Exhibit 4.3


 


 


 


Management’s Discussion and
Analysis


 


For the Year Ended March 31,
2020


 


 


DATE OF REPORT: May 14, 2020


 






    	 	 	 



     


    

 


MANAGEMENT’S DISCUSSION AND ANALYSIS


 


The following management’s discussion
and analysis (“MD&A”) has been prepared as of May 14, 2020 and should be read in conjunction with the consolidated
audited financial statements of Medicenna Therapeutics Corp. (“Medicenna”, the “Company”, “we”,
 “our”, “us” and similar expressions). The audited consolidated financial statements and related notes of
Medicenna were prepared in accordance with International Financial Reporting Standards (“IFRS”) and all dollar amounts
are expressed in Canadian dollars unless otherwise noted.


 


FORWARD-LOOKING STATEMENTS


 


This MD&A contains forward-looking
statements within the meaning of applicable securities laws. 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 that are not clearly historical in nature are forward-looking, and the 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. Forward-looking statements in this MD&A include, but are not limited to, statements
with respect to the Company’s:


 


		·	requirements for, and the ability to obtain,
future funding on favourable terms or at all;






		·	business strategy;






		·	expected future loss and accumulated deficit
levels;






		·	projected financial position and estimated
cash burn rate;






		·	expectations about the timing of achieving
milestones and the cost of the Company’s development programs;






		·	observations and expectations regarding
the effectiveness of MDNA55 and the potential benefits to patients;






		·	expectations about the Company’s
products’ safety and efficacy;






		·	expectations regarding the Company’s
ability to arrange for the manufacturing of the Company’s products and technologies;






		·	expectations regarding the progress, and
the successful and timely completion, of the various stages of the regulatory approval process;






		·	expectations regarding the filing and
approval of various submissions by regulatory agencies regarding the conduct of new clinical trials;






		·	ability to initiate, progress, and successful
and timely completion, of various preclinical and manufacturing activities associated with future clinical trials;






		·	ability to secure strategic partnerships
with larger pharmaceutical and biotechnology companies;






		·	strategy to acquire and develop new products
and technologies and to enhance the safety and efficacy of existing products and technologies;






		·	plans to market, sell and distribute the
Company’s products and technologies;






		·	expectations regarding the acceptance
of the Company’s products and technologies by the market;






		·	ability to retain and access appropriate
staff, management, and expert advisers;






		·	expectations with respect to existing
and future corporate alliances and licensing transactions with third parties, and the receipt and timing of any payments to be
made by the Company or to the Company in respect of such arrangements; and






		·	strategy with respect to the protection
of the Company’s intellectual property.



 


all as further and more fully described
under the section of this MD&A titled “Risk Factors”. 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.


 






    	 	 	2



     


    

 


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 occurring in the
first quarter of 2020 and the ongoing and developing resulting indirect global and regional economic impacts. The Company is currently
experiencing uncertainty related to the rapidly developing COVID-19 situation. It is anticipated that the spread of COVID-19 and
global measures to contain it, will have an impact on the Company, however it is challenging to quantify the potential magnitude
of such impact at this time. The Company is regularly assessing the situation and remains in contact with its partners, clinical
sites investigators, contract research organizations, contract development and manufacturing organizations and suppliers to assess
any impacts and risks.


 


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.


 


All references in this MD&A to “the
Company”, “Medicenna”, “we”, “us”, or “our” refer to Medicenna Therapeutics
Corp. and the subsidiaries through which it conducts its business, unless otherwise indicated.


 


COMPANY OVERVIEW


 


Medicenna Therapeutics Corp. is the company
resulting from a “three-cornered” amalgamation involving A2 Acquisition Corp (“A2”), 1102209 B.C. Ltd.,
a wholly owned subsidiary of A2 and Medicenna Therapeutics Inc. (“MTI”), a privately held clinical stage biotechnology
company. A2 was formed by articles of incorporation under the Business Corporations Act (Alberta) (“ABCA”) on
February 2, 2015, and following its initial public offering, was a “capital pool company” listed on the Toronto
Stock Exchange Venture (“TSXV”). As a capital pool company, A2 had no assets other than cash and did not carry on any
operations other than identifying and evaluating opportunities for the acquisition of an interest in assets or businesses for the
completion of a qualifying transaction.


 


In February 2015, the Company was
awarded a grant by the Cancer Prevention Research Institute of Texas (“CPRIT”) whereby the Company is eligible to receive
up to US$14,100,000 on eligible expenditures over a three year-period (later extended to a five-year period) related to the development
of the Company’s Phase 2b clinical program for MDNA55.


 


On March 1, 2017, A2 completed its
qualifying transaction in accordance with the policies of the TSXV by way of a reverse takeover of A2 by the shareholders of MTI
(the “Qualifying Transaction”). In connection with the Qualifying Transaction, A2 changed its name to Medicenna Therapeutics
Corp. and completed a consolidation of its share capital on the basis of one post-consolidation common share for every 14 pre-consolidation
common shares.


 


On August 2, 2017, Medicenna graduated
from the TSXV to the Toronto Stock Exchange (“TSX”). On November 13, 2017, Medicenna continued under the Canada
Business Corporations Act.


 


Medicenna has three wholly owned subsidiaries:
MTI, Medicenna Biopharma Inc. (Delaware) and Medicenna Biopharma Inc. (British Columbia).


 






    	 	 	3



     


    

 


Medicenna is a clinical stage immuno-oncology
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 in order to generate Empowered CytokinesTM
(“ECs”) that precisely deliver potent toxins to the cancer cells without harming adjacent healthy cells. Medicenna’s
mission is to become the leader in the development and commercialization of targeted ECs and Superkines for the treatment of a
broad range of cancers. The Company seeks to achieve its goals by drawing on its expertise, and that of world-class collaborators,
in order to develop a unique set of therapeutic Superkines. Compared to naturally occurring cytokines – that bind to multiple
receptor types on many cell types – Superkines are engineered with unique specificity toward defined target cell subsets
to enable precise activation or inhibition of relevant immune cells in order to improve therapeutic efficacy and safety. Superkines
can also be fused with other types of proteins such as antibodies to generate novel “immunocytokines” or combined with
other treatment modalities such as checkpoint inhibitors, chimeric antigen receptor T cells (“CAR-Ts”) or oncolytic
viruses to stimulate tumor-killing immune cells or overcome the immunosuppressive tumor microenvironment (“TME”).


 


Medicenna has completed enrolment in a
Phase 2b clinical trial of MDNA55, Medicenna’s lead EC, 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”), that is designed to preferentially target tumor
cells that over-express the interleukin-4 receptor (“IL4R”). MDNA55 has now been studied in 5 clinical trials in 132
patients, including 112 patients with rGBM, in which it has shown indications of superior efficacy when compared to the current
standard of care. 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. Medicenna announced on April 30, 2019 that patient enrollment was complete in the Phase
2b clinical trial of MDNA55 after treating 46 patients with rGBM. Medicenna announced preliminary top line data from the study
on June 18, 2019 and additional survival data in December 2019 and January 2020. Medicenna plans to have an End
of Phase 2 (“EOP2”) meeting with the FDA in 2020.


 


Complementing Medicenna’s lead clinical
asset (MDNA55), the Company has built a deep pipeline of promising preclinical Superkine candidates such as IL-2 agonists (MDNA109), IL-2
antagonists (MDNA209), dual IL-4/IL-13 antagonists (MDNA413) and IL-13 Superkine (MDNA132) all in-licensed from Leland Stanford
Junior University (“Stanford”). The most advanced of these programs is the MDNA109 platform (comprising of MDNA11 and
MDNA19), which is in preclinical development and is the only engineered IL-2 Superkine designed to specifically target CD122 (IL-2Rβ)
with high affinity without CD25 dependency. Both MDNA11 and MDNA19, which unlike native IL-2 (Proleukin), have superior pharmacokinetic
properties, lack CD25 binding in order to improve safety, potently stimulate effector T cells, reverse natural killer (“NK”)
cell anergy and act with exceptional synergy when combined with checkpoint inhibitors. Medicenna is working towards initiating
a Phase 1 clinical study with the MDNA109 platform in mid-2021.


 


ACHIEVEMENTS & HIGHLIGHTS


 


The following are the achievements
and highlights for the year ending March 31, 2020 through to the date hereof:


 


		·	On April 30, 2019, we announced completion
of enrolment in the MDNA55 Phase 2b clinical study for the treatment of rGBM.



 


		·	On May 1, 2019, Medicenna received
US$757,940 from CPRIT for reimbursement of past expenses.



 


		·	On June 3, 2019 a poster entitled
 “MDNA55: A Locally Administered IL4 Guided Toxin as a Targeted Treatment for Recurrent Glioblastoma” was presented
at the 55th Annual Meeting of the American Society of Clinical Oncology (“ASCO”) held in Chicago, IL. The presentation
by Dr. Dina Randazzo, of Duke University School of Medicine and a Principal Investigator, focused on the development of a
new biomarker test for the IL4R that may enable better selection and superior treatment outcomes for patients with rGBM.



 






    	 	 	4



     


    

 


		·	On June 18, 2019, Dr. Fahar
Merchant presented results from the Phase 2b MDNA55 clinical trial for rGBM at the Inaugural Immuno-Oncology Pharma Congress in
Boston, MA. The presentation highlighted disease control in up to 83% of the patients according to Immunotherapy Response Assessment
in Neuro-Oncology (“iRANO”) criteria which measure tumor response relative to the largest tumor size post-treatment
(nadir). In addition, safety data from the Phase 2b clinical trial show a similar safety profile to previous MDNA55 trials, with
no systemic toxicities, no clinically significant laboratory abnormalities and no drug-related deaths.



 


		·	On June 20, 2019, Medicenna presented
a poster entitled “Engineering a long-acting CD122 biased IL-2 superkine displaying potent anti-tumoral responses”.
The presentation by Dr. Moutih Rafei, Associate Professor, Department of Pharmacology and Physiology, Université de
Montréal, highlighted that MDNA109-LA (a precursor of MDNA19) when combined with checkpoint inhibitors (a) demonstrated
durable tumor control with strong memory response; (b) enhancing activation of naive CD8 T cells and NK cells (responsible
for attacking tumor cells) and (c) attained long term tumor control with fewer treatment cycles and a less frequent dosing
regimen.



 


		·	On June 26, 2019, we reported preclinical
data on MDNA55 which showed promising results in ovarian cancer models.



 


		·	On July 9, 2019 Medicenna announced
that it had received US$1,915,372 in non-dilutive funding from CPRIT.



 


		·	On July 31,
2019, we announced the selection of MDNA19 as our second immuno-oncology clinical candidate for the treatment of cancer. MDNA19
is a best-in-class long-acting IL-2 developed from Medicenna's Superkine platform that has shown unique ability to selectively
stimulate cancer killing immune cells without the limitations seen with other long-acting IL-2 programs.



 


		·	On September 24, 2019, we announced
the appointment of Ms. Karen Dawes to our Board of Directors. Ms. Dawes is an experienced and highly regarded leader
in the life sciences industry with extensive strategic expertise and considerable commercial background.



 


		·	On September 25, 2019, we presented
updated efficacy results from the Phase 2b clinical trial (MDNA55-05) in the first 33 rGBM patients enrolled in the study.
MDNA55 is a potent immunotherapy agent as it potently targets the IL4R which is overexpressed in glioblastoma (“GBM”)
as well as non-cancerous cells that make up the brain tumour microenvironment (“TME”). The data imply that targeting
the TME, particularly in GBM, is critical where almost half of the tumor mass is made up of the TME, a cancer swamp that hides
the tumor from the immune system. The TME is emerging as one of the key reasons why glioblastoma is extremely aggressive, and continues
to be one of the most difficult cancers to treat. Since MDNA55 can simultaneously kill both the tumor cells and the TME by targeting
the IL4R, the results to date indicate that MDNA55 could emerge as a new treatment for this deadly disease.



 


		·	On September 26, 2019 Medicenna announced
the publication of a peer-reviewed article in the August 2019 edition of Nature Communications providing independent
third-party validation of Medicenna’s IL-2 Superkine platform, MDNA109.



 


		·	On September 30, 2019, we announced
the presentation of new preclinical data from our IL-2 Superkine program to support the differentiating characteristics of long-acting
MDNA109 variants and their potency in vitro and in vivo from other long-acting IL-2 programs.



 


		·	On October 17, 2019, Medicenna completed
a public offering raising total gross proceeds of $6,900,000. The Company issued 5,307,693 units at a price of $1.30, each such
unit consisting of one common share and one-half common share purchase warrant. Each such whole warrant is exercisable at a price
of $1.75 until October 17, 2022.



 






    	 	 	5



     


    

 


		·	On November 21, 2019, we announced
new positive results on drug distribution from the recently completed Phase 2b clinical trial of MDNA55. Implementing new advances
in convection enhanced delivery (“CED”), that were previously not available allows us to bypass the blood-brain barrier
and deliver high concentrations of MDNA55 directly to the tumor and the at-risk area immediately surrounding it, without exposure
to the rest of the body.



 


		·	On November 25, 2019, Medicenna announced
the presentation of updated clinical results from the Phase 2b trial of MDNA55, by Dr. John Sampson at the 24th Society
for Neuro-Oncology (“SNO”) annual meeting. Dr. Sampson discussed updated efficacy results from the Phase 2b clinical
trial of MDNA55 in rGBM patients using the IL4R as an immunotherapy target.



 


		·	On December 12,
2019, we announced a presentation by Dr. Fahar Merchant at the Inaugural Glioblastoma Drug Development Annual Summit.
The presentation reported subgroup analysis from the first 40 patients
treated with MDNA55 in a Phase 2b clinical trial for patients with rGBM.



 


		·	On January 8, 2020 we announced receipt
of $1.3 million in proceeds from the exercise of previously issued warrants.



 


		·	On January 13, 2020, Medicenna announced
results from a retrospective study of subjects with rGBM who matched eligibility requirements of subjects enrolled in the MDNA55-05
clinical trial (Synthetic Control Arm, “SCA”) receiving standard therapies and compared their survival versus subjects
treated with MDNA55, in the Phase 2b rGBM clinical. The SCA comprised 81 rGBM patients receiving standard therapies
including Avastin®, lomustine and temozolomide (“TMZ”) with similar baseline features as patients treated in the
MDNA55 trial such as age, tumor size, ineligibility for surgery, lack of isocitrate dehydrogenase (“IDH”) mutations, IL4R
expression and other parameters known to affect survival. When comparing IL4R High groups across the two populations, a 150% survival
advantage is seen in patients who received MDNA55.



