Speaker: Raymond King, Senior Manager, TSX/TSX Venture Exchange Canada's biotechnology and cleantech communities have a history of developing world-leading technologies—but for these industries to grow, they must have access to new capital to fund research and development that will allow Canada to maintain its position as a world leader Part of the MaRS Best Practices Series - More information http://www.marsdd.com/events/details.html?uuid=8211fe27-3ce5-4a7d-b264-4c367fcd6b7f

1. 1
MaRS Best Practices
Series
Special
Valuation
Series
Nov. 12th, 2010
MaRS Best Practices
Special Valuation Series
Friday Nov 12th @ Noon
Raymond King,
Senior Manager
Toronto Stock Exchange
Wayne Schnarr,
Analyst, Equicom
Toronto Stock Exchange

2. 2
A Capital Opportunity for Life Science Companies
Listing on Toronto Stock Exchange and TSX Venture Exchange
Raymond D. King, MBA
Senior Manager, Global Diversified Industrials
Listings Business Development

3. 3
Who is TMX Group?
Toronto Stock Exchange and TSX Venture Exchange
Life Science Sector
Going Public
Outline

4. 4
7thlargest
exchange
group
By domestic market cap1
1st in North America
2ndglobally
By number of issuers1
TMX Group - Global Leader in Equities
6thlargest
exchange
group
By equity capital raised2
1Issuers on TSX and TSXV (WFE, June 2010)
2(WFE and Capital IQ, Dec 2009)

5. 5
North American Equity Stock Market Continuum
OTC - Pink
Sheets
OTCBB
NASDAQ
NYSE
• Minimal/No listing
standards
• Senior listing standards
• Disclosure rules
• Junior listing
standards
CNSX

6. 6
2,177 companies
20 graduates in First Half 2010
20 graduates in 2009
45 graduates in 2008
1,488 companies
TSX Venture Exchange
• Access to capital for earlier stage companies
or smaller financings
• Total market cap of $38 Billion & average
market cap of $17.4MM
• Cost effective stepping stone for international
companies looking to list on a quality North
American market
• Exchange mandate to mentor management of
newly public companies
• Streamlined graduation to TSX when senior
market requirements are met
• 103 year history
Toronto Stock Exchange
• Senior market for well established
businesses and management teams with
experience in public markets
• Total market cap of $1.8 Trillion & average
market cap of $1.2B
• 30% of TSX issuers >$500M are interlisted
on a US exchange
• Access to larger, more international
institutional investors and greater analyst
coverage
• Globally visible specialized indices
• 157 year history
Unique Equity Market Structure

7. 7
TMX Group Serves Companies at all Stages of
Growth
Market Capitalization
Toronto Stock Exchange and TSX Venture Exchange
Unique feeder system
471
graduates
+ 85 M&A*
*From January 1, 2000 – June 30, 2010
7
Toronto Stock Exchange issuer base: 1,488 issuers, ~$1.8 trillion market cap
TSX Venture Exchange issuer base (excludes NEX): 2,177 issuers, ~$37.7 billion market cap
As at June 30, 2010
514
Issuers
498
Issuers
476
Issuers
2016
Issuers 142
19
Issuers

8. 8
International Investment Community Trades on
Toronto Stock Exchange
25 International Brokers including:
Barclays Capital
Citigroup
CSFB
Deutsche Bank
Goldman Sachs
HSBC
JP Morgan
Macquarie Capital Markets
Merrill Lynch
Morgan Stanley
Raymond James
Thomas Weisel
State Street
UBS
80 Canadian Brokers including:
BMO Nesbitt Burns
Canaccord Genuity
CIBC World Markets
GMP Securities
RBC DS
Scotia Capital Markets
TD Securities
National Bank Financial
~35% of daily trading originates from
International brokers
Volume
CAGR 14%
Transactions
CAGR 37%
Toronto Stock Exchange Volume
and Transactions (2004-2009)

9. 9
Who is TMX Group?
Toronto Stock Exchange and TSX Venture Exchange
Life Science Sector
Going Public
Outline

10. 10
TMX Group’s Equity Exchanges Support a
Diverse Issuer Base
Number of Issuers by Sector
Includes issuers on Toronto Stock Exchange and TSX Venture Exchange (100% = 3665)
As at June 30 2010

11. 11
Why Companies Consider TSX and TSX Venture
Exchange
Unique Public Market
for small to mid cap
companies
• Access to Capital
• Liquidity
• Visibility

12. 12
Access to Capital: 2009 was a record year for
financing on TMX Group Equity Exchanges
*NOTE: TSX Venture Exchange commenced operations on November 29 1999
Toronto Stock Exchange and TSX Venture Exchange
Total Financings (C$Billions) 1999 – 2010 August

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TSX and TSX Venture Exchange have shown
consistent growth in liquidity
Billions of Shares
Toronto Stock Exchange
Volume of Shares Traded
Billions of Shares
TSX Venture Exchange
Volume of Shares Traded

14. 14
TMX Group Listing can Provide Analyst Visibility
872
TSX Companies get
Analyst Coverage
Source: Capital IQ, December 31 2009
4
Average Number of
Analysts Covering
TSX Cos.
259
TSXV Companies get
Analyst Coverage

