Exhibit 99.2
Management’s Discussion and Analysis
For the Three and Six Months Ended
September 30, 2022
DATE OF REPORT: November 3, 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
The following management’s discussion and analysis (“MD&A”)
has been prepared as at November 3, 2022 for the three and six months ended September 30, 2022 and should be read in conjunction with
the unaudited interim condensed consolidated financial statements of Medicenna Therapeutics Corp. for the three and six months ended September
30, 2022 and 2021, and the annual consolidated financial statements and accompanying notes for the years ended March 31, 2022 and 2021
(the “Annual Financial Statements”), which have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Our IFRS accounting policies are
set out in note 2 of the Annual Financial Statements and all dollar amounts are expressed in Canadian dollars unless otherwise noted.
All references in this MD&A to “the Company”, “Medicenna”,
“we”, “us”, or “our” and similar expressions refer to Medicenna Therapeutics Corp. and the subsidiaries
through which it conducts its business, unless otherwise indicated.
FORWARD-LOOKING STATEMENTS
This MD&A contains forward-looking statements within the meaning of
applicable securities laws. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they
are based on current beliefs, expectations or assumptions regarding the future of the business, future plans and strategies, operational
results and other future conditions of the Company. These statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such forward-looking statements. All statements contained herein other
than statements of historical fact regarding the prospects of the Company’s industry or its prospects, plans, financial position
or business strategy may constitute forward-looking statements and can generally be identified by the use of forward-looking words, such
as “plan”, “expect”, “is expected”, “budget”, “scheduled”, “estimate”,
“forecast”, “contemplate”, “intend”, “anticipate”, or “believe” or variations
(including negative variations) of such words and phrases, or statements that certain actions, events or results “may”, “could”,
“would”, “might”, “shall” or “will” be taken, occur or be achieved and similar expressions
are generally intended to identify forward-looking statements.
By their very nature, forward-looking statements involve inherent risks
and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements
will not be achieved. The Company cautions readers not to place undue reliance on these statements as a number of important factors could
cause the actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions
expressed in such forward-looking statements. Risks, uncertainties and other factors which may cause the actual results, performance or
achievements of the Company, as applicable, to be materially different from any future results, performance or achievements expressed
or implied by such forward-looking information and statements include, but are not limited to, the risks described under the heading “Risks
and Uncertainties” in this MD&A, the Company’s annual information form for the fiscal year ended March 31, 2022 (the “Annual
Information Form”) and the Company’s annual report on Form 20-F for the fiscal year ended March 31, 2022 (the “Annual
Report on Form 20-F”) filed with the U.S. Securities and Exchange Commission.
Forward-looking statements in this MD&A include, but are not limited
to:
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the potential and clinical development and related milestones of the Company’s
Superkines and Empowered Superkines including MDNA11, MDNA19 our BiSKITsTM platform and MDNA55; |
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the clinical trial collaboration and supply agreement with Merck; |
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a potential strategic partnership to facilitate MDNA55’s further
development and commercialization; and |
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use of proceeds from public equity offerings. |
Although the Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors
that cause actions, events or results to differ from those anticipated, estimated or intended, including the following:
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the lack of product revenue and inability to continue operations and research
and development without sufficient funding; |
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the Company’s requirements for, and our ability to obtain, future funding on favourable terms or
at all;
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the Company’s history of losses and expectations of future losses; |
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the Company’s inability to complete development of or the inability
to commercialize the Company’s product candidates, which are in the early stages of development; |
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the expense, length, and uncertainty of clinical drug development programs; |
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the inability to achieve publicly announced milestones according to schedule,
or at all; |
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the risk that competitors may develop and market products that are more
effective that the Company’s product candidates or that the products developed by competitors may render the Company’s product
candidates obsolete or uncompetitive; |
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the Company’s inability to secure a partnership for MDNA55; |
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the costs and uncertainty associated with extensive government regulation; |
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the obtaining of regulatory approvals, including delays or negative outcomes
from the regulatory approval process; |
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the potential negative results from clinical trials or studies, or adverse
safety events involving the targets of the Company’s products, including in the demonstration of efficacy and safety; |
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the pharmacokinetic (“PK”) and pharmacodynamic (“PD”)
properties of MDNA11 and MDNA19; |
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the tumour response data from our clinical trials; |
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the risk of product liability claims; |
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the Company’s inability to enroll subjects in clinical trials or
complete clinical trials on a timely basis |
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the failure of our product candidates to receive the marketing approval
or market acceptance necessary for commercial success; |
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the potential for environmental exposure to hazardous or radioactive materials
that are used in the Company’s discovery and development process; |
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the disruption in the availability of key components for ongoing clinical
studies that could delay clinical studies, product testing, and regulatory approval of the Company’s product candidates |
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the Company’s reliance on third parties for the planning, conduct,
and monitoring of preclinical and clinical trials and for the manufacture of drug product; |
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the Company’s reliance on contract manufacturers over whom the Company
has limited control; |
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the loss of license rights due to breach of license agreements; |
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the conditions and restrictions of the Cancer Prevention Research Institute
of Texas (“CPRIT”) grant; |
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the potential uses of proceeds generated under Company’s offerings; |
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the ability to protect the Company’s intellectual property and proprietary
technology; |
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the ability for the Company to obtain patent’s term extensions; |
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the potential involvement in intellectual property litigation; |
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the risk that third-parties to whom we rely for product development may
not adequately protect the Company’s trade secrets; |
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the risk of product liability claims; |
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the limitations surrounding intellectual property rights |
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the volatility in the price of our Common Shares |
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the dilution of investor’s voting power and reductions in earnings
per share owing to future issuances of equity or the conversion of securities into Common Shares; |
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the fact that future profits will likely be used for the continued growth
of the Company’s business and not for the payment of dividends |
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the Company’s treatment as a passive foreign investment company
and potential adverse U.S. federal income tax consequences associated with such treatment; |
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the difficulty United States investors may face in bringing actions against
the Company for violations of U.S. federal or state securities laws and challenges in enforcing the judgments of U.S. courts against the
Company and its directors and executive officers; |
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the Company’s status as a foreign private issuer under applicable
U.S. securities laws; |
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the ability of the Company’s significant shareholders to assert
a material influence over the Company’s operations and governance; |
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the adverse impact of factors outside our control, such as global health
pandemics, natural disasters, geopolitical conflict and macroeconomic challenges; |
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the Company’s ability to successfully manage its growth; |
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the failure of any acquired business, product, service, or alliance to
yield expected benefits |
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the Company’s dependence upon certain key personnel, the loss of
whom could adversely affect our ability to achieve our business objectives; |
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changes in government regulations that could impact our business and operations; |
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failure to comply with the U.S. Foreign Corrupt Practices Act, the Canadian
Corruption of Foreign Public Officials Act and other global corruption and anti-bribery laws; |
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a failure to comply with healthcare laws; |
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foreign currency exchange risks relating to the relative value of the
United States dollar; |
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the failure of our disclosure controls and procedures to detect all errors
or prevent all incidences of fraud; |
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the failure to maintain an effective system of internal controls; |
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the vulnerability of the computer and information systems of the Company,
its consultants and contractors, and third-parties on which the Company relies, to security breaches or failure; and |
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the pursuit of opportunities for further research and development or additional
business opportunities. |
The forward-looking information in this MD&A does not include
a full assessment or reflection of the unprecedented impacts of the COVID-19 pandemic and the efforts to mitigate it and the ongoing and
developing indirect global and regional economic impacts. The COVID-19 pandemic continues to cause significant financial market and social
disruption. The Company cannot presently predict the scope and severity of any potential business shutdowns or disruptions related to
COVID-19, the impact of any new variants nor the impact of the vaccines that are now accessible. If the Company or any of the third parties
with whom it engages, were to experience shutdowns or other business disruptions due to the pandemic, its ability to conduct its business
in the manner and on the timelines presently planned could be materially and negatively impacted. The Company will continue to monitor
developments of the pandemic and continuously assess its potential further impact on its operations to prevent any disruptions to the
conduct of its business and clinical trials. In the event of a prolonged continuation of the pandemic, it is not clear what the potential
impact may be on the Company's business, financial position and financial performance.
