Medicenna gets just the lift it needs

It turned out to be the perfect combination, the right mix of a relative newcomer with one of the veterans of the world of capital pool companies.

The result: a new public company listed on the TSX-Venture and known as Medicenna Therapeutics Corp. It defines itself as a “clinical-stage immunotherapy company developing a family of novel, proprietary therapeutic cytokines called Superkines.” Formed in 2011, it’s working on treatments for brain cancer.

The shares (MDNA/TSXV) have been trading for a few days. And investors, who bought into the recent $4 million financing done at the same time as the company went public can be pleased: the shares, issued at $2 a piece, closed Wednesday at $2.65.

Fahar Merchant, chief executive officer, said going public was part of a plan to give liquidity to some of the company’s original investors. “It will also give us a broader investor base and a better exposure to raise additional capital,” he said noting that being public “does bring additional responsibilities.”

But getting Medicenna to the stage of where it could go public required some hurdles be cleared. From a financial perspective, the story started about a year ago when the executives of the then privately owned Medicenna teamed up with Bloom Burton & Co., a Toronto-based investment bank, which focuses entirely on the health-care sector. Since then Bloom Burton has raised about $10 million by way of private placements, for the company headquartered in Toronto but with a subsidiary in Houston.

But the company was cashed up because it received US$14.1 million by way of a product development grant from the Cancer Prevention Research Institute of Texas. The company was one of four to receive such a grant. That grant is repayable, in the form of royalties, if Medicenna is successful.

Brian Bloom, the firm’s chief executive said, in his world, it’s rare “where the appropriate path to being a public company is a CPC. As a dealing firm, we are involved in companies that choose the CPC path very rarely,” he added.

But Medicenna was a suitable CPC candidate for two reasons, said Bloom: It has an “asset” for the treatment of brain cancer and his firm provided most of the capital to fund the private company.

“It only needed a small amount of capital concurrent with going public. That’s what made it ideal for a CPC. If it needed $50 million we would have done an IPO,” he said.

But to go public via a CPC, Medicenna had to find one that was available. So a call was made to the Calgary office of Richardson GMP, specifically Darrin Hopkins, the co-head of the firm’s private client capital markets division. In his career Hopkins has been involved in more than 100 CPCs.

Hopkins, turned to a former colleague Gino DeMichele, who two years back formed A2 Acquisition Corp. In July 2015, with Richardson GMP in the lead role, A2 closed its IPO with $500,000 in the kitty. A2 then had two years to find a qualifying transaction.

Last November, A2 announced that it had entered into a “non-binding letter of intent with an arm’s length private clinical stage, immuno-oncology company.” That move halted trading in the shares of A2.

In early February, the agreement was upgraded to a definitive agreement. In the resulting transaction, A2 acquired all the shares of Medicenna. As part of the transaction, Richardson GMP and Bloom Burton were agents on a financing that raised $4 million. One week back the former A2 shares resumed trading — but this time under the Medicenna name.