 


		·	On March 17, 2020, the Company closed
a public offering of 11,290,323 common shares at a price of $3.10 per share for gross proceeds of approximately
$35 million (the “2020 Public Offering”).



 


		·	On March 25, 2020, Medicenna presented
preclinical data, including non-human primate (“NHP”) data from its IL-2 Superkine program, highlighting data from
the long-acting variant MDNA19, engineered to have enhanced binding to CD122 without binding to CD25. This allows MDNA19 to specifically
activate naive CD8 T cells and NK cells with minimal stimulation of regulatory T cells (“Tregs”), thereby circumventing
toxicity and demonstrating potential for best-in-class features which was supported by the NHP data.



 


		·	In March 2020, the World Health Organization
declared the COVID-19 outbreak a global pandemic. We continue to monitor the COVID-19 situation, which is rapidly developing. The
Company operates in a virtual manner and current operations have not been impacted in any material way by the health crisis. However,
the pandemic does have an impact on our third party vendors which could result in the interruption of operations and result in
development delays including the timing of the EOP2 clinical study meeting for MDNA55 with the FDA, the ongoing preclinical and
future clinical activities related to MDNA19 or MDNA11. We have required all of our employees to work from home and are asking
business partners to engage us by telephone or video conference where possible, eliminating business travel and requiring self-isolation
for employees travelling outside of Canada. As the COVID-19 health crisis further develops, we will continue to rely on guidance
and recommendations from local health authorities, Health Canada and the Centers for Disease Control and Prevention to update our
policies.



 


		·	Subsequent to the year end, On April 15,
2020, Medicenna announced the closing of the full over-allotment option to purchase an additional 1,693,548 common shares of Medicenna
at a price of $3.10 per share, in connection with the 2020 Public Offering.



 






    	 	 	6



     


    

 


		·	Subsequent to the year end, on May 4,
2020, we announced that Medicenna will be presenting two abstracts at the American Society of Clinical Oncology Virtual Scientific
Program to be held from May 29 to May 31, 2020. The first abstract on our MDNA55 rGBM program has been selected
for a poster discussion and will provide new data on tumor response as well as survival outcomes compared to a matched SCA. The
second abstract will present preclinical data including non-human primate data for MDNA11, one of Medicenna's MDNA109 platform
candidates.



 


FINANCING UPDATE


 


Year ended March 31, 2020


 


On October 17, 2019, Medicenna completed
a public offering raising total gross proceeds of $6,900,000. The Company issued 5,307,693 units at $1.30, consisting of one common
share and one-half common share purchase warrant. Each whole warrant is exercisable at $1.75 until October 17, 2022. The Company
paid commission to the agents totaling $455,175 and issued 350,134 warrants to the agents exercisable into one common share of
the Company at an exercise price of $1.30 for a period of twenty-four months.


 


On March 17, 2020, Medicenna completed
the 2020 Public Offering of 11,290,323 shares for gross proceeds of $35,000,001. In the context of the 2020 Public Offering, Medicenna
issued 790,323 broker warrants as partial consideration for the services provided by the agents in connection with the 2020 Public
Offering. Each broker warrant is exercisable for one common share at a price of $3.10 per common share until March 17, 2022.
The total costs associated with the 2020 Public Offering were $3,365,487, including an amount of $456,016 which represents the
estimated fair value of the broker warrants.


 


During the year ended March 31, 2020,
1,623,675 warrants were exercised for proceeds of $2,372,822, the details of which are described below:


 


	Number of

Warrants	 	 	Exercise

Price	 	 	Proceeds	 	 	Expiry Date
	 	 	 	 	 	$ 	 	 	$	 	 	 
	 	695,544	 	 	 	1.75	 	 	 	1,217,202	 	 	October 17, 2022
	 	138,631	 	 	 	1.30	 	 	 	180,220	 	 	October 17, 2021
	 	35,000	 	 	 	2.00	 	 	 	70,000	 	 	April 5, 2021
	 	222,500	 	 	 	1.20	 	 	 	267,000	 	 	December 21, 2020
	 	532,000	 	 	 	1.20	 	 	 	638,400	 	 	December 21, 2023
	 	1,623,675	 	 	 	 	 	 	 	2,372,822	 	 	 



 


Year ended March 31, 2019


 


On December 21, 2018, the Company
closed a short-form prospectus offering of 4,000,000 units for gross proceeds of $4,000,000. Each unit consisted of one common
share of the Company and one-half common share purchase warrant of the Company. Each such whole warrant entitles the holder to
purchase one common share, at an exercise price of $1.20 per common share until December 21, 2023. In the context of this
offering, Medicenna issued 4,000,000 common shares and 2,000,000 warrants, as well as 280,000 broker warrants as partial consideration
for the services provided by the agents in connection with this offering. Each such broker warrant is exercisable for one common
share at a price of $1.20 per common share until December 21, 2020. The total costs associated with the transaction were $643,686,
including an amount of $91,000 which represents the estimated fair value of the broker warrants issued.


 


There were no warrants exercised in the
year ended March 31, 2019.


 


Subsequent Events


 


Subsequent to the year end, on April 15,
2020, Medicenna announced the closing of the full over-allotment option to purchase an additional 1,693,548 common shares of Medicenna
at a price of $3.10 per share, in connection with the 2020 Public Offering. As a result of the exercise of this over-allotment
option, Medicenna received additional gross proceeds of $5,249,999, which will be used to fund further development of Medicenna’s
MDNA109 platform candidate (MDNA19 or MDNA11) including preclinical activities, manufacturing and Phase 1/2a clinical trials as
well as for general corporate purposes and working capital.


 






    	 	 	7



     


    

 


RESEARCH & DEVELOPMENT UPDATE


 


MDNA55


 


Excluding the recently completed Phase
2b clinical study, MDNA55 has been studied in previous clinical trials under two Investigational New Drug Applications (“IND”)
for the treatment of rGBM, high grade glioma and non-CNS solid tumors. In these earlier studies, MDNA55 showed promising clinical
results from 72 patients including 66 adult patients with rGBM following a single intra-tumoral infusion. It has secured Orphan
Drug Status from the FDA and the EMA as well as Fast Track Designation from the FDA.


 


Since the above mentioned clinical trials,
there have been many improvements to the CED technology, a drug delivery technique for localized administration of MDNA55 into
brain tumors. This includes use of newly developed techniques for high precision placement of catheters into the tumor bed as well
as novel stepped design catheters that prevent backflow and leakage of MDNA55 during treatment. Furthermore, by co-infusion of
a magnetic resonance imaging (“MRI”) contrast agent with MDNA55, drug distribution can be monitored in real time in
order to achieve maximum coverage of the tumor bed and the tumor margins. Unlike previous clinical trials, data from the MDNA55
Phase 2b clinical trial show that each of these improvements facilitates more accurate targeting and superior distribution of MDNA55
to regions of active tumor growth as well as the margins around the tumor. Medicenna has obtained an exclusive license from the
National Institutes of Health (“NIH”) to patents covering CED and the use of a surrogate tracer for real-time monitoring
of MDNA55 delivery and distribution.


 


Phase 2b Study Outline for Glioblastoma
at First or Second Recurrence or Progression


 


The Phase 2b trial with MDNA55 using enhanced
CED delivery is a multi-center, open-label, single-arm study in up to 52 patients (at least 46 intent-to-treat (“ITT”)
patients evaluable for survival and 35 patients evaluable for response), with first or second recurrence or progression of GBM
after surgery or radiotherapy ± adjuvant therapy or other experimental therapies.


 


The primary endpoint of the study is median
overall survival (“mOS”) comparing an expected null survival rate of 8.0 months (based on historical control) with
an alternative pursue rate of 11.5 months (1-sided alpha = 0.10 and 80% power for approximately 46 ITT or per protocol subjects).
The secondary endpoint is objective response rate (“ORR”) assessed by the modified Response Assessment in Neuro-Oncology
(“mRANO”)-based criteria incorporating advanced imaging modalities according to a null response rate of 6% with an
alternative pursue rate of 18% (1-sided alpha = 0.10 and 80% power for at least 35 subjects evaluable for response). IL4R expression
levels in tumor biopsies and their potential impact on patient outcomes following treatment with MDNA55, were retrospectively evaluated.


 


Phase 2b Study Update


 


In April 2017, we treated the first
rGBM patient in the Phase 2b clinical trial of MDNA55 and enrolled patients at eight clinical sites across the United States and
1 site in Europe with enrolment in the study (46 ITT patients) completed in April 2019.


 


While the Company previously targeted completion
of the Phase 2b by not later than Q4 2018, the protocol amendments announced in September 2017 and May 2018, and described
below, resulted in slower than anticipated patient recruitment.


 






    	 	 	8



     


    

 


On September 28, 2017, we announced
that based on encouraging drug distribution and safety data observed we implemented an amended protocol incorporating enhanced
drug delivery procedure which was used for the treatment of the remaining patients. The amended protocol allowed higher doses and
volumes of MDNA55 as well as an increase in the total expected study size – from 43 patients under the original protocol
to up to 52 total planned patients. This protocol amendment was based on a planned safety analysis following a unanimous recommendation
from MDNA55’s Safety Review Committee. Of the up to 52 patients to be treated in the study we required at least 46 of those
patients to be evaluable for survival and at least 35 subjects evaluable for response. We met our threshold enrolment requirements
in April 2019 with 46 patients treated (ITT population) of which 44 patients met all the protocol eligibility requirements
(per protocol population).


 


On October 10,
2017, clinical data were presented by Principal investigator John H. Sampson MD, PhD, (Robert H. and Gloria Wilkins Distinguished
Professor and Chair of Neurosurgery at Duke University in Durham, NC) at the 2017 Congress of Neurological Surgeons (Boston, MA),
demonstrating successful delivery of MDNA55 in rGBM patients and a reassuring safety profile. Furthermore, the data showed that
a substantially higher proportion of the target tissue was being covered then in previous similar trials. In some cases, close
to 100% of the tumor and the 1 cm margin around it (at risk for tumor spread) had been successfully covered.


 


Additional clinical
data from the Phase 2b rGBM clinical trial of MDNA55 were presented at the 22nd Annual Meeting of the SNO held in San Francisco
in November 2017. Dr. Krystof Bankiewicz, MD, PhD, Professor in Residence of Neurological Surgery at the University of
California San Francisco, provided an update on drug distribution and safety data from the first 15 patients treated in the study.
The oral and poster presentations at the SNO conference outlined that through a process of real-time image guided delivery together
with the ability to monitor and adjust infusion parameters, drug delivery was dramatically improved with significant enhancement
in target coverage. A previous CED study in rGBM, without the advances implemented by Medicenna, [ref: J Neurosurg. 2010 Aug;113(2):301-9],
was able to achieve, on average, coverage of only 20% of the target volume. In contrast, in the current study, a comparable estimate
for coverage of the tumor and a 1cm high-risk margin around it showed approximately 65% coverage with the figure rising to 75%
for the tumor area alone, with some patients achieving near 100% coverage of the target volume.


 


It was reported on May 2, 2018 that
half the patients in the study had been recruited and the data to date demonstrated solid safety results and early signals of efficacy
based on the findings of the Safety Review and Clinical Advisory Committees, comprised of key opinion leaders and study investigators.
Following the Safety Review, Medicenna amended the protocol at the recommendation of clinical advisors to further improve the chances
for demonstrating increased therapeutic benefit for patients. The amendment allowed the implementation of optimal methodologies
including more personalized dosing based on the tumor load, incorporation of advanced imaging modalities to measure treatment responses
more reliably, use of sub-therapeutics dose of Avastin® in patients that could not tolerate steroid use to control edema and
inflammation and allowing investigators to administer a second dose of MDNA55 where appropriate.


 


Review of some patients who had been withdrawn
from the study, believing that their disease had progressed, found that the apparent increases in tumor volumes, seen on brain
scans, were, in fact, due to tissue necrosis, inflammation and edema. This is a known effect of immunotherapeutic agents such as
MDNA55, called pseudo-progression, which poses a challenge to patient retention, management and data interpretation. When evaluating
images from such patients, using multi-modal imaging, Medicenna found evidence of biological activity of MDNA55 suggesting that
these patients were benefiting from the treatment, and in multiple cases following withdrawal from the study, surgical resection
showed significant tumor necrosis. This amendment allowed a biopsy and/or advanced multi-modal imaging to more accurately discriminate
between necrosis/inflammation and true disease progression. These tools would encourage subjects to remain in the study, where
appropriate, giving time for the pseudo-progression to resolve and increase the likelihood of clinical responses.


 






    	 	 	9



     


    

 


Following
the amended protocol as announced on May 2, 2018 and after receiving the necessary regulatory and site approvals patient enrolment
was resumed at higher doses provided that the pre-established maximum tolerated dose (“MTD”) of 240mg
was not to be exceeded.


 


The protocol amendments announced September 28,
2017 and May 2, 2018 resulted in increased timelines for completion of the MDNA55 Phase 2b clinical trial due to an increase
in the original number of patients as well as a slowdown of patient recruitment while the necessary regulatory reviews and approvals
were completed.


 


On October 22, 2018, the Company presented
results and participated in a poster discussion session at the ESMO Congress held in Munich. Based on interim data from patients
treated at low doses implemented during the first half of the Phase 2b study of MDNA55, the presentation highlighted the benefits
of using of advanced imaging modalities in order to help tumor response evaluation and identify pseudo-progression in some patients
which ultimately translates into tumor shrinkage, and potential treatment benefit.


 


On October 31, 2018, Medicenna provided
an interim update from the ongoing Phase 2b clinical trial of MDNA55 for the treatment of rGBM. These results were superseded by
data reported on February 7, 2019 as described below.


 


On February 7, 2019, Medicenna presented
new clinical study results in a podium presentation entitled, “The IL4 Receptor as a Biomarker and Immunotherapeutic Target
for Glioblastoma: Preliminary Evidence with MDNA55, a Locally Administered IL-4 Guided Toxin” by John H. Sampson, MD, PhD,
Robert H. and Gloria Wilkins Distinguished Professor and Chair of Neurosurgery at Duke University during the 5th Annual
Immuno-Oncology 360o Conference held in New York, NY. These results have subsequently be superseded by more complete
data presented in late 2019 and January 2020.


 


On April 30, 2019, Medicenna announced
that enrolment in the study was complete with 46 evaluable patients (ITT population) of which 44 patients were subsequently identified
as meeting protocol eligibility requirements without major deviations (per protocol population).


