Novus Therapeutics Reports Second Quarter 2017 Results

IRVINE, Calif., Aug. 9, 2017

For the three months ended June 30, 2017, the Novus reported a net loss of $6.7 million or $1.32 per share.  This compares to a net loss of $1.0 million or $2.25 per share for the same period in the prior year.  For the six months ended June 30, 2017, Novus reported a net loss of $8.0 million or $2.51 per share.  This compares to a net loss of $2.1 million or $4.68 per share for the same period in the prior year.  Novus ended the second quarter of 2017 with $22.5 million in cash and cash equivalents.

"The second quarter was a transformational period for the company," said Gregory J. Flesher, President and Chief Executive Officer.  "We completed the previously announced merger with Tokai Pharmaceuticals, Inc., made changes to the leadership team, consolidated operations to our Irvine headquarters, and embarked on a focused effort to advance OP-02 as a potential first-in-class treatment option for the millions of patients burdened by otitis media."

Recent Business Highlights and Corporate Update

• Completion of the Merger:  On May 9, 2017, the previously announced merger between Otic Pharma, Ltd. and Tokai Pharmaceuticals, Inc. was completed and the name of the combined company was changed to Novus Therapeutics, Inc.  On May 11, 2017, Novus began trading on the NASDAQ Capital Market under the ticker symbol "NVUS."
  
  
• Financing Activities:  Novus raised an additional $7.1 million in gross proceeds in connection with the merger.  The proceeds included $4.0 million obtained through a private placement of the company's common stock on May 10, 2017 and approximately $3.1 million obtained through the exercise of Otic Pharma, Ltd. warrants prior to close of the merger.
  
  
• Leadership Change:  Jon Kuwahara joined Novus as Senior Vice President of Finance and Administration, succeeding Christine Ocampo.  Mr. Kuwahara has over 25 years of finance and operations experience, primarily within the pharmaceutical industry.  Mr. Kuwahara is a member of the Board of Directors, and Chairman of the Audit Committee, for Emmaus Life Sciences, Inc. and has held past finance roles at Espero Pharmaceuticals, Avanir Pharmaceuticals, and Questcor Pharmaceuticals.
  
  
• Research and Development:  Given the current capital resources, Novus made the strategic decision to focus substantially all of its development activities to the advancement of OP-02 for otitis media, an opportunity management believes has the greatest potential to create significant shareholder value.  Novus is currently conducting formulation development activities on OP-02, and upon successful completion and manufacturing of clinical supply, plans to begin human studies in 2018.  Novus currently maintains nine prostate cancer patients in a safety study of galeterone, but has terminated all other research and development activities related to galeterone.
  

Financial Results for the Three Months and Six Months Ended June 30, 2017

Research and development expenses for the three-month and six-month periods ended June 30, 2017 decreased to approximately $0.5 million and $1.0 million, as compared to $0.6 million and $1.3 million respectively, for the same periods in 2016.  The change was primarily attributed to decreased spending towards OP-01 and offset by costs incurred for Tokai's legacy development programs during 2017.

General and administrative expenses for the three-month and six-month periods ended June 30, 2017 increased to approximately $6.1 million and $7.0 million, as compared to $0.3 million and $0.8 million, respectively for the same periods in 2016.  The change was primarily attributed to $5.4 million in one-time merger related expenses for the three-month period ended June 30, 2017 and public company related expenses, including severance costs for previous Tokai employees.