Washington, DC (November 2, 2011) – The Biotechnology Industry Organization (BIO) strongly supports the Small Company Capital Formation Act (HR 1070), sponsored by Rep. David Schweikert (R-AZ), which passed the House today by a vote of 421-1.
This Act would reform the Security and Exchange Commission’s (SEC’s) current Regulation A (“Reg A”) by allowing companies that plan to sell up to $50 million in shares as part of a public offering to be exempt from registering with the SEC. Currently, companies must register with the SEC if they issue more than $5 million in shares.
BIO President and CEO Jim Greenwood made the following statement today:
“BIO supports the Small Company Capital Formation Act to help ease the burden on cash-strapped small biotechnology companies short on resources by streamlining requirements and supporting their efforts in raising much-needed capital. BIO thanks Rep. Schweikert for his leadership on this legislation, and urges the Senate to consider the issue at the earliest opportunity.
“Raising the exemption to $50 million would give struggling companies another avenue to raise capital through direct public offerings without a lengthy paperwork process.
“Supporting American biotechnology companies moves America closer to discovering breakthrough therapies, lowering overall health care costs and curing debilitating diseases like HIV/AIDS, cancer, Multiple Sclerosis and Parkinson’s.
“Since it takes on average 10 years or more of research, development and testing, and more than $1 billion to bring a new therapy to market, bolstering capital formation in the biotechnologyindustry through Reg A reform would helpspeed life-saving cures and treatments to patients.”
President Obama endorsed this proposal in his address to Congress in September, when he urged lawmakers to ‘cut away the red tape that prevents too many rapidly growing startup companies from raising capital and going public.’
Senators Jon Tester (D-MT) and Pat Toomey (R-PA) have introduced a companion bill (S.1544) in the Senate.
For additional data and analysis on the U.S. biotechnology industry, please visit http://insidebioia.com/.