All forward-looking statements reflect the Company’s beliefs and
assumptions based on information available at the time the assumption was made.
Although the forward-looking statements contained in this MD&A are
based upon what the Company’s management believes to be reasonable assumptions, the Company cannot assure readers that actual results
will be consistent with these forward-looking statements.
Any forward-looking statements represent the Company’s estimates
only as of the date of this MD&A and should not be relied upon as representing the Company’s estimates as of any subsequent
date. The Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of unanticipated events, except as may be required by securities
laws.
COMPANY OVERVIEW
The Company's principal business activity is the development and commercialization
of Superkines and Empowered Superkines for the treatment of cancer, inflammation and immune-mediated diseases. Medicenna has four wholly
owned subsidiaries, Medicenna Therapeutics Inc. (British Columbia), Medicenna Biopharma Inc. (Delaware), Medicenna Biopharma Inc. (British
Columbia) and Medicenna Australia PTY Ltd (Australia) (“MAL”). On November 13, 2017, Medicenna continued under the Canada
Business Corporations Act. On August 24, 2020, Medicenna began trading on the Nasdaq Capital Market (“Nasdaq”) under the
symbol “MDNA.
Medicenna is an immunotherapy company developing novel, highly selective
versions of interleukin-2 (“IL-2”), interleukin-4 (“IL-4”) and interleukin-13 (“IL-13”) tunable cytokines,
called “Superkines”. These Superkines can be developed either on their own as short or long-acting therapeutics or fused with
cell killing proteins to generate Empowered Superkines that precisely deliver potent payloads to cancer cells without harming adjacent
healthy cells. Superkines can also be fused with a large variety of proteins, antibodies and even other Superkines to incorporate two
synergistic therapeutic activities into one molecule, creating novel Bi-Functional SuperKine ImmunoTherapies
referred to by Medicenna as BiSKITsTM. Medicenna’s mission is to become the leader in the development and commercialization
of Superkines, Empowered Superkines and BiSKITsä for the treatment of a broad range of cancers
and other diseases. The Company seeks to achieve its goals by drawing on its expertise, and that of world-class collaborators and advisors,
to develop Revolutionary Medicines using Evolutionary Superkines. Compared to naturally occurring cytokines – that bind to multiple
receptors on many cell types – Superkines are engineered with unique selectivity toward specific receptor subtypes and defined target
cell subsets to precisely activate or inhibit relevant signalling pathways or immune cells in order to improve therapeutic efficacy and
safety.
Medicenna has built a diverse platform, each comprised
of a pipeline of Superkine candidates in-licensed from Leland Stanford Junior University (“Stanford”). This includes the MDNA109
platform that consists of IL-2 agonists, IL-2 antagonists and partial agonists of IL-2. Additional assets from Stanford also include several
super-agonists of IL-4 and IL-13 and dual IL-4/IL-13 antagonists. In addition, Medicenna has also independently developed therapeutic
agents based on its Empowered Superkine and BiSKITsä platforms.
The most advanced of these programs is the MDNA109 platform which is a
genetically engineered IL-2 Superkine designed to specifically bind to CD122 (IL-2Rβ) with high affinity. To further enhance its
selectivity, 2 additional mutations (FEAA) were incorporated in MDNA109 to abolish binding to CD25. To improve the PK properties of the
highly selective version of MDNA109 (MDNA109FEAA), it was genetically fused to protein scaffolds such as the Fc domain of IgG1 (MDNA19)
or human albumin (MDNA11) effectively increasing the size of the Superkine and improving its half-life to avoid frequent daily dosing
required for Proleukinâ.
We believe that, unlike Proleukinâ,
both MDNA11 and MDNA19, have superior PK properties, lack CD25 binding to improve safety and reduce immune suppression, potently stimulate
effector T cells, reverse natural killer (“NK”) cell exhaustion and act with exceptional synergy when combined with checkpoint
inhibitors.
Although MDNA19 was initially identified as the Company’s lead IL-2
candidate, a pilot non-human primate (“NHP”) study comparing MDNA11 with MDNA19 demonstrated that the former had better PK
and pharmacodynamic (“PD”) features. Medicenna is therefore advancing the clinical development of MDNA11 as it is a more promising
molecule and has been selected as the lead IL-2 Superkine candidate. Medicenna initiated the Phase 1/2 ABILITY Study (A Beta-only
IL-2 ImmunoTherapY Study) with MDNA11 (the “ABILITY Study”) in the third calendar quarter of 2021. MDNA19
remains relevant for Medicenna as it provides unique design features in the development of our BiSKITsTM platform. Our BiSKITsTM
platform allows us to develop designer Superkines by fusing them to other proteins, antibodies, cytokines or other Superkines allowing
us to incorporate two distinct but synergistic functions into one molecule: a BiSKITTM.
Complementing our Superkine platform is MDNA55, Medicenna’s Empowered
Superkine, for the treatment of recurrent glioblastoma (“rGBM”), the most common and uniformly fatal form of brain cancer.
MDNA55 is a fusion of a circularly permuted version of IL-4, fused to a potent fragment of the bacterial toxin, Pseudomonas exotoxin (“PE”),
and is designed to preferentially target tumor cells that over-express the interleukin 4 receptor (“IL-4R”). MDNA55 has been
studied in 5 clinical trials in 132 patients, including 112 patients with rGBM, the results of which support our belief that it has superior
efficacy when compared to the current standard of care (“SOC”). MDNA55 has secured Orphan Drug Status from the United States
Food and Drug Administration (“FDA”) and the European Medicines Agency (“EMA”) as well as Fast Track Designation
from the FDA for the treatment of rGBM and other types of high grade glioma. We continue to pursue a strategic partnership to facilitate
MDNA55’s further development and commercialization.
