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January 29, 2021

Q4 2020 Share Price Performance

Canadian Healthcare Stocks Outperform

In this blog post, the Bloom Burton equity research team summarizes the performance of the Canadian healthcare sector during 4Q-2020 and provides commentary on select stock movements and overall market trends. 

Inclusion Criteria 

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. 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 114 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).

4Q-2020 Performance

The 114 Canadian healthcare companies included in Bloom Burton’s 4Q-2020 blog were collectively up 23.1% in the quarter, outperforming the S&P/TSX Composite Index (+8.1%) and in line with the S&P/TSX Venture Composite Index (+23.8%). The broader market rally the last three quarters was driven by governmental fiscal stimulus programs in response to the pandemic, progress on the development of Covid-19 treatments/ vaccines, buzz around digital health and use of psychedelics in the treatment of psychological disorders, and the outcome of the U.S. presidential election. Collectively, Canadian healthcare stocks performed especially well this quarter due to several companies experiencing large, event-driven positive swings (Mind Medicine Inc. +394.0%; Hemostemix Inc. +337.5%; Vaxil Bio Inc. +140.0%; Sernova Corp. +139.3%; Revive Therapeutics Ltd. +138.5%; Titan Medical Inc. +130.9%). 

  • Canadian healthcare stocks typically perform in line with healthcare stocks south of the border, however, in 4Q-2020, the combined performance of Canadian healthcare stocks was stronger than that of their U.S. counterparts, mainly due to the strong performance of certain individual stocks, and their smaller size and higher volatility. The NASDAQ Biotechnology Index (NBI) was up +11.8% and the NYSE Pharmaceutical Index (DRG) was up +4.4%, with the NBI performing generally in line with the broader U.S. markets (S&P 500 Index up +11.7%; NASDAQ Composite up +15.4%). 

  • Among Canadian healthcare companies, larger Tier 1 companies performed better than smaller Tier 2 companies in 4Q-2020 (+27.2% vs +20.0% respectively). 

  • Among the healthcare subsectors in Bloom Burton’s Canadian tracking universe, the best performing subsector was medical devices (18 companies: +41.2%), driven by the particularly strong performance of a few individual stocks (Sernova Corp. +139.3%; Titan Medical Inc. +130.9%). The worst performing subsector was diagnostics (6 companies: +1.4%), with none of the component companies having large positive swings this quarter. However, all subsectors had a positive return in the quarter (therapeutic R&D: 42 companies, +36.2%; medical supplies: 4 companies, +27.6%; digital health: 6 companies, +26.5%; healthcare services: 17 companies, +17.9%; consumer health: 8 companies, +14.3%; and commercial therapeutics: 13 companies, +14.3%).

* 3Q-2020 values were based on an analysis of 103 companies that fit the inclusion criteria (38 Tier 1 and 65 Tier 2)

4Q-2020 Healthcare Stock Performance By Subsector:

Tier 1 Company Performance

  • Overall, we included 49 companies in our Tier 1 analysis with EV of $100 MM or greater, which collectively had a 4Q-2020 return of +27.2%. 

  • The number of Tier 1 advancers (33) was higher than the number of decliners (15) this quarter. 

Notable Tier 1 advancers in the quarter were:

  • Mind Medicine Inc. – The stock rose +394.0% during 4Q-2020 after the company announced a $50 MM bought deal, the completion of a phase 1 study of LSD and 3Q-2020 results. 

  • Sernova Corp. – The stock appreciated +139.3% in the quarter after the company provided a clinical update from its phase 1/2 trial for cell pouch for type 1 diabetes and presented at an investor conference. 

  • Revive Therapeutics Ltd. – The stock was up +138.5% in 4Q-2020 after the company announced a collaboration with PharmaTher for the development of psilocybin in cancer. 

  • Titan Medical Inc. – The stock rose +130.9% during 4Q-2020 after the company reported 3Q-2020 financial results and provided a business update. 

  • Opsens Inc. – The stock was up +90.0% in 4Q-2020 after the company provided a year-end update on the business and presented at multiple investor conferences.

  • Greenbrook Tms Inc. – The stock was up +75.2% in 4Q-2020 after the company  announced a pilot program that offers Spravato (esketamine) at select Greenbrook treatment centers, closed a US$30 MM credit facility, and announced an application to list on NASDAQ.

  • ESSA Pharma Inc. – The stock was up +72.9% in 4Q-2020 after the company provided a corporate update and 4Q-2020 financial results. 

Notable Tier 1 decliners in the quarter were:

  • Liminal BioSciences Inc. – The stock was down -61.9% during 4Q-2020 after the company announced a $30 MM private placement, an extension to the PDUFA date for Ryplazim and 3Q-2020 financial results. 

