The story of the Canadian Life Sciences sector mirrors that of the rest of the market: things were going great until the leaves began to fall.
The S&P TSX Pharma and Biotech Index was significantly up well into the third quarter when things went off the rails, turning what would have been a healthy gain into a losing year. But sector stalwart Eden Rahim of Next Edge Capital says the space is misunderstood as one fraught with risk.
“It got thrown in with other high-beta risk-off sectors like tech and autos and retail and energy,” he told BNN Bloomberg recently, “which is somewhat perplexing because there are defensive attributes about this sector in that for the revenue-producing companies, there is very little economic sensitivity to them and yet they were lumped in with a lot of these other sectors when the market began to worry about recessions and so on.”
The ten companies below bucked the trend in 2018. We count down the top ten performing stocks listed on the TSX Life Sciences Index (excepting those that began the year at less than ten cents or did not have a full year of trading.
1. Bellus Health (Bellus Health Stock Quote, Chart TSX:BLU)
Closing Price on December 29, 2017: $0.37
Closing Price on December 28, 2018: $1.02
Percentage Change: +176%
Top honours go to clinical stage drug company Bellus Health which this fall finished up Phase 1 clinical trials on their BLU-5937 drug to treat chronic cough, aimed at accessing a multi-billion-dollar market. Acquired from Neomed in 2017, BLU-5937 was found to have a good safety and tolerability profile, while its backers see it as a better bet than Merck’s competing drug candidate, which comes with loss of taste as a side-effect. Phase 2 trials are expected to start by mid-2019. Bellus recently closed on a $35-million equity offering, with President and CEO Roberto Bellini attesting that the financing effectively topped off a “transformational year” for his company.
“We are pleased to have the support and confidence of this high-quality group of healthcare-focused investors,” said Bellini. “This funding will enable us to advance the clinical development of BLU-5937 as expeditiously as possible. Accordingly, we look forward to initiating our Phase 2 study in chronic cough patients in mid-2019.”
2. Viemed Healthcare (Viemed Healthcare Stock Quote, Chart TSX:VMD)
Closing Price on December 29, 2017: $2.50
Closing Price on December 28, 2018: $5.23
Percentage Change: +109%
Times have been good for Viemed since its debut on the TSX a little over a year ago. A spin-out of Patient Home Monitoring, Viemed supplies post-acute respiratory care equipment to patients in the US suffering from, prominently, chronic obstructive pulmonary disease (COPD) and sleep apnea. The company continues to impress with its quarterly results and, best of all, it appears to be in just the early stages of its growth cycle, seeing as there are 1.25 million Stage 4 COPD patients in the US and Viemed’s base is so far less than 100,000.
3. Zymeworks (Zymeworks Stock Quote, Chart TSX, NYSE:ZYME)
Closing Price on December 29, 2017: $9.51
Closing Price on December 28, 2018: $19.92
Percentage Change: +109%
Vancouver-based biopharm company Zymeworks saw its share price quickly rocket up to $30.00 in May of this year, only to fall back just as fast, settling into the $17-$19 range over ensuing months. But the company has been racking up partnerships with Big Pharma partners as it advances a lineup of drug candidates, including lead product ZW25, a next-generation antibody targeting gastric, ovarian and breast cancer tumours.
Paradigm Capital analyst Rahul Sarugaser believes that Zymeworks is poised to be this decade’s next-generation drug development engine, saying, “ZYME’s suite of complementary therapeutic technology platforms and its fully integrated drug development engine are fuelling the development of a highly-differentiated product pipeline that is establishing ZYME as the industry standard for drug targeting technology.”
4. Correvio Pharma (Correvio Pharma TSX, NASDAQ:CORV)
Closing Price on December 29, 2017: $1.91
Closing Price on December 31, 2018: $3.35
Percentage Change: +75%
A volatile 2018 for Vancouver-based specialty pharma company Correvio was punctuated by news in June about its anti-arrhythmic drug Brinavess. In 2010, the drug had been put on hold by the US FDA when a case of cardiogenic shock occurred during a Phase III trial. Fast forward to August of 2017 when the FDA deemed Brinavess’ New Drug Application (NDA) insufficient. Yet this past June, Correvio was told that the FDA would consider a reapplication, potentially meaning that no new clinical trials would be required for its NDA, a result which investors jumped on, doubling CORV’s share price practically overnight.
