Consolidated financial statements of
Medicenna Therapeutics Corp.
(Expressed in Canadian Dollars)
For the years ended March 31, 2022, 2021 and 2020
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Medicenna Therapeutics Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of financial position of Medicenna
Therapeutics Corp. and its subsidiaries (together, the Company) as of March 31, 2022 and 2021, and the
related consolidated statements of loss and comprehensive loss, changes in shareholders’ equity and
cash flows for the years then ended, including the related notes (collectively referred to as the
consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of March 31, 2022 and 2021 and their
financial performance and their cash flows for the years then ended in conformity with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
Substantial Doubt About the Company's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the
Company has a net capital deficiency and cash outflows from operating activities that raise substantial
doubt about its ability to continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s consolidated financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of
the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud.The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion.
Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
PricewaterhouseCoopers LLP
PwC Centre, 354 Davis Road, Suite 600, Oakville, Ontario, Canada L6J 0C5
T: +1 905 815 6300, F: +1 905 815 6499
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Oakville, Canada
June 21, 2022
We have served as the Company's auditor since 2020.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Directors of
Medicenna Therapeutics Corp.
Opinion on the Consolidated Financial Statements
We have audited the consolidated statements of operations, cash flows and changes in shareholders’ equity of Medicenna
Therapeutics Corp. (the “Company”) for the year ended March 31, 2020, and the related notes (collectively referred to as the
“financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results
of the Company’s operations and its cash flows for the year ended March 31, 2020 in conformity with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatements of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
We served as the Company’s auditor from 2014 to 2020.
Vancouver, Canada
June 21, 2022
/s/ DAVIDSON & COMPANY LLP
Chartered Professional Accountants
Medicenna Therapeutics Corp.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian Dollars, except for share and per share amounts)
March 31, 2022
$
March 31, 2021
$
as at
Assets
Current assets
Cash and cash equivalents (Note 2d)
Marketable securities (Note 2d)
Prepaids and deposits
Other receivables (Note 7)
Intangible assets (Note 13)
Right-of-use assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 8)
Lease liability
Shareholders' Equity
Common shares (Note 9)
Contributed surplus (Notes 10 and 11)
Accumulated other comprehensive income
Deficit
Nature of business and going concern (Note 1)
Approved by the Board
/s/ Albert Beraldo
Director
/s/ Karen Dawes
Director
The accompanying notes are an integral part of these Consolidated financial statements.
20,535
-
1,548
1,308
23,391
65
-
23,456
2,621
-
2,621
83,671
7,926
171
(70,933)
20,835
23,456
30,375
10,010
1,354
410
42,149
71
32
42,252
4,073
34
4,107
79,587
6,680
234
(48,356)
38,145
42,252
1
Medicenna Therapeutics Corp.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in thousands of Canadian Dollars, except for share and per share amounts)
Operating expenses
General and administration (Note 16)
Research and development (Note 16)
Year ended
March 31,
2022
Year ended
March 31,
2021
Year ended
March 31,
2020
$
7,757
14,716
$
6,525
10,870
$
2,375
5,870
Total operating expenses
22,473
17,395
8,245
Finance income (Note 2d)
Foreign exchange loss
Net loss for the year
Cumulative translation adjustment
Comprehensive loss for the year
(69)
173
104
(22,577)
(63)
(22,640)
(314)
208
(106)
(17,289)
(14)
(17,303)
(7)
39
32
(8,277)
91
(8,186)
Basic and diluted loss per share for the year
(0.42)
(0.35)
(0.26)
Weighted average number of common shares
outstanding (Note 9)
54,286,671
49,661,776
31,899,640
The accompanying notes are an integral part of these Consolidated financial statements.
2
Medicenna Therapeutics Corp.
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian Dollars)
Operating activities
Net loss for the year
Items not involving cash
Depreciation
Stock based compensation
Government grant expense recoveries (Note 12)
Unrealized foreign exchange
Accrued interest
Changes in non-cash working capital
Other receivables and deposits
Accounts payable and accrued liabilities
Investing activities
Acquisition of marketable securities
Disposition of marketable securities
Financing activities
Repayment of lease liabilities
Issuance of share capital, net of issuance costs (Note 9)
Warrant and option exercises (Notes 10 and 11)
Effect of foreign exchange on cash
Net (decrease) increase in cash
Cash, beginning of year
Cash, end of year
Other non-cash transactions
Broker warrants issued
Warrants issued
Share issuance costs accrued through
accounts payable and accrued liabilities
Year ended
March 31, 2022
$
Year ended
March 31, 2021
$
Year ended
March 31, 2020
$
(22,577)
(17,289)
(8,277)
38
1,415
(700)
121
(37)
(392)
(1,452)
(23,584)
(10,000)
20,050
10,050
(37)
3,509
406
3,878
(184)
(9,840)
30,375
20,535
40
1,006
-
267
(15)
(1,612)
2,292
(15,311)
(10,000)
15,013
5,013
(39)
11,411
6,884
18,256
(281)
7,677
22,698
30,375
8
1,125
2,463
62
(3)
139
(932)
(5,415)
(15,000)
-
(15,000)
(3)
38,375
2,373
40,745
(3)
20,327
2,371
22,698
$ -
$ 69
$ 561
$ -
$ -
$ 705
$ -
$ -
$ 257
The accompanying notes are an integral part of these Consolidated financial statements.