 


On June 3, 2019, a poster entitled
 “MDNA55: A Locally Administered IL4 Guided Toxin as a Targeted Treatment for Recurrent Glioblastoma” was presented
at the 55th Annual Meeting of the ASCO held in Chicago, IL. The presentation by Dr. Dina Randazzo of Duke University
School of Medicine and a Principal Investigator, focused on the development of a new biomarker test for the IL4R that may enable
better selection and superior treatment outcomes for patients with rGBM. These data were subsequently updated as described below.


 


On June 18, 2019, Dr. Fahar Merchant
presented results from the Phase 2b MDNA55 clinical trial which recently completed enrollment (n=46) at the Inaugural Immuno-Oncology
Pharma Congress in Boston, MA. The presentation highlighted disease control in up to 83% of the patients according to iRANO criteria,
which measure tumor response relative to the largest tumor size post-treatment (nadir). Use of advanced imaging techniques (such
as perfusion and diffusion MRI) was able to show underlying tissue response amidst inflammation and edema in some subjects. In
addition, safety data from the Phase 2b clinical trial show a similar safety profile to previous MDNA55 trials, with no systemic
toxicities, no clinically significant laboratory abnormalities and no drug-related deaths.


 


On September 25,
2019, the Company presented updated efficacy results from the Phase 2b clinical trial MDNA55-05 in rGBM patients using
the IL4R as an immunotherapy target, as it is overexpressed in glioblastoma as well as in cells that make up the brain tumor microenvironment
(“TME”). The data imply that targeting the TME, particularly in GBM, is critical where almost half of the tumor mass
consists of non-cancerous cells that make up the TME, a cancer swamp that hides the tumor from the immune system. The TME is emerging
as one of the key reasons why glioblastoma is extremely aggressive, and continues to be one of the most difficult cancers to treat.
Since MDNA55 can simultaneously kill both the tumor cells and the TME by targeting the IL4R, the results to date continue to show
that MDNA55 is likely to emerge as a new treatment for this deadly disease. These data were subsequently updated in November and
December 2019 and January 2020.


 






    	 	 	10



     


    

 


On November 25,
2019, Medicenna announced the presentation of updated clinical results presented by Dr. John Sampson from our Phase 2b trial
of MDNA55 at the 24th SNO annual meeting. The presentation highlighted that with a single treatment with MDNA55, the
mOS in IL4R High subjects (n=21) was 15 months showing a survival advantage of up to nine months when compared to approved
therapies (mOS of 5.4 to 9.2 months with temozolomide, Avastin® and lomustine), among the 38 evaluable subjects, irrespective
of IL4R expression, 82% of the subjects experienced tumor shrinkage or stabilization from nadir. The mOS of patients showing tumor
control (n=31) was significantly longer when compared to patients with progressive disease (mOS of 15 months vs 8.4 months, respectively;
p-value of 0.0112) and updated analysis included the first 40 subjects treated with MDNA55 continuing to show an overall survival
rate at 12 months (OS-12) of 45%, irrespective of IL4R expression, and OS-12 of 58% in patients showing a treatment response (n=32).
This is an improvement of up to 150% when compared to approved therapies for rGBM (OS-12 is 18-34%).


 


On
December 12, 2019, the Company announced a presentation by Dr. Fahar Merchant at the Inaugural Glioblastoma Drug Development
Annual Summit. The presentation reported subgroup analysis from the first 40 patients treated with MDNA55 in the Phase 2b clinical
trial. The presentation highlighted that the patient characteristics in the clinical study excluded patients that are known to
have a much better prognosis, such as patients that were, (a) eligible for surgery to remove the tumor, (b) had a lower
grade of brain cancer at initial diagnosis (only de novo GBM patients were enrolled), and (c) had a known
mutation associated with better prognosis (IDH mutation). Furthermore, the presentation emphasized that despite enrolling only
patients known to have a very poor prognosis, patients actually did much better and were surviving significantly longer following
only one treatment with MDNA55, particularly in patients with high expression of the IL4R target. Of particular interest, subjects
receiving lower doses of steroids (≤ 4mg of concurrent steroid per day) showed a trend towards improved survival, particularly
in the IL4R High group, with a mOS of 16.5 months with 88% of patients being still alive at 12 months. In patients resistant to
approved chemotherapy temozolomide (rGBM with unmethylated MGMT promoter), MDNA55 treatment in IL4R High patients had a median
overall survival of 15.2 months and a 12 month survival rate of 69% versus 22% for lomustine and less than 19% for Avastin®.


 


 


 






    	 	 	11



     


    

 



 


On January 13,
2020, Medicenna announced that it had completed a retrospective study on subjects with rGBM who matched eligibility requirements
of subjects enrolled in the MDNA55-05 clinical trial. The study was conducted to compare the survival of subjects treated with
MDNA55 in the Phase 2b rGBM clinical trial versus matched patients (Synthetic Control Arm or SCA) recently treated using
other standard therapies. The SCA comprised of 81 rGBM patients receiving standard therapies including Avastin®, lomustine
and temozolomide with similar baseline features as patients treated in the MDNA55 trial such as age, tumor size, ineligibility
for surgery, IL4R expression and other parameters known to affect survival.


 


Key data from the study are summarized
below and have been computed from the date of relapse rather than from the date of treatment in results previously reported by
the Company:


 


		·	When comparing IL4R High groups across the two populations, a 150%
survival advantage is seen in patients who received MDNA55.



 


		o	IL4R High subjects treated with MDNA55 (n=21) had a mOS of 15.8 months versus 6.2 months in the SCA (n=17), a survival advantage
of an impressive 9.6 months.



 


		o	The 12 month overall survival (“OS-12”) was 62% in the MDNA55 arm versus 24% in the SCA.



 


		·	Regardless of IL4R status, subjects treated with MDNA55 (n=44 subjects
comprising the complete per protocol analysis population) demonstrated 112% increase in OS-12 over subjects in the SCA (n=81).



 


		o	OS-12 for the MDNA55 arm was 53% versus 25% in the SCA.



 


		o	mOS in the MDNA55 arm was 12.4 months versus 7.7 in the SCA.



 


 


 


Medicenna plans to have an EOP2 meeting
with the FDA in 2020 to discuss the results of the MDNA55 Phase 2b clinical study and the development pathway forward. This date
is later than previously anticipated due to additional information being prepared in order to strengthen the submission to the
FDA as recommended by regulatory consultants.


 


The Company expects the completion of clinical
development of MDNA55 to full approval (including a pivotal Phase 3 clinical trial), if undertaken by Medicenna, to last until
at least 2022, with a projected aggregate cost of up to approximately $75 million, incremental to the current cash on hand. It
is anticipated that following the successful completion of the Phase 2b clinical trial and a successful EOP2 meeting with the FDA
the Company will work to out-license the program to one or more partners who would fund or co-fund Phase 3 clinical development
of MDNA55 as well as prepare the program for commercialization and its subsequent launch in various countries where approval has
been granted. In addition to development and regulatory approval of MDNA55, the Company and/or its partner may also have to develop
and commercialize a companion diagnostic to test for IL4R expression prior to treatment with MDNA55. See “Risk Factors”
below.


 






    12


     


    

 


Superkine Platform


 


IL-2 Superkines


 


IL-2 was one of the first effective immunotherapies
developed to treat cancer due to its proficiency at expanding T cells, the central players in cell-mediated immunity. Originally
discovered as a growth factor for T cells, IL-2 can also drive the generation of activated immune cells, immune memory cells,
and immune tolerance.


 


In contrast, IL-2 induced overstimulation
of immune cells can lead to an imbalance in the ratio of effector and regulatory T cells, resulting in autoimmune diseases.


 


Part of the reason for this is due
to the nature of the IL-2 receptor. The IL-2 receptor is composed of three different subunits, IL-2Rα (also known as
CD25), IL-2Rβ (CD122) and IL-2Rγ (CD132). The arrangement of these different proteins determines the response to
IL-2 signaling.


 


The IL-2β and IL-2γ components
together make a receptor capable of binding IL-2, but only moderately so. When all three components are together, including IL-2Rα,
the receptor binds IL-2 with a much higher affinity. This complete receptor is usually found on regulatory T cells, which dampens
an ongoing immune response. The lower affinity receptor, composed of just the IL-2β and IL-2γ components, is more often
found on “naive” immune cells, which are awaiting instructions before seeking out cancer cells.


 


Altering IL-2’s propensity for binding
these receptors could encourage greater immune cell activation and/or block the function of regulatory cells. Medicenna’s
MDNA109 and MDNA209 platforms take advantage of this dynamic by binding to specific receptors and either activating (MDNA109) or
blocking them (MDNA209). The majority of development has been focused on the MDNA109 platform candidates where promising results
have been demonstrated in various animal tumour models, as described below.


 


MDNA109 (a precursor to MDNA19 and MDNA11)
is an enhanced version of IL-2 that binds up to 200 to 1,000 times more effectively to IL-2Rβ, thus greatly increasing its
ability to activate and proliferate the immune cells needed to fight cancer. Because it preferentially binds IL-2Rβ and not
the receptor containing IL-2Rα, MDNA109 drives effector T cell responses over regulatory T cells. Additionally, MDNA109 reverses
NK cell anergy and acts with exceptional synergy when combined with checkpoint inhibitors.


 


One of the development challenges with
MDNA109 was its short half-life, similar to native IL-2, which would require frequent dosing in a commercial setting. In order
to extend the half-life of MDNA109, Medicenna fused inactive protein scaffolds to MDNA109 including Fc-fusions (Fc) and Albumin
fusions (Alb) and, on August 2, 2018, we announced preliminary preclinical data on long acting variants of MDNA109, showing
that these fusions have better pharmacokinetic properties enabling less frequent dosing without sacrificing its efficacy or safety.


 


Further modifications were made to MDNA109
in its extended half-life forms to enhance pharmacodynamics and further enhance selectivity in order to reduce binding to CD25
which is associated with the toxic side effect profile of Proleukin. These modifications have provided us with two lead candidates
in development, MDNA19 and MDNA11.


 


On February 6, 2019, the Company presented
results on MDNA109 and its long acting variants in a podium presentation entitled, “Putting Pedal to the Metal: Combining
IL-2 Superkine (MDNA109) with Checkpoint Inhibitors” by Moutih Rafei, PhD, Associate Professor, Department of Pharmacology
and Physiology, Université de Montréal, at the 5th Annual Immuno-Oncology 360° Meeting in New York, NY.


 






    13


     


    

 


The results presented demonstrated that
MDNA109 exhibited 1000-fold enhanced affinity toward the CD122 receptor and best-in-class potency toward cancer killing effector
T cells. When tested in vivo, MDNA109 was not immunogenic and led to potent delay in the growth of pre-established B16F10
melanoma tumors compared to IL-2. Likewise, significant delay in the growth of pre-established MC38 and CT-26 colon cancer was
observed in syngeneic mice receiving MDNA109, whereas its co-administration with anti-PD1 checkpoint inhibitor eliminated tumors
in 90% of MC38 tumor-bearing mice. Furthermore, MDNA109 in combination with anti-CTLA-4 antibody, complete responses were observed
in a majority of mice in the CT26 model. When cured animals were re-challenged on the counter-lateral flank with CT26 tumor cells,
tumor growth was blocked at the secondary site clearly suggesting the generation of potent memory responses. Additional results
on long-acting MDNA109 variants with impaired CD25 binding demonstrated abrogation of regulatory T cell activation at therapeutic
doses in order to mitigate peripheral side effects, which are dependent on CD25 binding.


 


Medicenna presented a poster entitled “Engineering
a long-acting CD122 biased IL-2 superkine displaying potent anti-tumoral responses” at the Inaugural Immuno-Oncology Pharma
Congress, held from June 18-20, 2019 during World Pharma Week in Boston, MA. Highlights from the presentation by Dr. Moutih
Rafei included the following: (a) When MDNA109-LA was co-administered with the immune-checkpoint blocker anti-cytotoxic T-Lymphocyte-Associated
Protein (CTLA)4 in a colon cancer mouse model, 67% of animals with pre-established tumors remained tumor-free for over 100 days.
When these animals received a second and third re-challenge of the tumor without further treatment, 100% and 75% remained tumor
free, respectively, demonstrating a strong memory response. (b) A long-acting variant, MDNA19, engineered to mitigate Treg
activation by abolishing binding to the CD25 had 50-fold decreased Treg activity and 6-fold higher activity towards naïve
CD8 T cells for an overall 300-fold preferential activation of cancer killing T cells than recombinant IL-2. (c) In addition,
binding affinity studies using surface plasmon resonance confirmed absence of CD25 binding by MDNA19. (d) To further validate
the potency of MDNA19 mice with pre-established aggressive B16F10 melanoma tumors showed potent tumor control with a weekly dosing
schedule.


 


On
July 31, 2019, we announced the selection of MDNA19 as our second immuno-oncology clinical candidate for the treatment of
cancer. MDNA19 is a best-in-class long-acting IL-2 developed from Medicenna's MDNA109 Superkine platform that has shown unique
ability to selectively stimulate cancer killing immune cells without the limitations seen with other long-acting IL-2 programs.


 


On
September 26, 2019, Medicenna announced the publication of a peer-reviewed article in the August 2019 edition of Nature
Communications providing independent third-party validation of Medicenna’s MDNA109 Superkine platform.


 


The
publication titled “A next-generation tumor-targeting IL-2 preferentially promotes tumor infiltrating CD8+ T-cell response
and effective tumor control” describes the safety, efficacy, pharmacokinetics, immunogenicity as well as efficacy profile
in different tumor models of long-acting variants of MDNA109 including fusions to antibodies to create tumor targeted immunocytokines.
The work reported in the publication is covered by Medicenna’s patents and patents in-licensed by the Company.


 


On
September 30, 2019, Medicenna announced the presentation by Dr. Minh To, Director of Preclinical Development at Medicenna,
of preclinical data to support the differentiating characteristics of long-acting MDNA109 variants and their potency in vitro and
in vivo from other long-acting IL-2 programs.


 


Highlights from the presentation included:


 


		·	High potency towards naive effector
T cells but diminished potency on unwanted regulatory T cells (Tregs). Of the long-acting MDNA109 variants, MDNA19 is superior
in having decreased binding to CD25 and increased affinity to CD122, therefore selectively activating cancer killing CD8 T cells
instead of tumor protecting Tregs.



 






    14


     


    

 


		·	Potent effects as monotherapy with
improved PK characteristics. In CT26 (mouse colon cancer) and B16F10 (mouse melanoma) models, treatment with long acting variants
of MDNA109 (biweekly for 2 weeks or once weekly for 2 or 3 weeks) potently inhibited tumor growth. These data suggest that long-acting
MDNA109 variants could lead to potent therapeutic effects with a dosing schedule similar to that used for immune checkpoint inhibitors.
In addition, the results also confirm that different protein scaffolds may be used to extend the half-life of MDNA109 and can provide
similar tumor control as MDNA19.



