The development of a COVID-19 vaccine in record time has been a game-changer for the world and the biopharmaceutical industry, but it’s too early to claim victory over what is expected to be an endemic disease. A variety of treatments will still be required, for people with allergies to auto-immune conditions, among others, and the Canadian biotech sector, which has attracted renewed interest during the pandemic, stands to gain.
“It’s not won and done,” said Brian Bloom, Chairman and CEO of leading healthcare investment boutique, Bloom Burton, during a recent panel discussion hosted by NATIONAL Capital Markets on the Canadian biotech sector. “We need lots of solutions that include drugs in hospital, and drugs that can be taken in pill format.” Bloom added: “The general public now understands that our health is an asset worth trillions of dollars of GDP and worth millions and millions of lives. How could this not be permanently positive. The importance of our sector is paramount.”
Two exciting Canadian companies looking to fill needs along the treatment spectrum, include Appili Therapeutics Inc., currently conducting a Phase 3 study of advancing Avigan® (favipiravir) as a treatment and preventative measure for high-risk patients outside hospital settings, including long-term care facilities, and IMV Inc., which is currently planning a Phase 1/2 trial of vaccine candidate, DPX-COVID-19.
“If there's a silver lining to the pandemic, it's that it has shone a light on infectious diseases, the significant impact they can have on society, and how important it is that companies like Appili Therapeutics and IMV Inc. are working on potential solutions,” said Kimberly Stephens, CFO of Appili Therapeutics Inc.
Assessing the true players
Earlier in the pandemic, Canadian biotech stocks surged as masses of generalist and retail investors flocked to biotech as many companies announced that they were pursuing COVID-19 treatments. While the rush into biotech may have slowed since the peak of the pandemic, strong interest remains for biotech companies generating data and evidence that support the value of what they're developing.
Key to evaluating biotech companies working on potential COVID-19 treatments is understanding where they fit within the spectrum of treatments. Endri Leno, an equity research analyst with National Bank Financial told the panel: “You have to look at what preliminary data has been out there; how does it compare with other treatments or even from clinical cases. The design and length of clinical trials, the potential market size and market share, as well as the discount rate required to capture the probability of success are all important factors.”
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A sector still reliant on U.S. capital markets
While there has undoubtedly been a resurgence in Canadian biotech at home, the deeper U.S. markets with their healthcare-friendly investor base continue to lure Canadian companies. Repare Therapeutics and Fusion Pharmaceuticals earlier this year became the two largest Canadian biotech initial public offerings to list on the NASDAQ.
“The Canadian discount does exist,” acknowledged Kimberly Stephens, Appili Therapeutics, which also has a NASDAQ listing in its sights. “When we look at our U.S. counterparts and we see other infectious disease companies in the same stage of development that we are, they have increased valuation and higher trading volumes. So, it is a goal then for us to ultimately get to the U.S.”
Nevertheless, Leno and Bloom both see significant potential to continue to educate and expand the Canadian investor base and show investors what they’re missing out on if they are ignoring Canadian biotech companies listed on the Toronto Stock Exchange. Leno says “I think that Canadian companies should remain on the Canadian Stock Exchange, to show institutional investors, what they can do. And if they do get those billion-dollar valuations, it will be very hard for [investors] to justify not participating in Canadian biotech.”
On lessons learned and the continued role for Canadian biotech going forward, Frederic Ors, President and CEO of IMV Inc., says “the way I look at COVID-19, I see it as a rehearsal [for future pandemics and similar challenges]. We need to have solutions. We need to focus on what biotechnology can bring in the game to protect us, whether it's COVID-19 or something else. We have to be ready. We have to be better.”
——— Trevor Heisler is a former Vice-President, Capital Markets at NATIONAL Public Relations