Edesa Biotech (Edesa Biotech) Predictability Rank

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What is Edesa Biotech Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Edesa Biotech Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Edesa Biotech (Edesa Biotech) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Edesa Biotech Inc (NAS:EDSA) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

100 Spy Court, Markham, ON, CAN, L3R 5H6

Website

https://www.edesabiotech.com

Edesa Biotech Inc is a biotechnology company focused on inflammatory and immune-related diseases. It is involved in exploring novel ways to treat these diseases, including alternatives to topical steroids, which can have side effects. The company's product candidate, EB01, is a non-steroidal, anti-inflammatory treatment for chronic allergic contact dermatitis. The company operates in a single segment: research and development, manufacturing, and commercialization of innovative pharmaceutical products. The company's EB05 candidate is a monoclonal antibody therapy for hospitalized COVID-19 patients.

Executives

Stephen Lemieux	officer: Chief Financial Officer	100 SPY COURT, C/O EDESA BIOTECH, INC., MARKHAM A6 L3R 5H6
Joan Chypyha	director	100 SPY COURT, MARKHAM A6 L3R 5H6
Patrick Marshall	director	100 SPY COURT, MARKHAM A6 L3R 5H6
Van Der Velden Peter	director, 10 percent owner	C/O EDESA BIOTECH INC., 100 SPY COURT, MARKHAM A6 L3R 5H6
Michael J Brooks	officer: President	C/O EDESA BIOTECH INC., 100 SPY COURT, MARKHAM A6 L3R 5H6
Pardeep Nijhawan	director, 10 percent owner, officer: Chief Executive Officer	C/O EDESA BIOTECH INC., 100 SPY COURT, MARKHAM A6 L3R 5H6
Jennifer M Chao	director	7 PURITAN WOODS ROAD, RYE NY 10580
Frank R. Oakes	director, officer: President, CEO, & Director	C/O STELLAR BIOTECHNOLOGIES, INC., 332 EAST SCOTT STREET, PORT HUENEME CA 93041
Sean Arthur Macdonald	director	C/O EDESA BIOTECH INC., 100 SPY COURT, MARKHAM A6 L3R 5H6
Lorin K Johnson	director	3600 W BAYSHORE ROAD SUITE 205, PALO ALTO CA 94303
Pardeep Nijhawan Medicine Professional Corp	10 percent owner	C/O EDESA BIOTECH INC., 100 SPY COURT, MARKHAM A6 L3R 5H6
Paul William Pay	director	C/O EDESA BIOTECH INC., 100 SPY COURT, MARKHAM A6 L3R 5H6
Carlo Sistilli	director	C/O EDESA BIOTECH INC., 100 SPY COURT, MARKHAM A6 L3R 5H6
Lumira Capital Investment Management Inc.	10 percent owner	141 ADELAIDE STREET WEST, SUITE 770, TORONTO A6 M5H 3L5
Daniel E. Morse	director	C/O STELLAR BIOTECHNOLOGIES, INC., 332 EAST SCOTT STREET, PORT HUENEME CA 93041