TOKAI PHARMACEUTICALS, INC. (NASDAQ:TKAI) Files An 8-K Entry into a Material Definitive Agreement

TOKAI PHARMACEUTICALS, INC. (NASDAQ:TKAI) Files An 8-K Entry into a Material Definitive Agreement

Item1.01. Entry into a Material Definitive Agreement.

On December21, 2016, Tokai Pharmaceuticals, Inc. (Tokai or the
Company), Otic Pharma, Ltd., a private limited company organized
under the laws of the State of Israel (Otic), and the
shareholders of Otic named therein (the Selling Shareholders)
entered into a Share Purchase Agreement (the Share Purchase
Agreement), to which, among other things, subject to the
satisfaction or waiver of the conditions set forth in the Share
Purchase Agreement, each Selling Shareholder agreed to sell to
Tokai, and Tokai agreed to purchase from each Selling
Shareholder, all of the ordinary and preferred shares of Otic
(the Otic Shares) owned by such Selling Shareholder (the
Transaction).

The Selling Shareholders own 50% of the outstanding Otic Shares
and following the consummation of the Transaction, Otic will
become a wholly owned subsidiary of Tokai.

Subject to the terms and conditions of the Share Purchase
Agreement, it is currently anticipated that at the closing of the
Transaction, the Selling Shareholders will collectively receive
approximately 32,172,209 shares of Tokais common stock. Also in
connection with the Transaction, Tokai will assume the
(i)outstanding stock option awards of Otic, and (ii)outstanding
warrants of Otic, each of which will be adjusted to reflect the
exchange ratio for the Transaction. Immediately following the
closing of the Transaction, the Selling Shareholders are expected
to own approximately 60% of the outstanding common stock of
Tokai.

Each of Tokai, Otic and the Selling Shareholders has agreed to
customary representations, warranties and covenants in the Share
Purchase Agreement including, among others, covenants relating to
(1)using commercially reasonable efforts to obtain the requisite
approvals of the stockholders of Tokai to the Tokai Voting
Proposal described below, (2)non-solicitation of competing
acquisition proposals by each of Tokai and Otic, (3)Tokai using
commercially reasonable efforts to maintain the existing listing
of the Companys common stock on The NASDAQ Stock Market, Inc.
(NASDAQ), and (4)Tokais and Otics conduct of their respective
businesses during the period between the date of signing the
Share Purchase Agreement and the closing of the Transaction.

Consummation of the Transaction is subject to certain closing
conditions, including, among other things, (1)approval by the
stockholders of Tokai in accordance with applicable NASDAQ rules
of the issuance of the shares of the Companys common stock in the
Transaction (the Tokai Voting Proposal), (2) the absence of any
order or injunction preventing the consummation of the
Transaction or any legal requirement that makes the consummation
of the Transaction illegal, (3)the approval by NASDAQ of the
NASDAQ Listing ApplicationFor Companies Conducting a Business
Combination that Results in a Change of Control with respect to
the shares of Tokai common stock to be issued in connection with
the Transaction and (4)obtaining certain governmental
authorizations or consents, including certain Israeli tax
rulings. Each partys obligation to consummate the Transaction is
also subject to other specified customary conditions, including
(1)the representations and warranties of the other party being
true and correct as of the date of the Share Purchase Agreement
and as of the closing date of the Transaction, generally subject
to an overall material adverse effect qualification, and (2)the
performance in all material respects by the other party of its
obligations under the Share Purchase Agreement. The Share
Purchase Agreement contains certain termination rights for both
Tokai and Otic, and further provides that, upon termination of
the Share Purchase Agreement under specified circumstances, Tokai
may be required to pay Otic a termination fee of $1million, or
Otic may be required to pay Tokai a termination fee of
$1.5million.

The Share Purchase Agreement contains a lock-up covenant from the
Selling Shareholders, which provides that for 180 days following
the closing of the Transaction, no Selling Shareholder shall
offer, sell, or otherwise dispose of, directly or indirectly, any
securities of Tokai, or otherwise enter into a transaction that
would have similar effect.

