Novus Therapeutics, Inc. (NASDAQ:NVUS) Files An 8-K Material Modification to Rights of Security Holders
Item3.03 for additional information regarding this stock split.
| Item1.01 | Entry into a Material Agreement |
As previously disclosed, Novus Therapeutics, Inc. (formerly Tokai
Pharmaceuticals, Inc.), a Delaware corporation (the Company)
entered into a stock purchase agreement (the Stock Purchase
Agreement) with certain purchasers named therein (the Purchasers)
on January31, 2017, to which the Purchasers agreed to purchase
approximately $4,000,000 of the Companys common stock through the
purchase of 3,603,601 shares of the Companys common stock at a
price of $1.11 per share.
On May10, 2017, the Company and the Purchasers closed the
transaction contemplated by the Stock Purchase Agreement, whereby
the Company issued to the Purchasers an aggregate of 3,603,601
shares of the Companys common stock for the purchase price
described above.
On May10, 2017, the Company and the Purchasers entered into a
registration rights agreement (the Registration Rights Agreement)
under which the Company agreed to file a registration statement
on Form S-3 to register under the Securities Act of 1933, as
amended (the Securities Act), the shares issued to the Stock
Purchase Agreement. A copy of the Registration Rights Agreement
is filed herewith as Exhibit 10.1, the terms of which are
incorporated herein by reference.
| Item2.01 |
Completion of Acquisition or Disposition of Assets |
As previously disclosed, on December21, 2016, the Company, Otic
Pharma, Ltd., a private limited company organized under the laws
of the State of Israel (Otic Pharma), and the shareholders of
Otic Pharma (each a Seller and collectively, the Sellers),
entered into a Share Purchase Agreement (the Share Purchase
Agreement), to which, among other things, each Seller agreed to
sell to the Company, and the Company agreed to purchase from each
Seller, all of the ordinary and preferred shares of Otic Pharma
(Otic Pharma Shares) owned by such Seller in exchange for the
issuance of a certain number of shares of common stock of the
Company, as determined to the terms of the Share Purchase
Agreement (the Otic Transaction). The parties amended and
restated the Share Purchase Agreement on March2, 2017. A complete
description of the terms of the Share Purchase Agreement is
included in the Companys Proxy Statement on Schedule 14A (the
Proxy Statement), which was filed with the Securities and
Exchange Commission on April7, 2017.
On May9, 2017, the Company, Otic Pharma and the Sellers closed
the transaction contemplated by the Share Purchase Agreement, and
the Company issued to the Sellers an aggregate 36,249,237 shares
of the Companys common stock in exchange for the Otic Pharma
Shares. Following the completion of the Otic Transaction, the
business being conducted by the Company became primarily the
business conducted by Otic Pharma, which is a specialty
pharmaceutical company focusing on the development of ear, nose,
and throat (ENT) product candidates.
In connection with the Otic Transaction, the name of the
surviving corporation was changed to Novus Therapeutics, Inc. The
Companys common stock will remain listed on The NASDAQ Stock
Market, with trading having commenced on a post-split basis
(giving effect to the Reverse Stock Split described below) and
under the new name as of May11, 2017. The trading symbol also
changed on that date from TKAI to NVUS. The Companys common stock
is represented by a new CUSIP number 67011N105.
Immediately following the closing of the Otic Transaction and
prior to the Reverse Stock Split and the closing under the Stock
Purchase Agreement, there were 58,890,886 shares of the Companys
common stock issued and outstanding, with the Sellers
beneficially owning approximately 61.6% of the
outstanding shares. All of the Sellers are party to lock-up
agreements, to which such they have agreed, except in limited
circumstances, not to sell or transfer, or engage in swap or
similar transactions with respect to, shares of the Companys
common stock, including, as applicable, shares received in the
Otic Transaction, for a period of 180 days following the
completion of the Otic Transaction.
