Agreement Details
Under the terms of the agreement, the shareholders of Otic
Pharma will receive a total of 32,172,209 shares of newly issued
Tokai common stock, while outstanding Otic Pharma options and
convertible securities will be assumed by Tokai. Upon the exchange,
it is expected that existing Tokai stockholders will own
approximately 40% of the combined company, with existing Otic
Pharma shareholders owning approximately 60%. The transaction has
been unanimously approved by the boards of directors of both
companies and shareholders of Otic Pharma. Tokai’s largest
stockholder, Apple Tree Partners, who holds approximately 35% of
Tokai’s common stock has entered into an agreement in support of
the proposed transaction. The transaction is expected to close
during the first quarter of 2017, subject to customary closing
conditions, including approval by shareholders of Tokai.
Wedbush PacGrow advised Tokai Pharmaceuticals and Piper Jaffray
& Co. advised Otic Pharma in the proposed transaction. Wilmer
Cutler Pickering Hale and Dorr LLP and Gross, Kleinhendler, Hodak,
Halevy, Greenberg & Co. served as legal counsel to Tokai and
Gibson, Dunn & Crutcher LLP and Yigal Arnon & Co. served as
legal counsel to Otic Pharma.
Management and Organization
Upon the close of the proposed transaction, the board of
directors of the combined company will consist of seven members,
three to be designated by Tokai and four to be designated by Otic
Pharma. Officers of the new company will be Gregory J. Flesher,
President and Chief Executive Officer; Christine G. Ocampo, Chief
Financial and Compliance Officer; and Dr. Catherine C. Turkel,
Chief Development Officer.
Additional Funding
An Otic Pharma investor syndicate, including current
shareholders and members of the management team, has committed to
invest $7 million of additional capital in connection with the
share purchase agreement.
Conference Call Information
Tokai and Otic Pharma will host a conference call in early
January to discuss the proposed transaction. Call in information
will be provided in a future press release.
About Otic Pharma
Otic Pharma is a clinical-stage pharmaceutical company focusing
on the development and commercialization of products for disorders
of the ear, nose, and throat (ENT). The company has two platform
technologies, each of which has the potential to be developed for
multiple ENT indications. The company is currently developing a
nasally-administered, combination drug product (OP-02) intended to
address the underlying cause of otitis media and Eustachian tube
dysfunction (OM/ETD), a condition that affects more than 700
million people around the world every year. Otitis media is one of
the most common disease seen in pediatric practice and the most
frequent reason children consume antibiotics or undergo surgery.
The company also has a foam-based drug delivery technology platform
(OP-01) that can be used to deliver drugs into the ear, nose, and
sinus cavities. The company is currently developing OP-01 as an
improved treatment option for acute otitis externa (“swimmers
ear”). For more information on the company, please visit
www.oticpharma.com.
About Tokai Pharmaceuticals
Tokai Pharmaceuticals is a biopharmaceutical company previously
focused on developing and commercializing innovative therapies for
prostate cancer and other hormonally driven diseases. The ARMOR2
and ARMOR3-SV clinical trials of Tokai’s drug candidate,
galeterone, for the treatment of metastatic castration-resistant
prostate cancer (mCRPC) have been closed, with only patients in
ARMOR2 long-term extension continuing treatment at this time. Plans
remain in effect to present data from the ARMOR3-SV trial in a
scientific forum once fully available and analyzed. Assessment of
plans for galeterone, the ARDA platform and Tokai’s AR-V7 assay
work are underway at this time.
Safe Harbor
Additional Information about the Proposed Transaction and
Where to Find It
In connection with the proposed transaction, Tokai intends to
file with the Securities and Exchange Commission (the “SEC”) a
proxy statement in connection with the proposed transaction with
Otic Pharma and furnish or file other materials with the SEC in
connection with the proposed transaction. The definitive proxy
statement will be sent or given to the stockholders of Tokai and
will contain important information about the proposed transaction
and related matters. BEFORE MAKING ANY VOTING DECISION, TOKAI’S
STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND THOSE OTHER
MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO)
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. The proxy
statement and other relevant materials (when they become
available), and any other documents filed by Tokai with the SEC,
may be obtained free of charge at the SEC’s website at www.sec.gov.
In addition, security holders will be able to obtain free copies of
the proxy statement upon request directed to the Corporate
Secretary at 255 State Street, Boston MA 02109, or by phone at
617-225-4305.
Participants in the Solicitation
Tokai, Otic Pharma and each of their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of Tokai in
connection with the proposed transaction. Information regarding the
interests of these directors and executive officers in the proposed
transaction described herein will be included in the proxy
statement described above. Additional information regarding the
directors and executive officers of Tokai is included in proxy
statement for its 2016 Annual Meeting, which was filed with the SEC
on April 29, 2016, and is supplemented by other public filings
made, and to be made, with the SEC by Tokai.
Forward-looking
Statements
Any statements in this press release that are not historical
facts, including statements regarding the structure, timing and
completion of the proposed transaction; Tokai’s continued listing
on NASDAQ prior to and after the proposed transaction; expectations
regarding the capitalization, cash balances and working capital,
resources and ownership structure of the company after the
transaction; expectations regarding the sufficiency of the
company’s resources to fund the advancement of any development
program or the completion of any clinical trial; the nature,
strategy and focus of the company after the transaction; the
safety, efficacy and projected development timeline and commercial
potential of any product candidates; the expectations regarding
voting by Tokai stockholders: and other statements containing the
words “believes,” “anticipates,” “plans,” “expects,” “may,” and
similar expressions, constitute forward-looking statements within
the meaning of The Private Securities Litigation Reform Act of
1995. Actual results may differ materially from those indicated by
such forward-looking statements as a result of various important
factors, including: risks and uncertainties associated with
stockholder approval of and the ability to consummate the proposed
transaction; whether the anticipated cash resources will be
sufficient to fund operations for the period anticipated and to
conduct the anticipated studies; whether the necessary approvals to
commence clinical trials of Otic’s product candidates can be
obtained on a timely basis or at all; and whether the results of
clinical trials will warrant submission for regulatory approval,
any such submission will receive approval from the United States
Food and Drug Administration or equivalent foreign regulatory
agencies and, if any of such product candidates obtains such
approval, it will be successfully distributed and marketed. Risks
and uncertainties facing Tokai are discussed in the “Risk Factors”
section of its quarterly report on Form 10-Q for the three months
ended September 30, 2016 Any forward-looking statements contained
in this press release speak only as of the date hereof and not of
any future date, and the companies expressly disclaim any
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20161222005161/en/
Tokai Investors:Argot PartnersDavid Pitts or Maeve
Conneighton,
212-600-1902david@argotpartners.commaeve@argotpartners.comorOtic
Pharma Investors:The Trout GroupGita Ogawa,
646-378-2949Gogawa@troutgroup.com
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