Canada’s Cashed up Tech Stocks; Part Three

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Canada’s Cashed up Tech Stocks, PART THREE. Companies Listed in the TSX, Technology, Cleantech and Life Sciences Sectors with a Market Cap Less Than $200 million, more than $10 million.

1. Labopharm (TSX:DDS) 225%
Market Cap as of Friday, May 20th: $22.1 Million
Cash and Short Term Investments: $49.63 Million

Workforce reductions, staggering losses, regulatory delays, a strategic review of its business, and a stock that has fallen from nearly $8 in 2007 to a low of $.32 on May 17th. To the casual observer Labopharm is a company on the wane, to put it mildly. These facts, however, do not take away from the fact that if Labopharm, which focuses on controlled-release technologies for drugs, can find a way to stem the tide of losses it has gobs of money in reserve. But Labopharm shareholders know that’s a big “if”. In the most recent quarter, Q1 2011, Labopharm lost $12.36-million.

2. Craig Wireless (TSX:CWG) 157%
Market Cap as of Friday, May 20th: $17.1 Million
Cash and Short Term Investments: $26.79 Million

The balance sheet of Craig Wireless got a shot in the arm a little more than a year ago after the sale of the company’s Canadian spectrum assets to Inukshuk Wireless Partnership, a joint venture of Bell Canada and Rogers Communications, for $80 million. After the taxes were paid and the company issued a hefty one time dividend Craig had cash reserves of just over $30 million, which fell to current levels after the company lost $3.45-million in fiscal Q2 2011.

3. Counsel Corp (TSX:CXS) 83.5%
Market Cap as of Friday, May 20th: $74.5 Million
Cash and Short Term Investments: $62.23 Million

4. Bennett Environmental (TSX:BEV) 78.3%
Market Cap as of Friday, May 20th: $92.7 million
Cash and Short Term Investments: $64.99 million

Oakville’s Bennett Environmental is a bit of a turn-around story. In early 2004, shares of Bennett, which uses thermal oxidation technology to remediate contaminated soil and contaminated construction debris, were going for more than $27. Mired in a 2004 class action lawsuit launched on behalf of company investors over alleged misrepresentation of the company’s financial health, the stock fell to pennies in late 2008. The stock languished until late 2009, when it was clear that The Company’s fiscal health was rapidly improving; revenues grew from under $11 million in 2006 to over $32 million in 2010.

5. Day4 Energy (TSX:DFE) 78.2%
Market Cap as of Friday, May 20th: $13.4 million
Cash and Short Term Investments: $10.49 million

6. Bellus Health (TSX:BLU): 75.4%
Market Cap as of Friday, May 20th: $13.6 Million
Cash and Short Term Investments: $10.26 Million

In March of this year, Laval based Bellus Health, which makes Kiacta, a treatment for an inflammatory condition called AA amyloidosis, completed a restructuring to reduce costs, the company said it had cut it annual burn rate by $1.4-million, to approximately $400,000 per month. Bellus simply couldn’t afford to have another year like 2010, in which it lost $20.11 million. Things were helped out in May, when the company signed a deal with Celtic Therapeutics for the worldwide rights to Kiacta, which is Phase III candidate. The deal included an upfront payment of US$10 million.

7. Spectral Diagnostics (TSX:SDI) 70.3%
Market Cap as of Friday, May 20th $19.3 million
Cash and Short Term Investments: $13.57 million

8. Nuvo Research (TSX:NRI) 67.6%
Market Cap as of Friday, May 20th: $41.8 million
Cash and Short Term Investments: $28.27 million

Milestone payments can be tricky business for publicly listed biotechs. On one hand, the cash creates a margin of safety for investors. On the other hand, the huge spike in revenue can create unreasonable expectations for a company’s balance sheet, especially one with a product that is trying to gain traction in the market. In 2009, Nuvo was buzzing on a $27.3 million payment from Covidien that was triggered by FDA approval of Pennsaid, an osteoarthritis pain-killing cream that is absorbed through the skin. The cash was received in the fourth quarter of 2009, and it made Nuvo’s year. The company ballooned from $10.52 million in annual revenue to $38.35 million. The one time payment in 2009 made 2010’s revenue of $16.43 million look like a disappointment, but prescription of the company’s core drug, Pennsaid, increased as prescriptions dispensed increased by twenty per cent in Q4 2010 compared with the third quarter of 2010.

9. Espial (TSX:ESP) 67.5%
Market Cap as of Friday, May 20th: $14.75 million
Cash and Short Term Investments: $9.95 million

Founded in 1997, Ottawa based Espial Group (TSX:ESP) has not been around a very long time. But in the world of IPTV (internet protocol television), which is barely a decade old, Espial is practically a senior citizen. Since peaking at over $9 in 2007, Shares of espial have been in a tailspin. The Company’s continual losses mean that on April 29th the company hired Morgan Keegan to make the familiar “review strategic alternatives” to “enhance shareholder value” announcement.

10. RDM Corp (TSX:RC) 66.7%
Market Cap as of Friday, May 20th: $21.9 million
Cash and Short Term Investments: $14.6 million

A slow and gradual slide. RDM Corp seems unable to break out of a slump that seems to report a slightly worse year every year. Revenue slipped from nearly $34 million in 2007 to $26.6 in 2008, and $24.5 in 2009 before slumping to $20.8 in 2010. But the Waterloo based company, which designs and sells remote check deposit systems, may be set to buck the trend in 2011. This year, the company’s first two quarters each bested 2010’s and the company says its goal is to return to profit, territory it hasn’t seen since 2007.

This is PART THREE of Canada’s Cashed up Tech Stocks. CLICK HERE for PART ONE.

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