Why Are Biotech & Pharma Stocks Trending In North American Markets?

Summary

  • Biotech and pharma firms are making news, led by a drug regulatory approvals or denials and research partnerships with big companies, resulting in an overnight stock surge or plunge.
  • vTv Therapeutics’ parent company MacAndrews & Forbes Group bought 625,000 stocks for US$ 1.60 per stock. vTv stocks soared over 41 per cent on December 11.
  • Sonoma Pharma and Crown Laboratories, Inc., a skincare firm, announced a collaboration in retailing and marketing drugs in the US. Sonoma stocks rocketed by almost 43 per cent, followed by this agreement on December 11.

 

Biotechnology and pharma companies are wrapping up a strong calendar year. The coronavirus pandemic has catapulted many lesser-known healthcare, pharmacy and research firms into the limelight. Even therapeutic firms not targeting beating the virus, have been trending in the last couple of weeks.

These North American smallcap or midcap healthcare players are making news, driven by a drug regulatory approval or denial and research collaboration with big companies. Furthermore, the above outcomes are resulting in an overnight double-digit stock growth or haircut for these biotech firms. Even S&P/TSX Capped Health Care Index has added over 30 per cent growth in the last three months.

We will look at some of the therapeutic and pharma stock developments to better understand the latest trend:

 

vTv Therapeutics Inc. (VTVT: US or NASDAQ: VTVT)

Current Stock Price: US$ 3.10

 

US-based therapeutics firm engages in the development of orally administered small fragment drug candidates for the treatment of neurological disorders like Alzheimer's disease. Two of its major drug candidates are azeliragon, an Alzheimer’s drug and TTP399, type II diabetes drug.

In its exchange filing, the company announced that its parent company MacAndrews & Forbes Group bought 625,000 stocks for US$ 1.60 per stock. In this purchase, its parent company raised US$ 1 million for the biotech firm. On the back of this news, the stock soared over 41 per cent on December 11.

The biotech stock has returned over 77 per cent gains year-to-date (YTD) and surged nearly 80 per cent in the last one month.

Its 10-day average trading volume stands at 11.95 million units.

Its current market cap is approximately US$ 160 million. VTVT stocks offer a return on equity (ROE) of 28.72 per cent, as per TMX data.

 

Sonoma Pharmaceuticals Inc. (SNOA: US or NASDAQ: SNOA)

Current Stock Price: US$ 8.76

 

The drug manufacturer and Crown Laboratories, Inc., a skincare company, declared that they entered a license and supply pact for the exclusive rights to retail and market drugs for the over-the-counter dermatological market in the US. Sonoma Pharma stocks climbed by nearly 43 per cent, led by this agreement on December 11.

The pharma stock has rallied nearly 20 per cent in the last one month. The stock has bloomed over 101 per cent year-to-date (YTD).

SNOA stock’s 10-day average trading volume stands at 6.22 million units. Its price-to-book (P/B) ratio is 1.548, and the price-to-cashflow is 10.50. Its present debt to equity ratio is 0.17, as per TMX data.

In the second quarter of FY21, the drug maker reported revenues of U$ 5.8 million, a rise of 22 per cent year-over-year (YoY), guided by strong global growth.

The firm generates a major chunk of revenue from the retail of drugs in the US, Latin America, and Europe.


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