Cannabis, medtech, telehealth – could any of these health microcaps be the next multi-bagger?
Health & Biotech
Health & Biotech
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Every investors’ dream is to hit the jackpot, in buying a micro cap stock that grows into a giant.
These success stories are few and far between, and arguably rarer in the health sector where years of clinical trials and regulatory hurdles stand in their way.
But they can happen. One recent multi-bagger is Rhythm Biosciences (ASX:RHY), which grew from a $5.8m penny stock at 3.5 cents last March to a $250m stock trading at nearly $1.50 today.
Rhythm has been working on test kits to detect colorectal cancer through blood samples rather than the current faecal samples relied on as part of the Federal Government’s cancer screening program.
Rhythm is still some way off its goal but is far closer than it was 12 months ago, having begun recruitment for a major clinical trial and validating several biomarkers.
Currently, there are 18 health stocks on Stockhead’s list with a market cap under $15m. Here they are…
Three of these stocks are in the cannabis space. One is Cronos (ASX:CAU) which sells medical cannabis products, and runs a dedicated medicinal cannabis clinic in Melbourne as well as a personal care product range.
It listed in November 2019 at 50 cents but is only at 15.5 cents per share now – albeit well up from its all time lows.
However Cronos has also made product progress in recent months. It has begun to launch ranges and generate revenues from them, and its first half revenues exceeded the previous financial year by over 200 per cent.
Then there’s Wellfully (ASX:WFL), working on wellness and skincare products which include CBD-based products.
The other pot stock is Israeli-based eSense-Lab (ASX:ESE).
But in recent months it has excited investors with its endeavours against COVID-19 in creating an anti-viral hand sanitiser based on these oils and testing them against COVID-19.
Kicking off this list is Anatara Life Sciences (ASX:ANR) which is focused on gastrointestinal diseases both in animals and humans.
The company is planning a trial to test its GaRP dietary supplement on humans having recently received ethics approval. It is currently undertaking a study for its other asset against pig scour and hopes to complete this in the middle of this year.
New Zealand headquartered Living Cell Technology (ASX:LCT) is trying to prove its LC-002 and LC-003 peptides against migraines and obesity respectively and has other ambitions for the future but has suffered COVID-19 induced delays.
It nonetheless hopes to complete pre-clinical studies at some point this year.
Cellmid (ASX:CDY) was able to make the most of COVID-19 in entering the test kit market, which excited investors. But the Therapeutic Goods Administration’s examination of them didn’t go to plan.
It has had a somewhat better run with its traditional business – anti-aging pharmaceuticals. While its revenue from contracts with customers fell 24 per cent in the last half year it was still $2.79 million.
A company that helps with clinical trials is Cryosite (ASX:CTE) . It’s in the busines off cold-storing biological samples.
While some clinical trials were interrupted due to COVID-19, it saw sales and revenue growth in the September quarter last year and said the outlook was positive.
While not all of these companies on this list have seen share price growth, DorsaVi (ASX:DVL) is one of them. It makes wearable sensors for the clinical and workforce markets, and it surged in the middle of last year off the back of a deal with insurance giant QBE.
Analytica (ASX:ALT) has a device aimed to rehabilitate muscles that cause pelvic health problems in women such as organ prolapse and Stress Urinary Incontinence (SUI).
The stock rose last year after a successful clinical trial on SUI, although it took until a Health Economics white paper showing it was more cost effective for shares to take off.
It told shareholders last month PeriCoach was now in production with a new manufacturing contractor and thought COVID-19 would highlight the need for in-home health solutions.
Adherium (ASX:ADR) makes products for asthma sufferers but is a shadow of its former self having been over 40 cents a few years ago. COVID-19 was a further hit, causing logistical delays in the US.
Telehealth has been a hot sector thanks to COVID-19 and there are three stocks with market caps below $15 million.
One is InteliCare (ASX:ICR), which only listed last year and has a focus on aged care.
It has developed InteliLiving, which uses home sensors – not cameras – to help seniors and people with disabilities live at home independently.
It has another larger-scale SaaS product for care providers such as aged care facilities, home care providers or hospitals which integrates the InteliLiving output into a dashboard system that lets providers monitor many residents at once.
InteliCare is up over 25 per cent since its IPO and has seen demand for its products increase in recent months.
Jayex is one of the few ASX small caps based in the UK which has been more heavily hit by COVID-19. The company nonetheless saw a record sales month in the last November and said it hoped the momentum would continue into the March quarter – typically the business’ biggest selling quarter.
As for 1st Group, it too has reported growing revenues in recent months, reaching $5.8 million in Annual Recurring Revenue (ARR) in the December quarter but this hasn’t yet been enough to get investors excited.
The remaining two stocks on the list are currently suspended from the ASX. One is Factor Therapeutics (ASX:FTT) which since a failed clinical trial and a consequential near wipeout of the share price has been on the lookout for a new business.
For a few months it appeared it had found a new opportunity in a medical imaging business to partner with. But a deal couldn’t be reached and the company walked away last month.
At Stockhead, we tell it like it is. While InteliCare is a Stockhead advertiser, it did not sponsor this article.