Q3 2015 Share Price Performance (Part 2)

Tier 2 companies lost all previous 2015 gains in Q3

In this blog, I am going to comment on the Q3 and 9-month performance of the Tier 2 group of 50 companies with share prices of between $0.10 and $0.99 to start 2015. IMRIS, taken private after a Chapter 11 filing, and Premier Diagnostic Health Services, which no longer has a healthcare focus, were excluded from this analysis.

Q3 2015 Tier 2 Performance

• Decliners significantly outnumbered advancers by 35 to 15
• Average and median share price changes were -14% and -14%, respectively
• Only one company had a share price increase of 40% or more
  • ProMIS Neurosciences (formerly Amorfix; +125%) – survival financing triggered a bounce from a 3 cent share price low

• Eleven companies had share price declines of more than 40%
  • Ergoresearch (-40%) – slow decline on low trading volume/value and no substantial news
  • Tribute Pharmaceuticals (-42%) – no negative news but was dragged down in the last 15 days of Q3 along with all similar companies after the Turing Pharmaceutical drug price debacle
  • Miraculins (-44%) – slow decline on low trading volume/value and no substantial news
  • Axxess Pharma (-45%) – slow decline on low trading volume/value and no substantial news
  • Hamilton Thorne (-45%) – continues to be slightly profitable but slow share price decline on low trading volume/value
  • Medifocus (-48 %) – Q2 share price bounce was almost wiped out in Q3
  • Response Biomedical (-50%) – slow decline on sporadic and low trading volume/value and no substantial news
  • Acerus Pharmaceuticals (formerly Trimel; -54%) – declined all quarter from a previous price plateau
  • Patient Home Monitoring (-59%) – decline from the prior quarter continued in Q3
  • Aeterna Zentaris (-66%) – decline from the prior quarters continued in Q3
  • Vivione Biotech (-90%) – decline was caused by financial viability concerns

9-Month 2015 Tier 2 Performance

• Decliners more than doubled advancers by 34 to 16

Average and median share price changes were +2% and -17%, respectively

• Eight companies had share price increases of 40% or more (+51% to +489%) and seventeen companies had share price decreases of 40% or more (-42% to -91%)

The best performer in this group over the first 9 months of 2015 was Theratechnologies (+489%)

2014/2015 Sector Overview

Q1 has been the most positive quarter in both 2014 and 2015 for both the Tier 1 and 2 groups of companies. Q2 was a more balanced mix of advancers and decliners in both years. Whereas there was sleepy balanced performance in Q3 2014, both Tier 1 and 2 groups of companies performed badly in Q3 2015.

Medical Marijuana Group

Eight medical marijuana companies listed on the TSX Venture Exchange are being monitored for share price performance in 2015 (tickers APH, BCC, BED, MT, OGI, TPI [now TBQBF on OTCBB), TWD; MJN added after Q1 report). Many of these companies have been public for less than 12 months, have low trading volumes, are in the early stages of commercialization and are not yet profitable.

• There were 8 decliners and no advancers in Q3, with only Canadian Bioceutical having a slightly positive share price performance in the first 9 months of 2015
• Average and median share price changes in Q3 were -24% and -23%, respectively

Looking Ahead

• The Dow Jones Industrial Average (DJIA) peaked on May 19, slowly declined through August 17, collapsed until August 25 when it bounced off this bottom. The broad stock market trend at this time appears to be volatility. Junior biotech and resource investors have always lived with volatility – up or down 5% a day is normal. This is not normal for big caps and major indices, which scares retail investors and further reduces their risk appetite.
• The U.S. pharma and biotech trends have been negative. The NASDAQ Biotech Index peaked on July 20 and then slowly declined along with major stock markets. The big drop of 20% came between September 17^th and 29^th, triggered by the intensely negative response to the news on Turing Pharmaceuticals drug price increase for Daraprim. This index has since recovered about one-third of that big drop.
• In this type of market, there are a variety of investment approaches, including:
  • Avoid risk – cash and government bonds;
  • Low risk – large caps in the least volatile sectors; and
  • Bottom fishing – if you are considering bottom-fishing junior biotechs (a high risk group), two approaches could be looking for stocks which might have recovered some momentum or for stocks with near-term events.

 [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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