 


		·	Compelling preclinical synergism with
immune checkpoint inhibition. In a pre-established colon cancer CT26 model, long-acting MDNA109 variants co-administered with
the immune-checkpoint blocker anti-cytotoxic T-Lymphocyte-Associated Protein (CTLA) 4, showed significant tumor growth inhibition
with as many as 89% of animals remaining tumor-free for over 175 days.



 


		·	Strong Memory Response. Furthermore,
tumor free animals receiving a second and third re-challenge of the tumor without further treatment remained tumor free in up to
100% of mice, demonstrating development of a strong memory response with the ability to prevent tumor relapses.



 


On March 25,
2020, Medicenna announced preclinical data including NHP data from its IL-2 Superkine program during a conference call and webcast.


 


The presentation
highlighted data from the long-acting variant MDNA19, engineered to have enhanced binding to CD122 without binding to CD25 and
included:


 


		·	Kinetic studies in NHP showed a dose-dependent
upregulation of Ki67 in CD8 T-cells lasting for almost two weeks post-MDNA19 administration, with no apparent side effects.



 


		·	When administered to NHP, MDNA19 increases
the absolute number of circulating CD8 T-cells in the absence of Treg and eosinophil stimulation (the latter being a major source
of IL-5 production which is responsible for triggering vascular leak syndrome and associated toxicity).



 


		·	MDNA19 administration as a monotherapy
in syngeneic mice with pre-established CT26 colon cancer led to 60% survival and induction of strong and long-lasting memory responses
correlating with resistance to subsequent re-challenges.



 


		·	Furthermore, MDNA19 treatment of B16F10
tumors favoured activation of CD8 T cells over Tregs in the tumor microenvironment driving a strong therapeutic effect.



 


Medicenna has commenced GLP and GMP related
manufacturing activities with the intention of starting IND enabling studies in the second half of calendar 2020 and initiating
a Phase 1/2a clinical trial in mid 2021. These timelines are later than what was previously disclosed as additional optimization
to the molecules in development was necessary to to further enhance Medicenna's long acting MDNA109 program as potentially best
in class.


 


Like the MDNA109 platform, MDNA209 therapeutics
bind with exceptional affinity to IL-2Rβ, but are unable to bind to the common IL-2γ receptor which in turn blocks signaling
and activation of NK cells and memory CD8 T cells. MDNA209 platform offers a variety of candidates that are either partial agonists,
partial antagonists or complete antagonists, enabling us to dampen the signaling properties of an over-active immune system to
an amplitude that elicits desired therapeutic function without causing undesired toxicity. MDNA209 variants can therefore be used
to treat a host of autoimmune diseases such as multiple sclerosis and preliminary studies (Mitra et al, 2015) have shown that MDNA209
variants can also mitigate graft versus host disease (GvHD) following transplantation. Limited work on MDNA209 has been initiated
but development timelines have not been established at this time.


 


IL-4 and IL-13 Superkines


 


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).


 






    15


     


    

 


One promising IL-13 Superkine antagonist
is MDNA413. Compared to wild type IL-13, MDNA413 has been engineered to have 2,000-fold higher selectivity for the Type 2 IL4R
and which potently blocks IL-4 and IL-13 signaling (Moraga et al, 2015). Blocking of Type 2 IL4R by MDNA413 may be relevant not
only for targeting solid tumors that overexpress this receptor, but also the Th2 biased tumour microenvironment, which shields
the cancer from the immune system.


 


Another
promising IL-13 Superkine is MDNA132. Unlike MDNA413, MDNA132 is an IL-13 ligand that has been engineered to increase affinity
for IL13Ra2 overexpressed
on certain solid tumors while exhibiting sharply decreased affinity for IL13Ra1.
Medicenna believes MDNA132 has superior targeting compared to other IL-13 variants in development, and is an attractively differentiated
targeting domain for inclusion in new and exciting field of immuno-oncology based on the CAR-T platform. Development timelines
for MDNA132 have yet to be established.


 


As preparing, submitting, and advancing
applications for regulatory approval, developing products and processes and clinical trials are complex, costly, and time consuming
processes, an estimate of the future costs related to the development of MDNA413 and MDNA132 is not reasonable at this time.


 


SELECTED FINANCIAL INFORMATION


 


	 	 	2020	 	 	2019	 	 	2018	 
	 	 	$	 	 	$	 	 	$	 
	General and administration	 	 	2,375,211	 	 	 	1,709,286	 	 	 	2,334,684	 
	Research and development	 	 	5,869,588	 	 	 	3,017,997	 	 	 	5,090,146	 
	Net loss	 	 	(8,277,069	)	 	 	(4,708,031	)	 	 	(7,465,452	)
	Basic and diluted loss per share	 	 	(0.26	)	 	 	(0.18	)	 	 	(0.31	)
	Total assets	 	 	37,996,268	 	 	 	5,187,428	 	 	 	4,374,582	 
	Total liabilities	 	 	1,847,196	 	 	 	2,570,871	 	 	 	2,212,757	 



 


We have not earned revenue in any of the
previous fiscal years, other than income from interest earned on our cash balances.


 


For the year ended March 31, 2020,
we reported a net loss of $8,277,069, or $0.26 per share, compared to a loss of $4,708,031, or $0.18 per share, for the year ended
March 31, 2019. The increase in net loss for the year ended March 31, 2020 compared with the year ended March 31,
2019 was primarily a result of lower amount of costs reimbursed under the CPRIT grant in the current year compared with the prior
year and an increase in spending on discovery and preclinical expenses associated with the development of the MDNA109 platform
(MDNA11 and MDNA19).


 


Cash utilized in operating activities for
the year ended March 31, 2020 of $8,799,856, compared to cash utilized in operating activities for the year ended March 31,
2019 of $8,037,005. The increase in cash utilized in the current year was primarily a result of reduced accounts payable and accrued
liabilities balances.


 






    16


     


    

 


RESULTS OF OPERATIONS FOR THE YEAR ENDING MARCH 31,
2020


 


Research and Development Expenses


 


	 	 	Year
ended

March 31, 2020
	 	 	Year ended 
March 31, 2019	 
	 	 	$	 	 	$	 
	Chemistry, manufacturing and controls	 	 	342,578	 	 	 	399,994	 
	Regulatory	 	 	432,948	 	 	 	48,105	 
	Discovery and preclinical	 	 	1,898,191	 	 	 	805,477	 
	Research & Development Warrant	 	 	-	 	 	 	710,574	 
	Clinical	 	 	1,528,299	 	 	 	3,710,789	 
	Salaries and benefits	 	 	1,095,118	 	 	 	1,190,142	 
	Licensing, patent legal fees and royalties	 	 	810,987	 	 	 	783,458	 
	Stock based compensation	 	 	486,421	 	 	 	435,439	 
	CPRIT grant claimed on eligible expenses	 	 	(951,166	)	 	 	(5,140,039	)
	Other research and development expenses	 	 	226,282	 	 	 	74,058	 
	 	 	 	5,869,588	 	 	 	3,017,997	 



 


Research and development (“R&D”)
expenses of $5,869,588 were incurred during the year ended March 31, 2020, compared with $3,017,997 incurred in the year ended
March 31, 2019.


 


The increase in R&D expenses in the
current year is primarily attributable to:


 


		·	Increased regulatory costs associated
with preparation for the EOP2 meeting.






		·	Higher discovery and preclinical expenses
associated with the development of the MDNA109 platform (MDNA11 and MDNA19) as we advance it towards the clinic.






		·	Other research and development expenses
increased due to travel and administrative costs associated with closing clinical sites, program symposium and the EOP2 meeting.






		·	A lower reimbursement of expenses with
respect to the CPRIT grant of $951,166 in the year ended March 31, 2020, compared with $5,140,039 in the year ended March 31,
2019.



 


The above increases were partially offset
by the following reductions:


 


		·	No amortization related to the research &
development warrant which was fully amortized in the prior year.






		·	Lower clinical trial costs due to completion
of enrolment in the Phase 2b rGBM clinical study and the wind down of the study.



 


The clinical trial costs incurred in the
current year consist of:


 


		·	Clinical trial site close out costs and
associated data collection from sites and central labs.






		·	Completion of all laboratory analysis
of samples obtained from clinical trials.






		·	Costs associated with the initiation and
completion of the Synthetic Control Arm study in 81 patients.



 






    17


     


    

 


General and Administrative Expenses


 


	 	 	Year ended
 March 31, 2020
	 	 	Year ended 
March 31, 2019	 
	 	 	$	 	 	$	 
	Depreciation expense	 	 	7,893	 	 	 	6,818	 
	Stock based compensation	 	 	638,556	 	 	 	563,180	 
	Facilities and operations	 	 	252,716	 	 	 	162,995	 
	Legal, professional and finance	 	 	186,026	 	 	 	166,277	 
	Salaries and benefits	 	 	595,588	 	 	 	676,952	 
	Corporate communications	 	 	559,089	 	 	 	368,199	 
	Other expenses	 	 	260,715	 	 	 	271,054	 
	CPRIT grant claimed on eligible expenses	 	 	(125,372	)	 	 	(506,188	)
	 	 	 	2,375,211	 	 	 	1,709,286	 



 


General and administrative (“G&A”)
expenses of $2,375,211 were incurred during the year ended March 31, 2020, compared with $1,709,286 during the year ended
March 31, 2019.


 


The increase in G&A expenditures year
over year is primarily attributed to lower amounts of expenses eligible for reimbursement from CPRIT in the current year as well
as higher facilities and operations expenses associated with office rent and relocation costs and higher corporate communications
expenses in the current year due to increased activity. Stock based compensation expense increased in the year ended March 31,
2020 compared with the prior year due to the timing of grants as well as higher Black Scholes values of current year grants.


 


SUMMARY OF QUARTERLY FINANCIAL RESULTS


 


	 	 	Mar. 31

2020
	 	 	Dec. 31

2019
	 	 	Sept.
30

2019
	 	 	June 30

2019
	 	 	Mar. 31

2019
	 	 	Dec. 31

2018
	 	 	Sept.
30

2018
	 	 	June 30

2018
	 
	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	Revenue	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 
	General and administration	 	 	529,338	 	 	 	741,786	 	 	 	642,548	 	 	 	461,539	 	 	 	414,154	 	 	 	437,218	 	 	 	443,363	 	 	 	414,551	 
	Research and development	 	 	2,135,410	 	 	 	1,659,444	 	 	 	1,246,292	 	 	 	828,442	 	 	 	661,314	 	 	 	1,275,896	 	 	 	445,814	 	 	 	634,973	 
	Net loss	 	 	(2,688,713	)	 	 	(2,389,463	)	 	 	(1,904,259	)	 	 	(1,294,634	)	 	 	(1,049,074	)	 	 	(1,723,081	)	 	 	(897,659	)	 	 	(1,038,217	)
	Basic and diluted loss per share	 	 	(0.07	)	 	 	(0.07	)	 	 	(0.07	)	 	 	(0.05	)	 	 	(0.04	)	 	 	(0.07	)	 	 	(0.04	)	 	 	(0.04	)
	Total assets	 	 	37,996,268	 	 	 	7,315,780	 	 	 	2,243,789	 	 	 	3,674,228	 	 	 	5,187,428	 	 	 	6,017,780	 	 	 	3,408,806	 	 	 	3.644,480	 
	Total liabilities	 	 	1,847,196	 	 	 	1,993,314	 	 	 	2,050,249	 	 	 	1,897,899	 	 	 	2,570,871	 	 	 	2,512,414	 	 	 	2,173,528	 	 	 	2,000,746	 



 


R&D expenses fluctuate quarter over
quarter based on the amount of expenditures eligible for CPRIT reimbursement in the period as well as the pace of the clinical
trial enrollment during the period. Research and development costs in the quarter ended December 31, 2018 were higher than
prior periods due to patient treatment costs and a lower CPRIT reimbursement in the quarter. During the three months ended March 31,
2020, December 31, 2019 and September 30, 2019, the CPRIT expenses eligible for offset were smaller than comparable quarters
and therefore expenses were higher than comparable periods.


 


G&A expenses are higher in the quarters
ended December 31, 2019 and September 30, 2019 due to no expenditures claimed for CPRIT reimbursement as well as higher
stock-based compensation costs and expenses associated with investor relations activities.


 






    18


     


    

 


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDING MARCH 31,
2020


 


Research and Development Expenses


 


	 	 	Three
months

ended

March 31, 2020
	 	 	Three months

 ended 
March 31, 2019	 
	 	 	$	 	 	$	 
	Chemistry, manufacturing and controls	 	 	164,010	 	 	 	97,866	 
	Regulatory	 	 	168,521	 	 	 	21,968	 
	Discovery and preclinical	 	 	632,222	 	 	 	170,452	 
	Clinical	 	 	273,732	 	 	 	1,029,379	 
	Salaries and benefits	 	 	278,472	 	 	 	268,932	 
	Licensing, patent legal fees and royalties	 	 	413,260	 	 	 	213,381	 
	Stock based compensation	 	 	169,131	 	 	 	139,503	 
	CPRIT grant claimed on eligible expenses	 	 	-	 	 	 	(1,315,746	)
	Other research and development expenses	 	 	36,062	 	 	 	35,579	 
	 	 	 	2,135,410	 	 	 	661,314	 



 


R&D expenses of $2,135,410 were incurred
during the three months ended March 31, 2020, compared with $661,314 incurred in the three months ended March 31, 2019.


 


The increase in R&D expenses in the
current year is primarily attributable to:


 


		·	No reimbursement of expenses with respect
to the CPRIT grant in the three months ended March 31, 2020, compared with a reimbursement of $1,315,746 in the same period
in the prior year.






		·	Increased regulatory costs associated
with preparation for the EOP2 meeting.






		·	Higher discovery, preclinical and manufacturing
expenses associated with the development of the MDNA109 platform (MDNA11 and MDNA19) as we advance it towards the clinic.






		·	Higher patent and licensing fees associated
with a license amendment fee.



 


The above increases were partially offset
by lower clinical trial costs due to completion of enrolment in the Phase 2b rGBM clinical study and the wind down of the study.


