R&D disclosure

Details of research and development (R&D) activities must be disclosed in Biotech Companies’ annual and half-year reports and include:

• details of the key stages of each Core Product under development to achieve commercialisation, and a general indication of the likely timeframe to attain commercialisation;
• a summary of expenditure incurred on R&D activities; and
• a prominent warning that a Core Product may not ultimately be successfully developed and marketed.

Sufficient operations

The Stock Exchange may:

• suspend dealings in the shares of a Biotech Company or cancel its listing where it does not maintain sufficient operations or assets pursuant to LR13.24; and
• give a company up to 12 months to re-comply with LR 13.24 and cancel its listing if it fails to re-comply.

Consent required for fundamental change in business

The Stock Exchange’s consent is required for any acquisition, disposal or other transaction or arrangement (or a series of such transactions) that would result in a fundamental change to a Biotech Company’s principal business activities as set out in its listing document.

pre-IPO shareholders

A Biotech Company can issue shares to pre-IPO shareholders who are substantial shareholders (holding 10%) and thus connected persons without shareholders’ approval if the Exchange grants a waiver which may be granted if:

• The pre-IPO shareholder holds less than 20% of the issued shares and invested more than 6 months before the IPO;
• Shares are issued solely to prevent the pre-IPO shareholder’s dilution;
• The new share issue is made under a general mandate of existing shareholders;
• The subscription price is not discounted by more than 5% to the higher of (a) the closing price at the date of the agreement for issue; (b) the 30 trading day average closing price prior to the earlier of the dates of the issue’s announcement, agreement or fixing of the share price;
• The shares to be subscribed by the pre-IPO shareholders are the same as those to be issued to the company’s other shareholders (except as to price); and
• The pre-IPO shareholders are not involved in discussions of the share price.

Stock marker

Biotech Companies have the stock marker “B” at the end of their stock names.

Meeting the Main Board financial eligibility tests

Once a listed Biotech Company is able to satisfy the financial eligibility tests under Listing Rule 8.05, the rules on sufficient operations, Exchange’s consent required for fundamental change in business, and the stock marker requirement will no longer apply.

For further details of the post-listing obligations of Biotech companies listed under Chapter 18A, please see New Rules for Listing Pre-Revenue Biotech Companies on the Hong Kong Stock Exchange.