SGX RegCo is updating its listing rules from Aug 10 to make it explicitly clear that life sciences companies that do not meet conventional Mainboard listing requirements, can still apply.
SGX requires Mainboard IPO aspirants to meet certain operating track records, profitability levels and minimum market caps. The requirements are laid down under Listing Rule 210(2).
Under the revised Listing Rule 210(8), which is applicable to life sciences listing applicants, they can still try and apply to be quoted on the SGX even if they do not meet other 210(2) requirements. They are required, however, to have a market cap of at least $300 million.
Life sciences IPO applicants need special treatment because they typically do not have meaningful revenue until their products are proven and approved for sale.
In the meantime, they got to stump up years of R&D and clinical trial expenses. An IPO is often a key node of the process where they can raise additional funding to sustain themselves.
SGX RegCo's move to revise the listing rules came about after an on-going listing application was referred on July 18 to SGX's Listings Advisory Committee.
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The LAC, chaired by Tham Sai Choy, consists of 16 industry professionals and company honchos.
The listing applicant, which wasn’t named by SGX, is a company trying to develop a new drug and therefore not yet generating revenue.
The listing applicant's issue manager sought a confirmation from SGX RegCo that the requirement to have operating revenue will not apply to the applicant under the 210(8) - the first time such a waiver request was put forward.
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Listing Rule 210(8), the alternative framework for life sciences IPO aspirants, has been in place since March 2009. The operating revenue requirement, which is the subject of the waiver request, was introduced to the broader 210(2) in August 2012 as part of a wider set of refinements of listing requirements.
“However corresponding adjustments to Listing Rule 210(8) to account for the renumbering of the operating revenue and market cap criterion were inadvertently left out,” reads a report by the LAC.