3
Medicenna Therapeutics Corp.
Consolidated Statements of Changes in Shareholders' Equity (Expressed in thousands
Canadian Dollars, except for share and per share amounts)
Common shares issued and
outstanding
Contributed
surplus
Accumulated other
comprehensive
income
Deficit
Total
shareholders'
equity
Balance, March 31, 2019
Stock based compensation
Warrant and option exercises
Issued on October 2019 financing
Issued on March 2020 financing
Cumulative translation adjustment
Net loss for the year
Balance, March 31, 2020
Balance, March 31, 2020
Stock based compensation
Warrant and option exercises
Issued on April 2020 overallotment
Issued on ATM financing
Cumulative translation adjustment
Net loss for the year
Balance, March 31, 2021
Balance, March 31, 2021
Stock based compensation
Warrant and option exercises
Issued on ATM financing
Cumulative translation adjustment
Net loss for the year
Balance, March 31, 2022
Number
28,578,137
-
1,623,675
5,307,693
11,290,323
-
-
46,799,828
46,799,828
-
3,655,976
1,693,548
1,398,357
-
-
53,547,709
53,547,709
-
351,170
1,748,600
-
-
55,647,479
Amount
$
16,616
-
3,008
5,319
31,635
-
-
56,578
56,578
-
11,667
4,783
6,559
-
-
79,587
79,587
-
575
3,509
-
-
83,671
$
8,633
1,125
(635)
811
456
-
-
10,390
10,390
1,006
(4,785)
69
-
-
-
6,680
6,680
1,415
(169)
-
-
-
7,926
$
157
-
-
-
-
91
-
248
248
-
-
-
-
(14)
-
234
234
-
-
-
(63)
-
171
$
(22,790)
-
-
-
-
-
(8,277)
(31,067)
(31,067)
-
-
-
-
-
(17,289)
(48,356)
(48,356)
-
-
-
-
(22,577)
(70,933)
$
2,616
1,125
2,373
6,130
32,091
91
(8,277)
36,149
36,149
1,006
6,882
4,852
6,559
(14)
(17,289)
38,145
38,145
1,415
406
3,509
(63)
(22,577)
20,835
The accompanying notes are an integral part of these Consolidated financial statements.
4
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
1.
Nature of business and going concern
The Company's principal business activity is the development and commercialization of IL-2, IL-4 and IL-
13 Superkines and Empowered Superkines for the treatment of cancer, inflammation and immune-
mediated diseases. Medicenna has five wholly owned subsidiaries, Medicenna Therapeutics Inc. (“MTI”)
(British Columbia), Medicenna Biopharma Inc. (“MBI”) (Delaware), Medicenna Biopharma Inc. (“MBIBC”)
(British Columbia), Medicenna Australia PTY Ltd (“MAL”) (Australia) and Medicenna Therapeutics UK
Limited (“MTU”). Medicenna is traded on both the Toronto Stock Exchange and the Nasdaq Capital Market
(“NASDAQ”) under the symbol ‘’MDNA”. On March 30, 2021, the Company set up its wholly owned
subsidiary MAL. On April 15, 2021, the Company set up its wholly owned subsidiary MTU, which was
dissolved on March 8, 2022.
As at March 31, 2022, the head and registered office is located at 2 Bloor St W, 7th Floor, Toronto, Ontario,
Canada.
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 $70.9 million as of March 31,
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.
The accompanying consolidated financial statements have been prepared on a going concern basis in
accordance with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). The going concern basis contemplates the realization of assets and
the settlement of liabilities in the normal course of business as they come due for the foreseeable future.
Management has forecasted that the Company’s current level of cash is expected to be able to fund
operations into Q1 of fiscal 2024. The Company is actively pursuing additional financing to further develop
certain of the Company’s scientific initiatives, but there is no assurance these initiatives will be successful,
timely or sufficient. Consequently, the Company’s ability to continue as a going concern beyond Q1 of
fiscal 2024 is dependent on its ability to secure additional financing. These circumstances cast substantial
doubt as to the ability of the Company to continue as a going concern and, hence, the appropriateness of
the use of accounting principles applicable to a going concern.
These financial statements do not reflect the adjustments to the carrying values of assets and liabilities
and the reported expenses and balance sheet classifications that would be necessary if the Company
were unable to realize its assets and settle its liabilities as a going concern in the normal course of
operations. Such adjustments could be material.
