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February 1, 2023

Q4 2022 Share Price Performance

Healthcare Stocks Begin to Rebound

In this blog post, Bloom Burton’s equity research team summarizes the performance of the Canadian healthcare sector during 4Q-2022 and provides commentary on select stock movements and overall market trends.

Inclusion Criteria

The analysis includes all Canadian publicly listed healthcare companies, defined as companies that are Canadian headquartered and/or listed on Canadian exchanges, with either a market cap (MC) or enterprise value (EV) of C$10M or greater at December 31. 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 or psychedelic medicine companies (unless they are developing cannabis or psychedelic-based products under the traditional drug development regulatory process) or companies that operate long-term care facilities. Based on these criteria we identified 144 companies.

We classify companies as “Tier 1” and “Tier 2” based on their MC – Tier 1 companies are those with MC of >C$100M and Tier 2 are those with MC of <C$100M (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-2022 Performance

As a group, the 144 Canadian healthcare companies included in Bloom Burton’s 4Q-2022 blog universe were up an average 2.3% in the quarter, underperforming the S&P/TSX Composite Index (+5.1%) but outperforming the S&P/TSX Venture Composite Index (-4.2%). This marks the first positive quarterly performance for the group since 3Q-2021, when the sector returned 0.4%.

U.S. biotech stocks, which normally lead Canadian stocks, continued their positive performance from last quarter – the NASDAQ Biotechnology Index (NBI) gained 11.8% in 4Q-2022, outperforming the broader U.S. market (S&P 500 Index was up 7.1%; NASDAQ Composite was down 1.0%). Following the sector’s dismal performance since 3Q-2021, resulting from a general risk-off investment environment and concerns about drug pricing regulation, we appear to be turning a corner. With the passing of The Inflation Reduction Act (and clarity around drug pricing regulations), as well as low valuations and the large balance sheets of big pharma, we may be on the cusp of on M&A fueled rally in the sector.

The NYSE Pharmaceutical Index (DRG), which consists of large, well-capitalized, pharma companies, performed particularly well (up 17.0% vs the NBI’s 11.8% gain) due to the increased attractiveness of cash flowing companies and the defensive nature of the sector.

Among Canadian healthcare companies, larger Tier 1 companies, which are typically better capitalized and less risky, performed better than smaller Tier 2 companies in 4Q-2022 (+6.5% vs +0.8%, respectively).

Among the healthcare subsectors in Bloom Burton’s Canadian tracking universe, the best performing subsectors were diagnostics (10 companies: +32.3%), medical devices (15 companies: +18.1%) and commercial therapeutics (11 companies: +14.2%), which were each boosted by a few high performing names (Medexus: +116.7%; Asep Medical Holdings: +228.2%; Avricore Health: +103.2%; Neovasc: +128.3% and Profound Medical: +159.2%). Other sectors had more of a mixed bag of performances, including digital health (14 companies: +9.9%), medical supplies (5 companies: +3.7%), consumer health (11 companies: -3.2%), therapeutics R&D (60 companies: -5.2%) and healthcare services (18 companies: -12.5%).

Tier 1 Company Performance

Overall, we included 39 companies in our Tier 1 analysis with MC of $100M or greater, which collectively had a 4Q-2022 return of 6.5%.

The number of Tier 1 advancers (21) edged out the number of decliners (17) this quarter.

Notable Tier 1 advancers in the quarter were:

  • Profound Medical Corp. – The stock gained 159.0% during 4Q-2022 coinciding with share purchases by several top 5 insiders/stakeholders.
  • Titan Medical Inc. – The stock appreciated 57.9% in the quarter after the company announced the commencement of a strategic review process.

Notable Tier 1 decliners in the quarter were:

  • Theratechnologies Inc. – The stock was down 57.9% in the quarter, after the company announced an update from its TH1902 phase 1 study (in sortilin-expressing cancers), announcing it was pausing enrolment due to unconvincing efficacy results to date.
  • Milestone Pharmaceuticals Inc. – The stock retreated 55.8% in 4Q-2022, following the reporting of results from the phase 3 RAPID clinical trial of etripamil nasal spray in patients with paroxysmal supraventricular tachycardia.
  • Aurinia Pharmaceuticals Inc. – The stock declined 42.1% in 4Q-2022, after the company reported its 3Q-2022 financial results, lowered Lupkynis net sales guidance for 2022, and provided preliminary guidance for 2023.

Tier 2 Company Performance

Overall, we included 105 companies in our Tier 2 analysis (with MC of less than $100M), which as a group had a 4Q-2022 return of 0.8%.

The number of advancers (37) was lower than the number of decliners (63).

Notable advancers in the quarter include:

  • Asep Medical Holdings Inc. – The stock was up 228.2% in the quarter, although the move was not based on news or fundamentals, to our knowledge, and the stock is very thinly traded (average volume: 241 shares per day).
  • Edesa Biotech Inc. – The stock appreciated 134.5% in 4Q-2022, after the company announced that the FDA granted Fast Track Designation to its acute respiratory distress syndrome candidate, EB05.
  • Neovasc Inc. – The stock climbed 128.3%, after the company provided an enrolment update for its CORSICA-II clinical trial which is being run to support potential U.S. approval of the company’s Reducer implant.
  • Medexus Pharmaceuticals Inc. – The stock rose 116.7% in the quarter following the reporting of 2Q-2023 financial results.