5. Aurinia Pharmaceuticals (Aurinia Pharmaceuticals Stock Quote, Chart TSX:AUP)
Closing Price on December 29, 2017: $5.72
Closing Price on December 31, 2018: $9.28
Percentage Change: +62%
Clinical stage biopharm company Aurinia is in trials with its lead candidate drug voclosporin, for the treatment of Lupus Nephritis in one case and dry eye in another, with the former currently in Phase III trials and the latter in Phase II trials. Aurinia’s stock received a number of spikes this year as investors reacted to ongoing news concerning voclosporin.
“We achieved a significant milestone in September with the completion of enrolment for the AURORA Phase III trial ahead of schedule. Our target enrolment of 324 patients was surpassed due to high patient demand with 358 Lupus Lephritis patients randomized in sites across 27 countries,” said Richard M. Glickman, CEO and Chairman of the Board, at the November release of Aurinia’s third quarter financials, who noted that the Phase II dry eye trial should expect data this month.
6. Resverlogix (Resverlogix Stock Quote, Chart TSX:RVX)
Closing Price on December 29, 2017: $2.05
Closing Price on December 31, 2018: $3.29
Percentage Change: +60%
Calgary-based Resverlogix is developing apabetalone (RVX-208), a small molecule that may help with gene regulation affecting a wide range of diseases from cardiovascular disease and diabetes to neurodegenerative disease such as Alzheimer’s. The company announced in June that the US FDA confirmed that it would in all likelihood support RVX-208’s New Drug Application if and when the drug’s Phase III trials are positive.
7. Cronos Group (Cronos Group Stock Quote, Chart TSX, NASDAQ:CRON)
Closing Price on December 29, 2017: $9.74
Closing Price on December 31, 2018: $14.38
Percentage Change: +48%
Cronos is the first of two cannabis stocks to crack the Life Sciences top ten. The Toronto-based company was also the first of the bunch to list on a US exchange, last February, which gave Cronos’ share price a bump. For the most part, the stock traded in sync with the sector’s ups and downs over 2018 but the big news came in early December when tobacco company Altria Group agreed to take on a 45 per cent stake in Cronos for US$1.8 billion. The deal is monumental for Cronos, according to GMP Securities analyst Martin Landry, who stated, “In our view, this propels Cronos in the top 2 of global cannabis companies in terms of financial resources and execution capabilities. We believe that Altria’s investment significantly reduces Cronos’ risk profile and provides investors much more visibility on the path forward to significant revenue growth.”
8. AEterna Zentaris (AEterna Zentaris Stock Quote, Chart TSX, NASDAQ:AEZS)
Closing Price on December 29, 2017: $2.98
Closing Price on December 31, 2018: $4.06
Percentage Change: +36%
Shares of specialty biopharm developer and out-licensing company Aeterna Zentaris popped early in November on news that Strongbridge BioPharma Plc had signed an agreement with Novo Nordisk A/S, with the latter acquiring US and Canadian rights to the Macrilen, used in the diagnosis of a rare endocrine disorder called Adult Growth Hormone Deficiency. AEterna receives 15-18 per cent royalties from sales of Macrilen in the US and Canada.
9. CRH Medical (CRH Medical Stock Quote, Chart TSX:CRH)
Closing Price on December 29, 2017: $3.31
Closing Price on December 31, 2018: $4.18
Percentage Change: +26%
Investors in healthcare products company CRH Medical saw their share of disappointment in 2017 when the stock got ahead of itself and promptly fell off a cliff in April. 2018 proceeded at a more measured pace, however, as exemplified by the company’s most recent quarter which showed significant top and bottom line growth. Management has also kept busy on the M&A front by making a string of accretive purchases, the latest being the acquisition of an Indiana-based anesthesia practice, announced this Wednesday.
10. Canopy Growth Corp. (Canopy Growth Stock Quote, Chart TSX:WEED, NYSE:CGC)
Closing Price on December 29, 2017: $29.74
Closing Price on December 31, 2018: $36.61
Percentage Change: +23%
Rounding out the list is cannabis’ top dog, Canopy Growth, whose 23 per cent increase now seems minuscule when compared with all the excitement, the deal-making and headline-grabbing the company delivered over 2018. Canopy’s influence over the sector as a whole was drilled home in mid-August when the company announced a further $5-billion investment from beer and alcohol giant Constellation Brands. The news helped to legitimize cannabis in the minds of investors and touched off a buying spree that lasted until October 17, legalization day in Canada.