New Guidance: Inside Information Disclosure by Listed Biotech Companies in Belgium

In Short

The Development: Belgium's financial regulator, the Financial Services and Markets Authority ("FSMA"), published a recent opinion on "Considerations and good practices with respect to inside information disclosures by listed biotech companies" ("Opinion", available here). The Opinion appears to generally apply to all listed companies developing pharmaceutical products, which are referred to as "biotech" companies.

The Result: The Opinion guides listed biotech companies in complying with the general disclosure requirements of the Market Abuse Regulation ("MAR"), particularly with respect to innovative pipeline development. This will help biotech companies with the complexities of identifying reportable events under MAR, which may take place over an extended period of time, given the inherent nature of clinical development. The Opinion, in this respect, provides listed biotech companies with sector-specific considerations and good practices on inside information disclosures under MAR.

Looking Ahead: The Opinion and its good practices will enable listed biotech companies to better understand and manage their disclosure obligations in Belgium, as well as mitigate the risk of compliance pitfalls.


Belgium has a world-class biotech ecosystem, as Euronext Brussels is a leading European hub for listed companies active in the life sciences sector, with biotech companies accounting for more than 50% of its recent initial public offerings. However, compliance with inside information disclosure requirements under MAR may be challenging for listed biotech companies. This is particularly so for newly listed companies with a limited pipeline, given the specific nature of biotech activities and the extended process of clinical development.

The FSMA Opinion, published on October 29, 2020, seeks to assist listed biotech companies in complying with inside information disclosure requirements and to prevent market abuse infringements (i.e., insider dealing, unlawful disclosure of inside information and market manipulation) under MAR.

In this context, the Opinion sets out good practices for the determination, timing and content of inside information disclosures, which are designed to help listed biotech companies better navigate their duties under MAR and provide investors with complete, accurate and precise information in a timely manner.

Market Abuse Regulation and the Public Disclosure of Inside Information

Under MAR, listed companies must disclose inside information "as soon as possible" (further discussed below). To recall, MAR defines "inside information" as any nonpublic information of a precise nature relating, directly or indirectly, to an issuer or its securities and which, if made publicly available, is likely to have a significant effect on the price of the securities (shares or bonds). Under certain circumstances, "inside information" may also be deemed to arise as a result of an intermediate step in a process that extends over a period of time, such as during the innovative pipeline development process in biotech.

The clinical development of a biotech product candidate is a multiphased process, i.e., phases I, IIA, IIB and III for premarket clinical studies, and phase IV for postmarket studies. Consistent with the inside information definition above, such information could arise at different stages of the clinical development of a product candidate, before phase III results are known or a market authorization decision is issued. The Opinion acknowledges the challenge of identifying whether such an intermediate step would give rise to inside information in the framework of clinical development.

The Opinion applies to information relating to "material product candidates". Under the Opinion, these are defined as "a product candidate that has a significant revenue potential for the issuer". For such candidates, the Opinion considers that intermediate events or conclusions will, in most cases, qualify as "inside information", where these occur during the clinical development process and significantly alter the (i) assessment of the revenue potential, (ii) likelihood and timing of a potential marketing authorization and/or (iii) company's decision to move (or not) to the next phase of the clinical development program.

More specifically, the Opinion deems that inside information can potentially arise from one of the following intermediate events in the development process of a "material product candidate":

  • Efficacy and safety results: Safety and efficacy data generated as part of a phase III qualifies, in most cases, as inside information. Additionally, data developed as part of phase IIA and IIB could also qualify as such. FSMA also considers that inside information can arise upon the occurrence of unexpected serious adverse events (irrespective of the clinical trial phase), negative safety findings or, more generally, interim results, as well as negative trends in results and any decision to halt a trial on efficacy, inefficacy or safety grounds.
  • Recruitment progress: A gap between the actual and the expected level of patient recruitment and treatment, or a recruitment delay, may constitute inside information to the extent that it may impact the timing of a potential marketing authorization, irrespective of the actions considered or to be undertaken to resolve the problem.
  • Decision to stop or temporarily suspend a clinical trial: A decision to halt or suspend temporarily a trial, or to withdraw a market authorization application, constitutes inside information in most cases, irrespective of the reasons underlying the decision.
  • Marketing authorization decisions: In most cases, marketing authorization decisions ("MAD") by the European Union ("EU") and national competent regulatory authorities qualify as inside information. Notably, in FSMA's view, inside information can also arise from dialogue with such regulatory authorities, before a MAD is formally adopted. This is if, based on such dialogue, a company can reasonably conclude that a positive or negative decision is highly likely to be issued.
  • Partnership agreement: The conclusion or termination of a commercial partnership agreement (or any preliminary steps in that direction, including the signing of a binding letter of intent) may constitute inside information, depending on the specific circumstances of the deal, such as the structure, payment terms, the scope of the rights under the agreement or the extent of the partner's research and development experience or distribution network.

To better determine whether information qualifies as "inside information", FSMA recommends the adoption of a number of good practices, such as establishing appropriate internal procedures to assess the nature of available information or setting up a disclosure committee. FSMA also recommends that listed biotech companies disclose the status of their trials and a calendar with the expected timing of clinical milestones in their financial periodic reporting.

Timing of Disclosure of Inside Information

As mentioned above, MAR requires the disclosure of inside information "as soon as possible". The Opinion indicates that such disclosure should therefore occur immediately (including during trading hours after requesting a suspension of the trading of the concerned company's shares), except where a legitimate delay would be justified by exceptional circumstances.

