After releasing a corporate update, Otonomy Inc. (NASD: OTIC) is soaring on the charts today, up 19.18% to trade at $0.1367 at the last check in premarket trading.
What kind of update has OTIC given?
After the market closed yesterday, Otonomy (OTIC) stated that its board of directors has authorized and implemented a Plan of Liquidation and Dissolution (“Plan of Dissolution”). In addition, after an orderly wind-down of Otonomy’s activities, shareholders will receive any residual funds, including the sale proceeds of any pipeline assets.
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OTIC exploring strategic options
As reported earlier, OTIC began exploring strategic alternatives to maximize the value of its pipeline. Currently, Otonomy is in talks about possibly selling its pipeline assets. Upon stockholder approval, the proceeds of any such sale would be divided among stockholders in line with the Plan of Dissolution. It depends on a variety of variables how much would really be available to be given to investors if any at all.
OTIC will lay off employees
OTIC has decreased its employment and terminated all employees as of December 15, 2022which will help it cut expenses and prepare for its anticipated dissolution. All officers will have their employment terminated as a result. In the fourth quarter of 2022, Otonomy expects to incur total charges for compensation and other staff termination-related expenses of around $5.0 million.
Board Approval of Dissolution Plan
Subject to the stockholder agreement, the board of directors authorized the liquidation and dissolution of OTIC on December 13, 2022. To request approval of the Plan of Dissolution, Otonomy plans to conduct a special meeting of its stockholders in the first quarter of 2023. As soon as is reasonably possible, Otonomy will submit the necessary proxy papers to the Securities and Exchange Commission (“SEC”).
How will OTIC carry out the disintegration strategy?
If the Plan of Dissolution is approved by the stockholders of Otonomy, OTIC expects to be able to file a confirmation letter of dissolution, simply remove its common stock, and fulfill or rectify its leftover obligations, including but not limited to contingent liabilities and claims, as well as pay the costs of the dissolution. In line with relevant legislation, Otonomy (OTIC) plans to close its stock transfer books, stop documenting exchanges of shares of its share capital, and stop trading in its common stock after submitting the certificate of dissolution.