Australia: Navigating Continuous Disclosure In The Life Sciences Sector

Continuous disclosure obligations cause difficulties for many listed organisations. These difficulties are further amplified in the life sciences sector where entities need to communicate complex scientific information to investors and are faced with long regulatory and reimbursement timelines making determinations on how and when to disclose information to the market, under ASX Listing Rule 3.1 more challenging.

These challenges drove the development of the 'Code of Best Practice for Reporting by Life Science Companies' (the Code) by ASX, Ausbiotech and other key representatives in the life science sector.

Life science entities should closely follow the Code as it focuses on the key drivers of value for the sector, providing a recommended disclosure framework.

What are a listed company's legal obligations for disclosure?

ASX Listing Rule 3.1 requires that entities immediately disclose market sensitive information that a reasonable person would expect to have a material effect on the price or value of the entity's securities.

Market Sensitive Information

Like all ASX-listed entities, life science entities must objectively assess what information would likely influence an individual who commonly invests in securities to acquire or dispose their securities. The Code provides extensive (but not exhaustive) examples that are relevant for life science companies.

Immediately

Once market sensitive information becomes known to the life science entity they must immediately disclose it (unless an exception applies).

"Immediately" means in a prompt manner without delay. Life science entities should prepare for this by establishing a subcommittee of the board with delegated authority to release disclosures to the market. This is particularly important where speculation or inaccurate reports are published on social media and online platforms and the entity needs to correct the market.

Life science entities should also make use of trading halts to respond to unexpected events, when faced with an evolving situation (such as a deal that is under negotiation and close to signing) or where there is a large volume of complex material to analyse (such as clinical trial results).

Neuren Pharmaceuticals faced the challenge of "immediate" disclosure part way through a Phase 2 trial of a drug treating Rett Syndrome, when patients' parents commented on social media about their perceptions of the positive effect of the drug on their children. Neuren Pharmaceuticals promptly requested a trading halt and then later in the day issued a clarification statement that the "double blind" nature of the trial had not been compromised and that the actual results would only be known at the end of the trial.

Reasonable Person

Life science entities must contemplate what information an independent and prudent individual would expect to be disclosed. It is essential that entities do not "cherry pick" by over-emphasising positive information while downplaying or obscuring negative information. This is especially important when reporting on clinical trials. Entities must disclose the results of the trials regardless of their outcome, because that information will certainly have a material effect on the value of the securities.

Exceptions to ASX Listing Rule 3.1

A life science entity does not need to disclose information when these three requirements are fulfilled:

  1. At least one of these applies;

    • it would be a breach of law to disclose the information;
    • the information concerns an incomplete proposal or negotiation;
    • the information comprises matters of supposition or is insufficiently definite to warrant disclosure;
    • the information is generated for the internal management purposes of the entity; or
    • the information is a trade secret;
  2. the information is confidential and the ASX has not formed the view that the information has ceased to be confidential; and
  3. a reasonable person would not expect the information to be disclosed.

If at any time one of these ceases to apply, the entity must immediately disclose.

How does the Code assist?

The Code is a non-binding guideline for life science entities to use as a practical resource in applying the legal requirements of Listing Rule 3.1.

It promotes clear, timely and accurate market disclosures around key drivers of value for life science entities. Here is a summary of some of the guidelines:

Value Driver Commentary
Research and Development Activities
  • Ensure that reports are fair and balanced so investors can assess the commercial significance of the products under development.
Clinical Trials
  • Clearly state how the study is linked to the relevant regulatory process so investors understand the commercial or regulatory significance of the trial;
  • At the beginning, explain the endpoints, and other key aspects of the trial protocol; and
  • Report results by reference to the previously disclosed endpoints, structure and protocol.
Regulatory and Reimbursement Matters
  • Disclose steps in seeking regulatory approvals and in obtaining confirmation of reimbursement, and how those milestones affect the potential sale of products in the relevant jurisdictions
Intellectual Property and Regulatory Exclusivity Rights
  • Entities need to be clear on the extent of the rights and period of exclusivity conferred and its commercial significance. In some cases, this may need to be weighed up with confidentiality obligations to counterparties to licensing arrangements
Licensing and other agreements of Commercial Significance
  • Entities need to balance commercial sensitivity with the needs of investors to properly assess the value of the transaction entered into.
Manufacturing
  • Disclose material deviations from quality control systems, such as GMP if the material deviation is likely to adversely affect an entity's product and potentially require a recall; and
  • Disclose the granting of manufacturing approval from a regulatory body, as this is a significant milestone.
Key Staff Appointments and Departures
  • In addition to mandatory disclosures (changes in directors or company secretary), entities should disclose incoming and departing key managers or advisory board members, particularly where the organisation has a small team.

Applying the Code

Life science entities need to recognise that the investors (both retail and institutional) may struggle to understand the entity's operations and strategy given the complexity of scientific information and long timelines in achieving regulatory and reimbursement milestones. By applying relevant guidance from the Code, a listed life science entity can strengthen its continuous disclosure practices, and the clarity of disclosures. This will promote informed and engaged investors and reduce the risk to the board of breaching the law.

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
22 Jan 2019, Seminar, San Francisco, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

23 Jan 2019, Seminar, Los Angeles, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

24 Jan 2019, Other, New York, United States

Join Dentons’ Health Care Partner Lori Mihalich-Levin and White Collar & Government Investigations Counsel Christine Genaitis as they lead conference sessions at AHLA Academic Medical Centers and Teaching Hospitals Institute.

Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions