BIO Praises Rep. Michael Fitzpatrick for Introducing the Fostering Innovation Act
Washington DC, July 10, 2013– Today, the Biotechnology Industry Organization (BIO) thanks Rep. Michael Fitzpatrick (R-PA) for introducing H.R. 2629, the Fostering Innovation Act. H.R. 2629 will reduce regulatory burdens on small public companies, allowing emerging biotech companies to focus on groundbreaking research rather than spending capital on bureaucratic red tape.
Under current U.S. Securities and Exchange Commission (SEC) rules, public companies are grouped by size to determine compliance requirements. The smallest group, called non-accelerated filers, is capped at companies with a public float of no more than $75 million; these small businesses are subjected to a reduced regulatory burden. The Fostering Innovation Act will amend the filing status classifications in SEC Rule 12b-2 to allow companies with public floats below $250 million or revenues below $100 million to qualify as non-accelerated filers.
Jim Greenwood, BIO’s President and CEO, made the following statement:
“BIO applauds Rep. Fitzpatrick for introducing this important legislation. Biotech small businesses can spend more than a decade and more than $1 billion developing life-saving treatments for devastating diseases like cancer, Alzheimer’s disease, diabetes, and HIV/AIDS. But their research can be delayed when government compliance burdens siphon off their innovation capital. These innovators operate almost entirely without product revenue, so costly regulations like Sarbanes-Oxley (SOX) Section 404(b) force companies to spend dollars on reporting rather than research.
“The current filing status definitions at the SEC are outdated and do not reflect the reality of many small public biotech companies. Many biotech companies exceed the $75 million cap because of the high costs of groundbreaking R&D and are therefore forced to pay for an expensive compliance regime, including the costly burden imposed by SOX Section 404(b), despite their simple corporate structure and lack of product revenue.
“Rep. Fitzpatrick’s legislation will group companies with common characteristics together, giving the SEC more accurate filing classifications and providing important regulatory relief to startups working on cutting-edge scientific breakthroughs. This change will reduce their regulatory burden and, for growing biotech innovators, allow them to spend valuable innovation capital on breakthrough research.
“The Fostering Innovation Act will stop the damaging diversion of capital from science to compliance. Every dollar spent on bureaucratic red tape is lost to innovation. H.R. 2629 will reduce regulatory burdens, spur biotech research, and speed the development of next generation technologies.”
Rep. Fitzpatrick also introduced the Fostering Innovation Act in the 112th Congress. BIO Board member Jeffrey Hatfield, President and CEO of Vitae Pharmaceuticals, provided testimony before the House Subcommittee on Capital Markets supporting the legislation and providing perspective on the true cost of burdensome regulations on growing biotech companies. Please click here to read Mr. Hatfield’s testimony.
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