 


General and Administrative Expenses


 


	 	 	Three
months

ended

March 31, 2020
	 	 	Three months

 ended 
March 31, 2019	 
	 	 	$	 	 	$	 
	Depreciation expense	 	 	4,183	 	 	 	1,704	 
	Stock based compensation	 	 	122,902	 	 	 	96,966	 
	Facilities and operations	 	 	65,048	 	 	 	49,161	 
	Legal, professional and finance	 	 	32,717	 	 	 	30,455	 
	Salaries and benefits	 	 	148,760	 	 	 	168,204	 
	Corporate communications	 	 	82,243	 	 	 	114,395	 
	Other expenses	 	 	73,485	 	 	 	70,186	 
	CPRIT grant claimed on eligible expenses	 	 	-	 	 	 	(116,917	)
	 	 	 	529,338	 	 	 	414,154	 



 






    19


     


    

 


G&A expenses of $529,338 were incurred
during the three months ended March 31, 2020, compared with $414,154 during the three months ended March 31, 2019.


 


The increase in G&A expenditures in
the current period is primarily attributed to lower amounts of expenses eligible for reimbursement from CPRIT in the current year
period.


 


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 $31,066,720 as of March 31, 2020. 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 drug 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 both MDNA55 and the MDNA109 platform (MDNA19 or MDNA11) 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 24 months without further
financing being obtained.


 


CASH POSITION


 


At March 31, 2020, we had a cash,
cash equivalents and marketable securities balance of $37,700,202, compared to $2,370,976 at March 31, 2019. We invest cash
in excess of current operational requirements in highly rated and liquid instruments. Working capital at March 31, 2020 was
$36,037,022 (March 31, 2019: $2,709,784).


 


Subsequent to March 31, 2020, we received
gross proceeds of $5,249,999 from fulfillment of the over-allotment in connection with the 2020 Public Offering. We also have up
to US$1.4 million remaining available under the CPRIT grant to be used towards the development of MDNA55.


 


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 regulatory
approval to commercialize any of our products 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 CPRIT whereby the Company is eligible to receive up to US$14,100,000 on eligible expenditures
over a three year period related to the development of the Company’s phase 2b clinical program for MDNA55. In October 2017,
the Company was granted a one-year extension to the grant allowing expenses to be claimed over a four-year period ending February 28,
2019. On February 4, 2019 the Company was approved for a further six-month extension ending August 31, 2019, on July 25,
2019 an additional six-month extension was granted to February 28, 2020 and on January 6, 2020 an additional six-month
extension was granted to August 28, 2020.


 






    20


     


    

 


Of the US$14.1 million grant approved by
CPRIT, Medicenna has received US$12.7 million from CPRIT as of March 31, 2020. The Company is eligible to receive the remaining
US$1.4 million upon the achievement of certain criteria as determined by CPRIT, from time to time. There can be no assurances that
the balance of such grants will be received from CPRIT.


 


Ongoing program funding from CPRIT is subject
to a number of conditions including the satisfactory achievement of milestones that must be met to release additional CPRIT funding,
proof the Company has raised 50% matching funds and maintaining substantial functions of the Company related to the project grant
in Texas as well as using Texas-based subcontractor and collaborators wherever possible. There can be no assurances that the Company
will continue to meet the necessary CPRIT criteria, satisfactorily achieve milestones, or that CPRIT will continue to advance additional
funds to the Company.


 


If the Company is found to have used any
grant proceeds for purposes other than intended, is in violation of the terms of the grant, or relocates its MDNA55 related operations
outside of the state of Texas, then the Company is required to repay any grant proceeds received.


 


Under the terms of the grant, the Company
is also 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%.


 


During the year ended March 31, 2020,
the Company received $3,539,465 from CPRIT (2019: $3,242,073).


 


Intellectual Property


 


On August 21, 2015, the Company exercised
its right to enter into two license agreements with Stanford (the “Stanford License Agreements”). In connection
with this licensing agreement the Company issued 649,999 common shares with a value of $98,930 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, 2020, the Company’s intangible assets have a remaining capitalized net book value of $76,259 (March 31,
2019: $81,205).


 


The development milestones under the Stanford
License Agreements were updated during the year ended March 31, 2020 to reflect the current stage of development of the Company’s
programs. In connection with the amendment of the Stanford License Agreements, Medicenna paid a US$150,000 fee to Stanford.


 


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, 2020,
the Company is obligated to pay the following:


 


		·	Patent licensing costs due within 12 months
totaling $70,500.






		·	Patent licensing costs, including the
above, due within the next five years totaling $1,283,100.






		·	Given the current development plans and
expected timelines of the Company it is assumed that project milestones of US$50,000 and US$100,000 will be due in the next five
years.






		·	Project milestone payments, assuming continued
success in the development programs, of uncertain timing totaling US$2,650,000 and an additional US$2,000,000 in sales milestones.






		·	A liquidity payment of $370,375 is due
to the NIH which represents the remaining payments resulting from the Company’s liquidity event in March 2017.



 


As part of these license agreements, the
Company has committed to make certain royalty payments based on net sales to the NIH and Stanford.


 






    21


     


    

 



 


As of March 31, 2020, 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	 	$	70,500	 	 	$	465,300	 	 	$	747,300	 	 	$	1,283,100	 
	Lease payments	 	$	41,460	 	 	$	38,005	 	 	$	0	 	 	$	79,465	 
	Liquidity event payment	 	$	370,375	 	 	$	0	 	 	$	0	 	 	$	370,375	 




 


The Company cannot reasonably estimate
future royalties which may be due upon the regulatory approval of MDNA55 or MDNA109 assets (MDNA11 or MDNA19).


 


As at March 31, 2020, 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 $5,740,000. Most of these agreements are cancellable by
the Company with notice. These commitments include agreements for 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, and Ms. Rosemina Merchant, Chief Development Officer) and directors, received the following compensation
for the following periods:


 


	 	 	Year ended
 March 31,
	 	 	Three months ended
 March 31,
	 
	 	 	2020	 	 	2019	 	 	2020	 	 	2019	 
	 	 	$	 	 	$	 	 	$	 	 	$	 
	Salaries and wages	 	 	891,747	 	 	 	891,748	 	 	 	222,937	 	 	 	222,937	 
	Board fees	 	 	142,264	 	 	 	141,466	 	 	 	35,512	 	 	 	35,278	 
	Stock option expense	 	 	872,585	 	 	 	786,121	 	 	 	279,853	 	 	 	180,247	 
	Related-party rent and moving expenses	 	 	64,561	 	 	 	21,515	 	 	 	7,000	 	 	 	2,093	 
	 	 	 	1,977,157	 	 	 	1,840,850	 	 	 	545,302	 	 	 	440,555	 



 


During the year ended March 31, 2020,
the Company paid $64,561 (2019: $21,515) in moving, storage and rent expenses to the CEO and CDO of the Company. These transactions
were in the normal course of business and have been measured at the exchange amount, which is the amount of consideration established
and agreed to by the related parties.


 


As at March 31, 2020, the Company
had trade and other payables in the normal course of business, owing to directors and officers of $247,696 (2019: $380,328) related
to board fees and accrued vacation.


 



    	 	 	22



     


    

 


ACCOUNTING PRONOUNCEMENTS ADOPTED IN FISCAL YEAR 2020


 


The Company has adopted new accounting
standard IFRS 16 – Leases (“IFRS 16), effective for the Company’s annual period beginning April 1, 2019.


 


IFRS 16 sets out the principles for the
recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance
sheet model, with certain exemptions. The standard includes two recognition exemptions for lessees: leases of “low-value”
assets and short-term leases with a lease term of 12 months or less. At the commencement date of a lease, a lessee will recognize
a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. Lessees
will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use
asset. Lessees are also required to remeasure the lease liability upon the occurrence of certain events such as a change in lease
term. The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use
asset.


 


At the time of adoption, the Company did
not have any leases which fell under IFRS 16, as all leases had a term of 12 months or less.


 


In March 2020, the Company entered
into a lease with a term of two years for which it has applied IFRS 16.


 


The Company recognized a right-of-use asset
based on the amount equal to the lease liability, adjusted for any related prepaid and accrued lease payments previously recognized.
The lease liability was recognized based on the present value of remaining lease payments, discounted using the incremental borrowing
rate at the date of initial application. The lease payments include fixed payments less any lease incentives receivable, variable
lease payments that depend on an index or rate, and amounts expected to be paid under residual value guarantees. The variable lease
payments that do not depend on an index or a rate are recognized as expense in the period as incurred.


 


The carrying amounts of the Company’s
right-of-use assets and lease liabilities and movements during 2020 were as follows:


 


	 	 	Right of Use

 Asset	 	 	Lease Liability	 
	 	 	 	$	 	 	 	$	 
	Balance as of April 1, 2019	 	 	-	 	 	 	-	 
	Additions	 	 	70,706	 	 	 	70,706	 
	Depreciation	 	 	(2,946	)	 	 	-	 
	Accreted interest expense	 	 	-	 	 	 	62	 
	Payments	 	 	-	 	 	 	(3,455	)
	 	 	 	67,760	 	 	 	67,313	 
	 	 	 	 	 	 	 	 	 
	Classification:	 	 	 	 	 	 	 	 
	Current portion of lease liabilities	 	 	-	 	 	 	35,344	 
	Long-term portion of lease liabilities	 	 	-	 	 	 	31,969	 
	 	 	 	-	 	 	 	67,313	 



 


CRITICAL ACCOUNTING POLICIES AND ESTIMATES


 


Accounting policies are described in note
2 of the audited consolidated financial statements.


 






    	 	 	23



     


    

 


The Company makes estimates and assumptions
about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated
based on historical experience and other factors, including expectations of future events that are believed to be reasonable under
the circumstances. In the future, actual experience may differ from these estimates and assumptions. The effect of a change in
an accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the
change affects that period only, or in the period of the change and future periods, if the change affects both. Significant assumptions
about the future and other sources of estimation uncertainty that management has made at the statement of financial position date,
that could result in a material adjustment to the carrying amounts of assets and liabilities include:


 




Fair value of financial instruments


 


Where the fair value of financial assets
and financial liabilities recorded in the consolidated statements of financial position cannot be derived from active markets,
they are determined using valuation techniques including discounted cash flow models. The inputs to these models are taken from
observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.


 


The judgments include considerations of
inputs such as liquidity risk, credit risk and volatility. Significant management judgment is necessary. Changes in assumptions
about these factors could affect the reported fair value of financial instruments


 


Deferred taxes


 


The determination of deferred income tax
assets or liabilities requires subjective assumptions regarding future income tax rates and the likelihood of utilizing tax carry-forwards.
Changes in these assumptions could materially affect the recorded amounts, and therefore do not necessarily provide certainty as
to their recorded values.


 


Share-based payments and compensation


 


The Company applies estimates with respect
to the valuation of shares issued for non-cash consideration. Common shares are valued at the fair value of the equity instruments
granted at the date the Company receives the goods or services.


 


The Company measures the cost of equity-settled
transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating
fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on
the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model
including the fair value of the underlying common shares, the expected life of the share option, volatility and dividend yield
and making assumptions about them. The fair value of the underlying common shares are assessed as the most recent issuance price
per common share for cash proceeds.


 


FINANCIAL INSTRUMENTS


 


		(a)	Fair value



 


The Company’s financial instruments
recognized on the consolidated statements of financial position consist of cash, cash equivalents, marketable securities, government
grant receivable, other receivables, accounts payable and accrued liabilities, and license fee payable. The fair value of these
instruments, approximate their carry values due to their short-term maturity.


 


Classification of financial instruments


 


Financial instruments measured at fair
value on the statement 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.


 






    	 	 	24



     


    

 


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:


 


Cash, 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 earnings at each period end.


 


Other receivables and government grant
receivable are measured at amortized cost less impairments.


 


Accounts payable, accrued liabilities,
deferred government grants and license fee payable 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) Financial risk management


 


We have exposure to credit risk, liquidity
risk and market risk. Our Board of Directors has the overall responsibility for the oversight of these risks and reviews our policies
on an ongoing basis to ensure that these risks are appropriately managed.


 


i.           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 attempts to mitigate
the risk associated with cash and cash equivalents by dealing only with major Canadian financial institutions with good credit
ratings.


 


ii.          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.


 


iii.        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. The ability to do so relies on the Company maintaining sufficient cash in excess of anticipated needs.
As at March 31, 2020, the Company’s liabilities consist of trade and other payables that have contracted maturities
of less than one year.


 


iv.         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 the cash
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, 2020 of $108,423
(March 31, 2019: $69,305).


 






    	 	 	25



     


    

 


Balances in US dollars are as follows:


 


	 	 	March 31, 2020	 	 	March 31, 2019	 
	 	 	$	 	 	$	 
	Cash	 	 	134,835	 	 	 	118,440	 
	Accounts payable and accrued liabilities	 	 	(899,992	)	 	 	(1,430,518	)
	Deferred government grant receivable	 	 	-	 	 	 	1,831,337	 
	 	 	 	(765,157	)	 	 	519,259	 



 


(c) Managing Capital


 


The Company’s objectives, when managing
capital, are to safeguard cash, cash equivalents and marketable securities 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.


 


USE OF PROCEEDS


 


The following table provides an update
on the anticipated use of proceeds raised in the October 2019 equity offering along with amounts actually expended. As of
March 31, 2020, the following expenditures have been incurred:


 


	Item	 	Amount to Spend	 	 	Spent to Date	 	 	Adjustments	 	 	Remaining to Spend	 
	Continued clinical development of MDNA55	 	$	1,400,000	 	 	$	1,239,007	 	 	 	-	 	 	$	160,994	 
	Preclinical development of lead IL2 Superkine MDNA19 or MDNA11	 	$	2,375,000	 	 	$	1,565,321	 	 	 	-	 	 	$	809,680	 
	General corporate and working capital purposes	 	$	2,392,002	 	 	$	644,332	 	 	 	-	 	 	$	1,747,670	 
	Total	 	$	6,167,002	 	 	$	3,448,659	 	 	$	–	 	 	$	2,718,343	 



 






    	 	 	26



     


    

 


The following table provides an update
on the anticipated use of proceeds raised in the 2020 Public Offering along with amounts actually expended. As of March 31,
2020, the following expenditures have been incurred:


 





	Item	 	Amount to Spend	 	 	Spent to Date	 	 	Adjustments	 	 	Remaining to Spend	 
	Preclinical development of MDNA19 or MDNA11	 	$	3,300,000	 	 	 	-	 	 	 	-	 	 	$	3,300,000	 
	Manufacturing of MDNA11 or MDNA19 clinical batch	 	$	4,400,000	 	 	 	-	 	 	 	-	 	 	$	4,400,000	 
	Clinical development of MDNA19 or MDNA11	 	$	13,150,000	 	 	 	-	 	 	 	-	 	 	$	13,150,000	 
	General corporate and working capital purposes	 	$	11,350,000	 	 	 	-	 	 	 	-	 	 	$	11,350,000	 
	Total	 	$	32,200,000	 	 	$	–	 	 	$	–	 	 	$	32,200,000	 



 


RISKS AND UNCERTAINTIES


 


An investment in the Company’s
common shares (the “Common Shares”) involves a high degree of risk and should be considered speculative. An investment
in the Common Shares should only be undertaken by those persons who can afford the total loss of their investment. Investors should
carefully consider the risks and uncertainties set forth below, as well as other information described elsewhere in this MD&A.
The risks and uncertainties below are not the only ones the Company faces. Additional risks and uncertainties not presently known
to Medicenna or that Medicenna believes to be immaterial may also adversely affect Medicenna’s business. If any of the following
risks occur, Medicenna’s business, financial condition and results of operations could be seriously harmed and you could
lose all or part of your investment. Further, if Medicenna fails to meet the expectations of the public market in any given period,
the market price of the Common Shares could decline. Medicenna operates in a highly competitive environment that involves significant
risks and uncertainties, some of which are outside of Medicenna’s control.