In particular, according to MAR, a listed company may delay the publication of such inside information if (i) the immediacy of the disclosure is likely to prejudice its legitimate interests, (ii) the delay in the disclosure is not likely to mislead the public and (iii) the listed company is able to ensure the ongoing confidentiality of that information. Confidentiality is no longer deemed as "ensured" in situations where a sufficiently accurate rumor explicitly relates to the inside information whose disclosure has been delayed. In such case, the information must be disclosed to the public as soon as possible. MAR further provides that when a listed company has delayed the disclosure of inside information, it must notify FSMA of the delay immediately after the information is disclosed to the public and provide a written justification explaining how the conditions for delayed disclosure were met.

In its Opinion, FSMA specifies that the following circumstances could warrant a delay for biotech companies in disclosing inside information:

  • When clinical trial results require additional analysis (unless further analyses are unlikely to yield new information);
  • When an immediate disclosure is not permitted under applicable laws or regulations, or by the competent regulatory authorities; or
  • When an immediate disclosure is likely to jeopardize the outcome of negotiations relating to a commercial partnership agreement.

FSMA also recommends that listed biotech companies adequately document the reasoning underlying the timing of a disclosure and establish effective procedures and measures to ensure publication of inside information as soon as possible. The timing of disclosure to the market should also be aligned with the timing of disclosure by other third parties, such as regulatory authorities in charge of medical products.

Content of Disclosure of Inside Information

Neither MAR nor other Belgian law specifies the content of inside information disclosures. Instead, these simply contain general principles that should guide such disclosures. For example, MAR states that disseminating information that gives, or is likely to give, false or misleading signals will be considered as a market manipulation; however, it does not specify when such scenario would occur. Similarly, under the Belgian Royal Decree of 14 November 2007 on the obligations of issuers, listed companies must make all necessary information available to the public and ensure that such information is true and accurate. Again, however, such Decree is without guidance on how to articulate such information.

The Opinion therefore provides useful guidance on applying the above principles in the daily practice of biotech companies by detailing various general and specific good practices to help such companies meet these general requirements. For example, the Opinion clarifies that it is good practice to include a balanced mix of nontechnical and (supporting) technical information in public disclosures, thus allowing investors with different levels of knowledge and experience in scientific and clinical matters to make an informed investment decision. FSMA also expects that biotech companies will not use technical information to conceal the main, nontechnical message of such disclosures, which should always be easily accessible and understandable.

Furthermore, while biotech companies are asked to disclose information as factually and objectively as possible, FSMA acknowledges that company views and forward-looking statements on clinical developments may be useful to investors. If such forward-looking statements or company views are included in the disclosure, FSMA recommends that biotech companies only disclose information based on reasonable grounds and include, where necessary, meaningful cautionary statements and explanations. 

Concurrent Application of Sector-Specific Regulations

Notably, the FSMA guidance in the Opinion provides an additional layer of disclosure obligations for biotech companies that are already subject to certain sector-specific requirements, although such disclosures usually apply later in the life cycle of products developed by such companies. Indeed, these obligations derive from various instruments, including the European Medicines Agency ("EMA") policy on the publication of clinical data for medicinal products for human use (so-called "EMA Policy 0070").

EMA Policy 0070 provides for EMA's proactive publication of clinical reports submitted by pharmaceutical companies (including biotech companies) as part of centralized marketing authorization procedures, after the granting or denial of a marketing authorization or, in certain circumstances, after withdrawal of a marketing authorization application. Currently, however, EMA Policy 0070 is suspended, except for COVID-related medicinal products. In addition, under Regulation (EU) No. 536/2014 on clinical trials―while not yet in force―the EMA Policy 0070's public disclosure obligations for centrally authorized products shall extend to all clinical trial-related information generated during a clinical trial of any pharmaceutical products in the EU.

More generally, when making MAR-required disclosures, European pharmaceutical companies must ensure that they do not run afoul of sector-specific rules surrounding communications on medicinal products, including rules that prohibit promoting unapproved medicinal products. While communication on events that negatively affect the future of a candidate product will generally not be viewed as promoting a product, positive results could potentially be perceived as disguised promotion. In this regard, it is essential to carefully balance interests and to exercise great caution in drafting related communications.

The need for pharmaceutical companies to engage in a dialogue with the financial community on interim milestone results of clinical development is generally understood, and the life sciences industry has been dealing with potentially conflicting disclosure requirements and rules for years now. Indeed, some industry codes, such as the United Kingdom's Association of the British Pharmaceutical Industry Code, seek to help companies strike the right balance in addressing such requirements. The Opinion now offers further scenarios to carefully consider in designing and implementing a compliant corporate communications strategy that takes into account all applicable rules.

Three Key Takeaways

  1. Clinical trials are processes developing over a sometimes long period of time and consisting of several phases during which inside information may arise under MAR.
  2. The Opinion's guidance and good practices for the identification, timing and content of inside information disclosures will help listed biotech companies to better navigate their duties under MAR and avoid market abuse infringements, while promoting informed decision-making by investors.
  3. When designing and implementing their communications, life sciences companies must carefully evaluate their MAR disclosure obligations with applicable sector-specific regulations for communications on pharmaceutical products, including prohibitions on promoting unapproved products (such as those still in clinical development).

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