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Annual Reporting and the ASX/AusBiotech Code of Best Practice
Annual reporting time provides an opportunity for Life Science Companies to review their communications with shareholders in the light of the ASX/ AusBiotech Code of Best Practice. With preparations for Annual Reports well under way, it is timely for Life Science companies to familiarise themselves with the Code of Best Practice for Reporting by Life Science Companies launched as a joint ASX/AusBiotech initiative in October last year.
The Code is designed to promote high standards of communication and market disclosure in the interests of promoting investor confidence and greater market liquidity in the sector. It has already been adopted by leading companies as an important benchmark for reporting standards and has been strongly supported by equity analysts in the sector.
The Code recognises the Annual Report as an important communication tool for Life Science companies and in several areas specifically recommends that companies use the opportunity to provide key information to investors to enable them to better understand the company’s value and prospects. While reporting on any of the areas covered by the Code may be relevant in the context of an annual report, particular areas to look out for are:
- Updates on patent information – the Code recommends providing an update in the annual report of the company’s patent portfolio summarising the status of the company’s patents on a “patent family” basis.
- Regulatory matters – the annual report is an opportunity to update investors on the regulatory path(s) that applies to its products, and the significant steps required to achieve approval to market its products in relevant jurisdictions.
- Periodic reporting of activities generally – the Code encourages companies whose activities are primarily R&D to provide periodic reports on their R&D activities in the preceding period, and a summary of expenditure incurred on those activities.
- Clinical trials – the annual report provides an opportunity to clearly explain the clinical trial process and how it is linked to a relevant regulatory path. The Code also encourages companies engaged in clinical trials to provide regular reports on the progress of clinical trials while at the same time being careful not to provide a misleading impression of events during the conduct of the trial.
- Financial reporting – the Code recommends that companies should consider providing commentary on cash flow including implications for cash flow, of significant activities such as clinical trials and changes in status of clinical trials.
Companies should carefully note that the Code is designed to complement important reporting obligations under the Listing Rules and the Corporations Law and does not replace or modify these obligations in any way. If you have any questions on potential Listing Rule disclosure issues you are encouraged to raise and discuss them with your ASX Issuers advisor.
ASX and AusBiotech encourage companies to provide feedback on their experiences in working with the Code. This important information will be referred for consideration by the review committee which has been established by ASX and AusBiotech to ensure that the Code remains relevant and of value to companies and their investors. Your comments should be emailed to Eddie Grieve.
A copy of the Biotech Code of Best Practice.
The information in this article is intended to provide a general summary only and does not constitute financial product or investment advice. You should consider obtaining independent advice before making any financial and/or investment decisions. Whilst every care has been taken to ensure the accuracy of the information as at the date of the publication, ASX makes no representation or warranty with respect to the accuracy, completeness or currency of the content. To the extent permitted by law, ASX accepts no responsibility or liability for any losses, costs, damages, expenses or claims arising in any way (including due to negligence) from anyone acting upon, relying upon or refraining from acting upon the information or any material arising from or incidental to the information.
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