ACHIEVEMENTS & HIGHLIGHTS
The following are the achievements and highlights for the
quarter ended September 30, 2022 through to the date hereof:
| · | On July 12, 2022, US Patent and Trademark Office (USPTO) issued U.S. Patent No. 11,117,943, titled “Superagonists
and Antagonists of Interleukin-2.” The patent provides intellectual property (IP) protection for methods of treating leukemia using
IL-2 muteins that have an increased binding capacity for IL-2Rb and a decreased binding capacity
for IL-2Rgc. Unlike MDNA109, such IL-2 superkines act as IL-2 partial agonist and antagonists
(MDNA209 platform) in applications where inhibition of IL-2 and/or IL-15 functions is useful (e.g., adult T cell leukemia). |
| · | On July 27, 2022, Medicenna announced new clinical data on safety, pharmacodynamics and anti-tumor activity
from the Phase 1/2 ABILITY study of MDNA11. The data provide preliminary evidence of MDNA11’s single agent anti-cancer activity
in patients with advanced solid tumors were unresponsive to other treatments. These results were featured in an oral presentation at the
Cytokine Based Drug Development Summit, held in Boston. |
| · | On August 11, 2022, the Company announced the closing of a marketed underwritten public offering of 13,333,334 units
(the “Unit”) of the Company in Canada and in the United States at a price to the public of US$1.50 per Unit (the “2022
Public Offering”). The gross proceeds to the Company from the 2022 Public Offering were US$20 million, before deducting underwriting
discounts and commission and other expenses. Each Unit comprised of one common share and one common share purchase warrant (a “Warrant”).
Each Warrant entitles the holder thereof to purchase one common share at a price of US$1.85 per common share, subject to adjustment in
certain events, during a period of 60 months following August 11, 2022. |
| · | On September 13, 2022, Medicenna announced that it has entered into a clinical trial collaboration and
supply agreement (“CTCSA”) with Merck (known as MSD outside the United States and Canada) to evaluate MDNA11
in combination with KEYTRUDA® (pembrolizumab), Merck’s anti-PD-1 (programmed death receptor-1) therapy, in the ongoing
Phase 1/2 ABILITY Study. Under the terms of the CTCSA, Medicenna will sponsor the study and Merck will supply KEYTRUDA®.
The two companies will establish a Joint Development Committee to optimally advance the study’s combination arm. |
| · | On September 22, 2022, preclinical data on Fc-MDNA413, a
long-acting IL-4/IL-13 super-antagonist, and MDNA223, a next generation BiSKIT consisting of an
anti-PD1 antibody linked to an IL-2 super-agonist, were presented at the 10th Annual Meeting of the International
Cytokine & Interferon Society (Cytokines 2022), held in Hawaii. |
| · | On September 28, 2022, Medicenna reported new anti-tumor activity data from the first four (low and mid)
dose escalation cohorts of the Phase 1/2 ABILITY study of MDNA11. A confirmed partial response (PR) was achieved in a fourth-line (4L)
metastatic pancreatic cancer patient and overall, five of fourteen (36%) evaluable patients have achieved tumor control (PR or stable
disease (SD)) in the ABILITY study’s first four dose escalation cohorts. |
| · | Subsequent to the quarter end, on October 5, 2022, Medicenna announced the acceptance of two abstracts for poster presentations at the
Society for Immunotherapy of Cancer (SITC) 37th Annual Meeting, which is taking place both virtually and in-person at the Boston Convention
and Exhibition Center in Boston, MA, from November 8 – 12, 2022. |
FINANCING UPDATE
Six months ended September 30,
2022
August 2022 Public Offering
On August 10, 2022, pursuant to an underwritten public offering, we sold
13,333,334 units at a purchase price of US$1.50 per unit for gross proceeds of US$20.0 million ($25.6 million). Each unit included one
common share with a fair value of US$1.06 and one common share purchase warrant with a fair value of US$0.44. Each common share purchase
warrant entitles the holder to purchase one common share at an exercise price of US$1.85 until August 9, 2027. We incurred transaction
costs of $2.2 million ($US1.7 million) of which $1.6 million (US$1.2 million) were allocated to share issue costs and $0.6 million (US$0.5
million) were allocated to operating expenses, based on their relative fair values.
At-The-Market Facility
On December 30, 2020, the Company entered into a sales agreement with SVB
Leerink LLC (“SVB Leerink”) acting as sales agent (the “ATM Agreement”), pursuant to which the Company may, from
time to time sell, through an at-the-market (“ATM”) offering on the Nasdaq such number of common shares as would have an aggregate
offering price of up to US$25.0 million (the “ATM Facility”). The Company plans to use the net proceeds of the ATM offering
for general corporate purposes including, but not limited to working capital expenditures, research and development expenditures, and
clinical trial expenditures. During the six months ended September 30, 2022, the Company issued 656,656 common shares (September 30, 2021
– nil) for gross proceeds of US$0.8 million (September 30, 2021 - $nil) at an average price of US$1.20. The Company received, net
of commissions, US$0.7 million (September 30, 2021 - $nil). In total, the Company incurred share issuance costs (including commissions)
of US$0.1 million (September 30, 2021 - $nil).
During the six months ended September 30, 2022, no warrants were exercised.
Six months ended September 30, 2021
During the six months ended September 30, 2021, 211,196 warrants were exercised
for proceeds of $0.3 million, the details of which are described below:
| |
Number of Warrants |
| |
|
Exercise Price |
| |
|
Proceeds |
| |
Expiry Date |
| | | | |
| $ | | |
| $ | | |
|
| | 50,000 | | |
| 1.20 | | |
| 60,000 | | |
December 21, 2023 |
| | 16,650 | | |
| 1.30 | | |
| 21,645 | | |
October 17, 2021 |
| | 144,546 | | |
| 1.75 | | |
| 252,955 | | |
October 17, 2022 |
| | 211,196 | | |
| | | |
| 334,600 | | |
|
SUBSEQUENT EVENTS
| · | Subsequent
to the quarter end, Medicenna announced that it has received conditional approval from the
Toronto Stock Exchange to extend the expiry date of the common share purchase warrants, originally
issued on October 17, 2019. The Warrants, of which 1,549,052 are available to be extended,
are exercisable for common shares of the Company at a price of $1.75 per Common Share and
are set to expire on October 17, 2022. |
| · | Subsequent
to the quarter end, On October 28, 2022, the Company announced that on October 25, 2022,
it received a notice from the Nasdaq Stock Market LLC, stating that the Company is not in
compliance with the minimum bid price requirement of US$1.00 per share under the Nasdaq Listing
Rule 5450(a)(1) based upon the closing bid price of the Company’s common stock for
the 30 consecutive business days prior to the date of the Notice. The Notice has no immediate
effect on the listing or trading of the Company’s common stock on Nasdaq, and the Company’s
operations are not affected by the receipt of the Notice. |
RESEARCH & DEVELOPMENT UPDATE
Superkine Platform
MDNA11
On September 14, 2021, we announced that we had dosed the first patient
in a Phase 1/2 clinical study of MDNA11. Medicenna’s Phase 1/2 ABILITY Study is designed to assess the safety, PK, PD, and anti-tumor
activity of various doses of MDNA11 administered intravenously every 2 weeks, in patients with advanced solid tumors. The basket, dose
finding study includes a dose escalation phase followed by a dose expansion phase with both an MDNA11 monotherapy arm as well as a combination
arm designed to evaluate MDNA11 with a checkpoint inhibitor. The study will include patients with melanoma and renal cell carcinoma where
Proleukinâ is known to have clinical activity, as well as cluster of other tumor types
in order to explore the pan-tumor potential of MDNA11. The study also permits alternative dosing schedules, as well as options for intra-patient
dose escalation. The ABILITY study is currently enrolling patients at clinical sites in Australia, Canada and the United States.
