The cannabis market is making a come-back. Gold and other metals are strengthening. Yet through it all, investment circles are continuing to put the most attention on healthcare.
As economies are starting to open up and vaccine development is increasing positive market sentiment, the reality of COVID-19 hasn’t escaped investors. The need for testing isn’t going away anytime soon, in fact quite the opposite, with officials wanting to keep the threat of a second wave of infections and lockdowns to a minimum by keeping a handle on the coronavirus.
That has strengthened the spotlight on COVID-19 testing plays. On the small-cap friendly Stockhouse Bullboards, investors have been drawn to companies on their way to broad market testing, but each one has had its own setbacks and breakthroughs. This week we dive into three competing testing companies and see how they’re faring.
They may have snagged back the top spot across the Stockhouse Bullboards last week, but
StageZero Life Sciences Ltd. (
TSX:SZLS,
Forum) wasn’t the most-viewed out of celebration. Over the last few months, the early-detection cancer testing company had made a pivot to COVID-19 testing and seen shares surge, but recently it suffered its first setback. SZLS shares dropped from $0.125 on May 19 to $0.09 the following day.
As the chart shows, StageZero shares are still sitting above their pre-COVID-testing position, but it’s been a notable drop. On May 20, the company released its
Q4 and full-year fiscal results which showed a slight reduction in revenue and profitability still not in sight, which didn’t sit well with the markets when coupled with the announcement of
delayed filings for Q1 2020 results.
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The SZLS Bullboard, and the general market, are waiting to see when the company’s COVID-19 tests will impact the bottom-line. Unfortunately, many aren’t content to wait around while other companies are able to see results and benefits more quickly, but vocal investors like Stockhouse Member
SAGDollar are keeping in contact with StageZero to stay calm and in-the-loop.
“Good things take time. I myself have been eager and have set high standards and expectations. In saying so one of the responses I got from IR today is quoted below this paragraph. I think we all (including myself) need to chill out a bit and just let things rollout over the next week. The fact is we SHOULD see the initial flow of revenue on Q2 which is just going to be the start of what's to come. The chances are we will have to wait until the financial release or closer to it…
From IR: ‘The lab is not bottlenecked at all. We are processing results. I get the impression that the market envisions the testing like a bottle factory, but with social distancing sample collection presents certain challenges. We are ramping up but I would expect some ebb and flow in the daily numbers. Hence a more realistic idea will be hitting milestones and quarterly numbers.’”
(Post: Rome wasn't built in a day.)
While StageZero may have struggled, other healthcare companies invested in COVID-19 had a great week. Another COVID-19 testing play,
MedMira Inc. (
TSX-V:MIR,
Forum), climbed back near the top of the Bullboards on good momentum that has recently spilled into overdrive. Shares of MIR had hovered between $0.35-$0.27 for most of May, before starting to climb from $0.27 on May 20 to $0.70 on May 26,
an increase of 159%.
What has driven the recent resurgence? The Halifax-based biotech company announced on May 21 that it has completed Conformité Européene registration for its REVEALCOVID-19™ antibody test, positioning for entry into the European market. At the same time, some major Canadian news coverage that highlighted MedMira as a Nova Scotia testing company helped give the company even greater visibility.
But with FDA and Health Canada approval still being waited on, is the rise cause for celebration or premature? That has been the debate on the MIR Bullboard, though the mood is largely positive. One reason is that the company’s tests have performed
better than some of the COVID-19 tests that have already received approval. And with sales in Europe starting, users like Stockhouse Member
Vulcan are certain that more good tidings are on the way.
“I would not want to be caught chasing this stock. We are moving forward. Each announcement will project us upward to new levels and a new bottom… At some point it will get too expensive to get in…”
(Post: dont be caught chasing)
Right in the middle between StageZero’s tough week and MedMira’s surging one was another coronavirus-testing play,
Sona Nanotech Inc. (
CSE:SONA,
Forum). The producer of gold nanorods for diagnostic tests turned into a rapid COVID-19 screening test developer and saw SONA shares climb from just $0.12 to a high of $2.16 in April. After a fall in shares throughout May, SONA posted a renewed climb from $1.16 on May 19 to $1.84 on May 25.
Sona Nanotech’s COVID-19 antigen tests are still in relatively early stages, and the initial drop came from a May 12
progress update showing that more work was needed to be done. Positive results from some third-party trials clashed with negative results from others under different environments, and the company iterated the need for a major laboratory partner for streamlined validation results and authorization. On May 22, SONA
secured that much-needed partner,
MRIGlobal in Kansas City, bringing shares back up.
The fact that Sona Nanotech is further back on the testing development cycle than others is a mixed bag on the SONA Bullboard. On one hand, it feels like the company has a long way to go, but on the other, the early and impressive rise in shares already points to an even higher ceiling down the road. Many point to the impressive level of detail Sona gives in test development updates, but for Stockhouse Members like
wm23four, it’s important to remember the unanswered questions still lingering.
“…Well, now discussions are completed. But there are still unanswered questions that I hope we get answers to. Like, has the US lab actually started validation testing yet? If not, when will they start? Also, how long are validation tests expected to take?
Great to see all the interest in the purchasing tests once they are validated. But until we get official word of validation, orders, manufacturing etc., IMO this remains a spec investment. There is risk, but IMHO the reward is well worth the risk….”
(Post: Thoughts on PR)
It’s no surprise that three COVID-19 testing plays were at the top of the Stockhouse Bullboards last week. Interest in healthcare companies has continued to trend upwards since the initial onset of the coronavirus pandemic, and though many remain disinterested in the sector, the majority that responded to a recent Investor Pulse Poll are looking at some sort of healthcare play.
But the recent popularity of healthcare pales in comparison to the years-long dominance of the cannabis sector around small-cap investment circles. After some much needed strong results from major LPs and sector gains that were consistent over the course of weeks, interest in cannabis has once again picked up. Our latest poll on
Stockhouse homepage asks if cannabis is truly back in business, so head to the homepage or click the image below to cast your vote!
(Click image to go to the poll)
COVID-19 may be the king of investor attention for now, but every sector is seeing a rise in prominence. Has the small-cap tide turned back in the favor of cannabis for good, or will we see another change in the most-talked about companies? Check in on next week’s Buzz on the Bullboards weekly review to find out. For previous editions:
click here.