  • Avricore Health Inc. – The stock rose 103.2% in 4Q-2022 following the reporting of 3Q-2022 financial results.
  • Miravo Healthcare – The stock was up 77.6% in the quarter, after the company announced it has entered a definitive agreement to be acquired by Searchlight Pharma.
  • Defence Therapeutics Inc. – The stock rose 73.3% in the quarter, following the completion of a $2.4M debenture financing, the completion of GLP tox studies for Accuvac-pt007 and Accutox, as well an update on its mRNA cancer vaccine.
  • Newtopia Inc. – The stock climbed 72.7% in 4Q-2022 following the announcement and closing of a $1.4M non-brokered non-convertible debentures offering.
  • Irwin Naturals Inc. – The stock rose 68.4% in the quarter, following several clinic expansion announcements and reported 3Q-2022 financial results.
  • DIAGNOS Inc. – The stock was up 64.7% in the quarter, after it closed a $0.9M private placement.
  • IntelGenx Technologies Corp. – The stock climbed 63.6% in the quarter following the receipt of an FDA GDUFA date for its partnered buprenorphine buccal film.
  • Izotropic Corp. – The stock appreciated 59.1% in 4Q-2022, after the company outlined expected upcoming milestones for IzoView, a breast CT imaging platform.
  • Eupraxia Pharmaceuticals Inc. – The stock rose 58.7% in the quarter, after the company provided an update on its phase 2 study in knee osteoarthritis, initiated a phase 2 study in eosinophilic esophagitis and reported 3Q-2022 financial results.
  • BioNxt Inc. – The stock climbed 51.3% following XPhyto’s completion of rotigotine transdermal patch optimization and the reporting of preclinical data for Parkinson’s disease.
  • IBEX Technologies Inc. – The stock was up 41.6% in 4Q-2022 following the reporting of 4Q-2022 and 1Q-2023 financial results.

Notable decliners in the quarter include:

  • Neptune Wellness Solutions Inc. – The stock was down 78.9% in the quarter, after the company announced a $6.0M offering and concurrent private placement, settled a shareholder class action litigation, divested its cannabis assets and reported 2Q-2023 financial results.
  • Field Trip Health and Wellness Ltd. – The stock declined 63.9% in 4Q-2022, following the announced relaunch of its psychedelic app, the publication of a letter to shareholders and the reporting of 2Q-2023 financial results.
  • Akumin Inc. – The stock declined 59.8% in the quarter, after the company reported 3Q-2022 financial results.
  • IMV Inc. – The stock was down 57.4% in 4Q-2022, after the company provided an update on the VITALIZE trial in DLBCL and announced a US$9M registered direct offering.
  • Carebook Technologies Inc. – The stock fell 57.1% in the quarter, after the company amended and restated its loan agreements with SAYKL Investments Ltd. and UIL Limited.
  • Acerus Pharmaceuticals Corp. – The stock declined 56.2% in the quarter, following the initiation of a strategic review, the amendment to a promissory note and the reporting of 3Q-2022 financial results.
  • Cardiol Therapeutics Inc. – The stock was down 51.5% in 4Q-2022, as the company reported preclinical data and initiated its phase 2 trial in recurrent pericarditis.
  • Skylight Health Group Inc. – The stock lost 51.5% in the quarter, after the company reported 3Q-2022 financial results.
  • Revive Therapeutics Ltd. – The stock lost 51.1% in 4Q-2022, following an update on the company’s psilocybin study for methamphetamine use disorder and an update on a phase 3 clinical trial for bucillamine in COVID-19.
  • Avivagen Inc. – The stock fell by 46.7% in 4Q-2022, after the company announced a $1M private placement.
  • LifeSpeak Inc. – The stock declined 46.0% in the quarter, after the company reported 3Q-2022 financial results.
  • Small Pharma Inc. – The stock was down 45.5% in the quarter, after the company reported 1Q-2023 financial results, received approval for a first-in-human phase 1 clinical trial with SPL028 and announced the completion of a phase 2 trial for SPL026.
  • Clearmind Medicine Inc. – The stock declined 44.4% in the quarter, after the company announced a US$7.5M public offering.
  • MCI Onehealth Technologies Inc. – The stock was down 43.7% in 4Q-2022, following the reporting of 3Q-2022 financial results and announcements of a clinic consolidation and additional services.
  • Medicenna Therapeutics Corp. – The stock was down 43.4%, after the company presented updated clinical data from its phase 1/2 ABILITY study of MDNA11.
  • Awakn Life Sciences Corp. – The stock was down 40.0% in the quarter, after the company signed a third licensing partnership agreement in North America, closed a private placement and reported 3Q-2022 financial results.

Click Here to View the Appendix

Disclaimer:
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.