Recently, the Australian Securities Exchange (ASX) and
Ausbiotech, the peak body for the Life Sciences industry in
Australia, released the second edition of the "Code of Best
Practice for Reporting by Life Sciences Companies" (Code).
This is a timely update from the first edition which was published
in 2005, as it coincides with the ASX's recent revamp of the
continuous disclosure obligations in Listing Rule 3.1, and its
associated Guidance Note 8.
The Code is not mandatory but it is useful guidance for a sector
which has not yet been able to establish a mandatory code such as
the Australasian code for reporting of exploration results, mineral
resources and ore reserves (the JORC code) used for mining
companies. There are specific complexities for Life Sciences
companies seeking to communicate with the broader investing public
– the complex science is combined with long development
pathways, regulatory hurdles and intellectual property issues. As
such, the Code is a welcome aide to participants in the sector,
whether disclosing or reading those disclosures.
The Code clearly explains the interaction between Listing Rule
3.1, Guidance Note 8 and the Code, although the revised Code now
relies more on Guidance Note 8 to explain the basic concepts of
disclosure and the circumstances in which the disclosure
requirements (or the exemptions from them) may apply.
However the Code clearly notes specific issues of relevance to
Life Sciences companies. An example is explaining the need to
consider what is commercially sensitive information and how much
can be withheld while still providing sufficient information to
enable the investing public to make an assessment of the impact of
a disclosed event on the value of the company. A further issue
which is highlighted is the need to include carve outs from
confidentiality clauses in joint venture contracts and the like to
ensure that disclosure obligations (which cannot be avoided in
those circumstances) can be satisfactorily met. New emphasis is
given to the importance of maintaining confidentiality and the need
to monitor public sources of information, including social media,
for signs that an item of information is no longer
The detail of the Code itself as set out in section 4 is
materially the same as the previous edition. However it has been
reordered and the few significant changes are:
The inclusion of a new section on "The reimbursement
path", focussing companies on the importance of that process
to a company, and therefore its potential materiality.
A note that companies with earnings who become aware of any
material difference in expected or actual earnings with market
expectations should consider their obligation to disclose
Removal of the (previously short) section on consultant's
The glossary has also been expanded and some of the existing
definitions refined or elaborated on.
Notwithstanding the fact that this edition of the Code reflects
evolution rather than revolution, its release is important to
remind and confirm to Life Sciences companies that their disclosure
obligations require real and detailed consideration rather than
formulaic responses. While companies clearly need to be aware of
the strict legal obligations arising out of Listing Rule 3.1 and
the ASX's interpretation of those obligations as set out in
Guidance Note 8, the unique characteristics of the Life Sciences
industry mean that consistent reporting across companies can only
assist in the understanding of the industry as a whole and be
beneficial to all participants. If the publication of this revised
edition of the Code is a further step towards developing the Life
Sciences equivalent of the JORC code, it should be supported.
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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Liability was apportioned between the VMO, Dr.Brown, and the hospital on an 80/20 basis in favour of the hospital.
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