U.S. Listing May Ignite Move Toward Better Valuation

It is generally considered good news when a company announces a new listing on an American exchange such as Nasdaq, or the NYSE. Such a listing brings the company exposure to the world’s broadest markets of institutional and retail investors.

Even if a company is dual listed on another exchange such as the Toronto exchange (TSX), as are three smallcaps we are tracking here, the move to a U.S. listing brings the opportunity for more investment dollars and more exposure to sophisticated investors. The Canadian investment community, while expert in companies focused on natural resources or other traditional Canadian industries, is often thought to be less savvy than the broad base of U.S. investors in areas such as medical devices and other technologies. Ultimately, that can translate to lower valuation multiples in Canada than in the U.S.

Also, since the U.S. is generally considered to be among the largest commercial markets for a company’s products, trading in the U.S. can offer the secondary benefit of more exposure to customers.

Does that mean the onset of a new U.S. listing is a time for smallcap investors to buy? It is often the first step toward a better valuation, but that may take time and a marketing plan for the stock, based on our look at three Canadian companies that were all trading on the Toronto exchange and then moved south to also begin trading on Nasdaq. The three companies are from different market sectors and in different stages of development. We’ll continue to track these and report back on their progress in the future.

Vancouver-based GLG Life Tech Corporation (Nasdaq: GLGL, http://www.glglifetech.com/) produces, from seed to harvest and refining, high quality stevia, a zero-calorie, natural sweetener. The company’s newest product, BlendSure was created to compete with sugar as an additive in soft drinks. GLGL began trading on Nasdaq in November 2009 and, while the stock jumped at the onset to about $8.50, today the stock price has settled at about $7.60. A cursory look at the GLGL summary chart shows a lack of robust trading as perhaps a lingering problem–an average of only 7,800 shares trade each day.

Winnepeg-based IMRIS Inc. * (Nasdaq: IMRS, http://www.imris.com/) develops and markets image guided therapy solutions that are fully integrated into complete surgical and interventional suites. IMRIS just started trading on Nasdaq in November 2010 and announced the sale of an IMRISneuro, a fully-integrated, multi-operating room system designed for neursurgical procedures to Dartmouth-Hitchcock Medical Center in Lebanon, New Hampshire on November 29. By early December the stock price had dropped to about $4.75.

Burnaby, Canadar-based Tekmira Pharmaceuticals Corp. (Nasdaq: TKMR, http://www.tekmirapharm.com/) is a biopharmaceutical company that develops therapeutic agents based on the field of gene silencing, known as RNA interference (RNAi). Its three lead product candidates target cholesterol management, cancer and Ebola infection. TKMR works with partners including Roche, Bristol-Myers Squibb and Alnylam Pharmaceuticals. Like IMRIS, Tekmira began trading on the Nasdaq in November 2010. At the moment, however, the stock has not caught the eyes of many investors. Average volume is only about 18,000 shares a day. On December 7 the stock price jumped up 5.5 percent to an even $5.  

* Designated a client of Allen & Caron, publisher of this blog.

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