July 21, 2014

Q2 2014 Share Price Performance (Part 2)

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Momentum more selective in Q2 but still overall positive share price performance in H1 2014 for the Canadian Healthcare Sector (Part 2)

In this blog, I am going to comment on the Q2 performance of the group of 60 companies with share prices of between $0.10 and $0.99 to start 2014.

Q2 Results

  • Decliners more than doubled the number of advancers by 41 to 19 – almost an exact reversal of the Q1 results
  • Average and median share price changes were -9% and -13%, respectively
  • Three companies had share price increases of 40% or more, versus the 18 companies in Q1
    • Medicure Inc. (79%) – one of the repeaters from Q1; arranged for Knight Therapeutics Inc. (GUD) to provide advisory services
    • Adherex (66%) – announced positive results from 2 sodium thiosulfate Phase 3 studies looking at reduction in hearing loss in children receiving cis-platin chemotherapy
    • Tribute Pharmaceuticals (60%) – listed on TSX Venture Exchange and announced terms of a $26 million financing
  • Seven companies had a share price decline of more than 40%, versus the 2 companies in Q1
    • iCo Therapeutics (-86%) – announced inconclusive data from Phase 2 trial evaluating the efficacy and safety of iCo-007 in patients with Diabetic Macular Edema
    • Pivotal Therapeutics (-53%) – engaged U.S. marketing and branding specialist for VASCAZEN
    • Med BioGene (-50%) – waiting for potential milestone payments from Precision Therapeutics’ commercialization of GeneFx Lung
    • GLG LifeTech (-43%) – announced financial results and GRAS letters of no objection from FDA for several stevia extracts
    • Vigil Health Systems (-43%) – reported record revenue, bookings and earnings; probably hurt by infrequent trading
    • Miraculins Inc. (-42%) – one of the repeaters from Q1; closed a private placement and updated licensing activity for diabetes test in China and India
    • Cardiogenics (-40%) – announced $1.3 million private placement to European investors

 

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H1 Summary

    • There were an equal number of advancers and decliners in H1
    • Average share price increase was 26%
    • Seventeen companies had share price increases of 40% or more, nine of which were in the Therapeutics – Development sector
    • Nine companies had a share price decline of more than 40%, three of which were in the Therapeutics – Development sector

 

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Conclusions

Overall, Q2 2014 share price performance reflects a general but not complete loss of momentum in the sector. Among the senior group of companies, investors were still chasing the Therapeutics – Commercial companies, looking for acquisition candidates including those with ‘tax inversion’ potential. Interestingly, it was a company outside this group, QLT, which announced just before the quarter ended that it was being acquired by Auxilium Pharmaceuticals. In the junior group of companies, it was the Therapeutics – Development companies which were still surging, with 9 of 21 companies having share price increases greater than 40% in H1.

[The author and his immediate family members may have long or short positions in the shares of some companies mentioned in or assessed during the preparation of this blog. Past share price performance may not be an indicator of future share price performance. This blog does not consider the investment objectives, financial situation or particular needs of any particular person. Investors should obtain professional advice based on their own individual circumstances before making an investment decision.]

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