Otic Pharma merging into Tokai Nasdaq shell

Lab Technician.  Photo: Reuters
Lab Technician. Photo: Reuters

Otic's shareholders will invest $7 million in the merged company.

Otic Pharma, which develops ear, nose, and throat (ENT) treatments, has announced its merger with Nasdaq shell Tokai Pharmaceuticals. Otic main drug is used for treatment of middle ear infections in children.

The parties will exchange shares. Following the deal, Otic's shareholders will own 60% of the merged company, and Tokai's shareholders 40%. The listed company, which will change its name to Otic Pharma and develop Otic's products, will be managed by Otic CEO Gregory Flesher.

Tokay is listed on Nasdaq at a $24 million market cap, after its share price fell 10%, following the announcement. Tokay had $34 million in cash at the end of the third quarter of 2016, and Otic's shareholders agreed to invest $7 million more in the company. Israeli funds OrbiMed Israel, Pontifax, and Peregrine Ventures control Otic, which also obtained a direct investment from former Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) chairman and Opko Health Inc. (NYSE: OPK; TASE: OPK) CEO Phillip Frost. Together with Peregrine, Frost invested in the Intensive incubator in which Otic developed.

Otic's leading product is a nasally administered drug for treating the underlying cause of otitis media and Eustachian tube dysfunction (OM/ETD) more completely than the existing treatments. Initial clinical results from the product are due in mid-2017. The company said that the listed company's cash, combined with the additional investment, should be enough for the the merged company to commence Phase II clinical trials for treatment of ears in children.

Published by Globes [online], Israel business news - www.globes-online.com - on December 25, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Lab Technician.  Photo: Reuters
Lab Technician. Photo: Reuters
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