Canadians looking for profitable stocks related to the fight against the COVID-19 pandemic have plenty of homegrown options, but investing in small domestic firms carries elevated risks as well as rewards.
BetterLife Pharmaceuticals Inc. is one such company. The Vancouver firm is in final testing on a treatment for cases in which a vaccine doesnB次元官网网址檛 work or patients refuse to be inoculated.
B次元官网网址淲e have a Made-in-Canada solution,B次元官网网址� says founder and CEO Dr. Ahmad Doroudian. His company has worked with the National Research Council and Toronto immunologist Dr. Eleanor Fish.
The company has developed an inhalable method to treat COVID-19 patients by helping the immune system to defeat the virus.
B次元官网网址淲e think we can make an impact. We absolutely think weB次元官网网址檙e going to be part of a treatment cocktail thatB次元官网网址檚 going to be needed to contain this infection in years to come.B次元官网网址�
Other names include Algernon Pharmaceuticals Inc., IMV B次元官网网址� which is working on a vaccine B次元官网网址� and WELL Health Technologies Corp., which offers antibody tests.
Investing in biotechnology is by nature risky, Doroudian concedes, but the rewards are much larger than investing in a global vaccine developer like Pfizer, whose shares are more stable.
While shares of small biotech firms can surge or plunge based on clinical results, their trading prices are much lower.
BetterLifeB次元官网网址檚 shares have traded between 40 cents and $3 over the last 52 weeks with its market capitalization currently standing at $28.5 million. PfizerB次元官网网址檚 value is US$227 billion based on a US$40.84 share price.
Other Canadian biotech firms are private but have partnered with large multinationals that are available for investment. For example, Medicago is working with GSK.
VancouverB次元官网网址檚 AbCellera Biologics Inc. and Eli Lilly and Company have co-developed the anti COVID drug bamlanivimab to treat patients with mild or moderate symptoms that has received emergency use approval in Canada and the United States.
Approval comes as AbCellera seeks to raise US$200 million through an IPO on the Nasdaq Global Market.
The hype over the biotech company has grown with the announcement that Facebook early investor and PayPal co-founder Peter Thiel has joined its board of directors.
Yet, buying into a company thatB次元官网网址檚 launching an initial public offering because they have a promising COVID treatment or vaccine can be risky, warns Les Stelmach, portfolio manager at Franklin Templeton Canada.
B次元官网网址淒efinitely, buyer beware,B次元官网网址� he said from Calgary.
For the most part, Canadian investors have to turn to the U.S. to get direct access to pharmaceutical efforts to combat COVID, especially for vaccines.
Even before the virus, investors needed to look outside Canada to build a reasonable position in health care because the sector is dramatically under-represented in the TSX, said Craig Fehr, investment strategist at Edward Jones.
B次元官网网址淲eB次元官网网址檙e not necessarily advising our clients to look at specific investments that are the vaccine play per se. But we do think health care should be a meaningful part of any well-diversified equity portfolio because the secular and the cyclical opportunities that exist in that space are compelling to us,B次元官网网址� he said in an interview.
Relatively few Canadians do invest in U.S. biopharma, according to financial data firm Refinitiv.
Just 1.4 per cent of PfizerB次元官网网址檚 shareholders are Canadians. They hold 78.1 million shares valued at US$2.86 billion. The ratio for GSK is 1.42 per cent, 1.16 per cent for Eli Lilly, 1.36 per cent for Gilead and 0.58 per cent for Moderna.
Still, Pfizer, Moderna and AstraZeneca are attracting heightened investment interest after each announced COVID vaccines.
B次元官网网址淚 think you buy Pfizer because itB次元官网网址檚 a good drug company. They make money, and they have a good drug pipeline of new and promising products. ItB次元官网网址檚 not just a play on COVID,B次元官网网址� said Stelmach.
Investing in small- and mid-cap biotech companies is difficult because they generally rely heavily on a single source of revenues, said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
As a generalist investor Archibald said he doesnB次元官网网址檛 want to focus a lot of his portfolio that can surge on regulatory approval but collapse on negative news.
B次元官网网址淲hen IB次元官网网址檓 putting together a portfolio, those are bets that I generally donB次元官网网址檛 make. And if IB次元官网网址檓 gonna make them, I usually make them in very, very small percentage increments and would require a large amount of due diligence to ensure that I understand exactly what the potential outcomes are.B次元官网网址�
A good strategy for most Canadian retail investors is instead to focus on the positive impact of vaccines on the general economy, said Anish Chopra, managing director with Portfolio Management Corp.
B次元官网网址淚f youB次元官网网址檙e looking at reopening trades youB次元官网网址檙e starting to see them in the marketplace which would be old economy types of industries such as financial services, energy, hospitality.B次元官网网址�
Ross Marowits, The Canadian Press
