Aurinia Pharmaceuticals Inc. is delisting from the Toronto Stock Exchange, marking the exit of the last remaining biotechnology company valued at more than US$1-billion from Canadian capital markets, in favour of being U.S.-listed only.
Victoria-based Aurinia, which is taking its treatment for immune system disease lupus nephritis to market after receiving approval early this year from the U.S. Food and Drug Administration, announced late Friday it would voluntarily delist its shares from the TSX on July 30. They will continue to trade on Nasdaq, which accounts for 94 per cent of the stock’s daily trading volume over the past 12 months.
“The company believes that the trading volume of its shares on the TSX no longer justifies the expense and administrative efforts associated with maintaining a dual listing,” the company said in a news release. “The company is confident that the transition to a single listing will help deliver better value” to shareholders, employees and patients. A company spokesman declined to comment further.
It’s the latest in an exodus of dual-listed Canadian-based early-stage life sciences companies from their domestic exchange in favour of a U.S.-only listing. Last year, Essa Pharma Inc. and Liminal BioSciences Inc. delisted from the TSX Venture and TSX exchanges, respectively, keeping their listing on Nasdaq, the world’s pre-eminent exchange for the sector. Zymeworks Inc., another company valued at US$1-billion-plus, delisted from the TSX in 2019, two years after listing on both the senior Canadian exchange and the New York Stock Exchange in the hopes of stimulating domestic investor interest in Canada’s small but teeming biotechnology sector.
The dearth of biotechs on the TSX has become a cause of concern for John McKenzie, chief executive of parent company TMX Group Ltd., who told The Globe and Mail in February “we are looking for solutions” to encourage biotech and pharmaceutical companies to list in Canada.
But Brian Bloom, chairman and CEO of Toronto-based life sciences boutique investment bank Bloom Burton & Co., said Aurinia’s departure “isn’t a black eye on the Toronto Stock Exchange or a cause of concern. The TSX would be foolish to compete with Nasdaq and Hong Kong as a premier exchange for biotechnology.“
Instead, he said the TSX should focus on what it does well – being a starter exchange for local health care companies that don’t yet have the institutional shareholder interest to be listed on Nasdaq.
“Once you get in that billion-dollar range and your liquidity is 95-per-cent U.S., the TSX listing becomes immaterial.”
Mr. Bloom acknowledged that for companies in many sectors, such as Canadian banks, mining or oil and gas companies, the TSX is a “destination” index they will never outgrow.
“This is not the case in biotech and health care, and this is not troubling, and it says nothing about the health of the Canadian biotech sector.”
A TSX spokeswoman declined to comment on Aurinia’s delisting.
Canada’s early-stage health sciences sector has surged in recent years, setting records for private and public funding in 2020 and building on that trend so far in 2021. Last year Vancouver’s AbCellera Biologics Inc. and Repare Therapeutics Inc. of Montreal went public on Nasdaq only and achieved US$1-billion-plus valuations each.
Meanwhile, Victoria’s Eupraxia Pharmaceuticals Inc. in March completed the first TSX-only initial public offering by a Canadian biotech in 18 years, raising $41-million in a share-and-warrant offering. Shares in Eupraxia, which is developing a treatment for knee pain from osteoarthritis, have sold off sharply since then, reflective of the overall market trends for biotech stocks this year.
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Sean Silcoff