Boston-based Tokai throws in the towel, sells public shell to Israeli biotech
A Boston-based drug developer incorporated 12 years ago which stopped development of it’s lead drug for prostate cancer this past summer has transferred its publicly-traded shell to an Israeli firm.
Tokai Pharmaceuticals (Nasdaq: TKAI) and Otic Pharma Ltd., which is developing drugs for disorders of the ear, nose, and throat, announced a share purchase agreement Thursday under which the shareholders of Otic will become the majority owners of Tokai. The new company will operate under the name OticPharma and will be led by Gregory J. Flesher, current CEO of Otic Pharma, while Tokai’s president and CEO Jodie Morrison will become a member of the new board of directors.
Shareholders of Otic Pharma will receive a total of 32 million shares of newly-issued Tokai stock, while outstanding Otic Pharma options and convertible securities will be assumed by Tokai. Tokai stockholders will end up owning about 40 percent of the new company, and Otic’s will owning the other 60 percent. The transaction has been unanimously approved by the boards of directors of both companies and shareholders of Otic Pharma.
Tokai’s largest stockholder, New York-based Apple Tree Partners, held approximately 35 percent of Tokai’s common stock, before the transaction, which is expected to close during the first quarter of 2017.
The move means one fewer of the more than 80 Nasdaq-traded biotech firms based in Massachusetts, coming five months after Tokai halted a late-stage trial of its potential prostate cancer drug, called galeterone, because it determined it probably would have failed. The company’s shares fell to a quarter of what they were previously within a few hours of trading, giving the company a market value that was less than than the amount of cash the company had on hand at the time. It laid off 10 employees, more than half it’s total staff, in the following days.
“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 Morrison in a statement yesterday. “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.”
On Thursday, Tokai’s shares closed up 20 percent after the announcement.
A Boston-based drug developer incorporated 12 years ago which stopped development of it’s lead drug for prostate cancer this past summer has transferred its publicly-traded shell to an Israeli firm.
Tokai Pharmaceuticals (Nasdaq: TKAI) and Otic Pharma Ltd., which is developing drugs for disorders of the ear, nose, and throat, announced a share purchase agreement Thursday under which the shareholders of Otic will become the majority owners of Tokai. The new company will operate under the name OticPharma and will be led by Gregory J. Flesher, current CEO of Otic Pharma, while Tokai’s president and CEO Jodie Morrison will become a member of the new board of directors.
Jodie Morrison CEO, Tokai Pharmaceuticals Inc.
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Jodie Morrison CEO, Tokai Pharmaceuticals Inc.
M. SHAWN READ
Shareholders of Otic Pharma will receive a total of 32 million shares of newly-issued Tokai stock, while outstanding Otic Pharma options and convertible securities will be assumed by Tokai. Tokai stockholders will end up owning about 40 percent of the new company, and Otic’s will owning the other 60 percent. The transaction has been unanimously approved by the boards of directors of both companies and shareholders of Otic Pharma.
Tokai’s largest stockholder, New York-based Apple Tree Partners, held approximately 35 percent of Tokai’s common stock, before the transaction, which is expected to close during the first quarter of 2017.
The move means one fewer of the more than 80 Nasdaq-traded biotech firms based in Massachusetts, coming five months after Tokai halted a late-stage trial of its potential prostate cancer drug, called galeterone, because it determined it probably would have failed. The company’s shares fell to a quarter of what they were previously within a few hours of trading, giving the company a market value that was less than than the amount of cash the company had on hand at the time. It laid off 10 employees, more than half it’s total staff, in the following days.
“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 Morrison in a statement yesterday. “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.”
On Thursday, Tokai’s shares closed up 20 percent after the announcement.
