Canada's Exchanges: An Alternative for Life Science Financing
Raymond D. King,Senior Manager, Listings
Business Development – Technology, Life Sciences & Industrial Sectors
Toronto Stock Exchange & TSX Venture Exchange
Where do you go when you know you have a great concept for a
new drug that will benefit the lives of millions, but nobody will listen?
Canada's vehicle to the public capital market system is willing to listen.
TSX Group is a cornerstone of the Canadian financial system, and is at the
centre of Canada's world-class equity capital market. TSX Group owns and
operates Canada's two national stock exchanges: Toronto Stock Exchange, serving
the senior equity market; and TSX Venture Exchange, serving the public venture
equity market. From its preeminent domestic base, TSX Group's continues to
expand internationally, providing access to North America's equity capital
market for companies from around the world, as well as to global investors that
recognize the strength of our marketplace.
TSX
Group can provide a logical alternative to support the capital needs of
Canadian, US and international life sciences companies who continue to struggle
with the dearth of private venture funding, particularly for early and mid-stage
companies. This access to capital is crucial for life science companies to
sustain the research and development costs of new medicines, which can exceed US
$750 billion over the course of an eight to ten year development period. Most
importantly, TSX Group can provide a liquid marketplace for small and medium cap
life science companies, with greater levels of follow-on financing and analyst
coverage than can be found on other exchanges targeting the same level of life
science companies.
“Both Toronto Stock Exchange and TSX Venture Exchange are committed to providing
the biotech/life sciences sector with access to capital to sustain their growth
through the long and costly clinical R&D stages before they reach
commercialization,” says Raymond King. “The successes of those companies who
make it through the process are an inspiration to new and emerging biotech
companies. The goal of our exchanges is to provide access to the Canadian
capital markets for all listed companies.”
Life science companies at any stage of development, but particularly those in
the very early pre-clinical stage, can utilize TSX Venture Exchange to finance
their research efforts through vehicles such as the Capital Pool CompanyTM (“CPCTM”)
program. This program is available to all private companies, regardless of their
geographic origin, and is a cost effective manner in which to achieve a listing
on a well-regulated marketplace catering to emerging companies.
The CPC program is a unique, going public vehicle involving a two-step IPO
process. The first step is the creation of a shell company containing a
management team and capital. The second step involves the acquisition (most
often for shares) of a private company by that shell company, resulting in a
full-fledged operating company listed on TSX Venture Exchange. Recent amendments
have increased the amount of funds that can be raised on the creation of the
shell to CDN $2 million.
For a life science company that may be further along in its development,
Canada's senior exchange, Toronto Stock Exchange, is also a good means of
accessing capital to sustain its research initiatives. The ability to utilize
the senior exchange in this manner was aided by the establishment, in June 2000,
of listing criteria specifically designed to support the life science sector.
These criteria recognize the need to work with life science companies that, in
many cases, might still be a number of years away from commercialization, but
that can provide evidence of potential commercial viability of their research
efforts.
Whether a company is looking to TSX Venture Exchange or Toronto Stock Exchange,
we welcome any questions you may have on the life science listing requirements
for either exchange. Please call Raymond King at 416.947.4675 to discuss.
TSX
Group can provide a logical alternative to support the capital needs of
Canadian, US and international life sciences companies who continue to struggle
with the dearth of private venture funding, particularly for early and mid-stage
companies. This access to capital is crucial for life science companies to
sustain the research and development costs of new medicines, which can exceed US
$750 billion over the course of an eight to ten year development period. Most
importantly, TSX Group can provide a liquid marketplace for small and medium cap
life science companies, with greater levels of follow-on financing and analyst
coverage than can be found on other exchanges targeting the same level of life
science companies.