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FSC sets “Medigen Provision” for strict control of biotechs
Taiwan News, Staff Writer
2014-08-17 09:37 PM

The Securities and Futures Bureau of the Financial Supervisory Commission (FSC) will lay down a “Medigen Provision” due to the unmitigated Medigen (3176) crisis. Since stock prices are easily influenced and fluctuate wildly in the stages of drug R&D, in the future, TWSE/GTSM listed biotech companies cannot freely release new drug R & D progress. Incomprehensible terminology confusing to investors is also barred from drug names as a way to strengthen comprehensive information disclosure among biotech companies.

The FSC Securities and Futures Bureau stated last week, beyond biotech stocks, stricter information disclosure standards will be broadened to cover other “industries of a special nature.” The Taiwan Stock Exchange (TWSE) and GreTai Securities Market (GTSM) have been instructed to specify the industries specifically to be included. Hopefully, information disclosure will be more timely and transparent. After the provision is finalized it will be announced and implemented.

Medigen stock climbed from NT$199 to NT$486, or as much as 144%, this year on the market’s optimistic expectation of imminent breakthroughs in the company’s new cancer drug PI-88. However, with the release of certain substandard analysis data, shares went into freefall, declining to the stock’s daily limit on 15 consecutive days, and sending a ripple effect through biotech stocks.

According to the Securities and Futures Bureau’s understanding, the reason for Medigen’s recent woes lies in a new drug previously announced for imminent release failing to achieve the expected result during testing. For the Securities and Futures Bureau, there are two keys to the Medigen incident. One is whether market manipulation is involved, which the authority has been watching. Any unlawful actions will be handled according to the law.

Two is whether the timing and method of information disclosure is appropriate. There are many stages in new drug R&D. The Securities and Futures Bureau is currently deliberating stricter regulations on the timing and content of R&D progress announcements. For example, making public the number of stages in the R&D of a new drug and which stage is the most suitable for releasing research results. News cannot be released haphazardly to prevent misleading investors.

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