ASX claims guidelines already having impact

Draft guidelines are already having an impact on the way biotechnology companies communicate, according to the Australian Stock Exchange (ASX).

ASX regulators are keeping an eagle eye on biotechnology announcements. Melbourne biotech Prima (ASX:PRR) was asked last year to remove financial information of licence payments under a deal with US company ZymoGenetics, because it could not disclose details of individual milestone payments. The company did, however, provide the information to those who requested it.

ASX business development manager for listing Eddie Grieve said that although it would not be mandatory for companies to adhere to the code, it was possible that the code could eventually become part of the listing rules. The mining industry's Joint Oil Reserve Code, for example, was developed 30 years ago, and 10 years ago became part of the listing rules.

"We are aware of companies that have used it, including Metabolic, Pharmaxis and Peplin," said Grieve. "They've done it on a voluntary basis. We are encouraged by the fact that companies have adopted it and are using it."

Grieve said the code was intended to complement ASX listing rule 3.1, which calls for continuous disclosure of information which would have a material effect on a comany's share price.

A committee has been formed to oversee the new ASX reporting code for biotechnology companies. Chaired by Nanyang Ventures' Michael Hirshorn, the committee met for the first time late last year and includes Amrad's Peter Smith, CSL's director of clinical research Russell Basser, and independent analyst David Blake, of Bioshares.

"The first thing is to get a code which meets the needs of the various stakeholders," said Hirshorn. "It will be helpful to companies, useful to analysts because it will encourage a more full and standardised method of disclosure, and useful to the investment public."

"There are a number of side-benefits to this," said Grieve. "Regulators get a better understanding of the industry. It will also aid investors in understanding biotech because it sets out the key events and issues that drive value for biotechs."

The committee has called for final submissions to the draft code by February 7, with a view to finalising a code by the second half of 2005.