COVID-19 Update
In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic and
the Company continues to evaluate the COVID-19 situation and monitor any impacts or any potential
impacts to the business. Medicenna has implemented health and safety measures in accordance with
health officials and guidance from local government authorities. Further, the pandemic has had an impact
on the Company’s third-party vendors resulting in delays in receiving components and supplies which
delayed our ability to start certain studies and could result in development delays including the ongoing
and planned clinical activities related to MDNA11. As the COVID-19 health crisis continues, the Company
will continue to rely on guidance and recommendations from local health authorities, Health Canada and
the Centers for Disease Control and Prevention to update the Company’s policies.
5
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
2.
Basis of presentation and significant accounting policies
a) Statement of compliance
These consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”)
(“IFRS”) and the Interpretations of the International Financial Reporting and Interpretations Committee
(“IFRIC”).
The Consolidated financial statements were approved by the Company’s Board of Directors and
authorized for issue on June 21, 2022.
b) Principles of Consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned
Subsidiaries MTI, MBI, MAL, MTU (dissolved) and MBIBC (British Columbia, Inactive). Subsidiaries
are fully consolidated from the date at which control is determined to have occurred and are
deconsolidated from the date that the Company no longer controls the entity. The financial statements
of the subsidiaries are prepared for the same reporting period as the Company using consistent
accounting policies. Intercompany transactions, balances, and gains and losses on transactions
between subsidiaries are eliminated.
c) Functional and presentation currency
The functional currency of an entity and its subsidiary is the currency of the primary economic
environment in which the entity operates. The functional currency of the parent company is the
Canadian dollar and the functional currency of MBI is the US dollar, the functional currency of MTI
and MBI BC is the Canadian dollar, the functional currency of MAL is the Australian dollar, the
functional currency of MTU was the UK pound sterling, and the presentation currency of the parent
company is the Canadian dollar.
d) Cash and cash equivalents and marketable securities
Cash and cash equivalents
Cash equivalents include guaranteed investment certificates (March 31, 2022 - $5.0 million, March
31, 2021 - nil) with a maturity of 90 days or less and are readily redeemable for cash. The Company
has classified its cash and cash equivalents at fair value through profit or loss.
Marketable securities
Marketable securities consist of guaranteed investment certificates with a maturity of greater than 90
days and less than one year. The Company has classified its marketable securities at fair value
through profit or loss.
e) Research and development costs
Expenditures on research and development activities, undertaken with the prospect of gaining new
scientific or technical knowledge and understanding, are recognized in profit or loss as incurred.
Investment tax credits related to current expenditures are included in the determination of net income
as the expenditures are incurred when there is reasonable assurance they will be realized.
Development activities involve a plan or design for the production of new or substantially improved
products and processes. Development expenditures are capitalized only if development costs can be
measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable, and the Company intends to and has sufficient resources to complete
development and to use or sell the asset. These criteria will be deemed by the Company to have been
met when revenue is received by the Company and a determination that it has sufficient resources to
market and sell its product offerings. Upon a determination that the criteria to capitalize development
expenditures have been met, the expenditures capitalized will include the cost of materials, direct
labour and overhead costs that are directly attributable to preparing the asset for its intended use.
6
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
2. Basis of presentation and significant accounting policies cont’d
e) Research and development costs cont’d
Other development expenditures will be expensed as incurred.
Capitalized development expenditures will be measured at cost less accumulated amortization and
accumulated impairment losses. No development costs have been capitalized to date.
f) Government assistance
Government grants, including grants from similar bodies, consisting of investment tax credits are
recorded as a reduction of the related expense or cost of the asset acquired. Government grants are
recognized when there is reasonable assurance that the Company has met the requirements of the
approved grant program and there is reasonable assurance that the grant will be received.
Research grants that compensate the Company for expenses incurred are recognized in profit, or loss
in reduction thereof on a systematic basis in the same years in which the expenses are recognized.
Grants that compensate the Company for the cost of an asset are recognized in profit or loss on a
systematic basis over the useful life of the asset.
g)
Intangible assets
The Company owns certain patents, intellectual property licenses and options to acquire intellectual
property. The Company expenses patent costs, including license fees and other maintenance costs,
until such time as the Company has certainty over the future recoverability of the intellectual property
at which time it capitalizes the costs incurred. The Company capitalizes costs directly related to the
acquisition of existing license patents. The Company does not hold any intangible asset with an
indefinite life.
Intangible assets with finite lives are amortized over the useful economic life and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The
amortization method and amortization period of an intangible asset with a finite life is reviewed at least
annually. Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset is accounted for by changing the amortization period or
method, as appropriate, and are treated as changes in accounting estimates. The amortization
expense on intangible assets with finite lives is recognized in general and administrative expenses.
