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A Hamilton startup hoping to transform how people are treated for cancer by injecting them with tiny nuclear smartbombs got stuck in no man’s land Friday on its first day as a public company.

Shares of Fusion Pharmaceuticals Inc. closed at US$17 on their first day of trading on the Nasdaq, the same price at which the stock was issued, after peaking earlier in the day at US$19. That’s in sharp contrast to many biotech companies in recent weeks that have spiked on their first day of trading, including Montreal’s Repare Therapeutics, which rose more than 50 per cent in its debut June 19.

Fusion’s offering had met with strong demand. After initially pricing the offering at US$14 to US$16 a share, the company increased the number of shares offered by 50 per cent – to 12.5 million – and increased the price. The offering was 10 times oversubscribed, Fusion said.

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The cool response in Friday’s trading after a hot run for biotech IPOs this quarter could be due to several factors. Friday was a down day on the markets over all and the Nasdaq Biotechnology Index fell by more than 2 per cent. In addition, Fusion is led by a first-time biotech CEO and its first human trials have been stalled by the pandemic. Fusion also hasn’t signed any development partnership deals with pharma giants – as Repare did weeks before it went public – which often whets investor appetite.

“We are of course excited about our successful public offering which provided capital to support business growth,” Fusion chief executive officer John Valliant told The Globe and Mail. “However we aren’t motivated by the stock price. We are focused on executing on our business goals to deliver much-needed cancer therapies to patients. If we do that well, it will reflect in Fusion’s valuation over time.”

The IPO was the second largest in history for a Canadian biotechnology startup after the Repare issue, raising US$212-million in gross proceeds (and up to US$244-million if the underwriters exercise their option to buy stock). It is also a milestone achievement for the Hamilton region, representing a key effort to commercialize some of the breakthrough science created at McMaster University.

Fusion was spun out three years ago from McMaster’s Centre for Probe Development and Commercialization (CPDC), established in 2008 and backed by the university, the federal Networks of Centres of Excellence and the Ontario Institute for Cancer Research to discover, develop and distribute radiopharmaceuticals. Mr. Valliant founded the centre and led the spinout along with other key CPDC staff. The centre and Fusion have benefited from key infrastructure on campus, including a cyclotron that produces isotopes, and a nuclear reactor.

Companies like Fusion “don’t just materialize in a garage” like Silicon Valley technology companies, said Damian Lamb, Fusion’s chairman and managing partner of Toronto venture capital firm Genesys Capital, an early backer.

“There aren’t a couple of coders working in their basement coming up with the next app,” he said. “This is real science, it’s expensive to do. To build globally competitive companies, that science needs to be funded.”

Fusion, like other emerging cancer treatment developers, is looking to bring “precision medicine” to oncology by providing treatments that are more targeted and cause fewer side effects than conventional treatments.

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Mr. Valliant describes its treatment, known as targeted alpha therapy, as a “smartbomb for cancer cells,” combining antibodies that target and slip inside cancer cells with a payload of radioactive “alpha” isotope particles that kill the cells from within. “It’s like shooting off a shotgun in a cancer cell,” Mr. Valliant said. “It doesn’t travel very far but does massive damage inside the cell.”

Research on mice has shown the therapy shrinks tumours from a range of cancers.

Researchers can also switch out the radioactive component for an imaging agent so doctors can see on an image scan whether the payload is getting to the right places in the body. That makes it easy to know before treatment if the drug will be effective and what, if any, side effects there will be.

The company, with 40 employees split between its headquarters and facilities in Boston, was backed by investors from the United States, Ireland, Sweden and Canada, including the Canada Pension Plan Investment Board, which invested US$20-million this year for a stake now valued at more than double that amount. It’s the pension giant’s first direct investment in a Canadian biotech firm as it increases its commitment globally to early-stage biotechnology companies, including a recent investment in Seattle’s Sana Biotechnology Inc.

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