TMX POV - Canadian Life Sciences Market is Alive and Flourishing
In many ways, 2020 started out quite optimistically for Canadian markets -- according to Statistics Canada unemployment was at a five-year low of 5.6% at the end of 2019 and the S&P/TSX Composite Index* had a very robust 22% return from the previous year. All signs seemed to point to continued momentum into 2020.
Unfortunately, a curveball that no one could have predicted was thrown to upend much of the prevailing sentiment. This curveball came in the first quarter of 2020 by way of COVID-19, the infectious disease caused by the most recently discovered coronavirus, and the largest global pandemic since the 1918 H1N1 flu.
The effects of the COVID-19 pandemic were far reaching, impacting economies and societies across the globe, and are still being felt over one year later. One of the biggest impacts that COVID-19 had on the world, especially in Canada, was that people began looking more closely and with more urgency at topics like health, healthcare, health innovation, and the way people access them. In turn, investors responded with an increased focus on life sciences. In particular, investors placed a premium on publicly listed life sciences companies as the market volatility in early 2020 reminded investors of the premium they should place on liquidity.
The Trend
Although the life sciences sector had been on an upward trend in Canada for the past five years already, this was reinforced in 2020 as gross proceeds of life sciences financings reached a five-year high of $1.21 billion (excludes cannabis, agriculture, blockchain, Concordia recapitalization). This represented a 16% increase from 2019's gross proceeds in life sciences financings of $1.05 billion.
Source: TSX/TSXV Market Intelligence Group.
For the past five years, the largest sub-sector for life sciences financings in 2020 was biotechnology, having raised $669 million in the year, representing 55% of the total. Two other sub sectors that saw significant growth in financings in 2020 were healthcare services and supplies with $180 million raised in 2020, an increase of 328% from 2019; and healthcare technology with $151 million raised in 2020, an increase of 199% from 2019.
Source: TSX/TSXV Market Intelligence Group.
Some of the large life sciences financings that took place on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) in 2020 are showcased in the following table:
| Date | Company | Gross Proceeds (CAD million) | Subsector |
|---|---|---|---|
| July 2020 | Aurinia Pharmaceuticals Inc. | 268 | Biotechnology |
| January 2020 | Trillium Therapeutics Inc. | 150 | Biotechnology |
| December 2020 | MindBeacon Holdings Inc. | 75 | Healthcare Technology |
| July 2020 | Profound Medical Corp. | 62 | Healthcare Services and Supplies |
| October 2020 | BELLUS Health Inc. | 53 | Biotechnology |
| January 2020 | Profound Medical Corp. | 52 | Healthcare Services and Supplies |
| March 2020 | Medicenna Therapeutics Corp. | 35 | Biotechnology |
| December 2020 | Think Research Corporation | 33 | Healthcare Technology |
Source: TSX/TSXV Market Intelligence Group.
2020 also saw nine new life sciences listings come to TSX and TSXV having raised a total of $144 million in their go-public transactions. These included MindBeacon Holdings Inc., Think Research Corporation, and Perimeter Medical Imaging AI, Inc. to name a few.
2021 and beyond
Building on the strong momentum in 2020, 2021 is looking to be another strong year for the life sciences sector. On February 25, TSX hosted its first Life Sciences Investor Day of 2021, highlighting five companies, three of which are currently trading on TSX and TSXV, and two that are currently private. The event's attendance by industry participants surpassed the attendance of the Life Science Investor Day in 2020, reinforcing the trend of growing investor interest in the sector.
In just over the first two months of 2021, over $750 million has already been raised in the life sciences sector on TSX and TSXV. This includes the initial public offerings (IPO) of DRI Healthcare Trust and Eupraxia Pharmaceuticals Inc., which were $504 million and $41 million, respectively.
| Date | Name | Gross Proceeds (CAD million) | Subsector |
|---|---|---|---|
| February 2021 | DRI Healthcare Trust | 504 | Pharmaceuticals |
| January 2021 | Theratechnologies Inc. | 59 | Biotechnology |
| March 2021 | Eupraxia Pharmaceuticals Inc | 41 | Biotechnology |
| January 2021 | MCI Onehealth Technologies Inc. | 30 | Healthcare Technology |
| February 2021 | Medexus Pharmaceuticals Inc. | 33 | Healthcare Services and Supplies |
| February 2021 | Sernova Corp. | 23 | Biotechnology |
| January 2021 | Titan Medical Inc. | 15 | Healthcare Technology |
| February 2021 | PsyBio Therapeutics Corp. | 14 | Biotechnology |
| January 2021 | Assure Holdings Corp. | 14 | Healthcare Services and Supplies |
| January 2021 | Newtopia Inc. | 8 | Healthcare Services and Supplies |
| January 2021 | Helix BioPharma Corp. | 4 | Biotechnology |
| January 2021 | Hemostemix Inc. | 3 | Biotechnology |
| January 2021 | Devonian Health Group Inc. | 1 | Pharmaceuticals |
| January 2021 | Prospect Park Capital Corp. | 1 | Healthcare Services and Supplies |
| January 2021 | Vaxil Bio Ltd. | 1 | Pharmaceuticals |
| January 2021 | Resverlogix Corp. | 1 | Biotechnology |
| January 2021 | Arch Biopartners Inc. | 1 | Pharmaceuticals |
| Total | 753 |
Source: TSX/TSXV Market Intelligence Group.
The successful Eupraxia IPO particularly highlights Canada's premier equity market's ability to support and raise capital for Canadian biotechnology companies at strong valuations. Eupraxia's successful TSX listing will encourage additional Canadian biotechnology companies to decide to list on TSX, continuing the growth of the public biotechnology sector in Canada -- something that TMX CEO John McKenzie stated was a priority for TSX in a recent Globe and Mail article.
The Canadian life sciences sector will be shaped by the continued growth of the companies mentioned here, and the many strong promising life sciences companies that are yet to list on our Exchanges. The strong Canadian life sciences sector has serious momentum and investors are voting with their capital to keep that going.
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