On May 2, 2022, Medicenna announced
new clinical data from the third cohort of the Phase 1/2 ABILITY Study of MDNA11. This data was subsequently updated in July as described
below.
On May 11, 2022
, Medicenna presented additional clinical data from the Phase 1/2 ABILITY Study during a poster presentation at the 9th Annual Frontiers
in Cancer Immunotherapy Meeting, organized by the New York Academy of Sciences (“NYAS”).
This data was subsequently updated in July as described below.
On July 27, 2022, Medicenna announced new clinical data
on safety, PK, PD and anti-tumor activity from the Phase 1/2 ABILITY Study of MDNA11 which were presented at the Cytokine Based Drug Development
Summit, held in Boston. These data were subsequently updated on September 28, 2022 and are described below.
In the dose escalation portion of the ABILITY Study, MDNA11 is administered
intravenously, as a monotherapy, once every two weeks to patients with advanced solid tumors. The trial’s first two cohorts evaluated
MDNA11 doses ≤ 10 µg/kg. The trial’s third cohort was administered a dose of 30 µg/kg. Patients in the fourth
and fifth dose escalation cohorts receive two 30 µg/kg “priming” doses of MDNA11 before stepping up to receive fixed
doses of 60 and 90 µg/kg, respectively.
Key data from patients enrolled in the trial’s four initial dose
escalation cohorts include:
Demographics:
| - | Patients enrolled in the study to date (N=14) have failed up to four lines of prior systemic therapy. |
| - | 11 of 14 patients have relapsed, were not tolerant to or did not respond to at least one prior immunotherapy
with a checkpoint inhibitor. |
Safety:
| - | MDNA11 treatment in Cohort 4 (comprised of two step-up doses of 30 µg/kg followed by fixed doses
of 60 µg/kg every 2 weeks) was not associated with any dose-limiting toxicities. |
| - | The Safety Review Committee approved dose escalation for Cohort 5 to the 90 µg/kg dose every 2 weeks
following two priming doses at 30 µg/kg. |
| - | Significant increases in eosinophil count from baseline were not observed with MDNA11 treatment. Extremely
high eosinophil count is associated with vascular leak syndrome which is a known side effect of high-dose recombinant human IL-2 (Proleukin®). |
Pharmacokinetics:
| - | The pharmacokinetic data from the first 3 cohorts demonstrated similar trends following each of 3 repeat
doses which suggests lack of immunogenicity or insignificant levels of anti-drug-antibodies. |
| - | Dose dependent increase in the Cmax and Area Under the Curve (“AUC”) were also
observed. |
Pharmacodynamics:
| - | In addition to dose dependent increases in lymphocyte counts and lymphocyte kinetics, MDNA11 preferentially
expanded anti-cancer NK and CD8+ T cells without stimulating proliferation of pro-tumor Treg cells. |
| - | MDNA11 treatment potently activated anti-cancer CD8+ T cells as shown by increases in both CD25+ and ICOS+
CD8+ T cells. |
| - | Unlike IL-2, MDNA11 has not induced increases in ICOS+ Treg cells. ICOS+ Treg cells are highly immunosuppressive
and associated with lack of response to high dose IL-2 immunotherapy. |
Anti-tumor Activity:
| - | Of the fourteen (14) evaluable patients with at least one on-treatment imaging scan, five (5) patients
have achieved tumor control (defined as stable disease, partial response, or complete response as per RECIST 1.1) during the monotherapy
dose-escalation portion of the MDNA11 ABILITY Study as follows: |
| 1. | Metastatic Leiomyosarcoma Stage IV (Dose Level 2 @ 10 µg/kg); stable disease |
| 2. | Metastatic Melanoma Grade 4C (initially enrolled at Dose Level 2 @ 10 µg/kg Q2W with subsequent
intra-patient dose escalations to Dose Level 3 @30 µg/kg and Dose Level 4 @60 µg/kg), stable disease |
| 3. | Metastatic Sarcoma Stage IV (Dose Level 3 @ 30 µg/kg), stable disease |
| 4. | Pancreatic Ductal Adenocarcinoma (PDAC) Stage IV (Dose Level 4 @ 60 µg/kg following 2 divided doses
of 30 µg/kg), confirmed partial response. |
| 5. | Non-clear cell 3L renal cell carcinoma patient (Dose
Level 4 @ 60 µg/kg following 2 divided doses of 30 µg/kg), stable disease |
On September 13, 2022 we announced that we had entered into a CTCSA with
Merck (known as MSD outside the United States and Canada) to evaluate MDNA11 in combination with KEYTRUDA® (pembrolizumab),
Merck’s anti-PD-1 (programmed death receptor-1) therapy, in the ongoing Phase 1/2 ABILITY Study. Under the terms of the CTCSA, Medicenna
will sponsor the study and Merck will supply KEYTRUDA®. The two companies will establish a Joint Development Committee to
optimally advance the study’s combination arm.
Medicenna anticipates completing the following upcoming
milestones related to the MDNA11 ABILITY Study:
| 1) | Updated
anti-tumor activity data from the ABILITY study’s escalation cohorts - calendar Q1-2023 |
| 2) | Early anti-tumor activity
data from the ABILITY study’s single agent expansion phase - mid-calendar 2023. |
| 3) | Early
anti-tumor activity data from the ABILITY study’s combination arm – calendar
Q4-2023. |
Though these milestones represent a brief delay compared
to prior guidance, we believe that taking the extra time necessary to recruit an optimized patient population in the current and future
cohorts will allow us to potentially increase the impact of the data from these dose cohorts from a scientific and value-creation perspective.
BiSKITsTM (Bi-functional SuperKine ImmunoTherapies)
Platform
Our BiSKITsTM platform allows us to develop designer Superkines
by fusing them to other proteins, antibodies, cytokines or other Superkines to combine two distinct but synergistic functions into one
molecule: a BiSKITTM.
On April 8, 2022, we announced new preclinical data highlighting the potent
anti-tumor efficacy of the next-generation BiSKIT, anti-PD1-MDNA109FEAA, in an electronic poster at the AACR Annual Meeting. BiSKITs can
target cancers where other immunotherapies have failed to be effective. One example of this is MDNA223, an IL-2 Superkine fused to a checkpoint
inhibitor (anti-PD1). MDNA223 is a BiSKIT designed to activate cancer killing immune cells via the IL-2 receptor while simultaneously
preventing their exhaustion through the validated method of blocking PD-1 signaling. Combining these two functions into a single molecule
allows us to simultaneously engage both of these important targets on the same immune cells (also known as cis-binding).
On September 22, 2022, In vitro data presented at Cytokines
2022 demonstrated MDNA223’s potency was similar to that of a control anti-PD1 antibody while displaying high-affinity for IL-2 receptor
beta (IL-2Rβ) and no binding to IL-2 receptor alpha (IL-2Rα). This enhanced IL-2Rβ selectivity resulted in potent and preferential
stimulation of anti-cancer CD8+ T cells over pro-tumor Treg cells. In vivo murine data showed MDNA223 exhibiting
a prolonged pharmacodynamic response extending beyond the duration of pharmacokinetic exposure.
