Pharmaceutical and biotech companies must now break down the basis for their initial public offering (IPO) pricing into four categories in their securities registration statements. Regular disclosures will add a "R&D history management master table" for each pipeline, making it easier to grasp the progress of new drug development at a glance. The measures aim to help investors more easily understand how listed pharma-bio companies calculate corporate value and the status of their research and development.
The Financial Supervisory Service (FSS) announced the "Comprehensive Improvement Plan for Pharma-Bio Disclosure (Guidelines)" on the 30th, centered on these contents. Under the guidelines, the basis for IPO pricing stated in securities registration statements will be made more detailed. Listed pharma-bio companies filing securities registration statements from the 30th must prepare the basis for IPO pricing according to four items: expected market size, clinical trial success probability, approval and review risks, and development period and required costs.
For the expected market size item, companies must distinguish between the total market and the actual target market. The intent is to examine whether a company has reasonably calculated the size of the market it can actually enter based on its business capabilities. For clinical trial success probability, companies must base their calculations on objective data such as academic papers or existing statistics, minimizing arbitrary estimates by individual companies. The approval and review risk section was revised so that investors can fully understand the major risks that may arise during the product approval process even after a clinical trial succeeds. To allow investors to grasp the overall development plan at a glance, companies must present the development period and required funds broken down by stage.
Regular disclosures after listing will also be changed so that investors can more easily understand the new drug development process. Existing regular disclosures were centered on pipelines under research and development, making it difficult to grasp the development progress and current status of past pipelines at a glance. Going forward, through the newly added "R&D history management master table" for each pipeline in regular disclosures, companies must systematically manage pipelines currently under development along with major progress such as completed development, discontinued development, and product approval. If the schedule is delayed compared to the initial plan, the reason and plan must be specified together.
For technology transfer contracts, listed companies must separately state the upfront payment, development milestones, approval and sales milestones, and royalties, and also provide the payment conditions and nature of each amount. If a company cannot disclose the counterparty on the grounds of contractual confidentiality, it must now disclose minimum information such as the counterparty's size and business capabilities.
Ad hoc disclosures will also be improved in a way that enhances investor understanding. Companies must allow investors to check the pipeline history from the initial disclosure to the most recent disclosure through periodic reports. For clinical trial result disclosures, companies must provide detailed explanations of the meaning and interpretation of technical terms that were difficult for ordinary investors to understand.
The "Pharma-Bio Media Reporting Guidelines" were also newly established. The intent is that important information with a significant impact on investment decisions must first be disclosed through official disclosures, and media reports must maintain consistency with the disclosed content. The FSS recommended that listed companies establish internal approval procedures for the appropriateness of content before distributing press releases, and take action according to internal company regulations in case of violations. The final media reporting guidelines will be finalized after future discussions with the Financial Services Commission and the Korea Exchange.
The FSS forecast that establishing the guidelines will enhance the reliability of disclosures for pharma-bio companies and the transparency of the capital market. "We plan to hold a series of briefing sessions for market participants to help the guidelines settle in the market early and to encourage the early establishment of the improvement measures," an FSS official said. "We will continuously supplement the system by continuously reviewing review cases and market opinions and reflecting necessary matters in the guidelines."
