SciMar Ltd. is a biotech company unlike any other.
For starters, it is based in Dauphin, which is hardly a bioscience hub.
It’s also somewhat of a family business; Dr. Wayne Lautt leads the scientific work of the company while his son, Mick Lautt, is CEO and son-in-law, John West, is chief development officer.
Even while it has to undertake much scientific development, with Phase 2 clinical trials to be organized — Dr. Lautt discovered an unidentified hormone, hepatalin, in 1996 at the University of Manitoba, which SciMar believes will fundamentally change the way Type 2 diabetes is understood — it has been working on the front lines of dealing with diabetes and obesity by developing what it calls a “wellness transformation network” that effectively generates thousands of followers.
It even produces a popular podcast called Inside the Breakthrough, which has 500,000 listeners and is about to launch its third season.
To add to its trailblazing narrative, the company has become the first Manitoba company (and one of only a handful of Canadian companies) to use a U.S. Security Exchange Commission (SEC) market exemption, called REGA+ (Regulation A Tier 2 offering), which will allow just about anyone to buy common shares in the company directly from its website.
The offering went live this week. The goal is to raise US$55 million through the process that allows people to invest as little as US$100 and as much as US$10,000 via a smartphone or laptop from SciMar website (scimar.ca/invest-now/).
It has taken SciMar about 18 months to get all the approvals from the SEC and the Manitoba Securities Commission as well as provincial securities commissions across the country (with the exception of Quebec and the territories), and to build the fintech platform to make the online investment system work.
“It has been a huge amount of work,” said CEO Mick Lautt.
Marshall Ring, CEO of Manitoba Technology Accelerator, said, “I’m no scientist so I can’t comment on the data, but getting this investment process done is an accomplishment, in and of itself. It shows they are committed to it, they are professional about it and they have the ability to execute on this plan.”
Whereas typical private investment exemptions require that investors need an income of $250,000 and $1 million in assets, investors eligible to buy SciMar shares in this offering only need to show an income of $75,000 and assets of $450,000
“We’ve had people get in touch with us, who have been fans of the podcast or who have heard about what we’re doing through the wellness transformation network, asking to invest and we have not been able to take their money,” Lautt said.
SciMar’s approach and its mission statement is to “solve a problem, not sell a pill.” Unlike many other biotech companies that are in the process of developing a drug, it has been active in the community.
Kim Kline, CEO of Bioscience Association of Manitoba, said, “What is really unique about them is that they really are trying to engage with community and with different partners. That’s what makes the company a little different.”
Among other things, it recently received modest federal government financing to run a pilot program with Youville Community Health Centre for a kitchen skills program.
The company was formed in 2009 and since 2018 SciMar has raised just under $20 million in three rounds of fundraising, the most recent in 2022 when the company was valued at $340 million.
The current offering, at $5.50 per share for about 10 per cent of the company, values the company at more than $500 million.
Notwithstanding its success to date, access to capital is one of the biggest challenges for biotech companies anywhere, especially in Manitoba.
But it might say something that although the company has been active for 14 years it was named the Emerging Bioscience Company of the Year in 2023 by the bioscience association.
“Bioscience companies have a long runway,” Kline said, “That’s just the way it is. SciMar has been so dedicated for so many years now and they continue to think outside the box. This new model for raising capital is breaking ground for other Manitoba companies. Even though they’ve had offers to do development work and trials outside Manitoba, the Lautts have chosen to stay here and build capacity in Manitoba. It really is a great Manitoba story.”
With only 13 full-time employees and about 30 consultants, it is obviously not a large company but it is potentially very valuable.
As Lautt points out, “This is an impact investment. We are trying to make a major change in how we deal with diabetes, metabolic syndrome and obesity. The return could be spectacular. It is a four-billion-person market we are going after.”
The proceeds from the offering — which gives the company 12 months to raise the US$55 million — will primarily go towards the acceleration of its clinical trial program.
Multi-hundred person trials are designed for both a Type 2 diabetes diagnostic test called NuPa Test — that SciMar believes has the potential to predict diabetes 10 years earlier than current medical tests — and for its therapeutic pharmaceutical, NuPa Renew. It is based on a formulation shown to restore hepatalin production in 100 per cent of pre-clinical test subjects and has shown promising indications it can slowly change risk indicators of diabetes in human test subjects.
The SEC approvals just came in and this past week has been used to test the online investment process.
Lautt said the company will start to promote the offering starting next week by using all of its channels including social media, its podcast and the extensive grassroots networks it has established through its wellness transformation network.
The REGA+ platform requires that the share price remain constant throughout the offering.
The offering does not, however, guarantee liquidity. That means shareholders will not have any way to sell their shares, at least not immediately.
The company has the option of establishing a secondary market, but that is not likely to occur until or unless it launches a second REGA+ offering or it launches an initial public offering.
While the company currently does not generate revenue, Lautt said that will likely change in the next 12 months after it relaunches its nutritional supplement NuPa Daily, which it took off the market during the pandemic because of supply-chain disruption.
It is in the process of changing the formulation to allow it to make more enhanced claims on the label.
Source: Winnipeg Free Press