Treading on Nasdaq turf, NYSE cuts listing fees to woo biotech
By cutting its fees for companies with little to no revenue, the New York Stock Exchange (NYSE) is laying the groundwork to break Nasdaq’s strong hold on the biotech industry.
Cheaper listing fees, relatively lax listing standards and the chance to be featured on the Nasdaq Biotechnology Index has traditionally made Nasdaq the biotech listing venue of choice. The rationale is sound: Drug development is not cheap, and necessitates patience. Biotech firms are typically in the red for years before they are ready to take their first drug across the finish line.
NYSE’s new rules — which will reduce the fees for companies with annual revenue of less than $5 million and have a market capitalization of at least $200 million — are set to go into force next month. The bourse is offering such firms a 75% discount off its annual listing fee, as well as capping annual listing fees at $100,000, for three years, NYSE disclosed in an SEC filing.
“We are providing an improved on-ramp for biotech companies looking to access the public markets,” said John Tuttle, NYSE chief operating officer, in an emailed statement to Endpoints News.
The largest companies pay as much as $500,000 a year to list on the NYSE, while the Nasdaq — which invented electronic trading in 1971 — caps its listing fees at $155,000. NYSE has long lost out to its main rival due to its stricter listing standards, but it has been taking steps to relax those requirements to take a bite out of Nasdaq’s stranglehold on certain industries.
Overall, health-and-care focused firms — including biotechs, pharmaceuticals, medical device makers, healthcare services and health insurers — have overwhelmingly preferred listing on Nasdaq, whose website shows 757 such companies have chosen the stock exchange. Meanwhile, a mere 105 have adopted NYSE.
In fact, since the Hong Kong stock exchange opened up the listing regime to pre-revenue biotechs, nine companies — including one CRO giant — have joined the bourse in the past year, the South China Morning Post reported last month. These companies collectively have raised $3.8 billion in IPO proceeds — making Hong Kong the second largest public biotech hub worldwide after Nasdaq, the report noted, citing Refinitiv data.
Bicycle Therapeutics made its Nasdaq debut on Thursday, marking the 16th biotech IPO of 2019 — contributing to a total of $1.6 billion raised so far. Each of these 16 pre-revenue drug developers has chosen to align itself with Nasdaq.