Data from murine tumor models of colon, skin and breast cancer using a
mouse version of MDNA223 (i.e MDNA223m) showed dose-dependent and statistically significant improvements in efficacy compared to co-administration
of the anti-PD-1 antibody and IL-2 super-agonist (MDNA19) at equivalent molar doses, demonstrating the advantage of exploiting the BiSKIT’s
cis-binding potential. These data demonstrate the therapeutic synergy resulting from the BiSKIT’s ability to concurrently target
PD1 and the IL-2 receptor on the same immune cells (cis-binding approach).
Medicenna’s IL-4 and IL-13 Superkines are engineered versions of
wild type cytokines which possess enhanced affinity and selectivity for either the Type 1 or Type 2 IL4 receptors or dedicated IL13 receptors
such as IL13Ra2. This selectivity is achieved through mutations of the IL-4 or IL-13 proteins
to enhance affinity for binding to specific IL4R or IL13R subunits. Additional mutations have also been engineered to modulate their bioactivity,
resulting in Superkines with enhanced signaling (super-agonists) or the ability to block signaling (super-antagonists).
On April 8, 2022, Medicenna announced
new preclinical data on its long-acting IL-13 super-antagonist, Fc-MDNA413, in an electronic poster at the AACR Annual Meeting. Fc-MDNA413
is derived from Medicenna’s Superkine platform and comprises of an IL-13 super-antagonist (MDNA413) fused to the Fc domain for half-life
extension.
On September 22, 2022, data presented at Cytokines 2022 showed that Fc-MDNA413
blocks the IL-4 and IL-13 pathways that polarize Tumor Associated Macrophages (“TAMs”) to the M2a phenotype and stimulate
proliferation of Myeloid Derived Suppressor Cells (“MDSCs”). Both, TAMs and MDSCs that are known to promote cancer growth,
especially in immunologically cold tumors. In vitro analyses showed that Fc- MDNA413 is 300-times more selective for IL-13Rα1
(over-expressed by TAMs and MDSCs) over IL-13Rα2 (a decoy receptor) compared to wild type Fc-IL13. This superior binding profile
enabled Fc-MDNA413 to potently inhibit IL-4/IL-13 mediated functions as measured by blockade of pSTAT6 signaling, TF-1 cell proliferation,
and M2a polarization of macrophages. In murine studies, Fc-MDNA413 demonstrated sustainable serum exposure at a dose that was well tolerated
and inhibited tumor growth as a single agent in melanoma and colon cancer models. In addition, Fc-MDNA413 synergized with MDNA19
in a murine melanoma model, highlighting the advantages of co-targeting suppressive and effector immune cells within an otherwise cold
tumor microenvironment (“TME”).
Medicenna is currently screening and optimizing a variety of IL-2/IL-4/IL-13
Superkines as part of our BiSKITsTM platform
with the goal of having a BiSKIT candidate IND ready by the end of calendar 2023.
MDNA55
MDNA55 has been studied in 5 clinical trials in 132 patients, including
112 patients with rGBM, suggesting potentially superior efficacy when compared to the current SOC. The Company has secured Orphan Drug
Status from the FDA and the EMA as well as Fast Track Designation from the FDA.
A Phase 2b clinical trial with MDNA55 was completed in a multi-center,
open-label, single-arm study in patients with first or second recurrence or progression of GBM after surgery or radiotherapy ±
adjuvant therapy or other experimental therapies. Subsequently, a separate blinded study that collected rGBM survival and prognostic data
from 81 patients, that had contemporaneously received treatment at major clinical centres using current SOC, were used to establish a
matched External Control Arm (“ECA”). The blinded survival data from the matched ECA (established by matching with the MDNA55
treated population based on 11 different prognostic factors using propensity scoring methods) were then used as a control arm versus survival
data from the Phase 2b MDNA55 trial.
On September 29, 2020, Medicenna had an End of Phase 2 (EOP2) meeting with
the FDA to discuss future development and commercialization of MDNA55, if approved for rGBM. On October 15, 2020, we announced that the
FDA agreed that we could conduct an innovative open-label hybrid Phase 3 trial that allows use of a substantial number of patients (two-thirds)
from a matched ECA to support marketing authorization of MDNA55 for rGBM. Medicenna is pursuing strategic partnerships to assist with
additional clinical development of MDNA55, as well as preparing the program for commercialization and its subsequent launch in various
countries where marketing authorization has been granted.
SELECTED FINANCIAL INFORMATION
All tabular amounts below are presented in thousands of Canadian dollars, except for per share
amounts.
| | |
|
Three months ended
September 30, |
| |
|
Six months ended
September 30, |
|
| | |
|
2022 |
| |
|
2021 |
| |
|
2022 |
| |
|
2021 |
|
| | |
|
$ |
| |
|
$ |
| |
|
$ |
| |
|
$ |
|
| General and Administration | |
| 2,371 | | |
| 1,964 | | |
| 4,290 | | |
| 3,831 | |
| Research and Development | |
| 2,362 | | |
| 6,269 | | |
| 4,773 | | |
| 10,618 | |
| Change in fair value of warrant derivative | |
| (1,800 | ) | |
| — | | |
| (1,800 | ) | |
| — | |
| Foreign exchange (gain) loss | |
| (1,875 | ) | |
| (34 | ) | |
| (2,020 | ) | |
| 159 | |
| Net Loss | |
| (896 | ) | |
| (8,178 | ) | |
| (5,051 | ) | |
| (14,564 | ) |
| Basic and Diluted Loss per Share | |
| (0.01 | ) | |
| (0.15 | ) | |
| (0.08 | ) | |
| (0.27 | ) |
| Total Assets | |
| 42,560 | | |
| 30,093 | | |
| 42,560 | | |
| 30,093 | |
| Total Liabilities | |
| 8,644 | | |
| 5,431 | | |
| 8,644 | | |
| 5,431 | |
We have not earned revenue in any of the previous fiscal years, other than
income from interest earned on our cash and cash equivalents and marketable securities.
For the three and six months ended September 30, 2022, we reported a net
loss of $0.9 million ($0.01 loss per share) and $5.1 million ($0.08 loss per share), compared to a net loss of $8.2 million ($0.15 loss
per share) and $14.6 million ($0.27 loss per share) for the three and six months ended September 30, 2021 respectively. The decrease in
net loss for the three and six months period ended September 30, 2022, compared with the period ended September 30, 2021, was primarily
a result of decreased research and development expenditures related to the MDNA11 program, where GMP manufacturing and IND-enabling studies
were completed in the prior year. There was a foreign exchange gain of $2.0 million during the six months period ended September 30, 2022,
compared to a loss of $0.1 million in the period ended September 30, 2021, as a result of gain on USD cash and cash equivalents. There
was a non-cash change in the fair value of the warrant derivative (gain) of $1.8 million for the three and six month period ended September
30, 2022. These reductions were offset by a reimbursement of $1.8 million under the grant from CPRIT in the period ended September 30,
2021 which offset R&D expenditures in the prior year period.
Cash utilized in operating activities for the six months ended September
30, 2022 was $6.7 million, compared to cash utilized in operating activities for the six months ended September 30, 2021 of $13.9 million.