 


Risks Related to the Company’s Business and the
Company’s Industry


 


The Company has no sources of product
revenue and will not be able to maintain operations and research and development without sufficient funding.


 


The Company has no sources of product revenue
and cannot predict when or if it will generate product revenue. The Company’s ability to generate product revenue and ultimately
become profitable depends upon its ability, alone or with partners, to successfully develop the product candidates, obtain regulatory
approval, and commercialize products, including any of the current product candidates, or other product candidates that may be
developed, in-licensed or acquired in the future. The Company does not anticipate generating revenue from the sale of products
for the foreseeable future. The Company expects research and development expenses to increase in connection with ongoing activities,
particularly as MDNA55 is advanced through clinical trials and the MDNA109 platform (MDNA19 or MDNA11) is advanced towards the
clinic.


 


The Company will require significant additional
capital resources to expand its business, in particular the further development of its proposed products. Advancing its product
candidates or acquisition and development of any new products or product candidates will require considerable resources and additional
access to capital markets. In addition, the Company’s future cash requirements may vary materially from those now expected.


 


The Company can potentially seek additional
funding through corporate collaborations and licensing arrangements, through public or private equity or debt financing, or through
other transactions. However, if clinical trial results are neutral or unfavourable, or if capital market conditions in general,
or with respect to life sciences companies such as Medicenna, are unfavourable, the Company’s ability to obtain significant
additional funding on acceptable terms, if at all, will be negatively affected. Additional financing that it may pursue may involve
the sale of the Common Shares or financial instruments that are exchangeable for, or convertible into, the Common Shares, which
could result in significant dilution to its shareholders. If sufficient capital is not available, the Company may be required to
delay the implementation of its business strategy, which could have a material adverse effect on its business, financial condition,
prospects or results of operations.


 



    	 	 	27



     


    

 


The Company is highly dependent upon
certain key personnel and their loss could adversely affect the its ability to achieve its business objective.


 


The loss of Dr. Fahar Merchant, the
President and Chief Executive Officer, Rosemina Merchant, the Chief Development Officer, or other key members of the scientific
and operating staff could harm the Company. Employment agreements exist with Dr. Merchant and Ms. Merchant, although
such employment agreements do not guarantee their retention. The Company also depends on scientific and clinical collaborators
and advisors, all of whom have outside commitments that may limit their availability. In addition, the Company believes that future
success will depend in large part upon its ability to attract and retain highly skilled scientific, managerial, medical, clinical
and regulatory personnel. Agreements have been entered into with scientific and clinical collaborators and advisors, key opinion
leaders and academic partners in the ordinary course of business as well as with physicians and institutions who recruited patients
into the MDNA55 clinical trial and will recruit patients into future clinical trials. Notwithstanding these arrangements, there
is significant competition for these types of personnel from other companies, research and academic institutions, government entities
and other organizations. The loss of the services of any of the executive officers or other key personnel could potentially harm
the Company’s business, operating results or financial condition.


 


If the Company breaches any of the
agreements under which it licenses rights to product candidates or technology from third parties, it can lose license rights that
are important to its business. The Company’s current license agreements may not provide an adequate remedy for breach by
the licensor.


 


The Company is developing MDNA55, the MDNA109
platform (MDNA19 and MDNA11) and other earlier stage preclinical and discovery drug candidates pursuant to license agreements with
NIH and Stanford (collectively, the “Licensors”). The Company is subject to a number of risks associated with its collaboration
with the Licensors, including the risk that the Licensors may terminate the license agreement upon the occurrence of certain specified
events. The license agreement requires, among other things, that the Company makes certain payments and use reasonable commercial
efforts to meet certain clinical and regulatory milestones. If the Company fails to comply with any of these obligations or otherwise
breach this or similar agreements, the Licensors or any future licensors may have the right to terminate the license in whole.
The Company can also suffer the consequences of non-compliance or breaches by Licensors in connection with the license agreements.
Such non-compliance or breaches by such third parties can in turn result in breaches or defaults under the Company’s agreements
with other collaboration partners, and the Company can be found liable for damages or lose certain rights, including rights to
develop and/or commercialize a product or product candidate. Loss of the Company’s rights to the licensed intellectual property
or any similar license granted to it in the future, or the exclusivity rights provided therein, can harm the Company’s financial
condition and operating results.


 


Clinical drug development involves
a lengthy and expensive process with an uncertain outcome, results of earlier studies and trials may not be predictive of future
trial results, and the Company’s product candidates may not have favourable results in later trials or in the commercial
setting.


 


Clinical testing is expensive and can take
many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process.
The results of preclinical studies and early clinical trials may not be predictive of the results of later-stage clinical trials.
In the case of MDNA55, the promising results seen in the Phase 2b clinical study may not be replicated in a randomized, controlled
Phase 3 clinical study. Success in preclinical or animal studies and early clinical trials does not ensure that later large-scale
efficacy trials will be successful nor does it predict final results. This is applicable to the MDNA109 platform (MDNA19 and MDNA11)
as the promising preclinical data may not be replicated in a clinical setting. Favourable results in early trials may not be repeated
in later trials. There is no assurance the FDA, the EMA or other similar government bodies will view the results as the Company
does or that any future trials of its proposed products for other indications will achieve positive results. Product candidates
in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical
studies and initial clinical trials.


 



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The Company will be required to demonstrate
through larger-scale clinical trials that any potential future product is safe and effective for use in a diverse population before
it can seek regulatory approvals for commercial sale of its product. There is typically an extremely high rate of attrition from
the failure of product candidates proceeding through clinical and post-approval trials. If MDNA55 fails to demonstrate sufficient
safety and efficacy in future clinical trials, the Company’s operations and financial condition will be adversely impacted.


 


If the Company’s competitors
develop and market products that are more effective than the Company’s existing product candidates or any products it may
develop, or if they obtain marketing approval before it does, the Company’s products may be rendered obsolete or uncompetitive.


 


Technological competition from pharmaceutical
companies, biotechnology companies and universities is intense and is expected to increase. Many of the Company’s competitors
and potential competitors have substantially greater product development capabilities and financial, scientific, marketing and
human resources than the Company does. Our future success depends in part on our ability to maintain a competitive position, including
our ability to further progress MDNA55 and the MDNA109 platform (MDNA19 and MDNA11) through the necessary preclinical and clinical
trials towards regulatory approval for sale and commercialization. Other companies may succeed in commercializing products earlier
than we are able to commercialize our products or they may succeed in developing products that are more effective than our products.
While the Company will seek to expand its technological capabilities in order to remain competitive, there can be no assurance
that developments by others will not render its products non-competitive or that the Company or its licensors will be able to keep
pace with technological developments. Competitors have developed technologies that could be the basis for competitive products.
Some of those products may have an entirely different approach or means of accomplishing the desired therapeutic effect than the
Company’s products and may be more effective or less costly than its products. In addition, other forms of medical treatment
may offer competition to the products. The success of the Company’s competitors and their products and technologies relative
to its technological capabilities and competitiveness could have a material adverse effect on the future preclinical and clinical
trials of its products, including its ability to obtain the necessary regulatory approvals for the conduct of such trials.


 


The Company is subject to the restrictions
and conditions of the CPRIT agreement. Failure to comply with the CPRIT agreement may adversely affect the Company’s financial
condition and results of operations.


 


The Company has obtained a grant from CPRIT
to fund a portion of its operations to date. The CPRIT grant is subject to the Company’s compliance with the scope of work
outlined in the CPRIT agreement and demonstration of its progress towards achievement of the milestones set forth in the CPRIT
agreement. If the Company fails to comply with the terms of the CPRIT agreement, it may not receive the remaining US$1.4 million
tranche of the CPRIT grant or it may be required to reimburse some or the entire CPRIT grant. Further, the CPRIT grant may only
be applied to a limited number of allowable expenses. Failure to obtain the remaining tranche of the CPRIT grant or being required
to reimburse all or a portion of the CPRIT grant may cause a halt or delay in ongoing operations, which may adversely affect the
Company’s financial condition and operating results.


 



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The Company relies and will continue
to rely on third parties to plan, conduct and monitor preclinical studies and clinical trials, and their failure to perform as
required could cause substantial harm to the Company’s business.


 


The Company relies and will continue to
rely on third parties to conduct a significant portion of clinical development and planned preclinical activities. Preclinical
activities include in vivo studies providing access to specific disease models, pharmacology and toxicology studies, and
assay development. Clinical development activities include trial design, regulatory submissions, clinical patient recruitment,
clinical trial monitoring, clinical data management and analysis, safety monitoring and project management. If there is any dispute
or disruption in the Company’s relationship with third parties, or if the Company is unable to provide quality services in
a timely manner and at a feasible cost, any active development programs could face delays. Further, if any of these third parties
fails to perform as expected or if their work fails to meet regulatory requirements, testing could be delayed, cancelled or rendered
ineffective.


 


The Company relies on contract manufacturers
over whom the Company has limited control. If the Company is subject to quality, cost or delivery issues with the preclinical and
clinical grade materials supplied by contract manufacturers, business operations could suffer significant harm.


 


The Company has limited manufacturing experience
and relies on contract development and manufacturing organizations (“CDMOs”), to manufacture MDNA55 for clinical trials
and the MDNA109 platform (MDNA19 and MDNA11) for preclinical development. The Company relies on CDMOs for manufacturing, filling,
packaging, storing and shipping of drug product in compliance with cGMP, regulations applicable to its products. The FDA ensures
the quality of drug products by carefully monitoring drug manufacturers’ compliance with cGMP regulations. The cGMP regulations
for drugs contain minimum requirements for the methods, facilities and controls used in manufacturing, processing and packing of
a drug product. The Company plans to utilize CDMOs that are licensed by both the FDA and the EMA.


 


There can be no assurances that the CDMOs
selected will be able to meet future timetables and requirements. If the Company is unable to arrange for alternative third-party
manufacturing sources on commercially reasonable terms or in a timely manner, it may delay the development of the product candidates.
Further, contract manufacturers must operate in compliance with cGMP and failure to do so could result in, among other things,
the disruption of product supplies. The Company’s dependence upon third parties for the manufacture of its products may adversely
affect profit margins and ability to develop and deliver products on a timely and competitive basis.


 


The Company’s future success
is dependent primarily on the regulatory approval of a single product.


 


The Company does not have any products
that have gained regulatory approval. Currently, its only clinical product candidate is MDNA55. As a result, the Company’s
near-term prospects, including its ability to finance its operations and generate revenue, are substantially dependent on its ability
to obtain regulatory approval for, and, if approved, to successfully commercialize MDNA55 in a timely manner. The Company cannot
commercialize MDNA55 or other future product candidates in the United States without first obtaining regulatory approval for the
product from the FDA; similarly, it cannot commercialize MDNA55 or other future product candidates outside of the United States
without obtaining regulatory approval from comparable foreign regulatory authorities. Although MDNA55 has received Orphan Drug
(FDA, EMA) and Fast Track (FDA) designations, there can be no assurance regulatory approval will be granted. Before obtaining regulatory
approvals for the commercial sale of MDNA55 or other future product candidates for a target indication, the Company must demonstrate
with substantial evidence gathered in preclinical and clinical studies to the satisfaction of the relevant regulatory authorities,
that the product candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes
and controls are adequate. Many of these factors are beyond the Company’s control. If the Company, or its potential commercialization
collaborators, are unable to successfully commercialize MDNA55, the Company may not be able to earn sufficient revenues to continue
its business.


 






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The Company may not achieve its publicly
announced milestones according to schedule, or at all.


 


From time to time, the Company may announce
the timing of certain events expected to occur, such as the anticipated timing of results from clinical trials. These statements
are forward-looking and are based on the best estimates of management at the time relating to the occurrence of such events. However,
the actual timing of such events may differ from what has been publicly disclosed. The timing of events such as initiation or completion
of a clinical trial, filing of an application to obtain regulatory approval, or announcement of additional clinical trials for
a product candidate may ultimately vary from what is publicly disclosed. These variations in timing may occur as a result of different
events, including the ability to recruit patients in a clinical trial in a timely manner, the nature of results obtained during
a clinical trial or during a research phase, problems with a CDMO or a contract research organization (“CRO”), or any
other event having the effect of delaying the publicly announced timeline. The Company undertakes no obligation to update or revise
any forward-looking information, whether as a result of new information, future events or otherwise, except as otherwise required
by law. Any variation in the timing of previously announced milestones could have a material adverse effect on the business plan,
financial condition or operating results and the trading price of the Common Shares.


 


MDNA55 is in the mid stages of clinical
development and the MDNA109 platform (MDNA19 and MDNA11) in preclinical development and, as a result, the Company will be unable
to predict whether it will be able to profitably commercialize its product candidates.


 


The Company has not received regulatory
approval for the sale of MDNA55 in any market. Accordingly, the Company has not generated any revenues from product sales. A substantial
commitment of resources to conduct clinical trials and for additional product development will be required to commercialize all
of our product candidates. There can be no assurance that MDNA55, the MDNA109 platform (MDNA19 and MDNA11) or any of our other
product candidates will meet applicable regulatory standards, be capable of being produced in commercial quantities at reasonable
cost or be successfully marketed, or that the investment made by the Company in the commercialization of the products will be recovered
through sales, license fees or related royalties.


 


The Company will be subject to extensive
government regulation that will increase the cost and uncertainty associated with gaining final regulatory approval of its product
candidates.


 


Securing final regulatory approval for
the manufacture and sale of human therapeutic products in the United States, Canada and other markets is a long and costly process
that is controlled by that particular country’s national regulatory agency. Approval in the United States, Canada or Europe
does not assure approval by other national regulatory agencies, although often test results from one country may be used in applications
for regulatory approval in another country. Other national regulatory agencies have similar regulatory approval processes, but
each is different.


