Tokai Pharmaceuticals Inc (NASDAQ:TKAI) recently inked a share purchase agreement, which will give the shareholders of Otic Pharma, a major ownership for Tokai. According to an official statement from Tokai, an exchange of this agreement would mean that the present stockholders of the company will have around 40% shares of the combined company. Remaining shares would be owned by Otic Pharma.

About the deal and the changeover

From what has been learnt till now, the combined company will have Gregory J. Flesher, the Otic Pharma’s CEO; will now be the President and Chief Executive Officer of the new combined company.

The new company shall be called OticPharma, Inc. The shareholders in Otic Pharma shall enjoy ownership of 32.2 million shares of the common stock, to be issued fresh by Tokai. The Board of both these companies have given their nod to the decision.

After the transaction reaches its final stage, the combined board will constitute a total of seven members, of which 3 shall belong to Tokai and rest of them will belong to Otic Pharma. Apart from these terms and conditions, the investor organization of Otic Pharma shall invest an additional capital of $7 million.

The companies’ joint agenda

The combined company will focus largely on products that deal with development or marketing of ENT disorders. These will include the lead product, OP-02, of Otic Pharma.

The President and Chief Executive Officer of Tokai, Jodie Morrison said that the company has been exploring several strategic opportunities from past few months. The decision has been taken to offer enduring benefits to the shareholders.

Meanwhile, the CEO of Otic, Gregory J. Flesher stated that the lead program of company, viz. OP-02 comes with a lot of potential. This is an investigational drug product, which deals with acute otitis media.

The proposed transaction and its details shall be disclosed by both the companies in January 2017.