Crushed by a trial failure, Tokai hands the reins — and the stock listing — to Otic
Last August, Tokai became the latest in a long string of public biotechs to hit a brick wall running at full speed. The late-stage failure of its cancer drug galeterone effectively shredded its stock price and its business plan, forcing the company to rapidly ax staffers and start looking for strategic alternatives in the face of an extinction-level event.
Today, the investors at Otic Pharma took over the shell and executed a quick shortcut to a Nasdaq listing. Tokai, with its market cap set at about $22 million, saw its shares $TKAI jump 57%. Its investors will wind up with about 40% of the new company, with Otic in charge.
Otic’s investors, meanwhile, are adding $7 million to the company as it executes the deal.
While the biotech window hasn’t fully closed this year, it has narrowed considerably following the 2013-2015 go-go years. That’s made reverse mergers like this more appealing to companies like Otic, which is advancing its own early-stage program to mid-stage studies.
“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.”