Another strike for biotech: China

Already reeling from general waning investor sentiment, biotech now has another problem. China-based companies traded on US exchanges are coming under pressure over the perceived risk that they might be delisted because of a rule recently implemented by the SEC.

The issue relates to the accountancy firm that each company uses to audit financials; where such a firm is based in China it typically cannot be inspected by the US regulator – and this could be grounds for delisting. Though the risk is theoretical and just five companies have so far been identified the fear is that the list will grow as annual reports are filed, and that the SEC cuts its grace period for non-compliers.