 


Prior to obtaining final regulatory approval
to market a drug product, every national regulatory agency has a variety of statutes and regulations which govern the principal
development activities. These laws require controlled research and testing of products, government review and approval of a submission
containing preclinical and clinical data establishing the safety and efficacy of the product for each use sought, approval of manufacturing
facilities including adherence to cGMP during production and storage and control of marketing activities, including advertising
and labelling. There can be no assurance that MDNA55 or the MDNA109 platform (MDNA19 and MDNA11) will be successfully commercialized
in any given country. There can be no assurance that the Company’s licensed products will prove to be safe and effective
in clinical trials under the standards of the regulations in the various jurisdictions or receive applicable regulatory approvals
from applicable regulatory bodies.


 


Negative results from clinical trials
or studies of third parties and adverse safety events involving the targets of the Company’s products may have an adverse
impact on future commercialization efforts.


 


From time to time, studies or clinical
trials on various aspects of biopharmaceutical products are conducted by academic researchers, competitors or others. The results
of these studies or trials, when published, may have a significant effect on the market for the biopharmaceutical product that
is the subject of the study. The publication of negative results of studies or clinical trials or adverse safety events related
to the Company’s product candidates, or the therapeutic areas in which the Company’s product candidates compete, could
adversely affect the share price and ability to finance future development of the Company’s product candidates, and the business
and financial results could be materially and adversely affected.


 






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The Company faces the risk of product
liability claims, which could exceed its insurance coverage and produce recalls, each of which could deplete cash resources.


 


The Company is exposed to the risk of product
liability claims alleging that use of its product candidate MDNA55, and in the future, the MDNA109 platform (MDNA19 and MDNA11),
caused an injury or harm. These claims can arise at any point in the development, testing, manufacture, marketing or sale of product
candidates and may be made directly by patients involved in clinical trials of product candidates, by consumers or healthcare providers
or by individuals, organizations or companies selling the products. Product liability claims can be expensive to defend, even if
the product or product candidate did not actually cause the alleged injury or harm.


 


Insurance covering product liability claims
becomes increasingly expensive as a product candidate moves through the development pipeline to commercialization. Currently the
Company maintains clinical trial liability insurance coverage of $5 million. However, there can be no assurance that such insurance
coverage is or will continue to be adequate or available at a cost acceptable to the Company or at all. The Company may choose
or find it necessary under its collaborative agreements to increase the insurance coverage in the future but may not be able to
secure greater or broader product liability insurance coverage on acceptable terms or at reasonable costs when needed. Any liability
for damages resulting from a product liability claim could exceed the amount of the coverage, require payment of a substantial
monetary award from the Company’s cash resources and have a material adverse effect on the business, financial condition
and results of operations. Moreover, a product recall, if required, could generate substantial negative publicity about the products
and business, inhibit or prevent commercialization of other products and product candidates or negatively impact existing or future
collaborations.


 


Changes in government regulations,
although beyond the Company’s control, could have an adverse effect on the Company’s business.


 


The Company depends upon the validity of
its licenses and access to the data for the timely completion of clinical research. Any changes in the drug development regulatory
environment or shifts in political attitudes of a government are beyond the Company’s control and may adversely affect its
business. The Company’s business may also be affected in varying degrees by such factors as government regulations with respect
to intellectual property, regulation or export controls. Such changes remain beyond the Company’s control and the effect
of any such changes cannot be predicted. These factors could have a material adverse effect on the Company’s ability to further
develop its licensed products.


 


The Company’s significant shareholders
may have material influence over its governance and operations.


 


Dr. Fahar Merchant and Ms. Rosemina
Merchant (collectively, the “Merchants”), hold a significant interest in the Company’s outstanding Common Shares
on a fully diluted basis. For as long as the Merchants maintain a significant interest in the Company, they may be in a position
to affect the Company’s governance and operations. In addition, the Merchants may have significant influence over the passage
of any resolution of the Company’s shareholders (such as those that would be required to amend the constating documents or
take certain other corporate actions) and may, for all practical purposes, be able to ensure the passage of any such resolution
by voting for it or prevent the passage of any such resolution by voting against it. The effect of this influence may be to limit
the price that investors are willing to pay for the Common Shares. In addition, the potential that the Merchants may sell their
Common Shares in the public market (commonly referred to as “market overhang”), as well as any actual sales of such
Common Shares in the public market, could adversely affect the market price of the Common Shares.


 






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If the Company is unable to enroll
subjects in clinical trials, it will be unable to complete these trials on a timely basis.


 


It is anticipated that the COVID-19 pandemic
crisis will impact ongoing trial activities across the industry due to the pressure placed on the healthcare system as well as
governmental and institutional restrictions. The Company is not currently enrolling patients in a clinical study and does not plan
to enroll additional patients until 2021. Should the COVID-19 pandemic continue into 2021 the Company’s will need to determine
at that time if initiating a clinical trial is feasible and if so the clinical team will need to work closely with each clinical
site and a CRO on a plan to ensure that patient safety and the integrity of data is maintained. It is noted that some clinical
sites have paused or slowed enrollment in clinical trials, while other sites, less impacted, are continuing activities as planned.


 


Patient enrollment, a significant factor
in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity
of subjects to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, ability to obtain and
maintain patient consents, risk that enrolled subjects will drop out before completion, competing clinical trials and clinicians’
and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies,
including any new drugs that may be approved for the indications the Company is investigating. Furthermore, the Company relies
on CROs and clinical trial sites to ensure the proper and timely conduct of its clinical trials, and while it has agreements governing
their committed activities, the Company has limited influence over their actual performance.


 


If the Company experiences delays in the
completion or termination of any clinical trial of its proposed products or any future product candidates, the commercial prospects
of its product candidates will be harmed and its ability to generate product revenues from any of these product candidates will
be delayed. In addition, any delays in completing clinical trials will increase costs, slow down product candidate development
and approval process and can shorten any periods during which the Company may have the exclusive right to commercialize its product
candidates or allow its competitors to bring products to market before it does. Delays can further jeopardize the Company’s
ability to commence product sales, which will impair its ability to generate revenues and may harm the business, results of operations,
financial condition and cash flows and future prospects. In addition, many of the factors that can cause a delay in the commencement
or completion of clinical trials may also ultimately lead to the denial of regulatory approval of its proposed products or its
future product candidates.


 


The Company’s discovery and
development processes involve use of hazardous and radioactive materials which may result in potential environmental exposure.


 


The Company’s discovery and development
processes involve the controlled use of hazardous and radioactive materials. The Company is subject to federal, provincial, state
and local laws and regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste
products. Although the Company believes that the current safety procedures for handling and disposing of such materials comply
with the standards prescribed by such laws and regulations, the risk of accidental contamination or injury from these materials
cannot be completely eliminated. In the event of such an accident, the Company could be held liable for any damages that result
and any such liability could exceed the Company’s resources. The Company is not specifically insured with respect to this
liability. Although the Company believes that the Company is in compliance in all material respects with applicable environmental
laws and regulations and currently does not expect to make material capital expenditures for environmental control facilities in
the near term, there can be no assurance that the Company will not be required to incur significant costs to comply with environmental
laws and regulations in the future, or that the operations, business or assets will not be materially adversely affected by current
or future environmental laws or regulations.


 






    33


     


    

 


If the Company is unable to successfully
develop companion diagnostics for its therapeutic product candidates, or experience significant delays in doing so, the Company
may not achieve marketing approval or realize the full commercial potential of its therapeutic product candidates.


 


The Company plans to develop companion
diagnostics for its therapeutic product candidates. It is expected that, at least in some cases, regulatory authorities may require
the development and regulatory approval of a companion diagnostic as a condition to approving a therapeutic product candidate.
The Company has limited experience and capabilities in developing or commercializing diagnostics and plans to rely in large part
on third parties to perform these functions. The Company does not currently have any agreement in place with any third party to
develop or commercialize companion diagnostics for any of its therapeutic product candidates.


 


Companion diagnostics are subject to regulation
by the FDA, Health Canada and comparable foreign regulatory authorities as medical devices and may require separate regulatory
approval or clearance prior to commercialization. If the Company, or any third parties that the Company engages to assist, are
unable to successfully develop companion diagnostics for the Company’s therapeutic product candidates, or experience delays
in doing so, the Company’s business may be substantially harmed.


 


Significant disruption in availability
of key components for ongoing clinical studies could considerably delay completion of potential clinical trials, product testing
and regulatory approval of potential product candidates.


 


The Company relies on third parties to
supply ingredients and excipients for the manufacture and formulation of its drugs, catheters required to deliver the drug to the
brain as well as imaging software to accurately place catheters in the tumor (“Components”). Each of the suppliers
of these Components in turn need to comply with regulatory requirements. Any significant disruption in supplier relationships could
harm the Company’s business, including the potential impact of COVID-19. Any significant delay in the supply of a Component,
for a potential ongoing clinical study could considerably delay completion of potential clinical trials, product testing and regulatory
approval of potential product candidates. If the Company or its suppliers are unable to purchase these Components after regulatory
approval has been obtained for the product candidates, or the suppliers decide not to manufacture these Components or provide support
for any of the Components, clinical trials or the commercial launch of that product candidate would be delayed or there would be
a shortage in supply, which would impair the ability to generate revenues from the sale of the product candidates. It may take
several years to establish an alternative source of supply for such Components and to have any such new source approved by the
FDA and other regulatory agencies.


 


Risks Related to Intellectual Property and Litigation


 


The Company’s success depends
upon its ability to protect its intellectual property and its proprietary technology.


 


The Company’s success depends, in
part, on its ability and its licensors’ ability to obtain patents, maintain trade secrets protection and operate without
infringing on the proprietary rights of third parties or having third parties circumvent its rights. Certain licensors and the
institutions that they represent, and in certain cases, have filed and are actively pursuing certain applications for Canadian
and foreign patents. The patent position of pharmaceutical and biotechnology firms is uncertain and involves complex legal and
financial questions for which, in some cases, certain important legal principles remain unresolved. There can be no assurance that
the patent applications made in respect of the owned or licensed products will result in the issuance of patents, that the term
of a patent will be extendable after it expires in due course, that the licensors or the institutions that they represent will
develop additional proprietary products that are patentable, that any patent issued to the licensors or the Company will provide
it with any competitive advantages, that the patents of others will not impede its ability to do business or that third parties
will not be able to circumvent or successfully challenge the patents obtained in respect of the licensed products. The cost of
obtaining and maintaining patents is high. Furthermore, there can be no assurance that others will not independently develop similar
products which duplicate any of the licensed products or, if patents are issued, design around the patent for the product. There
can be no assurance that the Company’s processes or products or those of its licensors do not or will not infringe upon the
patents of third parties or that the scope of its patents or those of its licensors will successfully prevent third parties from
developing similar and competitive products.


 






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Much of the Company’s know-how and
technology may not be patentable, though it may constitute trade secrets. There can be no assurance, however, that the Company
will be able to meaningfully protect its trade secrets. To help protect its intellectual property rights and proprietary technology,
the Company requires employees, consultants, advisors and collaborators to enter into confidentiality agreements. There can be
no assurance that these agreements will provide meaningful protection for its intellectual property rights or other proprietary
information in the event of any unauthorized use or disclosure.


 


The Company’s potential involvement
in intellectual property litigation could negatively affect its business.


 


Its future success and competitive position
depends in part upon its ability to maintain the its intellectual property portfolio. There can be no assurance that any patents
will be issued on any existing or future patent applications. Even if such patents are issued, there can be no assurance that any
patents issued or licensed to the Company will not be challenged. The Company’s ability to establish and maintain a competitive
position may be achieved in part by prosecuting claims against others who it believes are infringing its rights and by defending
claims brought by others who believe that the Company is infringing their rights. In addition, enforcement of its patents in foreign
jurisdictions will depend on the legal procedures in those jurisdictions. Even if such claims are found to be invalid, the Company’s
involvement in intellectual property litigation could have a material adverse effect on its ability to out-license any products
that are the subject of such litigation. In addition, its involvement in intellectual property litigation could result in significant
expense, which could materially adversely affect the use or licensing of related intellectual property and divert the efforts of
its valuable technical and management personnel from their principal responsibilities, whether or not such litigation is resolved
in its favour.


 


The Company’s reliance on third parties requires
it to share its trade secrets, which increases the possibility that a competitor will discover them.


 


Because the Company relies on third parties
to develop its products, it must share trade secrets with them. The Company seeks to protect its proprietary technology in part
by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements,
consulting agreements or other similar agreements with its collaborators, advisors, employees and consultants prior to beginning
research or disclosing proprietary information. These agreements typically restrict the ability of the Company’s collaborators,
advisors, employees and consultants to publish data potentially relating to the Company’s trade secrets. The Company’s
academic collaborators typically have rights to publish data, provided that the Company is notified in advance and may delay publication
for a specified time in order to secure its intellectual property rights arising from the collaboration. In other cases, publication
rights are controlled exclusively by the Company, although in some cases it may share these rights with other parties. The Company
also conducts joint research and development programs which may require it to share trade secrets under the terms of research and
development collaboration or similar agreements. Despite the Company’s efforts to protect its trade secrets, its competitors
may discover its trade secrets, either through breach of these agreements, independent development or publication of information
including its trade secrets in cases where the Company does not have proprietary or otherwise protected rights at the time of publication.
A competitor’s discovery of the Company’s trade secrets may impair its competitive position and could have a material
adverse effect on its business and financial condition.


 


Product liability claims are an inherent
risk of the Company’s business, and if the Company’s clinical trial and product liability insurance prove inadequate,
product liability claims may harm its business.


 


Human therapeutic products involve an inherent
risk of product liability claims and associated adverse publicity. There can be no assurance that the Company will be able to obtain
or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance
is expensive, difficult to obtain and may not be available in the future on acceptable terms, or at all. An inability to obtain
sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could have
a material adverse effect on the Company’s business by preventing or inhibiting the commercialization of its products, licensed
and owned, if a product is withdrawn or a product liability claim is brought against the Company.


 






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Generally, a litigation risk exists
for any company that may compromise its ability to conduct the Company’s business.


 


All industries are subject to legal claims,
with and without merit. Defense and settlement costs can be substantial, even with respect to claims that have no merit. Due to
the inherent uncertainty of the litigation process, the resolution of any particular legal proceeding could have a material adverse
effect on the Company’s business, prospects, financial condition and results of operations.


 


Other Risks


 


Our Common Share price has been volatile in recent years
and may continue to be volatile.


