Choosing the right location to list your biotech company can be difficult. All the top-level institutions, including the Hong Kong Stock Exchange (HKEX), the London Stock Exchange, NASDAQ, and the New York Stock Exchange, offer a sufficiently high level of maturity and internationalization. It can be hard to differentiate one from the next.
However, the Hong Kong Stock Exchange’s continued success as a global capital formation market, which can be attributed to its respected legal system and deep capital pool, means it is consistently recognized as a particularly attractive listing venue.
The HKEX has raised over HK$2 trillion in total IPO funds by issuers over the past eight years, and continues to be the number-one global IPO fund formation center. In 2017, it cleared restrictions for pre-revenue biotech companies to list on the exchange, making it the ideal starting-point for pre-revenue biotech companies.
Here’s what you need to consider:
Eligibility: your company must demonstrate and be primarily engaged in the research and development, application and commercialization of biotech products.
Research and development: you must have engaged in research and development of your core products for at least 12 months before listing.
Core product: you must have developed at least one core product beyond the concept stage.
Reason for listing: your primary reason for listing must be to raise capital for R&D to bring your core products to commercialization.
Market capital: it is required that your company has an initial market capitalization of at least HK$1,500,000,000 ($192,085,442.24 USD).
Pipeline of products: if your company is engaged in the R&D of pharmaceutical (small molecule drugs) products or biologic products, it must demonstrate that it has a pipeline of those potential products.
Patents: you must have a patent, registered patents, patent applications, and/or intellectual property in relation to your core products. But there is now no need to demonstrate the durability of the patent.
History: your company must have been in operation under the same management for at least two financial years prior to listing.
Costs: you must ensure available and sufficient capital to cover 125% of the group’s costs for 12 months from the date of the listing.
Shares: your company must ensure that a portion of the total number of its issued shares are held by the public at the time of its initial listing. Any shares allocated to a cornerstone investor and any shares subscribed by existing shareholders of the biotech company at the time of listing are not considered as held by the public.
Fundamental changes: without the prior consent of the Exchange, your company must not affect any acquisition, disposal or other transaction or arrangement which would result in a fundamental change in the principal business activities as described in the listing document issued at the time of its application.
At first glance, it may seem that the admission standards are high, but they certainly represent a softening of the rules to list and make accessing critical capital much easier. Rooney Nimmo, working in affiliation with JC Legal on the ground in Hong Kong, stands ready to guide you through the process. If you have any questions, please drop us a line.