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of
intangible assets from the date they are available for use to August 31, 2035.
h)
Income taxes
Current tax and deferred tax are recognized in the Company’s profit and loss, except to the extent
that it relates to a business combination or items recognized directly in equity or in net loss and
comprehensive loss.
Current income taxes are recognized for the estimated taxes payable or receivable on taxable income
or loss for the current year and any adjustment to income taxes payable in respect of previous years.
Current income taxes are determined using tax rates and tax laws that have been enacted or
substantively enacted by the period end date.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability
differs from its tax base, except for taxable temporary differences arising on the initial recognition of
goodwill and temporary differences arising on the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of the transaction affects neither
7
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
2. Basis of presentation and significant accounting policies cont’d
h)
Income taxes cont’d
accounting nor taxable profit or loss.
Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary
differences is restricted to those instances where it is probable that future taxable profit will be
available against which the deferred tax assets can be utilized. At the end of each reporting period,
the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously
unrecognized deferred tax asset to the extent that it has been probable that future taxable profit will
allow the deferred tax asset to be recovered.
i) Basic and diluted loss per common share
Basic loss per share is computed by dividing the loss available to common shareholders by the
weighted average number of common shares outstanding during the year. The computation of diluted
earnings per share assumes the conversion, exercise or contingent issuance of securities only when
such conversion, exercise or issuance would have a dilutive effect on earnings per share. The dilutive
effect of convertible securities is reflected in diluted earnings per share by application of the “if
converted” method. The dilutive effect of outstanding options and warrants and their equivalents is
reflected in diluted earnings per share. Since the Company has losses, the exercise of outstanding
options and warrants have not been included in this calculation as it would be anti-dilutive.
j) Equipment
The Company’s fixed assets comprise of computer equipment for use in general and administrative
and research activities.
Depreciation is recognized using the straight-line method based on an expected life of the assets
Computer equipment
Right-of-use-assets
Impairment of long-lived assets:
2 years
Over the lease term
The Company’s long-lived assets are reviewed for indications of impairment at the date of preparing
each statement of financial position. If indication of impairment exists, the asset’s recoverable amount
is estimated.
An impairment loss is recognized when the carrying value of an asset, or its cash-generating unit,
exceeds its recoverable amount. A cash-generating unit is the smallest identifiable group of assets
that generates cash inflows that are largely independent of cash inflows from other assets or groups
of assets. For the purpose of impairment testing, the Company determined it has one cash-generating
unit. The recoverable amount is the greater of the asset’s fair value less cost to sell and value in use.
k) Stock-based compensation
The Company has a stock-based compensation plan (the "Plan") available to officers, directors,
employees and consultants with grants under the Plan approved by the Company's Board of Directors.
Under the Plan, the exercise price of each option equals the closing trading price of the Company's
stock on the day prior to the grant or a higher price as determined by the Board of Directors. Vesting
is provided for at the discretion of the Board of Directors and the expiration of options is to be not
greater than 10 years from the date of grant. The Company uses the fair value-based method of
8
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
2.
Basis of presentation and significant accounting policies cont’d
k) Stock-based compensation cont’d
accounting for employee awards granted under the Plan. The Company calculates the fair value of
each stock option grant using the Black Scholes option pricing model at the grant date. The stock-
based compensation cost of the options is recognized as stock-based compensation expense over
the relevant vesting period of the stock options using an estimate of the number of options that will
eventually vest.
Stock options awarded to non-employees are accounted for at the fair value of the goods received or
the services rendered. The fair value is measured at the date the Company obtains the goods or the
date the counterparty renders the service. If the fair value of the goods or services cannot be reliably
measured, the fair value of the options granted will be used.
l)
Share Capital
Common shares are classified as equity. Incremental costs directly attributable to the issue of
common shares are recognized as a reduction of equity.
The Company has adopted a relative fair value method with respect to the measurement of shares
and warrants issued as private placement units. The relative fair value method allocates value to each
component on a pro-rata basis, based on the fair value of the components calculated independently
of one another. The Company measures the fair value of the warrant component of the unit using the
Black-Scholes option pricing model. The unit value is then allocated, pro-rata, between the two
components, with the fair value attributed to the warrants being recorded to contributed surplus.
m) Financial Instruments
Financial assets and liabilities are recognized when the Company becomes a party to the contractual
provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows
from the assets have expired or have been transferred and the Company has transferred substantially
all risks and rewards of ownership.
Financial assets and liabilities are offset and the net amount is reported in the consolidated statement
of financial position when there is a legally enforceable right to offset the recognized amounts and
there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
The Company recognizes financial instruments based on their classification. Depending on the
financial instruments’ classification, changes in subsequent measurements are recognized in net loss
and comprehensive loss.
The Company has implemented the following classifications:
• Cash, cash equivalents and marketable securities are classified at fair value through profit or loss.
