The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Q2 2011 in Canadian Healthcare – Commercial Events were the Focus

There is a tendency to focus on clinical and regulatory events when looking at the biotech sector. However, the list of sector events in Equicom’s Q2_2011 Canadian_Healthcare_Review (which I co-author with Ross Marshall, Senior VP at Equicom) shows a greater number of commercial events, including mergers, acquisitions, in-licensing, partnering, R&D agreements and product launches. In the initial weeks of Q3, commercial events have continued to be the focus.

From a financing perspective, it was very similar to Q1. Gross proceeds of equity financings completed in Q2 totalled $157.3 million, with 5 companies completing financings over $10 million: $46.01 million – Leisureworld Senior Care; $34.49 million – MethylGene; $17.40 million – Medicago; US$13.07 million – YM BioSciences; and $12.60 million – Resverlogix.

The financings for public development stage companies in the first six months of 2010 and 2011 were almost the same at $187.9 M and $200.9 M, respectively. There were 16 financings under $10 million with total proceeds of $33.7 million in Q2, versus 25 financings for $37.8 million in Q1.

We often group companies according to their product focus – therapeutics, drugs & diagnostics, services, and others. The companies could also be grouped according to their revenues and profitability. The following assessment was based on a review of the most recent financial statements from each company and occasional assumptions by the authors on performance expected in 2011.

  • Revenues – 50 public companies, or about one third of the public Canadian healthcare group, are anticipated to have revenues of $5 million or more in 2011.
  • Profitability – 25 of these 50 companies are profitable based on positive net income or, in the case of some REITs, on positive AFFO (adjusted funds from operations). Additional companies have positive EBITDA or cash flow from operations and are close to profitability.
  • Dividends and distributions – 10 companies in the sector provide dividends or distributions, important attributes to some investors.

There is something in Canadian healthcare for all types of investors.

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