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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. |