Under the Share Purchase Agreement, the Company has agreed that
promptly following the closing of the Transaction, it will take
all action necessary to fix the number of members of the Board of
Directors of Tokai at seven; to cause to be elected to the Board
of Directors of Tokai four persons identified by Otic, who are
each reasonably acceptable to the Company; and to cause (i)the
resignations of three members of the Board of Directors of Tokai
or (ii)the resignations of four members of the Board of Directors
of Tokai, and the election of one person identified by Tokai, who
is reasonably acceptable to Otic. In addition, the Company has
agreed to take all action necessary to cause the persons
identified by Otic to be appointed as executive officers of the
Company.

In connection with the Transaction, Tokai will change its name to
OticPharma, Inc., subject to the consummation of the Transaction.
In addition, if necessary, Tokai may seek stockholder approval to
effect a reverse split of Tokai common stock at a ratio to be
determined by Tokai, which is intended to ensure that the listing
requirements of NASDAQ are satisfied.

Also in connection with the Share Purchase Agreement, the
officers and directors of the Company and certain entities
affiliated with Apple Tree Partners holding in the aggregate
approximately 36.3% of the outstanding common stock of Tokai as
of the date of the Stock Purchase Agreement have each entered
into a support agreement in favor of Otic (collectively, the
Support Agreements). The Support Agreements place certain
restrictions on the transfer of the shares of Tokai common stock
held by the respective signatories thereto and covenants on the
voting of such shares in favor of approving the Tokai Voting
Proposal and against any actions that could adversely affect the
consummation of the Transaction.

In addition, Tokai has entered into commitment letters with Otic
and certain purchasers set forth therein under which the
purchasers have agreed to invest up to $7,000,000 of new capital
in Otic and/or Tokai prior to or upon the closing of the
Transaction. Up to $4,000,000 of this amount will be invested in
Tokai through the purchase of 3,603,603 shares of Tokai common
stock at a price of $1.11 per share to a stock purchase
agreement, substantially in the form attached to the commitment
letter, to be entered into by the Company, such purchasers, and
potentially other third parties (the Commitment Letter).The stock
purchase agreement will be executed and delivered on or prior to
January31, 2017 and will provide for the purchase and sale of the
Companys common stock to occur at the time of the closing of the
Transaction. The remaining $3,000,000 will be invested in Otic
prior to the closing of the Transaction through the exercise of
outstanding warrants.

The foregoing description of the (i)Share Purchase Agreement and
the Transaction, (ii)the Support Agreements and (iii)the
Commitment Letter, and the transactions contemplated thereby, in
each case, do not purport to be complete and are qualified in
their entirety by reference to the Share Purchase Agreement,
which is filed as Exhibit 2.1 hereto and which is incorporated
herein by reference, to the Support Agreement, which is filed as
Exhibit 10.1 hereto and which is incorporated herein by
reference, and to the Commitment Letter, which is filed as
Exhibit 10.2 hereto and which is incorporated herein by
reference. The Share Purchase Agreement, the Support Agreement
and the Commitment Letter have been included to provide investors
and security holders with information regarding their terms. They
are not intended to provide any other factual information about
Tokai, Otic, the Selling Shareholders or their respective
subsidiaries and affiliates. The Share Purchase Agreement
contains representations and warranties by Otic and the Selling
Shareholders, on the one hand, and by Tokai, on the other hand,
made solely for the benefit of the other. The assertions embodied
in those representations and warranties are qualified by
information in confidential disclosure schedules delivered by
each party in connection with the signing of the Share Purchase
Agreement, certain representations and warranties in the Share
Purchase Agreement were made as of a specified date, may be
subject to a contractual standard of materiality different from
what might be viewed as material to investors, or may have been
used for the purpose of allocating risk between the Selling
Shareholders and Otic. Accordingly, the representations and
warranties in the Share Purchase Agreement should not be relied
on by any persons as characterizations of the actual state of
facts about the Company at the time they were made or otherwise.
In addition, information concerning the subject matter of the
representations and warranties may change after the date of the
Share Purchase Agreement, which subsequent information may or may
not be fully reflected in Tokais public disclosures.

Item3.02. Unregistered Sales of Equity
Securities.

The disclosure included in Item 1.01 of this Current Report on
Form 8-K is incorporated into this Item 3.02 by reference. The
shares of common stock of Tokai to be issued to the Selling
Shareholders to the Share Purchase Agreement will be issued to
exemptions from registration provided by Section 4(a)(2) and/or
the private offering safe harbor provisions of Regulation D of
the Securities Act and/or Regulation S of the Securities Act,
based on the following factors: (i)the number of offerees or
purchasers, as applicable, (ii)the absence of general
solicitation, (iii)investment representations obtained from the
Selling Shareholders, including with respect to their status as
an accredited investors or not a U.S. person, (iv) the provision
of appropriate disclosure, and (v)the placement of restrictive
legends on the certificates or book-entry notations reflecting
the securities.