The foregoing description of the Share Purchase Agreement is
qualified in its entirety by reference to the Amended and
Restated Share Purchase Agreement, which was filed as Exhibit 2.1
to the Companys Annual Report on Form 10-K for the year ended
December31, 2016.
| Item3.02 |
Unregistered Sales of Equity Securities |
to the Share Purchase Agreement, the Company issued 36,249,237
shares of common stock on May9, 2017. The nature of the
transaction, the nature and amount of consideration received by
the Company are described in Item 2.01 of this Form 8-K, which is
incorporated by reference into this Item 3.02. Such sales were
exempt from registration under Section 4(a)(2) and Regulation D
and Regulation S under the Securities Act, and the rules
promulgated thereunder.
to the Stock Purchase Agreement, the Company issued an additional
3,603,601 shares of common stock on May10, 2017. The nature of
the transaction, the nature and amount of consideration received
by the Company are described in Item 1.01 of this Form 8-K, which
is incorporated by reference into this Item 3.02. Such sales were
exempt from registration under Section 4(a)(2) and Regulation D
and Regulation S under the Securities Act, and the rules
promulgated thereunder.
| Item3.03 |
Material Modification to Rights of Security Holders |
On May9, 2017, the Company held a special meeting of stockholders
(the Special Meeting) to consider and vote on certain proposals
relating to the Share Purchase Agreement and the Stock Purchase
Agreement, each as described more fully in the Proxy Statement.
As described below under Item 5.07, the Companys stockholders
approved the proposal presented at the Special Meeting to
authorize the filing of a Certificate of Amendment to the
Companys Amended and Restated Certificate of Incorporation (the
COI) to effect a reverse split of the Companys common stock
within a range of 1-for-1 to 1-for-10 (the Reverse Stock
Split Proposal). Following the approval of the Reverse Stock
Split Proposal at the Special Meeting, the Company filed on May9,
2017 a Certificate of Amendment to the COI for the purpose of
implementing the Reverse Stock Split Proposal at a ratio of
1-for-9, with such reverse split to be effective as of 12:01 a.m.
(ET) on May11, 2017 (as implemented, the Reverse Stock
Split).
As a result of the
implementation of the Reverse Stock Split, the number of issued
and outstanding shares of the Companys common stock immediately
prior to the Reverse Stock Split will be reduced into a smaller
number of shares, such that every 9 shares of the Companys common
stock held by a stockholder immediately prior to the Reverse
Stock Split will be combined and reclassified into one share of
the Companys common stock. Immediately following the Reverse
Stock Split, and giving effect to the shares issued in the Otic
Transaction and the Stock Purchase Agreement, there will be
approximately 7million shares (post-split) of the Companys common
stock issued and outstanding. Unless otherwise noted herein,
references to share amounts do not reflect the Reverse Stock
Split.
No fractional
shares will be issued in connection with the Reverse Stock Split.
Any fractional shares otherwise resulting from the Reverse Stock
Split will be rounded down to the nearest whole number and each
stockholder who would otherwise be entitled to a fraction of a
share of common stock upon the
Reverse Stock
Split (after aggregating all fractions of a share to which the
stockholder would otherwise be entitled) will receive a cash
payment in an amount equal to the fair market value of the
fractional share based on the closing price of the Companys
common stock on The NASDAQ Stock Market on May10, 2017.
Also on May9,
2017, in connection with and immediately following the Otic
Transaction, the Company filed a further amendment to the COI to
change the Companys name from Tokai Pharmaceuticals, Inc. to
Novus Therapeutics, Inc.
The foregoing
descriptions of the amendments to the COI are subject to and
qualified in their entirety by reference to full text of such
amendments, copies of which are filed herewith as Exhibits 3.1
and 3.2 and are incorporated herein by reference.
| Item4.01 |
Change in Registrants Certifying Accountant |
On May10, 2017,
the Audit Committee of the Companys Board of Directors (the Audit
Committee) dismissed PricewaterhouseCoopers LLP (PwC) as the
independent registered public accounting firm of Novus
Therapeutics, Inc. (formerly known as Tokai Pharmaceuticals,
Inc.), effective immediately. On the same date, the Audit
Committee approved the appointment of Ernst Young LLP (EY) as the
Companys new independent registered public accounting firm,
effective as of such date.
The reports of PwC
on the Novus Therapeutics, Inc. (formerly known as Tokai
Pharmaceuticals, Inc.) financial statements for each of fiscal
years ended December31, 2016 and December31, 2015 did not contain
an adverse opinion or a disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or
accounting principle.
During the fiscal
years ended December31, 2016 and December31, 2015, and the
subsequent interim period through May10, 2017, there were no
disagreements (as that term is defined in Item 304(a)(1)(iv) of
Regulation S-K and related instructions) between the Company and
PwC on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedures
which disagreements, if not resolved to the satisfaction of PwC
would have caused PwC to make reference thereto in their reports
on the financial statements for such years.
