The Taipei Exchange (TPEX) yesterday said that it has not tightened requirements for biotechnology applicants seeking to be listed on the exchange.
Rocked by a number of high-profile scandals in recent years, the biotechnology sector has seen a continued decline in investor confidence, as well as slowing investment and capital market activity, while companies have begun to worry that their future development would be hampered by greater difficulties in fundraising.
That perception stems from a misunderstanding of the approval process, TPEX chairman Philip Chen (陳永誠) said at an industry forum in Taipei.
Because many new biotechnology firms are not likely to meet the earnings requirements for a listing, they can take advantage of an alternative route by gaining a “technology enterprise” designation from the Industrial Development Bureau, Chen said.
While the bureau is tasked with verifying an applicant’s technological competitiveness and the marketability of products derived from its intellectual property (IP) portfolio, the bureau’s approval does not guarantee a listing, Chen said.
The viability of applicants depends on their competitiveness against peers, such as the capability of their research and development arms and whether the intellectual property underpinning their products are developed in-house or licensed from other companies, the bureau said.
Applicants must also pass the TPEX’s examinations, including checks on corporate governance, internal controls, transparency of financial and operating information and other compliance requirements.
“The TPEX and the bureau operate independently, each overseeing different aspects of the approval process,” Chen said.
While some applicants consider this arrangement cumbersome, it was designed to protect investors and maintain order in the capital markets, he said, adding that no rules have been changed in the past few years.
In the past six years, the biotechnology sector has topped other industries in the number of initial public offerings, he said.
In the first nine months of this year, only one applicant was denied a listing, he added.
A number of companies begin their application with the bureau with a certain product, only to change their submission to another product once they progress to the TPEX, which does not help their chances, an official at the TPEX’s listing examination department said.
Some applicants’ revenue streams are found to be overly reliant on parent or affiliated companies, the department added.
The TPEX would work with the bureau to streamline the approval process and continue to guide companies in remedying shortcomings as they make their way toward a listing, Chen said.
Applicants who are unwilling or unable to meet the requirements are advised to seek funding through other avenues, such as private equity firms or angel investors, Financial Supervisory Commission Vice Chairman Cheng Cheng-mount (鄭貞茂) said.
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