The Cross-Border Biotech Blog

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

Positive Share Price Performance in Q1 2013 for the Canadian Healthcare Sector (Part 1)

Wayne Schnarr - seriousIn order to assess share price performance among the Canadian public healthcare companies, I have selected a portfolio of 118 companies for the 2013 assessment. The portfolio has been split into three parts according to the closing share price on December 31, 2012: $1.00 or more (38 companies); $0.10 to $0.99 (53 companies); and less than $0.10 (27 companies).

In this blog, I am going to comment on the Q1 performance of the first group of companies with share prices of $1.00 or more to start 2013 (a subsequent blog will comment on the other two groups of companies in the sector).

• Advancers outnumbered decliners by 24 to 14

• Average and median share price increases were 12% and 3%, respectively

• Six companies had share price increases of 40% or more (3 companies in each of the Therapeutics and Devices & Diagnostics groups)

• Response Biomedical (227%): the share price increase was probably triggered by two new distribution agreements, the first on January 3 with Laboratory Supply Company, Inc. and the second on January 24 with Fisher HealthCare, part of Thermo Fisher Scientific

• Resverlogix (71%): the expectation of data from the Phase 2b ASSURE clinical trial was probably the key trigger for this share price

• TearLab (71%): although listed on the TSX, this company is virtually unknown in Canada and almost all trading occurs on NASDAQ; share price movement in Q1 2013 appears to be a continuation of a product sales-based bounce from a bottom in Q4 2011

• NeoVasc (63%): continued share price momentum also appears to be a key for this stock, which bounced off a September 2011 bottom and, starting September 2011, increasing sales appear to be moving it off a share price plateau

• Cangene (57%): the base for the Q1 movement may have been good financial results reported in December 2012, followed by approval of two products, VARIZIG and BAT, by the U.S. FDA in Q1 2013

• Cipher Pharmaceuticals (41%): Cipher had the largest share price increase in this group in 2012 at 291%; the key event in Q1 2013 was probably the release of 2012 financial results, which showed net income of $2.5 million ($0.10 per share) and a cash balance of $15.8 million at December 31, 2012

• One company had a share price decline of more than 40%

• Trimel Pharmaceuticals (-59%): the decline mostly occurred after the announcement on March 20 of a proposed equity financing

[The opinions expressed herein are the author’s own and are not to be construed as investment advice. 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 and may buy, sell or hold such securities at any time. Past share price performance may not be an indicator of future share price performance. This blog and its contents do 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.]

Monday Deal Review: April 8, 2013

Welcome to your Monday Biotech Deal Review for April 8, 2013! After a hiatus last week due to the holiday, this week we have a lot of activity to cover. Valeant, in particular has been quite busy, being forced to up their bid for Obagi to $24.00 in response to interest from Germany’s Merz Pharma Group. In addition, Valeant’s latest bid is already 70 percent more than Obagi’s average 20-day stock price before the takeover fight began, the highest premium for a U.S. drug-industry deal in four years, according to data compiled by Bloomberg. Further, the Royal Bank fo Canada has said Valeant could be willing to pay as much as $28 a share to top any new offer from Merz, pushing the premium to as high as 99 percent. Valeant has also begun an unrelated note exchange, and has separately engaged a generic manufacturer with a license agreement after Mylan’s regulatory approval of their own anti-viral acyclovir-containing Zovirax® ointment equivalent.

In other news, Stem Cell Therepuetics has signed their merger agreement with Trillium, based on negotiations with Trillium’s debentureholders. There is much more to cover, so follow the break to get up to date on the latest and biggest biotech stories.

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Monday Deal Review: March 25, 2013

Welcome to your Monday Biotech Deal Review for March 25, 2013! This week’s big news was Valeant’s ongoing strategy of using acquisitions to bolster their product portfolio rather than R&D.  Valeant is paying US$19.75 per share of Obagi, which is a skin-care company that is thought to be a leader in the physician dispensed market. Following last year’s acquisition of skin-care maker Medicis, this acquisition is hoped to save $40 million a year for Valeant in cost synergies with tspectralhe new company. Analysts have said that Valeant is paying a little higher than the 2-2.5 times multiple of sales that Valeant has shown a preference to pay, although the cost synergies may be a likely explanation of that.