 


The market prices for securities of biotechnology
companies, including ours, have historically been volatile. In the year ended March 31, 2020, our Common Shares traded on
the TSX at a high of $4.86 and a low of $0.64 per share. A number of factors could influence the volatility in the trading price
of our Common Shares, including changes in the economy or in the financial markets, industry related developments, the results
of product development and commercialization, changes in government regulations, and developments concerning proprietary rights,
litigation and cash flow. Our quarterly losses may vary because of the timing of costs for clinical trials, manufacturing and preclinical
studies. Also, the reporting of clinical data or the lack thereof, adverse safety events involving our products and public rumors
about such events could cause our share price to decline or experience periods of volatility. Each of these factors could lead
to increased volatility in the market price of our Common Shares. In addition, changes in the market prices of the securities of
our competitors may also lead to fluctuations in the trading price of our Common Shares.


 


Future sales or issuances of equity
securities or the conversion of securities into Common Shares could decrease the value of the Common Shares, dilute investors’
voting power, and reduce earnings per share.


 


The Company may sell additional equity
securities in future offerings, including through the sale of securities convertible into equity securities, to finance operations,
acquisitions or projects, and issue additional Common Shares if outstanding securities are converted into Common Shares, which
may result in dilution.


 


The Company’s board of directors
will have the authority to authorize certain offers and sales of additional securities without the vote of, or prior notice to,
shareholders. Based on the need for additional capital to fund expected expenditures and growth, it is likely that the Company
will issue additional securities to provide such capital.


 


Sales of substantial amounts of securities,
or the availability of such securities for sale, as well as the issuance of substantial amounts of Common Shares upon conversion
or exchange of outstanding convertible or exchangeable securities, could adversely affect the prevailing market prices for securities
and dilute investors’ earnings per share. A decline in the future market prices of the Company’s securities could impair
its ability to raise additional capital through the sale of securities should it desire to do so.


 


In the past, following periods of volatility
in the market price of a company’s securities, shareholders have instituted class action securities litigation against those
companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources,
which could significantly harm the Company’s profitability and reputation.


 


The market price for the Common Shares
may also be affected by the Company’s ability to meet or exceed expectations of analysts or investors. Any failure to meet
these expectations, even if minor, may have a material adverse effect on the market price of the Common Shares.


 






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The Company is subject to foreign
exchange risk relating to the relative value of the United States dollar.


 


A material portion of the Company’s
expenses are denominated in United States dollars. As a result, the Company is subject to foreign exchange risks relating to the
relative value of the Canadian dollar as compared to the United States dollar. A decline in the Canadian dollar would result in
an increase in the actual amount of its expenses and adversely impact financial performance.


 


The Company’s disclosure controls
and procedures may not prevent or detect all errors or acts of fraud.


 


The Company’s disclosure controls
and procedures are designed to reasonably assure that information required to be disclosed by the Company in reports it files or
submits under applicable securities laws is accumulated and communicated to management, recorded, processed, summarized and reported
within the time periods specified under applicable securities laws. The Company believes that any disclosure controls and procedures
or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly,
because of the inherent limitations in the Company’s control system, misstatements or insufficient disclosures due to error
or fraud may occur and not be detected.


 


Any failure to maintain an effective
system of internal controls may result in material misstatements of the Company’s consolidated financial statements or cause
the Company to fail to meet the reporting obligations or fail to prevent fraud; and in that case, shareholders could lose confidence
in the Company’s financial reporting, which would harm the business and could negatively impact the price of the Common Shares.


 


Effective internal controls are necessary
to provide reliable financial reports and prevent fraud. If there is a failure to maintain an effective system of internal controls,
the Company might not be able to report financial results accurately or prevent fraud; and in that case, shareholders could lose
confidence in the Company’s financial reporting, which would harm the business and could negatively impact the price of the
Common Shares. While the Company believes that it will have sufficient personnel and review procedures to maintain an effective
system of internal controls, no assurance can be provided that potential material weaknesses in internal control could arise. Even
if it is concluded that the internal control over financial reporting provides reasonable assurance regarding the reliability of
financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS, as
issued by the International Accounting Standards Board (IASB), because of its inherent limitations, internal control over financial
reporting may not prevent or detect fraud or misstatements. Failure to implement required new or improved controls, or difficulties
encountered in their implementation, could harm results of operations or cause a failure to meet future reporting obligations.


 


Failure to comply with the U.S. Foreign
Corrupt Practices Act (“FCPA”), the Canadian Corruption of Foreign Public Officials Act (“CFPOA”), and
other global anti-corruption and anti-bribery laws could subject the Company to penalties and other adverse consequences.


 


The FCPA and the CFPOA, as well as any
other applicable domestic or foreign anti-corruption or anti-bribery laws to which the Company is or may become subject generally
prohibit corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person
working in an official capacity and requires companies to maintain accurate books and records and internal controls, including
at foreign-controlled subsidiaries.


 


Compliance with these anti-corruption laws
and anti-bribery laws may be expensive and difficult, particularly in countries in which corruption is a recognized problem. In
addition, these laws present particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated
by the government, and physicians and other hospital employees are considered to be foreign officials. Certain payments by other
companies to hospitals in connection with clinical trials and other work have been deemed to be improper payments to governmental
officials and have led to FCPA enforcement actions.


 






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The Company’s internal control policies
and procedures may not protect it from reckless or negligent acts committed by the Company’s employees, future distributors,
licensees or agents. The Company can make no assurance that they will not engage in prohibited conduct, and the Company may be
held liable for their acts under applicable anti-corruption and anti-bribery laws. Noncompliance with these laws could subject
the Company to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant
fines, damages, other civil and criminal penalties or injunctions, suspension or debarment from contracting with certain persons,
the loss of export privileges, whistleblower complaints, reputational harm, adverse media coverage, and other collateral consequences.
Any investigations, actions or sanctions or other previously mentioned harm could have a material negative effect on the Company’s
business, operating results and financial condition.


 


Any future profits will likely be
used for the continued growth of the business and products and will not be used to pay dividends on the issued and outstanding
shares.


 


The Company will not pay dividends on the
issued and outstanding Common Shares in the foreseeable future. If the Company generates any future earnings, such cash resources
will be retained to finance further growth and current operations. The board of directors will determine if and when dividends
should be declared and paid in the future based on the Company’s financial position and other factors relevant at the particular
time. Until the Company pays dividends, which it may never do, a shareholder will not be able to receive a return on his or her
investment in the Common Shares unless such Common Shares are sold. In such event, a shareholder may only be able to sell his,
her or its Common Shares at a price less than the price such shareholder originally paid for them, which could result in a significant
loss of such shareholder’s investment.


 


The Company may pursue other business
opportunities in order to develop its business and/or products.


 


From time to time, the Company may pursue
opportunities for further research and development of other products. The Company’s success in these activities will depend
on its ability to identify suitable technical experts, market needs, and effectively execute any such research and development
opportunities. Any research and development would be accompanied by risks as a result of the use of business efforts and funds.
In the event that the Company chooses to raise debt capital to finance any such research or development opportunities, its leverage
will be increased. There can be no assurance that the Company would be successful in overcoming these risks or any other problems
encountered in connection with any research or development opportunities.


 


The Company may acquire businesses
or products, or form strategic alliances, in the future, and the Company may not realize the benefits of such acquisitions.


 


The Company may acquire additional businesses
or products, form strategic alliances or create joint ventures with third parties that the Company believes will complement or
augment its existing business. If the Company acquires businesses with promising products or technologies, the Company may not
be able to realize the benefit of acquiring such businesses if the Company is unable to successfully integrate them with its existing
operations and company culture. The Company may encounter numerous difficulties in developing, manufacturing and marketing any
new products resulting from a strategic alliance or acquisition that delay or prevent it from realizing their expected benefits
or enhancing the Company’s business. The Company cannot assure investors that, following any such acquisition, it will achieve
the expected synergies to justify the transaction.


 


The Company’s success depends
on its ability to effectively manage its growth.


 


The Company may be subject to growth-related
risks including pressure on its internal systems and controls. The Company’s ability to manage its growth effectively will
require the Company to continue to implement and improve its operational and financial systems and to expand, train and manage
its employee base. Inability to deal with this growth could have a material adverse impact on its business, operations and prospects.
The Company may experience growth in the number of its employees and the scope of its operating and financial systems, resulting
in increased responsibilities for its personnel, the hiring of additional personnel and, in general, higher levels of operating
expenses. In order to manage its current operations and any future growth effectively, the Company will also need to continue to
implement and improve its operational, financial and management information systems and to hire, train, motivate, manage and retain
its employees. There can be no assurance that the Company will be able to manage such growth effectively, that its management,
personnel or systems will be adequate to support its operations or that the Company will be able to achieve the increased levels
of revenue commensurate with the increased levels of operating expenses associated with this growth.


 






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If the Company is treated as a passive
foreign investment company, United States shareholders may be subject to adverse U.S. federal income tax consequences


 


Under the U.S. Internal Revenue Code of
1986, as amended (the “Code”), the Company will be classified as a passive foreign investment company (“PFIC”)
in respect of any taxable year in which either (i) 75% or more of its gross income consists of certain types of “passive
income” or (ii) 50% or more of the average quarterly value of its assets is attributable to “passive assets”
(assets that produce or are held for the production of passive income). For purposes of these tests, passive income includes dividends,
interest, gains from the sale or exchange of investment property and certain rents and royalties. In addition, for purposes of
the above calculations, if the Company directly or indirectly owns at least 25% by value of the shares of another corporation,
the Corporation will be treated as if it held its proportionate share of the assets and received directly its proportionate share
of the income of such other corporation. PFIC status is a factual determination that needs to be made annually after the close
of each taxable year, on the basis of the composition of the Company’s income, the relative value of its active and passive
assets, and its market capitalization. For this purpose, the Company’s PFIC status depends in part on the application of
complex rules, which may be subject to differing interpretations, relating to the classification of the Company’s income
and assets. Based on our interpretation of the law, the Company’s recent financial statements, and considering expectations
about the Company’s income, assets and activities, the Company believes that it was a PFIC for the taxable year ended March 31,
2020 and expects that it will be a PFIC for the current taxable year.


 


If the Company is a PFIC for any taxable
year during which a United States shareholder holds the Common Shares, the Company will continue to be treated as a PFIC with respect
to such United States shareholder in all succeeding years during which the United States shareholder owns the Common Shares, regardless
of whether the Company continues to meet the PFIC test described above, unless the United States shareholder makes a specified
election once the Company ceases to be a PFIC. If the Company is classified as a PFIC for any taxable year during which a United
States shareholder holds the Common Shares, the United States shareholder may be subject to adverse tax consequences regardless
of whether the Company continues to qualify as a PFIC, including ineligibility for any preferred tax rates on capital gains or
on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements. In
certain circumstances, a United States shareholder may alleviate some of the adverse tax consequences attributable to PFIC status
by making either a “qualified electing fund,” (“QEF”) election or a mark-to-market election (if the Common
Shares constitute “marketable” securities under the Code). If the Company determines that it is a PFIC for this year
or any future taxable year, the Company currently expects that it would provide the information necessary for United States shareholders
to make a QEF election.


 


Each United States shareholder should consult
its own tax advisors regarding the PFIC rules and the United States federal income tax consequences of the acquisition, ownership
and disposition of the Common Shares.


 






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The Company’s operations could
be adversely affected by events outside of its control, such as natural disasters, wars or health epidemics


 


The Company may be impacted by business
interruptions resulting from pandemics and public health emergencies, including those related to COVID-19 coronavirus, geopolitical
actions, including war and terrorism or natural disasters including earthquakes, typhoons, floods and fires. An outbreak of infectious
disease, a pandemic or a similar public health threat, such as the recent outbreak of the novel coronavirus known as COVID-19,
or a fear of any of the foregoing, could adversely impact the Company by causing operating, manufacturing supply chain, clinical
trial and project development delays and disruptions, labour shortages, travel and shipping disruption and shutdowns (including
as a result of government regulation and prevention measures). It is unknown whether and how the Company may be affected if such
an epidemic persists for an extended period of time. The Company may incur expenses or delays relating to such events outside of
its control, which could have a material adverse impact on its business, operating results and financial condition.


 


It may be difficult for non-Canadian investors to obtain
and enforce judgments against the Company because of the Company’s Canadian incorporation and presence.


 


The Company is a corporation existing under
the federal laws of Canada. Most of the Company’s directors and officers, and several of the experts, are residents of Canada,
and all or a substantial portion of their assets, and a substantial portion of the Company’s assets, are located outside
the United States. Consequently, it may be difficult for holders of the Company’s securities who reside in the United States
to effect service of process within the United States upon those directors, officers and experts who are not residents of the United
States. It may also be difficult for holders of the Company’s securities who reside in the United States to realize in the
United States upon judgments of courts of the United States predicated upon the Company’s civil liability and the civil liability
of the Company’s directors, officers and experts under the United States federal securities laws. Investors should not assume
that Canadian courts (i) would enforce judgments of United States courts obtained in actions against the Company or such directors,
officers or experts predicated upon the civil liability provisions of the United States federal securities laws or the securities
or “blue sky” laws of any state or jurisdiction of the United States or (ii) would enforce, in original actions,
liabilities against the Company or such directors, officers or experts predicated upon the United States federal securities laws
or any securities or “blue sky” laws of any state or jurisdiction of the United States. In addition, the protections
afforded by Canadian securities laws may not be available to investors in the United States.


 


The Company may lose foreign private
issuer status in the future, which could result in significant additional costs and expenses.


 


The Company may in the future lose foreign
private issuer status if a majority of the Common Shares are held in the United States and the Company fails to meet the additional
requirements necessary to avoid loss of foreign private issuer status, such as if: (i) a majority of the Company’s directors
or executive officers are U.S. citizens or residents; (ii) a majority of the Company’s assets are located in the United
States; or (iii) the Company’s business is administered principally in the United States. The regulatory and compliance
costs to the Company under U.S. securities laws as a U.S. domestic issuer may be significantly more than the costs incurred as
a foreign private issuer.


 


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.


 






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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 year ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.


 


As of March 31, 2020, 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	48,500,376
	Warrants	7,363,764
	Stock options	4,130,000
	Total	59,994,140


 


For a detailed summary of the outstanding
securities convertible into, exercisable or exchangeable for voting or equity securities of Medicenna as at March 31, 2020,
refer to notes 8, 9, and 10 in the audited 2020 annual financial statements of the Company.


 


Additional information relating to the
Company, including the Company’s annual information form in respect of fiscal year 2020, is available under the Company’s
profile on SEDAR at www.sedar.com.


 






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