In this blog post, Bloom Burton equity research team summarizes the performance of the Canadian healthcare sector during 1Q-2021 and provides commentary on select stock movements and overall market trends.
Our analysis includes all Canadian publicly listed healthcare companies, defined as companies that are Canadian headquartered and/or listed on Canadian exchanges, with an enterprise value (EV) of C$10 MM or greater. Our definition of healthcare includes companies operating in the following areas: therapeutic R&D; commercial therapeutics; healthcare services; digital health; medical devices; medical supplies; diagnostics; and consumer health/veterinary. We do not include medical cannabis producers (unless they are developing cannabis-based products under the traditional drug development regulatory process) or companies that operate long-term care facilities. Based on these criteria we identified 128 companies.
We classify companies as “Tier 1” and “Tier 2” based on their EV – Tier 1 companies are those with EV of >C$100 MM and Tier 2 are those with EV of <C$100 MM (for a complete listing of companies included in Tiers 1 and 2 of Bloom Burton’s “blog universe”, please see Appendix 1 at the end of the blog).
The 128 Canadian healthcare companies included in Bloom Burton’s 1Q-2021 blog were collectively up 32.7% in the quarter, outperforming the S&P/TSX Composite Index (+7.3%) and the S&P/TSX Venture Composite Index (+8.9%). The broader market rally since 1Q-2020 has largely been driven by governmental fiscal stimulus programs in response to the pandemic and progress on the development and rollout of COVID-19 vaccines. Collectively, Canadian healthcare stocks performed especially well this quarter due to a number of stock specific events (discussed below), and as they played catch-up to U.S. healthcare stocks which had risen 50% from March 2020 lows.
Canadian healthcare stocks typically perform in line with healthcare stocks south of the border, although their performance can sometimes lag behind. This was the case in 1Q-2021, where the combined performance of Canadian healthcare stocks was stronger than that of their U.S. counterparts, which pulled back following their COVID-19-driven large gains in 2020. In 1Q-2021, the NASDAQ Biotechnology Index (NBI) was down -0.8% and the NYSE Pharmaceutical Index (DRG) was up +0.6%, underperforming the broader U.S. markets (S&P 500 Index up +5.8%; NASDAQ Composite up +2.8%). The weak performance of U.S. healthcare stocks was due to increased scrutiny of pharmaceutical M&A by the U.S. Federal Trade Commission, regulatory and drug pricing uncertainty, and the risk of rising interest rates (negative for growth sectors like biotech).
Among Canadian healthcare companies, smaller Tier 2 companies performed better than larger Tier 1 companies in 1Q-2021 (+44.8% vs +18.5% respectively).
Among the healthcare subsectors in Bloom Burton’s Canadian tracking universe, the best performing subsector was diagnostics (6 companies: +132.6%), driven by the particularly strong performance of a few individual stocks (Ventripoint Diagnostics Ltd. +383.3%; BioMark Diagnostics Inc. +180.0%; Telo Genomics Corp. +125.9%). The worst performing subsector was digital health (10 companies: +9.1%), with fewer of the component companies having large positive swings this quarter. However, all subsectors had a positive return in the quarter (consumer health: 10 companies, +78.9%; commercial therapeutics: 15 companies, +50.3%; medical devices: 18 companies, +41.4%; healthcare services: 15 companies, +18.3%; medical supplies: 5 companies, +14.1%; and therapeutics R&D: 49 companies, +13.6%).
1Q-2021 Healthcare Stock Performance By Subsector
Tier 1 Company Performance
Overall, we included 59 companies in our Tier 1 analysis with EV of $100 MM or greater, which collectively had a 1Q-2021 return of +18.5%.
The number of Tier 1 advancers (35) was higher than the number of decliners (23) this quarter.
Notable Tier 1 advancers in the quarter were:
ESSA Pharma Inc. – The stock rose +143.5% during 1Q-2021 after the company announced a clinical collaboration with Janssen and presented initial phase 1 data for its prostate cancer drug, EPI-7386.
Therma Bright Inc. – The stock appreciated +141.9% in the quarter after the company reported accuracy data for its COVID-19 rapid saliva antigen test.
Senova Corp. – The stock was up +119.4% in 1Q-2021 after the company presented additional safety and efficacy data from its ongoing phase 1/2 cell pouch clinical trial for type 1 diabetes.
Miravo Healthcare – The stock rose 83.5% after the company announced the Canadian launch of NeoVisc+ and NeoVisc ONE for the treatment of knee pain and hosted an investor webcast.
Helix BioPharma Corp. – The stock was up +70.0% in 1Q-2021 after the company announced the closing of a $3 MM private placement.
CRH Medical Corp. – The stock was up +66.8% in 1Q-2021 after the company announced an agreement to be acquired by Well Health for US$292.7 MM.
1Q-2021 Performance of Tier 1 Companies
Tier 2 Company Performance
Overall, we included 69 companies in our Tier 2 analysis (with EV of less than $100 MM), which as a group had a 1Q-2021 return of +44.8%.
The number of advancers (41) exceeded the number of decliners (26).
Notable advancers in the quarter include:
Sunshine Biopharma Inc. – The stock rose +664.3% in the quarter (from a small base) after the company announced that it received a notice of allowance for a new patent extending protection for its anti-cancer drug, Adva-27a, in Canada until 2033, and signed a license agreement with the University of Georgia for COVID-19 compounds.
Ventripoint Diagnostics Ltd. – The stock was up +383.3% in 1Q-2021 (from a small base) after the company announced a series of options grants and announced a distribution partnership in China for its echocardiography diagnostics.
BioMark Diagnostics Inc. – The stock was up +180.0% in 1Q-2021 (from a small base) after the company granted stock options and announced that its sponsored research collaboration with The Metabolomics Innovation Centre was successful in receiving funding from the Novel Technology Application in Cancer Prevention and Early Detection Spark Grants competition.
Aeterna Zentaris Inc. – The stock was up +166.7% in 1Q-2021 after the company announced a development program to develop an oral prophylactic bacterial vaccine against COVID-19 through an option grant with Julis-Maximilians University Wuerzburg.
Avricore Health Inc. – The stock was up +147.4% in the quarter after the company announced that it was placing its real-time reporting HealthTab systems at Whole Health Pharmacy Partners locations.
Telo Genomics Corp. – The stock rose 125.9% in 1Q-2021 after the company announced it was bringing on a former Abbott and Siemens veteran to lead development of its industry partnership strategy.
Vitality Products Inc. – The stock was up +121.4% in the quarter after the company upsized its $1 MM private placement.
ProMIS Neurosciences Inc. – The stock rose +110.0% after the company completed a US$7 MM financing.
Aurora Spine Corp. – The stock was up +105.0% in 1Q-2021 after the company announced listing of its shares on to the PTCQB Exchange.
Notable decliners in the quarter include:
Vaxil Bio Ltd. – The stock was down -58.3% in 1Q-2021 after the company reported results from a preclinical challenge experiment for its COVID-19 vaccine, which did not show vaccine protection in animals.
1Q-2021 Performance of Tier 2 Companies
Information included in this blog post has been sourced from publicly available sources. No representation or warranty, express or implied, is made with respect to the accuracy, correctness or completeness of the information contained herein. The commentary in this blog post represents the views and opinions of Bloom Burton only and should not be relied upon as investment advice. Bloom Burton accepts no liability whatsoever for any direct or consequential loss arising from any use or reliance on the information contained herein. The blog is published on a quarterly basis.