Titan looks to Nasdaq, again, to woo U.S. investors
Dual listing ‘strategic move’ for medical device firm
Maybe this time the full plan will be implemented. At Thursday’s annual meeting of Titan Medical Inc., a Toronto-based medical device company “focused on the design, development and commercialization of a robotic surgical system for application in minimally invasive surgery,” shareholders will be asked to approve a stock consolidation — again.
At last year’s annual meeting a similar motion was put forward and received the requisite approval. But the second part of that plan — to list on Nasdaq — didn’t proceed because Titan, whose shares closed at 25 cents on Friday, didn’t meet all the exchange’s requirements.
In 2018, Titan has the same two-part plan: receive shareholder approval for a one-for-30 stock consolidation and then list the consolidated shares on Nasdaq. The shares would remain listed on the TSX, its trading venue for the past decade.
This time, David McNally, the Salt Lake City, Utahbased chief executive, said Titan meets all the requirements including the threshold for net shareholders equity. “By the end of this month we expect to be dual-listed on the TSX and on Nasdaq,” said McNally, who became the CEO effective Jan. 1, 2017.
Such a dual listing is “a strategic move,” McNally said. In fact, it’s strategic in a couple of ways.
For starters, “it allows us to access fundamental institutional investors in the U.S.,” McNally said, adding such investors will more than complement its current shareholder base, which is “nearly all in the hands of retail investors.” Generally institutional investors have a different philosophy than retail: they tend to have a more thorough process in buying stocks; they tend to ignore low-priced stocks; they tend to acquire reasonable size positions; and, they tend to invest with a longer perspective. But they can make mistakes.
“The company would benefit from having some long-term institutional investors who see the opportunity (in our company) a number of years out,” said McNally, noting such investors traditionally don’t invest in penny stocks and typically don’t invest in TSE-only listed stocks.
“The Nasdaq gets us that credibility.”
But the U.S. institutional investors don’t just turn up. Relationships have to be established both with investment analysts — Titan is not covered by any Canadian analysts, according to Bloomberg — and investment bankers.
Establishing those contacts — and remembering that not all Nasdaq-listed stocks receive coverage — takes time, effort and money, despite the vastness of the U.S. capital markets. In other words it’s difficult to stand out. (Some Canadian issuers, and Shopify is probably a good example, do have a very large U.S. following and effectively become owned by the U.S.)
Given his previous experience in the U.S. McNally, may have a chance. When he was hired 18 months back, the company spoke of him having built “an impressive track record of successful medical device commercialization (including being the cofounder of a Nasdaq-listed issuer), plus capital markets experience.”
He has already made some contacts, and says “there appears to be an appetite particularly in the area of surgical robotics for investment in what could be the next great robotic technology.” Titan’s system is currently used in three pre-clinical environments.
In its almost 10 years as a public company, Titan has raised close to $155 million of share capital. Bloom Burton, an investment bank “dedicated exclusively to the healthcare investment industry,” has played a key role in rounding up investors for those equity raises. Over the spring it raised $12 million via the sale of 30-cent units.
But creating successful products will be the key factor in generating investor interest. “We have to have the credibility of a very real product ….. and telling that story to the right parties, to bring in sufficient funding (estimated at US$50 million) for us to execute through commercialization in mid2020.”
THE NASDAQ GETS US THAT CREDIBILITY.