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Medicenna Therapeutics Corp.

MDNA / NasdaqGS / $3.99

March 2, 2021


Business Overview



Medicenna Therapeutics Corp. (the Company) is a clinical-stage immunotherapy company developing highly selective versions of interleukin-2 (IL-2), interleukin-4 (IL-4), and interleukin 13 (IL-13) tunable cytokines (Superkines) and cytokines fused with cell-killing proteins (Empowered Cytokines) for treatment of a broad range of cancers and other human ailments.


The lead Empowered Cytokine, IL4-EC, MDNA55, is an Empowered IL-4 cytokine that is fused to the catalytic domain of the bacterial pseudomonas exotoxin A (PE). This toxin is active only once it has been internalized by the target cell. The drug is locally administered onto the tumor itself after the tumor has recurred, thereby bypassing the blood-brain barrier, and reducing systemic side effects.


MDNA55 has completed a Phase 2b clinical trial for recurrent brain cancer (rGBM), and it has demonstrated highly promising efficacy vs. approved therapies. There were no detectable levels of MDNA55 in the blood stream, nor any evidence of significant systemic toxicity following treatment. The FDA and the European Medicines Agency have granted MDNA55 Orphan Drug status for treatment of gliomas, as well as Fast Track Designation from the FDA for the treatment of GBM and anaplastic astrocytoma. The pipeline also includes plans to study MDNA55 for metastatic brain cancer, newly diagnosed GBM, and diffuse intrinsic pontine glioma.


The long-acting Superkine asset, MDNA19, is a next-generation IL-2 for cancer immunotherapies. Non-human primate data has shown superior CD122 binding without CD25 affinity, stimulating cancer-killing cells preferentially compared to competing IL-2 programs. Management expects MDNA19 to be introduced to the clinic in 2021. Approximately C$20,850,000 of the net proceeds from the March 2020 equity offering was earmarked for this program.


The Company has a pipeline of other candidates in preclinical and discovery phases. These include MDNA57 (solid tumors), MDNA209 (autoimmune diseases), MDNA413 (solid tumors, atopic dermatitis, asthma, and various forms of fibrosis), and MDNA132 (solid tumors).


The Company licensed technology from Leland Stanford Junior University and the National Institutes of Health (NIH). The Stanford and NIH agreements include low-single-digit royalty rates, modest back-ended development milestone payments, and sub-licensing royalties.



2021 Focus



Management expects to initiate a Phase 1/2a clinical trial of MDNA11 in the U.K. suich that the trial could begin around mid-year 2021, with initial data possibly before the end of 2021.


With a clear path in place for a Phase 3 trial for MDNA55, management is hopeful that a partnership can be entered into in the near term.


Advance the other preclinical candidates.



Management and Directors



Fahar Merchant, PhD, is President, CEO, and a co-founder. He has 25+ years of biotech experience and has closed several transactions valued at more than $300 million. Other members of the management team include Elizabeth Williams, CPA, CA (CFO); Rosemina Merchant, MESc (Chief Development Officer); and Martin Bexon, MD (Head of Clinical Development).


The BoD consists of four non-employee members and Dr. Merchant and Ms. Merchant. The backgrounds of the management and directors are outlined on the Medicenna website and SEDAR filings.






Income Statement (9 months through 12/31/20 vs. 12/31/19) (C$)


G&A expense: 4,516,000 vs. 1,846,000

R&D expense: 7,169,000 vs. 3,734,000

Operating income (loss): (11,581,000) vs (5,580,000)

Other income (expense): (210,000) vs. 8,000

Net income (loss): (11,475,000) vs. (5,588,000)

Comprehensive income (loss): (11,488,000) vs. (5,512,000)

Earnings (loss) per basic and diluted common share: (0.24) vs. (0.19)

Weighted average number of common shares outstanding: 48,812,674 vs. 30,206,534



Balance Sheet (12/31/20) (C$)


Cash & equivalents: 23,239,000

Total current assets: 36,209,000

Other assets: 114,000

Total assets: 36,323,000

Current liabilities: 2,213,000

Stockholders equity: 34,107,000

Common shares outstanding (02/12/21): 52,900,000

Warrants (12/31/20): 5,471,435 at a weighted average exercise price of $1.86

Options (12/31/20): 4,147,584 at a weighted average exercise price of $1.80



On December 30, 2020, the Company entered an agreement under which it might sell, from time to time, that number of common shares as would have an aggregate offering price of up to $25.0 million.


On March 17, 2020, the Company closed a public offering of 11,290,323 shares at a price of C$3.10, generating gross proceeds of approximately C$35 million (C$32.2 million net proceeds). Agents have a 30-day over-allotment option to sell up to an additional 15% of the number of offered shares.



Valuation Considerations



The target markets are substantial. Brain cancers targeted by MDNA55 alone represent a $2 billion opportunity in the U.S., Europe, and Japan, including $650 million for rGBM, $1.3 billion for metastatic brain cancer, and $50 million for pediatric glioma. MDNA19 is positioned to be a best-in-class IL2 asset ready for the clinic in 2021. Considering recent transactions in the space (THOR: $2.5B acquisition by Sanofi at Phase 1) there is the potential for considerable upside related to this molecule.


The R&D effort is well focused and has a proven record of advancing the development pipeline. The lead asset is late stage.


The impact of COVID-19 is an uncertainty. In addition, the Medicenna website and SEDAR filings detail a number of risk factors, and these are hereby incorporated by reference.






Executive offices: 2 Bloor St. W., 7th Floor, Toronto, Ontario M4W 3E2.


Investor contact: Elizabeth Williams, CFO; ewilliams@medicenna.com; Phone: 416.648.5555.



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