15. 15
Who is TMX Group?
Toronto Stock Exchange and TSX Venture Exchange
Life Science Sector
Going Public
Outline

16. 16
Life Sciences Companies By The Numbers
136
Life Sciences Cos.
$11B
Market Cap
$367M
Raised Through 84
Financings
4B
Shares Traded
Through 2.4Million
Transactions
Average Number of
Analysts Covering
Life Sciences Cos:3
7
New Life Sciences
Listings
YTD Dec 31 2009
Analyst Coverage Source: Capital IQ

17. 17
Who is TMX Group?
Toronto Stock Exchange and TSX Venture Exchange
Life Science Sector
Going Public
Outline

18. 18
Benefits of Going Public

19. 19
Methods for Going Public on Toronto Stock
Exchange or TSX Venture Exchange

20. 20
• IPO market window closed
• Listing certainty needed – removes
underwriting risk
• Financing amount below a
minimum IPO floor
• Lower up-front costs
• A private placement can be
escrowed until reverse merger
completed
When to Pursue an IPO vs. a CPC™ Transaction
CPC™IPO
• Demand for primary distribution
• Scale and liquidity criteria met
• Limited transaction timeline
constraints
• Sufficient capital to fund up-front
costs

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Capital Pool Company™ (CPC) Program has a
Strong Track Record
Since inception in 1987:
• Over 2095 CPCs have been created
• 80% have completed their QT – over
1660 companies
• 332 Graduates now trade on TSX
• 96 of the grads were CPCs
As at June 30 2010

22. 2222
CPC Acquires
Business (QT)
Public Financing and
CPC Trades
Seed
24 Months Maximum
Capital Pool Company: Process
Aftermarket and
Growth

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Seed Financing
• seed financing of the company by 3-5 Founders/Directors
CPC IPO
• a prospectus offering to create a corporate vehicle with public
distribution
Qualifying Transaction (QT)
• a target business is identified, disclosed and acquired
Aftermarket and Growth
• company trades and executes its business plan
Capital Pool Company: Milestones

24. 2424
CPC Acquires
Business (QT)
Public Financing
and CPC TradesSeed
24 Months Maximum
Qualifying Transaction

25. 2525
Considerations for a Qualifying Transaction:
• Significant growth opportunity & reason to be public
• Strong & coachable management
• Capital needs: $5+ Million
• Close to or at commercialization
• Meets minimum listing and audit requirements
• Stock options and acquisition currency
• Strong market appetite
• 12 to 18 month cash requirements (can be financed)
Selecting a QT Candidate

26. 2626
Consider this…
Success Factors:
• Lots of cash on closing
• Market interest and
understanding
• Deliver in short term post
closing
• Reasonable valuation – not
always maximum valuation
Potential Pitfalls:
• Listing requirements shortfalls
• Insufficient cash/working
capital on closing
• Valuation versus escrow
regime (TSXV Policy 5.4)
• PIFs - timing and impact on
circular

27. 2727
CPC Acquires
Business (QT)
Public Financing
and CPC TradesSeed
24 Months Maximum
Aftermarket and Growth
Aftermarket
and Growth

28. 2828
Consider this…
Success Factors:
• Press release clarity / quality
• Broker management and
support
• Timely disclosure against
published milestones (good
and bad)
Potential Pitfalls:
• Orphan status
• Mistrust of management’s
willingness to communicate
• Market fluctuations

29. 29
Listing Requirements – Life Sciences
TSX Venture Exchange Toronto Stock
Exchange
Tier 1 Tier 2
Net Tangible Assets,
Revenue or Financing
$5 million NTA OR $5 million
revenue
$750,000 NTA OR $500,000
revenue OR $2 million arm’s
length financing
Adequate Working Capital Adequate for 18 months plus
$200,000 unallocated funds
Adequate for 12 months plus
$100,000 unallocated funds
Funds to cover all R&D and
capital expenditures for 2 years
Cash in Treasury Minimum $12 million raised via
prospectus offering
History History of operations or validation of business Minimum 2 year history of R&D
activities
Distribution • Public float of 1 million shares
• 250 board lot shareholders
• 20% of issued and outstanding
shares in hands of public
shareholders
• Public float of 500,000 shares
• 200 board lot shareholders
• 20% of issued and outstanding
shares in hands of public
shareholders
• 1 million free trading public
shares
• $4 million held by public
• 300 public board lot
shareholders
Sponsorship Generally required

30. 30
Disclaimer
This document is for information purposes only and is not an invitation to purchase securities listed on Toronto Stock Exchange and/or TSX Venture Exchange or Natural Gas Exchange.
TMX Group Inc. and its affiliates do not endorse or recommend any securities referenced in this document. Please seek professional advice to evaluate specific securities.
While the information herein is collected and compiled with care, neither TMX Group Inc. nor any of its affiliated companies represents, warrants or guarantees the accuracy or the
completeness of the information. You agree not to rely on the information contained herein for any trading, business or financial purpose.
This information is provided with the express condition, to which by making use thereof you expressly consent, that no liability shall be incurred by TMX Group Inc. and/or any of its
affiliates as a result of any errors or inaccuracies herein or any use or reliance upon this information.
© 2010 TMX Group Inc.
Diversified Industrials
Raymond King
416 947-4675
raymond.king@tsx.com