Exchange Insights from TSX and TSXV

Investors see life in Life Sciences

Companies involved in the Life Sciences sector focus on a range of specialties, from biotechnology to healthcare equipment, medical devices, nutraceuticals and pharmaceuticals. Activities in the sector also extend into agriculture, aquaculture and clean technology.

There are currently 115 Life Sciences companies listed on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV). Many of these companies conduct research and product development to influence treatment for a variety of health concerns. For example, MethylGene Inc. (TSX:MYG) is focusing on cancer treatment, biOasis Technologies Inc. (TSXV:BTI) is pursuing research on disorders of the central nervous system, and Cipher Pharmaceuticals Inc. (TSX:DND) is working on a treatment for acne-related conditions.

The combined market value of Life Sciences companies on TSX and TSXV is more than $23 billion. More than half of the companies are listed on TSXV and have an average market capitalization of $15 million. For investors, these companies provide a combination of risk and opportunity. Many spend years developing and commercializing their products and services, and while there’s no guarantee they will capture a receptive market, they have the potential to grow significantly if they are successful.

It is worthwhile noting that approximately one in three Life Science companies listed on TSX began as smaller firms on TSXV. Centric Health Corp. (TSX: CHH), for example, operates in the areas of medical assessments, disability and rehabilitation management, physiotherapy and hospital services. Founded in 2001, the company went public on TSXV in 2002 and graduated to TSX in 2009. It now has a market capitalization of almost $100 million.

Compared to the S&P/TSX Composite index, which was up 0.89% over the first nine months of 2012, the five companies included in the S&P/TSX Capped Health Care Index were up 15.26%. As a measure of the sector’s broader performance, according to Philippa Flint of Bloom Burton & Co., Canada’s largest and most active specialized healthcare investment banking group, the value of the 34 largest Life Science companies by market capitalization on TSX rose slightly more than the S&P/TSX Composite index (1.29% on an equal weighted basis) over the first nine months of this year.