From left: Andrew Elbaz of Minden Gross; Brandon Roop of Stifel GMP; George Khalife of TSX; and Alexander Katznelson of Minden Gross.
Going public has long been an option for growth-stage healthcare and life sciences companies, but exiting the U.S. market is often seen as a more realistic option for late-stage companies. At this week’s MedCity INVEST conference, a panel discussion sought to challenge that assumption by drawing attention to an alternative avenue for early-stage companies to consider: listing on Canada’s Toronto Stock Exchange or the Toronto Venture Exchange.
Sponsored by Toronto Law Firm total gross, the panel discussion was moderated by firm partner Andrew Elbaz, who served as moderator. He was joined by Minden Gross partner Alexander Katznelson and US vice president of capital formation George Khalife. Toronto Stock Exchangeand Brandon Roop, Head of Healthcare Investment Banking Stifel GMP.
The discussion highlighted some of the advantages of listing in Canada and sought to challenge some of the misconceptions about listing on the Toronto Stock Exchange.
“Toronto is one of the best places to do business in the G20,” Khalife said. “It’s the third largest exchange in North America. Over the past 5 years, Canada has raised about $234 billion in equity.”
two-tier system
In Canada, there is a primary exchange called the Toronto Venture Exchange, which companies can use to list and lay the groundwork for preparing to list on the Toronto Stock Exchange. Khalife likens the system to going from the NCAA to the NBA.
“We think in the early stages of the public market, Canada has a different mentality than the U.S.,” Khalife said.
He pointed out that the Toronto Venture Exchange is a real exchange. Financial requirements include three years of audited financial statements, although many companies may opt for one year of audited financial statements and file an auditor-reviewed interim report.
Khalife observes that while early growth stage companies struggle to meet financial requirements as they prepare to list in Canada, it can be very helpful in providing young companies with the financial discipline that will help them thrive.
increase awareness
Panelists noted that going the Canadian route allows companies to differentiate themselves in several ways. On the one hand, a life sciences company with a market capitalization of C$50 million ($40.04 million) would be considered one of the top ten life sciences companies in Canada. In contrast, the same company in the US market ranks a mere 398th among life sciences companies.
There are 221 healthcare-related companies listed on the Toronto Stock Exchange. Of these companies, 183 have market caps below $80 million.
Another benefit of going public, Roop added, is that analyst coverage can help further boost the profile of the healthcare and life sciences company. In the U.S. market, Roop believes companies must have higher market caps to get the analyst coverage they get in the Canadian market.
Roop noted that while several health tech companies went public in Canada last year, medical device companies fared better.
Less stringent requirements for early growth stage companies
While he admits it seemed intimidating at first, Khalife said The level of readiness required by the TSX is not dissimilar to what is expected of a Series B or C stage company in the US market.
Listing requirements include $750,000 in net tangible assets or $500,000 in revenue or $2 million in financing. The company needs to have at least three directors and two need to be independent.
Still, Katznelson cautioned against rushing to list on the Toronto Stock Exchange.They need to make sure they have their own [financial] Ducks lined up in a row.
Diverse investor base
One misconception about listing in Canada, Roop observed, is the assumption that these companies are limited to Canadian investors. He noted that Canadian public companies have a diverse investor base. They span family offices, hedge funds, asset managers across the US and Canada.
“we have already [investors] As big as BlackRock. “
