#BIOSPAIN2023Interview | "Biotech SMEs focus on projects with no mid-term cash generation, as they rely on constant investment in innovation and development"

Funding for R&D, the use of new technologies in biotechnology, and strengthening capital as a key instrument for growth are fundamental aspects when discussing biotechnology companies.

Having financing options in a research-intensive sector with disruptive projects in early development stages is crucial for the advancement of their innovations and ultimately bringing them to the market.

In this regard, BME has recently announced BME Scale, a new market primarily aimed at so-called "scale-ups". These types of companies have a proven business model, experiencing rapid growth for at least three years, with a minimum revenue of one million euros and/or an investment of at least that amount.

To understand how BME Scale can promote innovation and development in the biotech industry, we spoke with Jesus González, Managing Director of BME Growth and BME Scale, a Bronze Sponsor of BIOSPAIN 2023, the international flagship event in the biotechnology sector.

AseBio. What is BME Scale?

Jesús González. At BME, we've identified that a significant portion of the Spanish business landscape consists of SMEs that, due to their size or organizational structure, may not have the capacity or find it challenging to meet the requirements for inclusion and maintenance on BME Growth. For this reason, we focused on the idea of creating a new, more flexible market with tailored requirements for these smaller companies.

BME Scale is the first step in financing through the stock markets operated by BME. This market is targeted at scale-ups, which are companies in an early development phase with a proven and scalable business model and a minimum revenue of one million euros from any sector.

AseBio. What types of companies is it aimed at?

Jesús González. BME Scale is primarily focused on scale-ups. These are companies with a proven and high-growth business model. The OECD defines them as companies with annualized growth of over 20%, either in terms of the number of employees or revenue, sustained for more than three years, and with revenues exceeding 1 million euros. BME aims to support these companies, which play a crucial role in wealth creation, employment, and the construction of a robust and globally competitive business ecosystem.

AseBio. What are the requirements? How is it organized?

Jesús González. Companies wishing to join BME Scale must meet transparency and market information commitment requirements, as well as appoint a Registered Advisor to assist them throughout the process. Companies applying for inclusion in BME Scale must be joint-stock companies that meet the following requirements:

1.    Transparency: The level of transparency in the stock market implies a change in the mindset of reference shareholders, in governance bodies, and their methods of operation. Regulation is adapted to their needs and introduces new intermediaries, the Registered Advisor, BME Scale itself, and the CNMV (Spanish Securities Market Commission) in matters related to market abuse. All this is done while maintaining adequate levels of information through various procedures.

2.    Financial Information: Commitment to providing annual financial information, duly audited, as well as significant shareholdings required by BME Scale.

3.    Appointment of a Registered Advisor to assist them both during the listing process and while they are part of the market.

AseBio. Financing is one of the major challenges facing biotech companies. What advantages can BME Scale offer them?

Jesús González. BME Scale, under the approval and supervision of the CNMV, has designed a regulation and a straightforward incorporation process for these companies with very competitive costs.

Unlike BME Growth, there is no need for stock market diffusion to join BME Scale. Companies decide when and how to open their capital to investors. BME Scale offers companies a market tailored to their needs to raise funds through the issuance of shares, increasing their visibility and credibility as a publicly traded company, which has implications for transparency and professionalism in their dealings with customers, suppliers, financiers, etc.

Listed companies have a powerful tool at their disposal for share exchange operations in corporate transactions, facilitating inorganic growth for these companies.

Furthermore, companies listed on BME Scale have access to a training, coaching, and networking program called the Pre-Market Environment, where companies learn to professionalize and accelerate their transformation to meet their growth objectives through the stock markets.

AseBio. Based on your experience, what are the main obstacles that biotech companies face in terms of financing?

Jesús González. Biotech SMEs focus on projects with no mid-term cash generation, as they rely on constant investment in innovation and development. This is why financing these business projects is crucial. In this sense, BME Scale and BME Growth offer an alternative to traditional bank financing so that these projects can progress without relying solely on the latter.

They also need to build trust with their potential clients, often large companies. Being listed on a market can open many doors for partnerships and suppliers.

AseBio. What does BME expect from BIOSPAIN 2023?

Jesús González. Biotech companies are vital for the Spanish entrepreneurial ecosystem. For over 10 years, BME has collaborated with Asebio and BioCat to promote the development of companies in this sector through initiatives like BIOSPAIN, which foster knowledge sharing and interaction between biotech companies and potential clients and investors.

For us, BIOSPAIN is the key place to connect with the major players in this sector and convey our messages. It's an opportunity to meet new companies and discuss how BME provides support to companies in all stages of development, from their initial forays into the stock markets, through training in the Pre-Market Environment, to listing on the Scale, Growth, or Stock markets, all tailored to their needs.

In fact, in this edition, we have good examples like Atrys and Oryzon, which are part of this ecosystem and have leveraged BME markets to grow and strengthen their capital structure.