• Other receivables, prepaid and deposits are classified as amortized cost. After their initial fair value
measurement, they are measured at amortized cost using the effective interest method; and
• Accounts payable and accrued liabilities are classified as other amortized cost. After their initial fair
value measurement, they are measured at amortized cost using the effective interest method.
9
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
2.
Basis of presentation and significant accounting policies cont’d
n)
Impairment of financial assets
The Company applies the simplified method of the expected credit loss model required under IFRS
9. Under this method, the Company estimates a lifetime expected loss allowance for all receivables.
Receivables are written off when there is no reasonable expectation of recovery.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows. The present value of the estimated future cash flows is discounted at the financial
asset’s original effective interest rate.
o) Employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed
as the related service is provided. A liability is recognized for the amount expected to be paid in short-
term cash bonuses if the Company expects to pay these amounts as approved by the Board of
Directors as a result of past services provided by the employee and the obligation can be estimated
reliably.
p) Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are assessed by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability. The unwinding of the discount on provisions is recognized in
finance costs. A provision for onerous contracts is recognized when the unavoidable costs of meeting
the obligations under the contract exceed the economic benefits expected to be received under it. The
provision is measured at the present value of the lower of the expected cost of terminating the contract
and the expected net cost of continuing with the contract.
q) Research and development tax credits
Research and development tax credits Refundable investment tax credits relating to Research and
Development Tax Incentive (“RDTI”) are recorded in the accounts in the fiscal period in which the
qualifying expenditures are incurred provided there is reasonable assurance that the tax credits will
be realized. Refundable investment tax credits, in connection with RDTI activities, are accounted for
using the cost reduction method and included in government assistance on the statements of loss
and comprehensive loss. Amounts recorded for refundable investment tax credits are calculated
based on the expected eligibility and tax treatment of qualifying RDTI expenditures recorded in the
Company’s consolidated financial statements.
3.
New standards and interpretations not yet adopted
In January 2020, the IASB issued amendments to Presentation of financial statements (“IAS 1”) to provide a more
general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at
the reporting date. The amendments to IAS 1 are effective for annual reporting periods beginning on or after
January 1, 2023. The company is currently evaluating the potential impacts of adoption.
There are no other standards, interpretations or amendments to existing standards that are not yet effective that
are expected to have a material impact on the consolidated financial statements of the Company.
10
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
4.
Key sources of estimation uncertainty and judgement
The preparation of consolidated financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates. Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are accounted for prospectively.
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying
amounts of assets and liabilities are discussed below:
Valuation of stock-based compensation and warrants
Management measures the costs for stock-based compensation and warrants using market-based option
valuation techniques. Assumptions are made and estimates are used in applying the valuation techniques. These
include estimating the future volatility of the share price, expected dividend yield, expected risk-free interest rate,
future employee turnover rates, future exercise behaviors and corporate performance. Such estimates and
assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates of stock-
based compensation and warrants.
5.
Capital disclosures
The Company’s objectives, when managing capital, are to safeguard cash and cash equivalents as well as
maintain financial liquidity and flexibility in order to preserve its ability to meet financial obligations and deploy
capital to grow its businesses.
The Company’s financial strategy is designed to maintain a flexible capital structure consistent with the objectives
stated above and to respond to business growth opportunities and changes in economic conditions. In order to
maintain or adjust its capital structure, the Company may issue shares or issue debt (secured, unsecured,
convertible and/or other types of available debt instruments).
There were no changes to the Company’s capital management policy during the year. The Company is not subject
to any externally imposed capital requirements.
6.
Financial risk management
(a) Fair value
The Company’s financial instruments recognized on the Consolidated statements of financial position
consist of cash and cash equivalents, marketable securities, government and other receivables, and
accounts payable and accrued liabilities. The fair value of these instruments, approximate their
carrying values due to their short-term maturity.
Classification of financial instruments
Financial instruments measured at fair value on the statements of financial position are summarized
into the following fair value hierarchy levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset
or liability.
Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The Company classifies its financial assets and liabilities depending on the purpose for which the
financial instruments were acquired, their characteristics, and management intent as outlined below:
11
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
6.
Financial risk management cont’d
Cash and cash equivalents and marketable securities are measured using Level 1 inputs and changes
in fair value are recognized through profit or loss, with changes in fair value being recorded in net
income at each year-end.
Other receivables, prepaids and deposits are measured at amortized cost less impairments.
Accounts payable and accrued liabilities are measured at amortized cost.
The Company has exposure to the following risks from its use of financial instruments: credit, interest
rate, currency, and liquidity risk. The Company reviews its risk management framework on a quarterly
basis and makes adjustments as necessary.
(b) Credit risk
Credit risk arises from the potential that a counterparty will fail to perform its obligations. The financial
instruments that are exposed to concentrations of credit risk consist of cash and cash equivalents and
marketable securities.
