Listing Pre-Revenue Biotech Companies in Hong Kong
On 14 October 2022, Julia Charlton presented a podcast on Listing Pre-Revenue Biotech Companies on the HKEx. This webinar is to provide a detailed explanation on listing pre-revenue Biotech Companies. In April 2018, the HKEx implemented a new listing regime aimed at attracting the listings of companies in high-growth emerging and innovative sectors, particularly from the PRC. This included the introduction of Chapter 18A of the Listing Rules which allows for, and stipulates the requirements for, listing biotech companies that cannot meet the financial eligibility tests of Listing Rule 8.05. Since the introduction of Chapter 18A, the HKEx has become the world’s second-largest and Asia’s largest funding hub for biotech companies. In order to be considered eligible and suitable for listing under Chapter 18A, the company must meet the definition of a “Biotech Company” which is a company primarily engaged in the R&D, application and commercialization of Biotech products, processes or technologies. An applicant must demonstrate that it meets the suitability criteria set out in HKEx Guidance Letter GL92-18 “Suitability for Listing of Biotech Companies” (Core Product developed beyond the concept stage, primary engagement in R&D for developing Core Product(s), the primary reason for listing, patents and prior meaningful third party investment). In addition, Chapter 18A listing applicants must satisfy other eligibility requirements for listing (expected market capitalization, track record, working capital, ownership continuity, and public float). Chapter 18A applicants must have a minimum expected market capitalization of HK$1.5 billion at the time of listing. Chapter 18A listings enjoy modified requirements relating to the subscription and allocation of IPO shares, including subscription of IPO shares by existing shareholders and Cornerstone Investors. Biotech Companies are subject to enhanced disclosure under Biotech Company Listing Rule 8.04 and HKEx Guidance Letter GL107-20. Biotech Companies listed under Chapter 18A of the Listing Rules are subject to additional and modified continuing obligations compared to an issuer with a standard listing. Chapter 18A issuers are identified through the stock marker “B” at the end of their stock name. Biotech Companies are subject to enhanced disclosure in their financial reports. Once a Biotech Company listed under Chapter 18A is able to satisfy one of the three financial eligibility tests under Listing Rule 8.05, the requirements of Listing Rules 18A.09 to 18A.11 cease to apply.