The Company
provided PwC with a copy of the disclosures it is making in this
Current Report on Form 8-K and requested that PwC furnish the
Company with a letter addressed to the Securities and Exchange
Commission stating whether it agrees with the statements
contained herein. A copy of PwCs letter, dated May12, 2017, is
filed as Exhibit 16.1 to this Current Report on Form 8-K.
During the fiscal
years ended December31, 2016 and December31, 2015, and the
subsequent interim period through May10, 2017, neither the
Company, nor anyone acting on its behalf, consulted with EY
regarding: (i)the application of accounting principles to a
specified transaction, either completed or proposed, or the type
of audit opinion that may be rendered on the Companys financial
statements, and EY did not provide either a written report or
oral advice to the Company that was an important factor
considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue, or (ii)any
matter that was either the subject of a disagreement (as defined
in Item 304(a)(1)(iv) of Regulation S-K and the related
instructions) or a reportable event (as described in Item
304(a)(1)(v) of Regulation S-K).
| Item5.01 | Changes in Control of Registrant |
The disclosures
set forth in Item 2.01 regarding the Otic Transaction and the
disclosures set forth in Item 5.02 regarding the Companys board
of directors are incorporated by reference into this Item
5.01.
| Item5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers |
Directors
In accordance with
the Share Purchase Agreement, on May 9, 2016, effective
immediately prior to the effective time of the Otic Transaction,
each of Joseph A. Yanchik, III, David A. Kessler, Seth L.
Harrison and Stephen Buckley, Jr. resigned from the Companys
board of directors and any respective committees of the board of
directors on which they served, which resignations were not the
result of any disagreements with the Company relating to the
Companys operations, policies or practices.
In accordance with
the Share Purchase Agreement, at the effective time of the Otic
Transaction, on May10, 2017, the board of directors and its
committees were reconstituted, with Erez Chimovits, Cheryl A.
Cohen and Jodie P. Morrison appointed as ClassI directors of the
Company whose terms expire at the Companys 2018 annual meeting of
stockholders; Keith A. Katkin and John S. McBride appointed as
ClassII directors of the Company whose terms expire at the
Companys 2019 annual meeting of stockholders; and Gregory J.
Flesher and Gary A. Lyons appointed as ClassIII directors of the
Company whose terms expire at the Companys 2017 annual meeting of
stockholders. In addition, Keith A. Katkin, Gary A. Lyons and
Cheryl A. Cohen were appointed to the Companys Audit Committee,
Gary A. Lyons and Cheryl A. Cohen were appointed to the
Compensation Committee and Keith A. Katkin and Cheryl A. Cohen
were appointed to the Nominating and Governance Committee.
Officers
On May10, 2017,
the newly constituted Board of Directors appointed Gregory J.
Flesher as Chief Executive Officer (in which capacity he will
serve as the Companys principal executive officer), Christine G.
Ocampo as Chief Financial Officer and Chief Compliance Officer
(in which capacity she will serve as the Companys principal
financial and accounting officers), and Catherine C. Turkel as
the Companys Chief Development Officer, with such officers
replacing their predecessors, Ms. Morrison and Mr. McBride. As of
the date hereof, Mr. Flesher and Messes. Ocampo and Turkel are
the sole officers of the Company.
Biographical
information regarding each of the newly appointed directors and
executive officers is included in the Proxy Statement and is
incorporated herein by reference.
Mr.Flesher and
Ms.Ocampo are currently both a party to at-will employment
agreements with Otic, which provide for an annual base salary of
$400,000 and $255,000, respectively, and an annual bonus in the
target amounts equal to 40% and 25% of their respective base
salaries. The Company intends to enter into new employment
agreements with Mr.Flesher and Ms.Ocampo and expects that these
agreements will provide for at-will employment, provide for each
officers base salary, an annual incentive bonus opportunity and
standard employee benefit plan participation, including
participation in equity incentive plans maintained by the
Company.