The Company manages credit risk associated with its cash and cash equivalents and marketable
securities by maintaining minimum standards of R1-med or A-high investments.
(c) Interest rate risk
Interest rate risk is the risk that the fair values and future cash flows of the Company will fluctuate
because of changes in market interest rates. The Company believes that its exposure to interest rate
risk is not significant.
(d) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall
due. The Company currently settles all of its financial obligations out of cash and cash equivalents.
The ability to do so relies on the Company maintaining sufficient cash in excess of anticipated needs.
As at March 31, 2022, the Company’s liabilities consist of accounts payable and accrued liabilities that
have contracted maturities of less than one year.
(e) Currency risk
Currency risk is the risk that future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Company is exposed to currency risk from employee costs
as well as the purchase of goods and services primarily in the United States and cash and cash
equivalent balances held in foreign currencies. Fluctuations in the US dollar exchange rate could have
a significant impact on the Company’s results. Assuming all other variables remain constant, a 10%
depreciation or appreciation of the Canadian dollar against the US dollar would result in an increase
or decrease in loss and comprehensive loss for the year ended March 31, 2022 of $660 thousand
(March 31, 2021 - $938 thousand).
Balances in US dollars are as follows:
Cash and cash equivalents
Accounts payable and accrued liabilities
March 31, 2022
March 31, 2021
$
5,456
(1,269)
4,187
$
9,593
(2,147)
7,446
12
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
7.
Other receivables
Investment tax credits receivable
Sales tax receivable
8.
Accounts payable and accrued liabilities
Trade payables
Accrued liabilities
9.
Share capital
Authorized
Unlimited common shares
Equity Issuances
March 31, 2022
March 31, 2021
$
700
608
1,308
$
-
410
410
March 31, 2022
March 31, 2021
$
1,672
949
2,621
$
2,245
1,828
4,073
On March 17, 2020, the Company completed a public offering raising total gross proceeds of $35 million.
The Company issued 11,290,323 common shares at $3.10 per share and issued a 15% overallotment
option to the underwriters. The Company paid commission to the agents totaling $2.5 million, share
issuance costs of $0.5 million and issued 790,323 warrants to the agents exercisable into one common
share of the Company at an exercise price of $3.10 for a period of 24 months. The fair value of the
warrants issued was determined to be $0.5 million.
On April 15, 2020, the Company announced the full exercise of the overallotment option, issuing an
additional 1,693,548 common shares at $3.10 per share for additional proceeds of $5.3 million. The
Company paid commission to the agents totaling $368 thousand, share issuance costs of $32 thousand
and issued 118,723 warrants to the agents exercisable into one common share of the Company at an
exercise price of $3.10 expiring on March 17, 2022. The fair value of the warrants issued was determined
to be $69 thousand.
On December 30, 2020, the Company entered into a sales agreement with SVB Leerink acting as sales
agent, pursuant to which the Company may, from time to time sell, through at-the-market (“ATM”) on the
NASDAQ such number of common shares as would have an aggregate offering price of up to US$25.0
million (the ATM Offering). 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. As of March 31, 2022, the Company has issued 3,146,957
common shares raising total gross proceeds of $10.9 million to date. During the year ended March 31,
2022, the Company issued 1,748,600 common shares raising total gross proceeds of $3.8 million to date.
Calculation of loss per share
Loss per common share is calculated using the weighted average number of common shares outstanding.
For the year ended March 31, 2022, 2021 and 2020, the calculation was as follows:
13
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
9.
Share capital cont’d
Common shares issued and outstanding, beginning of year
Shares issued in March/April 2020 financing
Shares issued in October 2019 financing
ATM issuances
Effect of warrants and options exercised
Weighted average common shares
outstanding, end of year
Common shares issued and outstanding, end of year
issued and
2022
53,547,709
-
-
515,693
223,269
2021
46,799,828
1,623,950
-
182,226
1,055,772
2020
28,578,137
431,870
2,407,314
-
482,319
54,286,671
49,661,776
31,899,640
55,647,479
53,547,709
46,799,828
The effect of any potential exercise of the Company’s stock options and warrants outstanding during the
year has been excluded from the calculation of diluted loss per common share as it would be anti- dilutive.