In other news, IMRIS and Cynapsus have closed private placements, while Trimel has continued their plan of a private placement in conjunction with their major shareholder Eugene Melnyk. Hit the break to catch up on all of the week’s major biotech news!

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Monday Deal Review: March 18, 2013

Welcome to your Monday Biotech Deal Review for March 18, 2013! Another busy week on the investment front saw a number of financings close as well as details provided for ongoing private placements. On the M&A front, Ergoresearch and Victhom have entered into an arrangement whereby Ergoresearch will acquire Victhom. See the details on these transactions and the rest of the week’s major stories by clicking through!

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Monday Deal Review: March 11, 2013

Welcome to your Monday Biotech Deal Review for March 11, 2013! The past week saw significant activity in the investment space, so click through to review a busy week’s worth of biotech news!

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Monday Deal Review: March 4, 2013

Welcome to your Monday Biotech Deal Review for March 4, 2013! The highlights from the past week include Oncolytics’ closing of their$32 million public offering, an update on Paladin’s ongoing share purchase program, and Atrium’s joint venture agreement with Fosum.  Get the details on these and the rest of the week’s major biotech news by clicking through.

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Monday Deal Review: February 25, 2013

Welcome to your Monday Biotech Deal Review for February 25, 2013!

This week saw significant activity on the investment front. Stem Cell Therepeutics and Sirona have each indicated an intention to raise funds through private placements, while Oncolytics Biotech is aggressively hoping to raise $32 million through a public offering. Sernova, Helix BioPharma and Amforfix have each closed their own private placements this week as well. On the M&A front, Cangene has closed their acquisition of the hemophilia compound IB1001, acquiring it through Inspiration Biopharmaceutical’s bankruptcy.

There’s more great stories this week, so click onward to see the whole week’s Deal Review.

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2012 Canadian Healthcare Financings – strong but very selective

Wayne Schnarr - seriousLarge profitable public companies had no problem completing financings, especially those in the seniors housing and long-term care field (the gross proceeds for this category are listed below).

  • Catamaran – $541.8 M (equity)
  • Chartwell Seniors Housing REIT – $339.3 M (equity and convertible debt)
  • Extendicare – $126.5 M (convertible debt)
  • HealthLease Properties REIT – $110.0 M (IPO)
  • Leisureworld Senior Care – $56.4 M (equity)
  • Medical Facilities – $41.8 M (convertible debt)
  • Patheon – $30.0 M (equity)

Some development stage and not yet profitable public companies were able to complete financings over $10 million, a level which allows most of these companies to execute growth strategies and not strictly be in survival mode. The total for these 13 financings was $334.3 million.

  • YM Biosciences – $80.5 M (equity)
  • Novadaq Technologies – $40.3 M (equity)
  • Neptune Bioresources – $34.1 M (equity)
  • Centric Health – $27.50 (convertible debt)
  • Methylgene – $26.1 M (equity)
  • Resverlogix – $25.0 M (debt)
  • Oncolytics Biotech – $21.3 M (equity)
  • Bioniche Life Sciences – $20.0 M (debt)
  • BELLUS Health – $17.3 M (includes plan of arrangement proceeds)
  • Aeterna Zentaris – $16.5 M (equity)
  • Trimel Pharmaceuticals – $13.3 M (equity)
  • TearLab – $12.4 M (equity)
  • Merus Labs – $10.0 M (equity)

A total of $165.2 million was raised through financings less than $10 million each. Some of these financings would have provided only survival funds while some companies with low cash needs may have been able to grow.

The total equity and convertible debt funding raised by development stage companies in 2012 was just slightly lower than in the previous three years, but was almost 60% lower than the 2005-2007 average.

[The data in this post was compiled for the upcoming 2012 Canadian Healthcare Annual Review, co-authored by myself and Ross Marshall, Senior Vice President, The Equicom Group Inc., a wholly-owned subsidiary of TMX Group Inc.]

