This health small cap has grown by more than 8000pc in the last decade
Health & Biotech
Link copied to
Over the last 10 years, one health small cap has grown its market cap by 8288 per cent.
Another six have grown their market caps by over 1000 per cent.
Health companies — and biotechs which do drug discovery and testing in particular — have a reputation for taking investor money and setting it on fire, such as Phosphagenics (ASX:POH) did when it lost a court case in November 2018.
Others, like Viralytics when it was taken over by Merck this year, or Biotron (ASX:BIT), when investors jumped on a hint of an HIV cure, can turn into 20-baggers just as fast.
Of the 140 health small caps Stockhead monitors, just 63 have made it through the last 10 years more or less intact — that is, without going into administration or being used as a vehicle for another company to backdoor list onto the ASX.
>> Scroll down to find out who is up — and who is down — since 2008
But most importantly, three quarters of those 63 companies are now bigger in terms of market cap than they were 10 years ago.
On average, including Phospagenics’ and Novita Healthcare’s (ASX:NHL) almost complete loss of value, the collective 63 grew by 596 per cent.
In comparison, over that time the Small Ordinaries has grown by 57 per cent and the All Ordinaries by 30 per cent.
The 1000+ club
Paragon Care (ASX:PGC) is the company that has grown its market cap by 8288 per cent.
It couldn’t have come from a much lower base.
In 2008, it was just coming out of the ‘CitroFresh’ soap opera: CitroFresh was — and indeed still is — a household cleaner.
In 2005, then-CitroFresh International claimed its cleaner could cure HIV and the common cold, among other things.
But by 2007 they were admitting in court that this was misleading, and paid ASIC $50,000 in costs.
Paragon switched into aged care early in 2008, and has since evolved into a medical equipment supplier.
It hasn’t been plain sailing for the next six companies either.
Their market cap has grown 4764 per cent in the last decade.
PolyNovo (ASX:PNV) — the grow-your-own-breast-reconstruction company — came into being as an ASX stock in 2008 when listed Metabolic Pharmaceuticals bought 60 per cent of it.
Metabolic found infamy for the failure of its obesity trial in 2007 based on the peptide AOD9604 — the same substance allegedly taken by the unknowing players of the Essendon Football Club and Cronulla Sharks.
Although Actinogen (ASX:ACW) is essentially the same company as in 2008, a major shift in strategy in 2014 ended the scattergun biofuel, brain cancer, and plant hormone experiments and launched the Alzheimer’s track it’s on today.
Medical Developments International (ASX:MVP) has been plodding away at its Penthrox non-opioid painkiller — the one in the ‘Green Whistle’ inhaler made famous on the TV show Bondi Rescue — for well over 10 years.
And CogState (ASX:CGS) and Capitol Health (ASX:CAJ) have both been plugging away at the same business models since before 2008 as well.
Yet good fortune later in life doesn’t necessarily mean growth over the last 10.
Patrys hit it big in 2017 when it found lab success for its brain cancer treatment. Yet they’re 37 per cent smaller than a decade ago.
Viagra mouthspray-maker Suda Pharmaceuticals (ASX:SUD) still hasn’t shaken off a long running lawsuit in Germany, and is 57 per cent smaller than it was in 2008.
The legal battle started in 2010 when it claimed its partner and then drug manufacturer failed to provide proper audited financial accounts for 2008 and 2009, in July this year. The partner, HC Pharma, then went into receivership and the receiver began chasing Suda for $6.15m.
It closed the suit in July this year, agreeing to pay $2.2m plus costs.
And Novita Healthcare, in a prior iteration as ‘Avexa’, thought it would be a good idea to invest $8.5m in a US coal mine “with the aim of generating cash flow to fund its key drug candidates” from 2012.
Needless to say this didn’t work out, and in 2016 the board admitted “it has been extremely difficult to attract a sufficient volume of orders to make the North Pratt coal mine viable”.
In spite of their excitement about their digital game software for children with attention problems, Novita is yet to outrun those difficult years as a part-time coal miner since 2008 — they’re 90 per cent smaller.