Diversity seems to be alive and well in the types of companies seeking to go public.

So far this year, the market has been receptive to Canadian companies in the healthy food business (Freshii); in the expensive outerwear business (Canada Goose); in the gold exploration and development business (Superior); in the investment business (Fairfax Africa) and in the oil and gas exploration business (Persta Resources which listed in Hong Kong.) But the market hasn’t been receptive to issuers in the oil services business, with planned IPO offerings by Source Energy and STEP Energy being postponed.

Over the next few weeks, we will know whether investors, both here and in the U.S. decide to support a Vancouver-based biopharmaceutical company. The last Canadian biopharmaceutical IPO by a Canadian company onto a Canadian exchange was Imris Inc. which raised $40 million in a 2007 offering.

Monday, Zymeworks Inc. filed documents with Canadian and U.S. regulatory authorities for an initial public offering. Plans call for the shares to be listed on the NYSE and on the TSX. According to the registration statement filed with the Securities & Exchange Commission (the full document runs to 302 pages; three less than the Canadian prospectus) the company plans to raise a maximum of US$75 million.

And it would seem the bulk of the shares will be sold to U.S. investors. For starters, the company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act, or the JOBS Act, that was signed by President Obama in 2012. That status brings certain benefits including exemptions from various requirements that are normally applicable to public companies in the United States.

A couple of other reasons are at work: the shares are set to be denominated in US$ and the underwriters are either U.S. firms or the U.S. firms of Canadian investment dealers. Three U.S. firms, Citigroup, Barclays and Wells Fargo Securities, carry the title of joint book-running managers, while Canaccord Genuity is a lead manager and Cormark Securities (USA) Ltd. is a co-manager.

Zymeworks defines itself as “a clinical-stage biopharmaceutical company dedicated to the discovery, development and commercialization of next-generation multifunctional biotherapeutics, initially focused on the treatment of cancer.”

The company, which has been around since 2003, operates under the trademark, Building Better Biologics. And it generates revenue: $11 million in the year ended Dec. 31 2016 — up from $9.66 million the previous year and $1.67 million the previous years.

Over those three years it has operated with larger losses. But it has been able to attract considerable support from outside shareholders, the largest of which is Eli Lily & Co., which has a 17.5 per cent stake. Montreal based CTI Life Sciences Fund is the next largest with a 14.6 per cent stake, while investment funds owned by Ian Ihanatowycz (the founder of Acuity Investment Management which was later sold to AGF Management) is listed as the third largest shareholder with an 8.5 per cent stake. U.S. based Celgene Alpine Investment Co. with a 6.1 per cent stake, is the only other shareholder with a stake of more than five per cent. As a group, the executive officers and directors have a 14.7 per cent interest.

None of the shareholders are planning to sell any of their holdings in the IPO. Instead all the proceeds will flow to the company, which plans to use part of the proceeds from the offering to fund the clinical development expenses for two of its “product candidates” — ZW25 and ZW33. The former is in “ongoing adaptive Phase 1 clinical trial,” while the latter is set for “planned Phase 1 clinical trial.”

Financial Post
bcritchley@postmedia.com