The decrease in cash utilized in the current year is primarily the result of decreased research and development expenses, and unrealized
foreign exchange gain.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDING SEPTEMBER 30, 2022
Research and Development (“R&D”) Expenses
| | |
|
Three months ended
September 30,
|
| |
|
Six months ended
September 30,
|
|
| | |
|
2022 |
| |
|
2021 |
| |
|
2022 |
| |
|
2021 |
|
| | |
|
$ |
| |
|
$ |
| |
|
$ |
| |
|
$ |
|
| Chemistry, manufacturing and controls | |
| 45 | | |
| 3,023 | | |
| 540 | | |
| 6,415 | |
| Regulatory | |
| 9 | | |
| 175 | | |
| 37 | | |
| 389 | |
| Discovery and pre-clinical | |
| 401 | | |
| 1,612 | | |
| 871 | | |
| 2,300 | |
| Clinical | |
| 901 | | |
| 372 | | |
| 1,531 | | |
| 1,022 | |
| Salaries and benefits | |
| 545 | | |
| 656 | | |
| 1,059 | | |
| 1,310 | |
| Licensing, patent legal fees and royalties | |
| 275 | | |
| 306 | | |
| 436 | | |
| 528 | |
| Stock based compensation | |
| 185 | | |
| 125 | | |
| 296 | | |
| 317 | |
| CPRIT grant claimed on eligible expenses | |
| — | | |
| — | | |
| — | | |
| (1,753 | )
|
| Other research and development expenses | |
| 1 | | |
| — | | |
| 3 | | |
| 90 | |
| | |
| 2,362 | | |
| 6,269 | | |
| 4,773 | | |
| 10,618 | |
R&D expenses of $2.4 million and $4.8 million were incurred during
the three and six months ended September 30, 2022, compared with $6.3 million and 10.6 million incurred in the three and six months ended
September 30, 2021.
The decrease in R&D expenses during the current year period is primarily
attributable to:
| · | One-time higher chemistry, manufacturing and controls costs (“CMC”), associated with the first
scale-up GLP and GMP manufacturing of MDNA11 required to supply adequate drug product for IND-enabling studies and the ABILITY Study,
completed in the prior year period. |
| · | Discovery and pre-clinical expenses associated with the one-time GLP compliant MDNA11 IND enabling studies,
completed in prior year period. |
| · | Decrease in regulatory costs due to the preparation of regulatory filings necessary to initiate the MDNA11
ABILITY study incurred in the prior year period. |
| · | Lower salary and benefits costs due to reduced headcount in the current year period. |
The above decreases were partially offset by the reimbursement of previously
incurred expenses with respect to the CPRIT grant of $1.8 million in the six months ended September 30, 2021. There was increased clinical
costs during the three and six months ended September 30, 2022, due to increased activities associated the MDNA11 Phase 1/2 ABILITY study.
General and Administrative (“G&A”) Expenses
| | |
|
Three months ended
September 30, |
| |
|
Six months ended
September 30, |
|
| | |
|
2022 |
| |
|
2021 |
| |
|
2022 |
| |
|
2021 |
|
| | |
|
$ |
| |
|
$ |
| |
|
$ |
| |
|
$ |
|
| Depreciation expense | |
| 2 | | |
| 10 | | |
| 2 | | |
| 20 | |
| Stock based compensation | |
| 245 | | |
| 283 | | |
| 541 | | |
| 444 | |
| Facilities and operations | |
| 149 | | |
| 102 | | |
| 273 | | |
| 182 | |
| Public company expenses | |
| 1,097 | | |
| 1,343 | | |
| 2,374 | | |
| 2,765 | |
| Transaction costs, warrant derivative | |
| 652 | | |
| — | | |
| 652 | | |
| — | |
| Salaries and benefits | |
| 226 | | |
| 226 | | |
| 448 | | |
| 420 | |
| | |
| 2,371 | | |
| 1,964 | | |
| 4.290 | | |
| 3,831 | |
G&A expenses of $2.4 million and $4.3 million were incurred during
the three and six months ended September 30, 2022, compared with $2.0 million and $3.8 million during the three and six month period ended
September 30, 2021.
The increase in G&A expenses in the three and six months period is
primarily due to one-time transaction costs associated with the warrant derivative partially offset by a reduction in directors and officers
liability insurance premiums.
SUMMARY OF QUARTERLY FINANCIAL RESULTS
| |
Sep. 30
2022 | |
Jun. 30
2022 | |
Mar. 31
2022 | |
Dec. 31
2021 | |
Sep. 30
2021 | |
Jun. 30
2021 | |
Mar. 31
2021 | |
Dec. 31
2020 |
| |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ |
| Revenue | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| General and administration | |
| 2,371 | | |
| 1,919 | | |
| 1,936 | | |
| 1,990 | | |
| 1,964 | | |
| 1,867 | | |
| 2,009 | | |
| 2,093 | |
| Research and development | |
| 2,362 | | |
| 2,411 | | |
| 1,191 | | |
| 2,907 | | |
| 6,269 | | |
| 4,349 | | |
| 3,701 | | |
| 3,180 | |
| Change in fair value of warrant derivative | |
| (1,800 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Net loss | |
| (896 | ) | |
| (4,155 | ) | |
| (3,206 | ) | |
| (4,807 | ) | |
| (8,178 | ) | |
| (6,386 | ) | |
| (5,813 | ) | |
| (5,338 | ) |
| Basic and diluted loss per share | |
| (0.01 | ) | |
| (0.07 | ) | |
| (0.06 | ) | |
| (0.09 | ) | |
| (0.15 | ) | |
| (0.12 | ) | |
| (0.11 | ) | |
| (0.11 | ) |
| Total assets | |
| 42,560 | | |
| 20,140 | | |
| 23,456 | | |
| 26,107 | | |
| 30,093 | | |
| 37,336 | | |
| 42,252 | | |
| 36,323 | |
| Total liabilities | |
| 8,644 | | |
| 2,147 | | |
| 2,621 | | |
| 2,351 | | |
| 5,431 | | |
| 4,958 | | |
| 4,107 | | |
| 2,216 | |
R&D expenses fluctuate quarter over quarter based on activities ongoing
during that period. During the quarter ended September 30, 2021 there was a $1.8 million reimbursement received from CPRIT which offset
increased R&D expenses, primarily due to manufacturing and pre-clinical costs associated with MDNA11. The increase in expenditures
from the quarter ended December 31, 2020 onwards, is primarily related to activities associated with the MDNA11 program and establishment
of the BiSKITsTM program. One-time higher CMC costs, associated with the scale-up GLP and GMP manufacturing of MDNA11 was completed
in the quarter ended September 30, 2021, resulting in a decrease in R&D expenses from the quarter ended December 31, 2021 onwards.
Refundable tax credits of $0.7million contributed to decreased R&D expenses during the quarter ended March 31, 2022.
G&A expenses began to increase in the quarter ended December 31, 2020,
due to increased in directors and officers’ liability insurance premiums. Directors and officers liability insurance premiums are
amortized for 2 months in the quarter ended September 30, 2020, with 3 months each subsequent quarter. G&A expenses increased in the
quarter ended September 30, 2022 due to transaction costs, associated with the warrant derivative.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has devoted its resources to funding R&D
programs, including securing intellectual property rights and licenses, conducting discovery research, manufacturing drug supplies, initiating
preclinical and clinical studies, submitting regulatory dossiers and providing administrative support to R&D activities, which has
resulted in an accumulated deficit of $76.0 million as of September 30, 2022. With current revenues only consisting of interest earned
on excess cash, cash equivalents and marketable securities, losses are expected to continue while the Company’s R&D programs
are advanced.
