Shareholders of Otic Pharma Ltd. will become majority owners of Tokai Pharmaceuticals Inc. as part of a share purchase agreement.
Otic Pharma is a clinical-stage pharmaceutical company focusing on the development and commercialization of products for disorders of the ear, nose and throat.
Under the agreement, the shareholders of Otic Pharma will receive a total of 32,172,209 newly issued Tokai common shares, while outstanding Otic Pharma options and convertible securities will be assumed by Tokai. After the exchange, it is expected that existing Tokai stockholders will own about 40% of the combined company, with existing Otic Pharma shareholders owning about 60%.
The combined company will be listed on Nasdaq and will operate as OticPharma Inc. The combined company will be led by Gregory Flesher, current CEO of Otic Pharma. Jodie Morrison, current president and CEO of Tokai, will remain as a member of the board.
The deal was approved by the boards of both companies and shareholders of Otic Pharma. Apple Tree Partners, Tokai's largest shareholder with its 35% holding in the company, entered into an agreement in support of the proposed transaction.
Pending Tokai shareholders' approval and other customary closing conditions, the transaction is expected to close in the first quarter of 2017.
Wedbush PacGrow served as the adviser of Tokai and Piper Jaffray & Co. advised Otic Pharma in the proposed deal. Wilmer Cutler Pickering Hale and Dorr LLP and Gross Kleinhendler Hodak Halevy Greenberg & Co. served as legal counsel to Tokai. Gibson Dunn & Crutcher LLP and Yigal Arnon & Co. served as legal counsel to Otic Pharma.