Pharma Boom: The Return of Canadian Healthcare Investment and M&As

A recent article from The Wall Street Journal, told of analysts going into bull mode once again on the pharmaceutical sector. And while the article mentions 3,000 drugs currently in development in the U.S. compared to nearly 2,000 a decade ago, the movement in the sector isn’t entirely restricted to US companies. On the Canadian side of the border, there are also some viable options for those looking to cash in on the bullish pharma environment.

What the article pointed to was the targets of the new drugs for unmet needs. Currently untreatable conditions such as Alzheimer's and stroke hold opportunities where any realistic advances in care would send reverberations of hope to the market. Another major target among the developers of these treatments is cancer, especially the forms of which that remain without adequate treatment to date.

As the global economic climate reflects uncertainty in Europe’s capability to resolve its debt issues and the relative effect on investor confidence, the markets have provided somewhat of a new landscape in where the flow of capital will settle. With near and mid-term equity performance largely constrained, the commodity markets are still the traditional refuge of both retail and institutional capital, that is until recently. Many speculate that the current commodity value fluctuations have introduced an equal environment of instability and unpredictable performance and have changed the normative relationship of equity to commodity safeguards that the markets have enjoyed for so long.

In the swings of this market sentiment, value adjusted pricing and the significant corrections endured over the years, the one mainstay has always presented itself in the Pharmaceuticals sector. Moving forward, Canada’s contribution includes some companies worth looking at in 2012:

Tekmira Pharmaceuticals Corp. (TSX:TKM) (NASDAQ:TKMR) – With Nobel Prize winning breakthroughs in the field of gene silencing, Tekmira has already earned significant merit. The company is a leader in the development of therapeutic agents based upon these breakthroughs in gene silencing, known as RNA interference (RNAi). The company’s three lead RNAi product candidates in their stable target cholesterol management, cancer and Ebola infection. 

iCo Therapeutics(TSX-V:ICO) (ICOTF.PK) – Known as a "Search and Development" company because iCo focuses its efforts on development instead of research. Their business model is centered around acquiring rights to drugs that are either off-patent, currently approved or near commercialization, before developing them through redosing or reformulating the drugs for new or expanded labels. As well, further development of these treatments can also include the implementation of drug delivery technologies-such as sustained release or biodegradable matrices in order to extend patent coverage.

biOasis Technologies Inc.(TSX-V:BTI) (BIOAF.PK) – For biOasis Technologies, the name of the game is the central nervous system (“CNS”). With a focus on developing and commercializing proprietary pharmaceutical products and diagnostic technologies, biOasis Technologies is specifically targeting CNS diseases and disorders. A big note to take away on biOasis is the attention to addressing the limitations to biodistribution presented by the properties of the blood-brain barrier (“BBB”), particularly through the creation of therapeutic options for patient management.

Sirona Biochem Corp.(TSX-V:SBM) (SRBCF.PK) – Carbohydrates are the name of Sirona Biochem’s game. This biotechnology company boasts expertise in carbohydrate-based chemistry. They are currently applying a proprietary chemistry technique for the development of three major programs, including: diabetes therapeutics, cosmetic agents and biological ingredients.

With an environment that foreshadows an upcoming M&A frenzy, it’s worth keeping an eye on companies of all sizes and market caps, including the little fish in line to be snapped up, and the larger firms there to overtake them. The year looks to be full of opportunity, both for investors and those who will benefit from the enhanced treatments that come as a result.

Robert Lawrence
VantageWire
Contact: 604.637.6381

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