The Hong Kong StockExchange (“HKSE”) published in February 2018 a consultation paper seekingpublic feedback on the proposed new rules to expand Hong Kong’s listing regime tofacilitate listings of companies from emerging and innovative sectors.


The paper includesdraft Main Board Listing Rules (Listing Rule or Rules) to:

(a)    Permit listingsof biotech issuers that do not meet any of the financial eligibility tests ofthe Main Board;

(b)   Permitlistings of companies with weighted voting right structures; and

(c)    Establisha new concessionary secondary listing route for Greater China and internationalcompanies that wish to secondary list in Hong Kong.


This article is toprovide highlights of the proposed new chapter of the Main Board Rules forBiotech.


HKSE is proposingto initially target Biotech Companies engaged in the research and development,application and commercialization of Regulated Products only.  There are certain principles underlying Biotech issuer suitability:

1.     Productregulated by Competent Authority

– US Foodand Drug Administration (FDA), China Food and Drug Administration (CFDA),European Medicines Agency (EMA)

– Otherauthorities will be considered on a case-by-case basis


2.     PastConcept Stage

– CompletedPhase 1 and received no objection to commence Phase II (or later)

– Productsubject to human testing


3.     Meaningfulinvestment from at least one Sophisticated Investor

– Toprovide a level of validation from an experienced third party investor


ProposedListing Eligibility

Suitability for Listing
PRODUCT At least one  Core Product(1) beyond concept stage
RESEARCH AND DEVELOPMENT Primarily engaged  in R&D of its Core Product(s) for a minimum of 12 months
IPO Primary reason  for listing is to raise capital for R&D to bring its Core Product(s) to commercialization
PATENTS Durable patent(s),  registered patent(s), patent application(s) and/or intellectual property in  relation to its Core Products
SOPHISTICATED INVESTOR(2) Meaningful investment(3)  for at least 6 months before IPO (which must retain at IPO)


(1)     ABiotech Product(s) that is required by applicable laws, rules or regulations tobe evaluated and approved by a Competent Authority based on data derived fromclinical trials (i.e. on human subjects) before it could be marketed and soldin the market regulated by that Competent Authority which forms the basis of aBiotech Company’s listing application under Chapter 18A of the Listing Rules

(2)     Byreference to factors such as net assets or assets under management, relevantinvestment experience, and the investor’s knowledge and expertise in therelevant field

(3)     Beingmore than just a token investment


SpecificGuidance for Biotech Issuers


  • Pharmaceutical(small molecule drugs)
  • CompletedPhase I or, for previously approval products (e.g. FDA’s 505(b)(2)) – at leastone trial on human subjects; and
  • Noobjection to commence Phase II


  • Biologics
  • CompletedPhase I, or for biosimilar – at least one trial on human subjects; and
  • Noobjection to commence Phase II (or later)


  • MedicalDevices (including diagnostics)
  • ClassII medical device (or equivalent) or above;
  • Atleast one trial on human subjects;
  • Endorsedor no objection to proceed to further clinical trials or commence sales of thedevice


  • OtherBiotech Products
  • Will beconsidered on a case-by-case basis;
  • Need todemonstrate it is beyond concept stage;
  • Appropriateframework or objective indicator for investors to make an informed investmentdecision


AdditionalListing Requirements and Shareholders Protections


Market  Cap
  • At least  HK$1.5 billion
Track  Record
  • In its  current line of business for at least 2 financial years
  • Substantially  the same management
Working  Capital
  • 125%  of the group’s costs for at least next 12 months (after taking into account  the proceeds of the IPO)
  • Must  substantially consist of (a) general, administrative and operating costs; and  (b) R&D costs
Restriction  on Cornerstones 
  • Cornerstones  will not count towards minimum initial public float requirement at listing or  during 6 months lock-up
  • Existing  pre-IPO investors can participate in IPO and only IPO shares subscribed for  will not count towards minimum initial public float requirement
Special  Measures to Manage Risks
  • Fundamental  change of principal business will require consent from HKSE
  • Accelerated  de-listing process (12 months to re-comply with requirement)
  • Stock  market “B” at the end of its stock name


HKSE expects theconsultation conclusions to be issued in late April at the earliest, followingwhich it hopes to start accepting formal listing applications under the newregime.