From now on, disclosures by pharmaceutical and biotech corporations will become more specific. In addition to detailing the research and development progress by pipeline, technology transfer contracts must be broken out into upfront payments, milestones, and royalties to improve investors' access to information.
On the 30th, the Financial Supervisory Service released the "pharmaceutical and biotech disclosure guidelines" reflecting these measures. Since April, the Financial Supervisory Service has operated a "pharmaceutical and biotech disclosure comprehensive improvement task force (TF)" with external advisors and the pharmaceutical and biotech industry to prepare improvement plans.
First, at the initial public offering (IPO) stage, the basis for calculating the offering price will be standardized. Prospectuses must now separate and disclose the assumptions used to calculate the offering price across four items: expected market size, probability of clinical trial success, approval and review risks, and development period and expense. This measure reflects the high volatility of the pharmaceutical and biotech industry so investors can evaluate corporate value more systematically.
After listing, ad hoc and periodic disclosures will allow investors to track progress. A "research and development history management summary table" by pipeline has been newly introduced so investors can see at a glance the results at each research and development stage, such as under development, development completed, and development halted.
Disclosures on technology transfer contracts will also become more specific. Going forward, corporations must separately state upfront payments, development milestones, approval and sales milestones, and royalties, and also explain payment conditions and their nature. The aim is to prevent situations in which emphasizing only the total contract size leads to perceptions that exceed the actual amounts to be received.
In addition, even when the counterparty to a contract is not disclosed, corporations must disclose at least the information necessary for investment decisions, such as the counterparty's size and business capabilities.
The authorities also established a principle that disclosures should take precedence over media reports for information that materially affects investment decisions. The move comes after concerns that investors could make decisions based on inaccurate information when media reports precede disclosures or report content that differs from disclosures.