2012 Canadian Healthcare Share Price Performance – volatile with opportunities

Wayne Schnarr - seriousA group of 96 Canadian healthcare companies, which was assessed for 2012 share price performance is extremely diverse, with market caps ranging from about $1 million to $10 billion, but most less than $100 million.

The 2012 share price performance of the group showed:

  • Median and average share price changes of -11% and +7%, respectively; and
  • Decliners outnumbered gainers by 54 to 42.

In addition, the sector continued to show high volatility, with 46% (44 of 96) of the companies having share price changes of 40% or more. The 19 companies with share price increases of 40% or more are listed below by sector.

Therapeutics:

  • Cipher Pharmaceuticals (291%)
  • Tekmira Pharmaceuticals (223%)
  • iCo Therapeutics (222%)
  • BioSyent (122%)
  • Acasti (87%)
  • YM BioSciences (70%)
  • Lorus Therapeutics (59%)
  • Transition Therapeutics (54%)
  • Microbix Biosystems (46%)

Devices & Diagnostics:

  • TearLab (280%)
  • biOasis Technologies (161%)
  • Novadaq Technologies (76%)
  • Medifocus (50%)
  • Amorfix Life Sciences (41%)

Services Sub-group:

  • Lifebank (191%; acquired)
  • Patheon (161%)
  • Audiotech Healthcare (79%; taken private)
  • Catamaran (63%)

Other Companies Sub-group:

  • Prometic Life Sciences (104%)

 [The data in this post was compiled for the upcoming 2012 Canadian Healthcare Annual Review, co-authored by myself and Ross Marshall, Senior Vice President, The Equicom Group Inc., a wholly-owned subsidiary of TMX Group Inc.]

Monday Deal Review: February 18, 2013

Welcome to your Monday Biotech Deal Review for February 18, 2013! This week saw Gilead finally close its acquisition of YM Biosciences, with YM’s shares now de-listed from trading on the NYSE Amex and the TSX. Shareholders were given $2.65 for each of their common shares during the plan of arrangement.  On the investment front, Innovotech, RepliCel, Lignol, Biosenta and Biosign each had announcements relating to the close or amendment of existing private placements.  Click on to see the full details.

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Friday Science Review: February 15, 2013

John HolyoakeThe Dick lab at the Campbell Family Cancer Research Institute has a prestigious history of unraveling the complexities of cancer and their recent publication in Science adds yet more detail.

Analysis of tumours has revealed that there is immense heterogeneity between patients and also between cancer cells within the same tumour. This heterogeneity is evident at the genetic level, but also in the morphology and behaviours of individual clonal cell lines.

In the research reported in Science, the Dick lab tracked the in vivo propagation of xenotransplanted patient-derived colorectal cancer cells at the resolution of individual clones and demonstrated that cancer cells with the same genetic lineage demonstrate significantly different functional states and notably included clonal cells that were dormant compared to their peers. These populations of dormant cells may be the source of disease recurrence after treatment and therefore determining the mechanism through which the cells enter and sustain their dormant state may open up a new therapeutic strategy to fully eradicate the disease and prevent recurrence.

Monday Deal Review: February 11, 2013

Welcome to your Monday Biotech Deal Review for February 11, 2013! This week saw YM Biosciences obtain the required court approval necessary before their plan of arrangement acquisition by Gilead could proceed. The transaction is essentially free to proceed by the effective date of the agreement. Cangene has acquired a hemophilia compound from the remaining assets of Inspiration Biopharmaceuticals, which is undergoing bankruptcy proceedings. Cangene paid $5.9 million for the compound. Also in the news, Stem Cell Therepuetics will undergo a plan of arrangement with Trillium Therepeutics, where the two companies will effectively be merged and continue to operate under Stem Cell’s name.

Of course, there was considerably more activity this week, so click through to get the full story!

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Monday Deal Review: February 4, 2013

Welcome to your Monday Biotech Deal Review for February 4, 2013! This week saw significant activity in the sector generally  On the M&A side, Valeant continued their ongoing acquisition strategy, buying the Russian Natur Product International, a primarily OTC private pharma company. Gilead’s acquisition of YM Biosciences took one step closer to completion as YM shareholders approved the statorily mandated vote to approve the plan of arrangement that will facilitate the arrangement. Court approval is now required as one of the final steps. Microbix was also involved in the week’s M&A activity, having sold its water for injections business to Irvine Scientific. The there was also significant investment activity this week, including Biosenta announcing a new private placement.

See detail on these and the the rest of the week’s major biotech stories by clicking through!

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Monday Deal Review: January 28, 2013

Welcome to your Monday Biotech Deal Review for January 28, 2013!  The past week was relatively quiet, but highlights include Sernova’s $2 million private placement and Helix’s closing of their $8.5 million sale of the Rivex division.  Click below to get the whole week’s stories!

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Monday Deal Review: January 21, 2013

Welcome to your Monday Biotech Deal Review for January 21, 2013!  Medicago made news last week with a $15 million loan agreement with an unnamed pharmaceutical company. The funds are being used for Medicago’s plant-based VLP vaccine pipeline. As the agreement provides for potential licensing options with that partner, we will be watching closely to see any further announcements.

YM Biosciences, as it continues with its plan of arrangement transaction with Gilead, has received the endorsement of two proxy firms who have recommended to shareholders that they vote in favour of the transaction. This will likely allow YM Biosciences to obtain the shareholder approval required by statute to be able to continue with the arrangement.

Paladin labs, meanwhile, has closed their acquisition of a controlling stake in Ativa Pharma of Mexicom, and has also in-licensed a new biologic from Apeiron Biologics. Also, last week we saw Theratechnologies conclude their recent issues with the NASDAQ exchange by voluntarily delisting. They remain on the TSX, however.

As always, click through to see more on these deals as well as the rest of last week’s major biotech activity.

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Monday Deal Review: January 14, 2013

Welcome to your Monday Biotech Deal Review for January 14, 2013! This week’s big news is that Cytochroma, a privately held company, will be acquired by OPKO Health.  Also on the M&A side, Asia-Biochem completed their acquisition of China’s Tieling Wanshunda Starch Company Ltd for over CDN$44 million. There was not much activity in the investment space, however ProMetric has been able to close $10 million in financing from Shenzhen Hepalink Pharmaceutical Co.,  as we’ve covered previously.  Find out more about these transactions, as well as the rest of this week’s major Canadian Biotech news, by clicking through! Read more of this post

Friday Science Review: January 8, 2013

John HolyoakeUbiquitin-specific proteases (USPs) are implicated in many diseases and yet only a few weak inhibitors of their function have been available. A report in Science from a collaboration led by the Siddhu lab at the Terrence Donnelly Center for Cellular and Biomolecular Research, University of Toronto describes the development of a molecular strategy to inhibit these important enzymes.

The conjugation of ubiquitin to proteins is one of the most common post-translational modifications of proteins. Labeling of these proteins by ubiquitin often functions to target the protein for destruction by the proteasome or to alter the proteins’ sub-cellular localization and activities. The labeling process is itself complex involving the sequential action of enzymes (E1, E2 and E3) and can result in the addition of a single ubiquitin or multiple ubiquitins either as a chain (polyubiquitination) or at multiple sites on the target protein (multiubiquitination). Removal of ubiquitin can rescue a protein from destruction or restore its activity and is carried out by deubiquitination enzymes, of which the ubiquitin-specific proteases (USPs) are the largest class. Members of this class are implicated in multiple disease processes, including cancer and neurodegeneration, making them an attractive area of study, but one that has been hampered by the lack of high affinity inhibitors.