10. Warrants
Warrant continuity:
Balance outstanding at March 31, 2019
Common share purchase warrants issued in the October 2019 financing
Broker warrants issued in the financing October 2019 financing
Broker warrants issued in the March 2020 financing
Warrants exercised during the year
Warrants outstanding at March 31, 2020
Broker warrants issued in overallotment
Warrants exercised during the year
Warrants outstanding at March 31, 2021
Warrants expired during the year
Warrants exercised during the year
Warrants outstanding at March 31, 2022
Number of
Warrants
5,145,083
2,653,846
350,134
790,323
(1,623,675)
7,315,711
118,548
(3,415,266)
4,018,993
(788,161)
(266,290)
2,964,542
Weighted average
exercise price
$ 1.65
1.75
1.30
3.10
1.46
$ 1.86
3.10
1.96
$ 1.82
3.07
1.53
$ 1.51
The following warrants were exercised during the year ended March 31, 2022:
Number of
Warrants
Exercise
Price
Proceeds
Expiry Date
50,000
71,744
144,546
266,290
$
1.20
1.30
1.75
$
60,000
93,267
252,955
406,222
December 21, 2023
October 17, 2021
October 17, 2022
At March 31, 2022, warrants were outstanding and exercisable, enabling holders to acquire common
shares as follows:
Number of
Warrants
Exercise
Price
Expiry Date
1,661,542
1,303,000
2,964,542
$
1.75
1.20
October 17, 2022
December 21, 2023
14
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
11. Stock options
Year ended March 31, 2022
During the year ended March 31, 2022, the Company granted 1,097,056 stock options at an average exercise
price of $3.55 per share. 812,706 of the options were granted to the Company’s officers and employees and
vest 1/3 after one year, 1/3 after two years and 1/3 after three years, and have a ten-year life; and 20,000 stock
options granted to a consultant vest 1/3 after one year, 1/3 after two years and 1/3 after three years, and have
a ten-year life. 264,350 options were granted to Directors of the Company at a price of $2.72 and vest 50% upon
issuance and 50% after 1 year and have a five-year life.
Year ended March 31, 2021
During the year ended March 31, 2021, the Company granted 450,084 stock options at an average exercise
price of $5.14 per share. 212,464 of the options were granted to the Company’s officers and employees and
vest 1/3 after one year, 1/3 after two years and 1/3 after three years, and have a ten-year life; 62,620 stock
options granted to the Company’s Board of Directors vest 50% immediately and 50% after one year and have a
five-year life; 75,000 stock options granted to a consultant vest monthly over 48 months and have a 10-year life;
and 100,000 stock options granted to a consultant vest monthly over 16 months and have a 5-year life.
Year ended March 31, 2020
During the year ended March 31, 2020 the Company granted 1,030,000 stock options exercisable at $1.30 per
share. Of these options, 300,000 vest 50% upon issuance and 50% after one year and have a five-year life.
730,000 options vest 50% after one year, 25% after 2 years and 25% after 3 years and have a ten-year life.
200,000 options were also issued, exercisable at $1.38 per share. 50,000 of the options granted vest 50% after
one year, 25% after two years and 25% after three years, 150,000 of the options vest 50% on September 1,
2019 and 50% on December 1, 2019 and have a ten-year life.
Stock option transactions for the years ended March 31, 2022 are set forth below:
Balance outstanding at March 31, 2019
Granted
Forfeited
Balance outstanding at March 31, 2020
Granted
Exercised
Forfeited
Balance outstanding at March 31, 2021
Granted
Exercised
Forfeited
Balance outstanding at March 31, 2022
Number of
options
Weighted
average
exercise
price
3,275,000 $ 1.67
1.38
1,230,000
(375,000)
1.09
4,130,000 $ 1.56
5.14
450,084
1.29
(240,710)
(184,290)
1.67
4,155,084 $ 1.96
3.55
1,097,056
(84,880)
1.47
4.23
(702,620)
4,464,640 $ 2.00
15
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
11. Stock options cont’d
The following table summarizes information about stock options outstanding at March 31, 2022:
Exercise
Prices
$
1.00-1.99
2.00-2.99
3.00-5.19
Options
1,955,000
1,679,000
830,640
4,464,640
Options Outstanding
Weighted average
remaining
contractual life
Weighted
average
exercise price
Options Exercisable
Options
Weighted
average
exercise price
Years
6.42
4.68
5.55
5.61
$
1.17
2.08
3.82
2.00
1,747,500
1,550,000
131,458
3,428,958
$
1.15
2.06
5.11
1.64
The following assumptions were used in the Black-Scholes option-pricing model to determine the fair value
of stock options granted during the year:
March 31, 2022 March 31, 2021 March 31, 2020
Exercise price
Grant date share price
Risk free interest rate
Expected life of options
Expected volatility
Expected dividend yield
Forfeiture rate
Weighted average fair value of options granted during
the year
$2.05-4.85
$2.05-4.85
$5.11-5.19
$5.11-5.19
1.0%
5 years
90%
-
1.0%
5 years
103%
-
$1.30-1.38
$1.30-1.38
1.5%
2.5-5 years
100-114%
-
$2.58
$4.01
$0.94
12.
Government assistance
CPRIT assistance
In February 2015, the Company received notice that it had been awarded a grant by the Cancer Prevention
Research Institute of Texas (“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, the grant with CPRIT is complete.
Of the US$14.1 million grant approved by CPRIT, Medicenna received US$14.1 million from CPRIT as at
March 31, 2022. Amounts received (US$1.4 million) were recorded as a reduction in research and
development expenses in the year ended March 31, 2022.
