Biotechnology startups could soon raise capital through an initial public offering even if they do not have the financial track record to satisfy present listing standards.
That is according to proposed rules revealed yesterday by the Singapore Exchange and open for public consultation until Aug 7.
If passed, the rules may stem the outflow of Singaporean biotech startups such as Rockeby and Cordlife that have taken advantage of more relaxed listing rules to list in Australia.
London's Alternative Investment Market has also been popular with biotech companies around the world. SGX said that the amendments were proposed because such companies 'are capital-intensive in nature and are in need of funding at various stages of their business cycle'.
'In view of Singapore's bid to become a hub for life science companies, and in consideration of the unique business model of such companies, the exchange proposes the introduction of criteria for the listing of life science companies which cannot meet our current admission requirements ie those that have no financial track record.'
However, biotech companies seeking to list must first show that they can get funds from institutional or accredited investors and must have a market capitalisation or valuation of at least $30 million six months before listing.
The capital raised should be used to bring identified products to the market where they can generate 'significant' revenue.
The company must also announce every quarter how the capital raised was used and give a projection for the next quarter.
And before it lists, it should also state in its prospectus 'details of its operations in laboratory research and development, to the extent material to investors'.
This includes patents granted and progress on products.
Rockeby chief executive officer Tan Sze-Wee told BT that while the company has 'no immediate plans' to re-list in Singapore, he was open to returning 'at the right time, when we have the financial figures to support our valuation'.
He said that the company had listed in Australia in 2003 as it did not satisfy listing rules in Singapore.
Over 100 small biotech startups are listed in Australia because there is a sizable and supportive investor and analyst community there, he said.
But the proposed changes are the right way to go, he said.
'Investors will definitely be more appreciative if there is an exit.'
Aravind Vasu of Matrixview Healthcare, also listed in Australia, said that his firm would definitely be interested in returning to Singapore.
This article was first published in The Business Times on 11 July 2008.