USPs share a conserved ubiquitin binding site structure, albeit with low affinity for ubiquitin, therefore the research led by the Siddhu lab used the strategy of phage-display-based screening of ubiquitin mutants that had increased binding affinity for specific USPs. Using this approach several specific USP inhibiting mutants were created and the researchers were able to build upon this success by expanding the concept to inhibit other deubiquitinating enzyme classes and components of the ubiquitin labelling system – the E2 and E3 enzymes. In vivo activity of this system means the door is open to carry out detailed dissections of the ubiquitin system, along with using the system to validate drug targets, to create screening assays and ultimately to guide the generation of ubiquitin-system target specific inhibitors.

Monday Deal Review: January 7, 2013

Happy New Year and welcome to your Monday Biotech Deal Review for January 7, 2013! While biotech gets back to business for 2013 after the holidays, the last 2 weeks have not seen a flurry of activity.  Nonetheless, on the M&A side, IBEX Technologies acquired Bio-Research Products, while Biosign and Patheon completed private financings of their own.  Further, Warnex has begun trading under the NEX and Stellar Pharmaceuiticals has completed their planned name change to Tribute Pharmaceuitcals.  Get more details on these stories as well as last week’s other major biotech news by clicking through.   Read more of this post

Monday Deal Review: December 24, 2012

Welcome to your Monday Biotech Deal Review for December 24, 2012.  While the past week was relatively slow as everyone prepared for holiday breaks, there was nonetheless a series of option grants, commercial agreements and even the closing of a major private placement and conversion of a convertible debenture.  Click onward to see more, and of course, we wish you a wonderful holiday and a happy new year!

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Monday Deal Review: December 17, 2012

Welcome to your Monday Biotech Deal Review for December 17, 2012.  This week saw the completion of a number of previously announced acquisitions, as well as the announcement of new ones. The latter group includes Gilead’s acquisition of YM Biosciences and Helix’s sale of Rivex to Pharmascience. See the details on these major transactions, as well as the past week’s other biotech news, by clicking through.

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Monday Deal Review: December 10, 2012

Welcome to your Monday Biotech Deal Review for December 10, 2012.  This week saw significant activity in the commercial and licensing agreements arena, as well as a couple M&Eh transactions. Of particular note is Valeant’s commercial resolution of their ongoing issues with Gladerma SA stemming from Valeant’s recent purchase of Medicis.  On the M&A side of things, Biosign has purchased their exclusive distributor Bioanalytics Inc. hot on the heels of closing their recent private placement, which closed the previous week. See the rest of a relatively busy past week’s major biotech deals by clicking through!
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Investing in Junior Mining –Consider Biotech Stocks Also: Part 23 of Valuation and Other Biotech Mysteries

[Ed. This is the twenty-third part in Wayne's series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series.
As with all commentary on this blog, these comments do not consider the investment objectives, financial situation or particular needs of any particular person, and investors should obtain professional advice based on their own individual circumstances before making any investment decision.]

Many Canadian small cap investors have probably done most of their investing in resource companies. Although monoclonal antibodies, gold, copper and oil have substantially different chemical properties, discovery activities, manufacturing processes and commercial uses, the investment strategies used are more similar than one might expect because the commercialization processes are similarly long, expensive and high risk.
Read on for similarities, differences and strategies…

Monday Deal Review: December 3, 2012

Welcome to your Monday Biotech Deal Review for December 3, 2012.  An unusually high number of private placements characterized the past week’s Canadian biotech activity, with Biosign Technologies having closed one private placement and following up with another. Cynapsus has filed a short form prospectus, following last week’s filing by Allon Therepeutics, and Patheon has indicated they intend to make a cash tender offer for outstanding senior notes.  See more detail on these and last week’s other major biotech stories by clicking through!
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Friday Science Review: November 30, 2012

John HolyoakeAutism spectrum disorder (ASD) encompasses a range of developmental disorders that effect multiple basic functions including language and socialization. Specific causes of ASD have not been determined, though multiple risk factors have been identified, including genetic components and prenatal complications. Increased neuronal connectivity as a result of dysregulated and overactive synaptic protein expression is, however, proposed to be part of the molecular mechanism.