In connection with
the resignation of the officers of the Company, Jodie P. Morrison
and John S. McBride became entitled to receive the severance and
change of control payments as described in each of their
employment agreements. For additional information regarding these
payments, please refer to Interests of Tokais Directors and
Officers Quantification of Payments and Benefits to Tokais Named
Executive Officers on page 89 of the Proxy Statement.
| Item5.03 |
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year |
The disclosures
set forth in Item 3.03 regarding the amendments to the Companys
COI are incorporated by reference into this Item 5.03.
| Item5.07 |
Submission of Matters to a Vote of Security Holders. |
On May9, 2017, the
Company held the Special Meeting to vote on the four proposals
described in the Proxy Statement. As of April3, 2017, the record
date for the Special Meeting, the Company had 22,641,651 shares
of Common Stock outstanding and entitled to vote. At the Special
Meeting, 19,032,694 shares were present in person or represented
by proxy and entitled to vote. The number of votes cast for and
against each proposal, as well as the number of abstentions and
broker non-votes with respect to each matter voted upon are set
forth below:
1. To approve the
issuance of shares of to the terms of the Share Purchase
Agreement:
|
For |
Against | Abstain | Broker Non-Votes | |||||||||
|
13,246,740 |
765,452 | 6,883 | 5,013,619 |
2. To approve the
issuance of shares of to the terms of the Stock Purchase
Agreement:
|
For |
Against | Abstain | Broker Non-Votes | |||||||||
|
13,239,283 |
766,409 | 13,383 | 5,013,619 |
3. To approve and
adopt the Reverse Stock Split Proposal:
|
For |
Against | Abstain | Broker Non-Votes | |||||||||
|
18,389,503 |
625,712 | 17,479 |
4. To adjourn the
Special Meeting, if needed, to solicit additional votes to
approve the foregoing proposals:
|
For |
Against | Abstain | Broker Non-Votes | |||||||||
|
17,574,016 |
1,330,100 | 128,577 |
| Item9.01 | Financial Statements and Exhibits |
(a) Financial
statements of businesses acquired.
The audited
consolidated financial statements of Otic Pharma Ltd. and its
subsidiary, which comprise the balance sheets as of December31,
2016 and 2015, and the related Statements of Operations, Changes
in Shareholders Deficit and Cash Flows for the year and period
then ended, and the related notes thereto, are contained in the
Proxy Statement commencing on Page F-28 and are incorporated
herein by reference.
The required
unaudited consolidated interim financial statements of Otic
Pharma Ltd. and its subsidiary as of and for the period ended
March31, 2017 will be filed as an amendment to this Current
Report on Form 8-K as soon as practicable after the date hereof,
but not later than July25, 2017.
(b) Pro Forma
Financial Information
The pro forma
financial information required by Item 9.01(b) will be filed as
an amendment to this Current Report on Form 8-K as soon as
practicable after the date hereof, but not later than July25,
2017.
(d)
Exhibits
|
Exhibit No. |
Description |
|
| 3.1 |
Certificate of Amendment (Reverse Stock Split) to the Restated Certificate of Incorporation of the Company, dated May9, 2017. |
|
| 3.2 |
Certificate of Amendment (Name Change) to the Restated Certificate of Incorporation of the Company, dated May9, 2017. |
|
| 10.1 |
Registration Rights Agreement, dated May10, 2017, by and among the Company and the Purchasers. |
|
| 16.1 | Letter from PricewaterhouseCoopers LLP, dated May12, 2017 |
About Novus Therapeutics, Inc. (NASDAQ:NVUS)
Novus Therapeutics, Inc., formerly Tokai Pharmaceuticals, Inc., is a pharmaceutical company. The Company is focused on the acquisition, development, and commercialization of ear, nose, and throat products. It has two platforms: OP-01 Foam Platform and OP-02 Surfactant Program. OP-01 is developed with the intent to be used as a delivery vehicle for drugs treating ears, as well as the nasal and sinus cavities. OP-01 is currently being developed as an improved treatment option for acute otitis externa. OP-02 is a daily nasal spray that is designed to improve and maintain a healthy middle ear. OP-02 is being developed as a potential treatment option for patients with otitis media and Eustachian tube dysfunction. OP-02 is a combination drug product, which comprises two components: surfactant dipalmitoylphosphatidylcholine and a spreading agent cholesteryl palmitate. The product is sprayed through the nostrils toward the opening of the Eustachian tube at the back of the nasal cavity. Novus Therapeutics, Inc. (NASDAQ:NVUS) Recent Trading Information
Novus Therapeutics, Inc. (NASDAQ:NVUS) closed its last trading session down -0.22 at 5.79 with 28,395 shares trading hands.