We currently do not earn any revenues from our product candidates and are
therefore considered to be in the development stage. As required, the Company will continue to finance its operations through the sale
of equity or pursue non-dilutive funding sources available to the Company in the future. The continuation of our research and development
activities for MDNA55, MDNA11 and the BiSKITsTM platform and the commercialization of MDNA55 is dependent upon our ability
to successfully finance and complete our research and development programs through a combination of equity financing and revenues from
strategic partners. We have no current sources of revenues from strategic partners.
Management has forecasted that the Company’s current level of cash
will be sufficient to execute its current planned expenditures for more than the next 12 months without further financing, including proceeds
from the ATM Facility, being obtained. The company’s cash is expected to fund operations into Q2 of calendar 2024.
CASH POSITION
At September 30, 2022, we had a cash, cash equivalents and marketable securities
balance of $40.0 million, compared to $20.5 million at March 31, 2022. We invest cash in excess of current operational requirements in
highly rated and liquid instruments. Working capital at September 30, 2022 was $39.6 million (March 31, 2022 - $20.8 million).
On August 10, 2022, pursuant to an underwritten public offering, 13,333,334
units were sold at a purchase price of US$1.50 per unit for gross proceeds of US$20.0 million ($25.6 million). Each unit included one
common share with a fair value of US$1.06 and one common share purchase warrant with a fair value of US$0.44. Each common
share purchase warrant entitles the holder to purchase one common share at an exercise price of US$1.85 until August 9, 2027. We incurred
transaction costs of $2.2 million (US1.7 million) of which $1.6 million (US$1.2 million) were allocated to share issue costs and $0.6
million (US$0.5 million) were allocated to operating expenses, based on their relative fair values.
On December 30, 2020, we announced that we entered into the ATM Agreement
with SVB Leerink acting as sales agent for our ATM offering of up to US$25.0 million. We plan to use the net proceeds of the ATM Facility
for general corporate purposes including, but not limited to working capital expenditures, research and development expenditures, and
clinical trial expenditures. As of September 30, 2022, a total of 3,803,613 common shares have been sold under the ATM Facility for total
gross proceeds of $12.0 million (US$9.7 million). $19.1 million (US$15.3 million) approximately remained unused under the ATM Facility.
The shelf supplement filed has expired and therefore the ATM facility is not available as of this date, but we have the ability to renew
it and regain access to the facility.
We do not expect to generate positive cash flow from operations for the
foreseeable future due to additional R&D expenses, including expenses related to drug discovery, preclinical testing, clinical trials,
chemistry, manufacturing and controls and operating expenses associated with supporting these activities. It is expected that negative
cash flow from operations will continue until such time, if ever, that we receive marketing authorization to commercialize any of our
product candidates under development and/or royalty or milestone revenue from any such products should they exceed our expenses.
CONTRACTUAL OBLIGATIONS
CPRIT Assistance
In February 2015, the Company received notice that it had been awarded
a grant by the CPRIT whereby the Company was eligible to receive up to US$14.1 million on eligible expenditures over a three-year period
related to the development of the Company’s phase 2b clinical program for MDNA55. As of March 31, 2022, all of the US$14.1 million
had been received and the grant with CPRIT is complete.
Under the terms of the grant, the Company is required to pay a royalty
to CPRIT, comprised of 3-5% of revenues on net sales of MDNA55 until aggregate royalty payments equal 400% of the grant funds received
at which time the ongoing royalty will be 0.5% of revenues. At this time the royalty is not probable and therefore no liability has been
recorded. In addition, the Company must maintain a presence in Texas for three years following completion of the grant.
Refundable tax credits
In June 2022, the company received $0.7 million through our Australian
R&D incentive program relating to the year ended March 31, 2022. The amount receivable was recorded as a reduction in research and
development expenses in the year ended March 31, 2022.
Intellectual Property
The Company has entered into various license agreements with respect to
accessing patented technology. In order to maintain these agreements, the Company is obligated to pay certain costs based on timing or
certain milestones within the agreements, the timing of which is uncertain. These costs include ongoing license fees, patent prosecution
and maintenance costs, royalty and other milestone payments. As at September 30, 2022, the Company is obligated to pay the following:
| · | Given the current development plans and expected timelines of the Company it is assumed that project milestones
of US$0.3 million will be due in the next five years. |
| · | Project milestone payments, assuming continued success in the development programs, of uncertain timing
totaling US$2.0 million and an additional US$2.0 million in sales milestones. |
As part of these license agreements, the Company has committed to make
certain royalty payments based on net sales to the NIH and Stanford.
Future commitments
As of September 30, 2022, we have the following obligations to make future
payments, representing contracts and other commitments that are known and committed:
| | |
Payments Due by Period |
| Contractual obligations | |
Less than 1 year | |
1-3 years | |
3-5 years | |
Total |
| Patent licensing costs, minimum annual royalties per license agreements | |
$ | 206 | | |
$ | 1,247 | | |
$ | 315 | | |
$ | 1,768 | |
The Company cannot reasonably estimate future royalties which may be due
upon the marketing authorization of MDNA55 or MDNA11.
As at the date of this report, we had obligations to make future
payments, representing significant research and development and manufacturing contracts and other commitments that are known and committed
in the amount of approximately $3.4 million, of which $1.9 million has been paid or accrued at September 30, 2022. Most of these agreements
are cancellable by the Company with notice. These commitments include agreements for clinical contract research organizations, manufacturing,
and preclinical studies.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no material undisclosed off-balance sheet arrangements
that have, or are reasonably likely to have, a current or future effect on our results of operations, financial condition, revenues or
expenses, liquidity, capital expenditures or capital resources that is material to investors.
TRANSACTIONS WITH RELATED PARTIES
Key management personnel, which consists of the Company’s officers
(Dr. Fahar Merchant, President and Chief Executive Officer, Ms. Elizabeth Williams, Chief Financial Officer, Ms. Rosemina Merchant, Chief
Development Officer, Dr. Mann Muhsin, former Chief Medical Officer, and Dr. Kevin Moulder, former Chief Scientific Officer) and directors,
received the following compensation for the following periods:
| | |
Three months ended
September 30, | |
Six months ended
September 30, |
| | |
|
2022 |
| |
|
2021 |
| |
|
2022 |
| |
|
2021 |
|
| | |
| $ | | |
| $ | | |
| $ | | |
| $ | |
| Salaries and wages | |
| 252 | | |
| 508 | | |
| 505 | | |
| 761 | |
| Board fees | |
| 76 | | |
| 68 | | |
| 152 | | |
| 140 | |
| Stock option expense | |
| 369 | | |
| 339 | | |
| 711 | | |
| 546 | |
| | |
| 697 | | |
| 915 | | |
| 1,368 | | |
| 1,447 | |
As at September 30, 2022, the Company had trade and other payables in the
normal course of business, owing to directors and officers of $0.1 million (2021: $0.1 million) related to accrued bonuses, board fees
and accrued vacation.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The significant accounting policies of the Company are described in note
2 of the Annual Financial Statements and available on SEDAR at www.sedar.com and included in the Annual Report on Form 20-F filed on EDGAR
at www.sec.gov.