mTOR has previously been implicated in the observed overactive protein expression, but events downstream of mTOR have not been investigated. It is known that mTOR phosphorylates eukaryotic translation initiation factor 4E-binding proteins (4E-BPs), which are important for suppressing initiation of the translation of mRNA’s and therefore researchers at McGill University and the Université de Montréal investigated the effects of knocking out 4E-BP2 and of overexpressing eukaryotic translation initiation factor 4E (eIF4E). Their paper in Nature shows that both of these perturbations lead to overexpression of neuroligins, a postsynaptic protein class implicated in ASDs. Furthermore, the 4E-BP2 KO mice exhibited autism-like behaviours and had an altered excitatory-inhibitory synaptic balance. Returning neuroligin 1 levels to their normal range restored the synaptic balance, as did pharmacologic inhibition of eIF4E, opening up new avenues to explore for therapeutic interventions in ASDs.

Some Questions When Considering Investing in Canadian Healthcare Stocks: Part 22 of Valuation and Other Biotech Mysteries

[Ed. This is the twenty-second part in Wayne's series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series.]

Note: as with all commentary on this blog, these comments do not consider the investment objectives, financial situation or particular needs of any particular person, and investors should obtain professional advice based on their own individual circumstances before making any investment decision.
If you and your financial advisor(s) are discussing investing in Canadian healthcare stocks, here are some points for you to consider. Read more of this post

Capital Markets – The Biotech Analyst: Part 21 of Valuation and Other Biotech Mysteries

[Ed. This is the twenty-first part in Wayne's series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series.]

In the 20 years since I started my first stint as a biotech stock analyst, both the biotech and financial industries have seen major changes. I was the third new biotech analyst hired in 1992 by a Canadian investment dealer, bringing the total to 5 or 6 at that time. During the biotech boom there were over 30 analysts in Canada but that number has declined back to the 1992 levels. There were only about a dozen public Canadian biotech companies in 1992 whereas there are now about 100 developing therapeutics, diagnostics and medical devices. Here are answers to three common questions about biotech stock analysts: Read more of this post

Monday Deal Review: November 26, 2012

Welcome to your Monday Biotech Deal Review for November 26, 2012. This past week saw Valeant continue their aggressive stock repurchase program. Valeant plans to repurchase up to $1.5 billion worth of its own stock, senior notes or debt. Further, we saw Paladin expand its potential sales reach with the purchase of a controlling stake in Mexico-based Ativa Pharma.  Get the full breakdown of these and many more of the past week’s major biotech stories.   
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Monday Deal Review: November 19, 2012

Welcome to your Monday Biotech Deal Review for November 19, 2012. This past week saw the FTC give Valeant formal approval to acquire Medicis. A busy week on the investment front saw Kane Biotech, Lignol and MethylGene announce their intentions to raise capital. We also saw Abattis executing their previously announced licensing agreement with Vertical Design Systems for the use of Vertical’s plants, plant materials and extracts production technology. For more details on these sotries as well as many more, click through below!  
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Monday Deal Review: November 12, 2012

Welcome to your Monday Biotech Deal Review for November 12, 2012.  This week was a rather slow week as most biotech companies reported their third quarter financial results.  However, Atrium bucked the trend and has continued with its share repurchase program.  Click through to learn more.
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Friday Science Review: November 9, 2012

Histones are essential components of chromosomes, whose function is to both package DNA and to regulate the expression of genes. For the latter function, histones are subject to a range of post-translational modifications that can activate or silence transcription of the local DNA. The modification status of histones is determined by the activities of a range of enzymes that act to add or remove the modifications and the coordination of the different activities is essential to regulate the transcription or silencing of genes.

The recent PNAS paper from the Brand lab at the Ottawa Hospital Research Institute’s regenerative medicine program adds to our knowledge of this epigenetic process by determining the mechanism by which two proteins, H3K9 methyltransferase G9a/KMT1C and the H3K4 demethylase Jarid1a/KDM5A, work together to achieve developmentally regulated gene expression at the β-globin locus. Opening the window on these complex mechanisms will be key to developing new therapies for a wide range of conditions ah, cancer, autoimmune diseases and psychiatry.

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