4Q-2020 Performance of Tier 1 Companies:

Tier 2 Company Performance

  • Overall, we included 65 companies in our Tier 2 analysis (with EV of less than $100 MM), which as a group had a 4Q-2020 return of +30.0%. 

  • The number of advancers (39) exceed the number of decliners (24). 

Notable advancers in the quarter include:

  • Hemostemix Inc.  – The stock rose +337.5% in the quarter (from a small base) after the company announced a $1.3 MM private placement.

  • Vaxil Bio Inc. – The stock was up +140.0% in 4Q-2020 after the company provided an update on its agreement with USAMRIID and oral experiments for its immunotherapy for Covid-19. 

  • Jack Nathan Medical Corp. – The stock was up +92.4% in 4Q-2020 since it began trading on the TSX on October 6. 

  • DIAGNOS Inc. – The stock was up +78.8% in 4Q-2020 after the company announced that Mexico’s largest optical retailer will use its AI technology to detect early stage blindness. 

Notable decliners in the quarter include:

  • Neovasc Inc. – The stock was down -57.0% in 4Q-2020 after the company announced that the FDA’s Advisory Panel voted 17 to 1 against on the issue of a reasonable assurance of effectiveness for Neovasc Reducer Medical Device. 

  • Edesa Biotech Inc.  – The stock finished 4Q-2020 down -47.8% after it announced it has received approval to initiate a Covid-19 study in the U.S. for EB05. 

4Q-2020 Performance of Tier 2 Companies:

Appendix 1

Disclosures:
This Research Report is issued and approved for distribution by Bloom Burton Securities Inc. (“Bloom Burton”), a member of the Investment Industry Regulatory Organization of Canada.

This Research Report is provided for informational purposes only and is not an offer to sell or the solicitation of an offer to buy any of the securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this Research Report may not be suitable for all types of investors. This Research Report does not take into account the investment objectives, financial situation or specific needs of any particular investor. Recipients of this Research Report should not rely solely on the investment recommendations contained herein and should contact their own professional advisors to determine if an investment is suitable for them.

The information contained in this Research Report is prepared from sources believed to be reliable but Bloom Burton makes no representations or warranties, express or implied, with respect to the accuracy, correctness or completeness of such information. All opinions and estimates contained in this Research Report constitute Bloom Burton’s judgment as of the date of this Research Report and are subject to change without notice.  Past performance is not necessarily indicative of future results and no representation or warranty is made regarding future performance of the securities mentioned in this Research Report. Bloom Burton accepts no liability whatsoever for any direct or consequential loss arising from any use or reliance on this Research Report or the information contained herein. This Research Report may not be reproduced, distributed or published, in whole or in part, without the express permission of Bloom Burton.

Company Specific Disclosures

1. Bloom Burton & Co. or its affiliates have provided investment banking services for Xenon Pharmaceuticals Inc., HLS Therapeutics Inc., Greenbrook TMS Inc., and Mimi’s Rock Corp. during the 12 months preceding the date of issuance of the research report or recommendation.

2. Bloom Burton has managed an offering of Antibe Therapeutics Inc., ESSA Pharma Inc., Greenbrook TMS Inc., Medicenna Therapeutics Corp., Trillium Therapeutics Inc., Appili Therapeutics Inc., MindBeacon Holdings Inc., Field Trip Health Inc., Newtopia Inc., and Titan Medical Inc. during the 12 preceding the date of issuance of the research report or recommendation.

3. Bloom Burton & Co. and its affiliates collectively beneficially own more than 1% of the outstanding common shares of Nuvo Pharmaceuticals Inc., Mimi’s Rock Corp., Newtopia Inc., Appili Therapeutics Inc., Avivagen Inc. and NeuPath Health Inc.

4. The research analyst responsible for the report or recommendation or any individuals directly involved in the preparation of the report hold or are short the securities of Aurinia Pharmaceuticals, Bellus Health, Essa Pharma, Greenbrook TMS, Hamilton Thorne, HLS Therapeutics, Medicenna Therapeutics, Newtopia, Repare Therapeutics, Trillium Therapeutics, Xenon Pharmaceuticals and Zymeworks directly or through derivatives.

5. The research analyst responsible for this report or recommendation may hold securities discussed in the report indirectly through Bloom Burton Canadian Healthcare Fund, LP which is indirectly affiliated with Bloom Burton & Co.

6. The research analyst responsible for the report or recommendation has visited facilities operated by Aurinia Pharmaceuticals Inc., Correvio Pharma Corp., CRH Medical Corp., ESSA Pharma Inc., Greenbrook TMS Inc., HLS Therapeutics Inc., Knight Therapeutics Inc. and Trillium Therapeutics Inc. preceding the date of issuance of the research report or recommendation. No remuneration was received from, nor expenses paid by the companies in respect of the visits.