SINGAPORE (THE BUSINESS TIMES) - iX Biopharma is looking to spin off and list its pharmaceutical and medicinal cannabis business on the mainboard of the Stock Exchange of Hong Kong (HKEX), the company announced in a bourse filing on Monday.
The speciality pharmaceutical company will restructure its pharmaceutical and medicinal cannabis business to be held by Ligo Pharma, a subsidiary that was incorporated on March 31 in the Cayman Islands.
Ligo Pharma will then be engaged in the manufacturing, research, development and sales of pharmaceutical and medicinal cannabis products. Currently, these activities are undertaken by iX Biopharma's wholly-owned subsidiaries iX Syrinx, Arrow Property Trust, iX Biopharma Pty Ltd, iX Biopharma Europe and iXB.
iX Biopharma will then focus on sales, marketing and distribution of nutraceutical products after the spin-off and listing is completed.
Under the spin-off, the company said that both businesses will be managed by separate management and operations teams.
Since the pharmaceutical and medicinal cannabis business and the nutraceutical business are distinct, with different regulations, developmental pathways and sales channels, both businesses have put divergent demands on the group's management, the company said.
The company noted that pharmaceutical drug development can take up to seven years for drug repurposing and 15 years for a new molecule and may require Ligo Pharma to partner other pharmaceutical companies with established regulatory and sales teams.
On the other hand, the nutraceutical business will have lower product development risks and development cost as well as generally shorter time to market as the products rely on third-party clinical evidence and scientific literature.
Furthermore, iX Biopharma said that drug development will likely require substantial capital due to its lengthy process and complex regulatory requirements. Allowing Ligo Pharma to list on the HKEX will enable it to gain independent access to capital markets.
"The listing will relieve the company from the burden of having to continuously obtain financing for the operations and future expansion of this business, while allowing the value of the pharmaceutical and medicinal cannabis business to be unlocked and unbundled," the company said.
iX Biopharma also said that under its proposed plans, Ligo Pharma will list under HKEX's Chapter 18A biotech listing rules, which were set up to encourage investments from financial institutions that understand and have previous experience investing in pharmaceutical companies with good drug development pipelines.
The company cited the rules as "very attractive" to Ligo Pharma as it would depend heavily on funding and support from these institutions to succeed.
The Singapore Exchange (SGX) has advised that it has no objection to the company's spin-off and listing plans under the condition that it complies with SGX's listing rules and that it seeks its shareholders' approval.
The company will need to disclose to shareholders the board's assessment of the plans' benefits to shareholders, while also distributing an independent financial adviser's letter concerning the plans and the prospectus of Ligo Pharma within the shareholders' circular.
iX Biopharma said that the plans are pending the results of preparatory work being undertaken as well as the requisite approvals from relevant regulatory authorities and the then-prevailing market conditions, and that the proposed plans may not materialise.
The company's board may also decide against proceeding with the plans if they deem it to not be in the company's interests.
Shares of iX Biopharma closed flat at 23.5 cents on Friday.