Estimates and assumptions are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The
determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience
and current and expected economic conditions. Actual results could differ from those estimates. Critical judgements in applying the Company’s
accounting policies are detailed in the Annual Financial Statements, filed on SEDAR at www.sedar.com and included in the Annual Report
on Form 20-F filed on EDGAR at www.sec.gov.
FINANCIAL INSTRUMENTS
Financial instruments are defined as a contractual right or obligation
to receive or deliver cash on another financial asset. The Company recognizes financial instruments based on their classification. Depending
on the financial instrument’s classification, changes in subsequent measurements are recognized in net loss or other comprehensive
loss.
A description of the financial instruments, their fair value and risk management
is included in notes 2, 5 and 6 of the Annual Financial Statements, filed on SEDAR at www.sedar.com and included in the Annual Report
on Form 20-F filed on EDGAR at www.sec.gov/edgar.
2020 Public Offering and USE OF PROCEEDS
The following table provides an update on the anticipated use of proceeds
raised as part of the public offering of common shares of the Company which was completed on March 17, 2020 (the “2020 Public Offering”)
along with amounts actually expended. Following completion of the 2020 Public Offering, Medicenna selected MDNA11 as its lead IL-2 candidate
over MDNA19 to progress to the clinic and, as such, proceeds from the 2020 Public Offering, which were initially allocated to the development
of MDNA19, have been re-directed to the development of MDNA11 in the same proportions. As of September 30, 2022, the following expenditures
have been incurred (in thousands of Canadian dollars):
| Item |
Amount to Spend |
Spent to Date |
Adjustments |
Remaining to Spend |
| Preclinical development |
$ 3,300 |
$ 3,300 |
- |
- |
| Manufacturing of clinical batch |
$ 4,400 |
$ 4,400 |
- |
- |
| Clinical development |
$ 13,150 |
$ 6,352 |
- |
$ 6,798 |
| General corporate and working capital purposes |
$ 11,350 |
$ 11,350 |
- |
- |
| Total |
$ 32,200 |
$ 25,402 |
$ - |
$ 6,798 |
2022 Public Offering and USE OF PROCEEDS
The following table provides an update on the anticipated use of proceeds
raised in the 2022 Public Offering along with amounts actually expended. As of September 30, 2022, the following expenditures have been
incurred (in thousands of Canadian dollars):
| Item |
Amount to Spend |
Spent to Date |
Adjustments |
Remaining to Spend |
| Phase 1/2 MDNA11 Ability Study |
US$ 8,000 |
- |
- |
US$ 8,000 |
| Pre-clinical development of a BiSKIT candidate |
US$ 8,000 |
- |
- |
US$ 8,000 |
| Total |
US$ 16,000 |
$ - |
$ - |
US$ 16,000 |
ATM Facility
On December 30, 2020, the Company entered into the ATM Agreement with SVB
Leerink acting as sales agent, pursuant to which the Company may, from time to time sell, through ATM offerings, on the Nasdaq such number
of common shares as would have an aggregate offering price of up to US$25.0 million. During the six month period ended September 30, 2022,
the Company has issued 656,656 common shares, raising total gross proceeds of $1.0 million under the ATM Facility. $19.1 million (US$15.3
million) approximately remains unused under the ATM Facility. The shelf supplement filed has expired and therefore the ATM facility is
not available as of this date, but we have the ability to renew it and regain access to the facility.
RISKS AND UNCERTAINTIES
The Company is an immunotherapy company that operates in a highly competitive
industry that is dependent on a number of factors that include the Company’s capacity to raise additional funding on reasonable
terms when necessary, secure partnerships for the development of its product candidates, obtain necessary regulatory approvals and achieve
market acceptance, face disruption in availability of key components for ongoing clinical studies, obtain positive results from pre-clinical
and clinical studies, successfully develop existing and new products, hire and retain skilled staff and key personnel, rely on third party
providers, protect its intellectual property, and face litigation risk in connection thereof. An investment in the Common Shares is subject
to a number of risks and uncertainties, including the risks related to the Company being a foreign private issuer.
In addition, the Company may, from time to time, announce or publish preliminary
or interim data from its clinical trials. Preliminary and interim data remains subject to audit and verification procedures that may result
in the final data being materially different from the preliminary or interim data. Preliminary and interim results of a clinical trial
are not necessarily predictive of final results. There can be no assurance that favorable interim or preliminary data will result in favorable
final data. Preliminary and interim data are subject to the risk that one or more of the clinical outcomes may materially change as patient
enrollment continues, patient data are further examined and reviewed, more patient data become available, and the Company prepares and
issues its final clinical study report. As a result, preliminary and interim data should be viewed with caution until the final, complete
data are available. Material adverse changes in the final data compared to the preliminary or interim data could significantly harm the
Company’s business, prospects, financial condition and results of operations.
An investor should carefully consider these risks, as well as the risks
described in the Company’s Annual Information Form and the Annual Report on Form 20-F filed with the U.S. Securities and Exchange
Commission, as well as the other information filed with the securities regulators before investing in the Common Shares. If any of such
described risks occur, or if others occur, the Company’s business, financial condition and the results of operations could be seriously
harmed and investors could lose all or part of their investment.
There are important risks which management believes could impact the Company’s
business. For information on risks and uncertainties, please also refer to the “Risk Factors” section of the Company’s
most recent Annual Information Form filed on SEDAR at www.sedar.com and included in the Annual
Report on Form 20-F filed on EDGAR at www.sec.gov/edgar.
DISCLOSURE CONTROLS AND INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company has implemented a system of internal controls that it believes
adequately protects the assets of the Company and is appropriate for the nature of its business and the size of its operations. The internal
control system was designed to provide reasonable assurance that all transactions are accurately recorded, that transactions are recorded
as necessary to permit preparation of financial statements in accordance with IFRS, and that our assets are safeguarded.
These internal controls include disclosure controls and procedures designed
to ensure that information required to be disclosed by the Company is accumulated and communicated as appropriate to allow timely decisions
regarding required disclosure.
Internal control over financial reporting means a process designed by or
under the supervision of the Chief Executive Officer and the Chief Financial Officer, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB.
The internal controls are not expected to prevent and detect all misstatements
due to error or fraud. There were no changes in our internal control over financial reporting that occurred during the three and six month
period ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
As of September 30, 2022, the Company’s management has assessed the
effectiveness of our internal control over financial reporting and disclosure controls and procedures using the Committee of Sponsoring
Organizations of the Treadway Commission’s 2013 framework. Based on their evaluation, the Chief Executive Officer and the Chief
Financial Officer have concluded that these controls and procedures are effective.
OTHER MD&A REQUIREMENTS
Outstanding Share Data
As at the date of this report, the Company has the following securities
outstanding:
| |
Number |
| Common shares |
69,637,469 |
| Warrants |
16,185,385 |
| Stock options |
5,580,353 |
| Total |
91,403,207 |
For a detailed summary of the outstanding securities convertible into,
exercisable or exchangeable for voting or equity securities of Medicenna as at March 31, 2022, refer to notes 9, 10, and 11 of the Annual
Financial Statements of the Company.
Additional information relating to the Company, including the Company’s
Annual Information Form and the Annual Report on Form 20-F, is available under the Company’s profile on SEDAR at www.sedar.com
and EDGAR at www.sec.gov, respectively.
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