Additional Information about the Transaction and Where to
Find It

In connection with the proposed Transaction, Tokai intends to
file relevant materials with the SEC, including a definitive
proxy statement on Schedule 14A (the Proxy Statement). The Proxy
Statement will be sent to stockholders of Tokai seeking their
approval of the Tokai Voting Proposal, and potentially, of an
amendment to Tokais Certificate of Incorporation to effect a
reverse split of its common stock and the issuance of shares of
its common stock under the Stock Purchase Agreement in accordance
with applicable NASDAQ rules. Investors and stockholders of Tokai
are urged to read these materials when they become available
because they will contain important information about Tokai,
Otic, and the proposed Transaction and related transactions. The
Proxy Statement, any amendments or supplements thereto (when they
become available) and other documents filed by Tokai with the SEC
may be obtained free of charge through the SEC web site
atwww.sec.gov. They may also be obtained for free by
directing a written request to: Tokai Pharmaceuticals, Inc., 255
State Street, 6th Floor,
Boston, Massachusetts, 02109, Attention: Chief Financial Officer
and Chief Operating Officer.

This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer
to buy any securities, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under or
applicable exemption from the securities laws of any such
jurisdiction.

Participants in the Solicitation

Tokai, Otic and each of their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the stockholders of Tokai in connection with the
Tokai Voting Proposal. Information regarding the interests of
these directors and executive officers in the proposed
transaction described herein will be included in the proxy
statement described above. Additional information regarding the
directors and executive officers of Tokai is included in its
proxy statement for its 2016 annual meeting of stockholders,
which was filed with the SEC on April29, 2016, and is
supplemented by other public filings made, and to be made, with
the SEC by Tokai.

Item8.01 Other Events

On December22, 2016, Tokai issued a joint press release with Otic
announcing that the companies and the shareholders of Otic have
entered into the Share Purchase Agreement. A copy of the joint
press release is attached hereto as Exhibit 99.1 and is
incorporated by reference herein.

Item 9.01.Financial Statements and Exhibits.

(d) Exhibits

See the ExhibitIndex attached hereto.

to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

TOKAI PHARMACEUTICALS, INC.
Date: December 22, 2016 By:

/s/ John S. McBride

John S. McBride
Chief Financial Officer and Chief Operating Officer

EXHIBITINDEX

Exhibit

Number

Description

2.1* Share Purchase Agreement dated as of December 21, 2016 by and
among Tokai, Otic Pharma, Ltd. and shareholders of Otic
Pharma, Ltd. named therein.
10.1 Support Agreement dated as of December 21, 2016 entered into
by and among Tokai, Otic and certain stockholders of Tokai.
10.2 Commitment Letter dated as of December 21, 2016 entered into
by and among Tokai, Otic and certain purchasers named
therein.
99.1 Joint Press Release dated December22, 2016.
* All Schedules to the Share Purchase Agreement have been
omitted from this filing


About TOKAI PHARMACEUTICALS, INC. (NASDAQ:TKAI)

Tokai Pharmaceuticals, Inc. is a United States-based biopharmaceutical company. The Company focuses on developing and commercializing therapies for prostate cancer and other hormonally-driven diseases. The Company’s lead drug candidate, galeterone, is an oral small molecule that utilizes the mechanistic pathways of second-generation androgen signaling inhibitors, while also introducing a mechanism called androgen receptor degradation, including impairing the function of androgen receptors. The Company is developing galeterone for the treatment of patients with metastatic castration-resistant prostate cancer (mCRPC). Androgen Receptor Modulation Optimized for Response (ARMOR) is its clinical development program for the evaluation of galeterone in patients with prostate cancer. Its drug discovery platform, androgen receptor degradation agents (ARDA), enables the Company to identify and develop compounds with potent androgen receptor degradation activity.

TOKAI PHARMACEUTICALS, INC. (NASDAQ:TKAI) Recent Trading Information

TOKAI PHARMACEUTICALS, INC. (NASDAQ:TKAI) closed its last trading session down -0.14 at 1.07 with 2,099,179 shares trading hands.

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