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
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 is recorded as a reduction in research and
development expenses in the year ended March 31, 2022.
16
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
13.
Commitments
Intellectual property
On August 21, 2015, the Company exercised its right to enter into two license agreements (the “Stanford
License Agreements”) with the Board of Trustees of the Leland Stanford Junior University (“Stanford”). In
connection with this licensing agreement, the Company issued 649,999 common shares with a value of
$0.1 million to Stanford and affiliated inventors. The value of these shares has been recorded as an
intangible asset that is being amortized over the life of the underlying patents. As at March 31, 2022, the
Company’s intangible assets have a remaining capitalized net book value of $65 thousand (March 31,
2021 - $71 thousand).
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 March
31, 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.
Contractual obligations
Less than
1 year
1-3 years
3-5 years
Total
Patent licensing costs
$
$
188
1,137
$
287
$
1,612
As at March 31, 2022, the Company 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 $10.7 million, of which $8.4 million has been paid or accrued as
at March 31, 2022. Most of these agreements are cancellable by the Company with notice. These
commitments include agreements for clinical CRO’s, manufacturing and preclinical studies.
14. Related party disclosures
(a) Key management personnel
Key management personnel, which consists of the Company’s officers (President and Chief Executive
Officer, Chief Financial Officer, Chief Development Officer, former Chief Medical Officer and former
Chief Scientific Officer) and directors, earned the following compensation for the following years:
Salaries and wages
Board fees
Stock option expense
2022
$
1,555
285
886
2,726
2021
$
1,501
230
797
2,528
2020
$
892
142
873
1,907
17
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
14. Related party disclosures
(b) Amounts payable to related parties
As at March 31, 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 board fees and accrued
vacation.
15.
Income taxes
a) Provision for Income Tax
A reconciliation of income taxes at statutory rates with the reported taxes is as follows:
Loss before income taxes
Tax rate
Expected tax recovery
Change in statutory rates and foreign exchange rates
Permanent differences
Share issuance costs
Change in unrecognized deductible temporary difference
Total income tax expense (recovery)
b) Deferred Income Tax
2022
$
(22,577)
27.0%
(6,095)
29
383
(67)
5,750
-
2021
$
(17,289)
27.0%
(4,668)
(288)
272
(153)
4,837
-
2020
$
(8,277)
27.0%
(2,235)
35
309
(993)
2,884
-
The significant components of the Company’s deferred tax assets that have not been included on the consolidated
statement of financial position are as follows:
Non-capital losses carry-forward
Property and equipment
Share issuance costs
Unrecognized deferred tax asset
Net deferred tax assets
2022
$
16,968
50
846
17,864
(17,864)
-
2021
$
10,971
50
1,093
12,114
(12,114)
-
2020
$
6,287
50
940
7,277
(7,277)
-
The significant components of the Company’s temporary differences, unused tax credits and unused tax losses
that have not been included in the consolidated statements of financial position are as follows:
Type
Non-capital losses carry-forward
Property and equipment
Share issuance costs
Amount
Expiry
$ 63,756,000
2036-2042
186,000
3,132,000
N/A
2040-2043
18
Medicenna Therapeutics Corp.
Notes to the Consolidated financial statements
For the Years Ended March 31, 2022, 2021 and 2020
(Tabular amounts expressed in thousands of Canadian Dollars, except for share and per share amounts)
16. Components of Expenses
General and Administration Expenses
Depreciation expense
Stock based compensation
Facilities and operations
Public company expenses
Salaries and benefits
CPRIT grant claimed in eligible expenses (Note 12)
Research and Development Expenses
Chemistry, manufacturing, and controls
Regulatory
Discovery and pre-clinical
Clinical
Salaries and benefits
Licensing, patent, legal fees and royalties
Stock based compensation
CPRIT grant claimed in eligible expenses (Note 12)
Australian R&D refund claimed in eligible expenses (Note 12)
Other research and development expenses
2022
$
37
949
384
2021
$
40
614
304
5,424
4,677
963
-
890
-
7,757
6,525
2022
$
6,841
502
3,441
2,322
2,759
733
467
(1,753)
(700)
104
2021
$
2,356
801
2,896
1,225
1,413
1,620
391
-
-
168
14,716
10,870
2020
$
8
639
253
1,004
596
(125)
2,375
2020
$
343
433
1,899
1,528
1,095
811
486
(951)
-
226
5,870
17.
Subsequent events
Subsequent to the year end, a total of 656,656 shares were sold under the ATM for total gross proceeds
of US $0.8 million (Note 9).
In May 2022, the Company received $0.6 million in HST credits, included in other receivables (Note 6) at
March 31, 2022. In June 2022, the Company received $0.7 million through the Australian R&D incentive
program included in other receivables (Note 6 and 12) at March 31, 2022.
19