(The Canadian Press)

(The Canadian Press)

Canadians have some domestic options to invest in COVID buzz, says biotech CEO

Relatively few Canadians do invest in U.S. biopharma, according to financial data firm Refinitiv

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 doesn’t work or patients refuse to be inoculated.

“We have a Made-in-Canada solution,” 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.

“We think we can make an impact. We absolutely think we’re going to be part of a treatment cocktail that’s going to be needed to contain this infection in years to come.”

Other names include Algernon Pharmaceuticals Inc., IMV — which is working on a vaccine — 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.

BetterLife’s shares have traded between 40 cents and $3 over the last 52 weeks with its market capitalization currently standing at $28.5 million. Pfizer’s 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.

Vancouver’s 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 that’s 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.

“Definitely, buyer beware,” 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.

“We’re 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,” 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 Pfizer’s 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.

“I think you buy Pfizer because it’s a good drug company. They make money, and they have a good drug pipeline of new and promising products. It’s not just a play on COVID,” 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 doesn’t want to focus a lot of his portfolio that can surge on regulatory approval but collapse on negative news.

“When I’m putting together a portfolio, those are bets that I generally don’t make. And if I’m 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.”

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.

“If you’re looking at reopening trades you’re starting to see them in the marketplace which would be old economy types of industries such as financial services, energy, hospitality.”

Ross Marowits, The Canadian Press

CoronavirusInvesting

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer Regional Airport CEO Graham Ingham has ambitious plans for the airport. (Advocate file photo).
Red Deer Regional Airport revenues climb in 2020

Bringing in more business is the 2021 goal, says director

City council will have to wait longer to hear back from administration on possible alternative sites — if the homeless shelter is moved from Red Deer downtown. (Photo by LANA MICHELIN/Advocate staff).
Alternative sites for homeless shelter will be explored by the City of Red Deer

Council gave administration more time to return with a report

Quentin Lee Strawberry was found not guilty of second-degree murder in connection with stabbing death of Joseph Gallant in March 2019. (Photo from RCMP)
Updated: O’Chiese man found not guilty of 2019 stabbing death of Red Deer man

Quentin Strawberry found guilty of assaulting murdered man’s common-law partner

(Advocate file photo).
City of Red Deer property tax bills are in the mail

Red Deer 2021 tax notices are on their way. Red Deer property… Continue reading

Vancouver Canucks’ Nils Hoglander (36) scores on Winnipeg Jets goaltender Laurent Brossoit (30) during first-period NHL action in Winnipeg on Monday May 10, 2021. THE CANADIAN PRESS/Fred Greenslade
Hoglander scores twice as Vancouver Canucks dump slumping Winnipeg Jets 3-1

Hoglander scores twice as Vancouver Canucks dump slumping Winnipeg Jets 3-1

Edmonton Oilers' Dominik Kahun (21) celebrates with teammate Connor McDavid (97) after scoring the third goal against Montreal Canadiens goaltender Jake Allen (34) during second-period NHL hockey action in Montreal, Monday, May 10, 2021. THE CANADIAN PRESS/Ryan Remiorz
Canadiens clinch playoff spot with single point, fall to McDavid and Oilers in OT

Canadiens clinch playoff spot with single point, fall to McDavid and Oilers in OT

Rory McIlroy tees off on the fourth hole during the fourth round of the Wells Fargo Championship golf tournament at Quail Hollow on Sunday, May 9, 2021, in Charlotte, N.C. (AP Photo/Jacob Kupferman)
McIlroy ends 18 months without winning at Quail Hollow

McIlroy ends 18 months without winning at Quail Hollow

Canada , left to right, lead Briane Meilleur, third Val Sweeting, skip Kerri Einarson, and second Shannon Birchard discuss strategy against Sweden in a qualification game at the Women's World Curling Championship in Calgary, Alta., Saturday, May 8, 2021. Both of Canada's teams were shut out of the medals, marking the first time ever that Canada did not reach the podium at either the men's or women's worlds in the same season. THE CANADIAN PRESS/Jeff McIntosh
Bubble Wrap: Fresh questions for Canada after medal shutout at curling worlds

Bubble Wrap: Fresh questions for Canada after medal shutout at curling worlds

Edmonton Oilers' Connor McDavid (97) celebrates his 100th point this season with Leon Draisaitl (29) against the Vancouver Canucks during second period NHL action in Edmonton on Saturday, May 8, 2021.THE CANADIAN PRESS/Jason Franson
Oilers plan to keep playing McDavid, Draisaitl as NHL regular season winds down

Oilers plan to keep playing McDavid, Draisaitl as NHL regular season winds down

Canada's Tyler Ardron, right, tries to block the kick by Italy's Callum Braley during the Rugby World Cup Pool B match in Fukuoka, western Japan, Thursday, Sept. 26, 2019.  THE CANADIAN PRESS/Kyodo News via AP
Canadian men to face Wales and England in July rugby test matches

Canadian men to face Wales and England in July rugby test matches

John Velazquez, right, rides Medina Spirit ahead of Florent Geroux aboard Mandaloun to win the 147th running of the Kentucky Derby at Churchill Downs, Saturday, May 1, 2021, in Louisville, Ky. THE CANADIAN PRESS/AP/Darron Cummings
Casse believes colleague Baffert deserves “due process” folowing positive test

Casse believes colleague Baffert deserves “due process” folowing positive test

Canada forward Liam Millar (23) moves the ball past Bermuda defender Eusebio Blankendal (2) during the second half of a World Cup 2022 Group B qualifying soccer match Thursday, March 25, 2021, in Orlando, Fla. THE CANADIAN PRESS/AP-John Raoux
Canadian men to play next two World Cup qualifying matches in the U.S.

Canadian men to play next two World Cup qualifying matches in the U.S.

Most Read