Today, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing on “Spurring Job Growth through Capital Formation While Protecting Investors, Part II.” On behalf of the Biotechnology Industry Organization (BIO) William D. Waddill, Senior Vice President and Chief Financial Officer of OncoMed Pharmaceuticals, presented testimony at the hearing on the importance of capital formation to encourage investment in the biotechnology industry and spur job growth across the country.
The hearing focused on several bills that aim to support emerging biotechnology companies, including:
--The Reopening American Capital Markets to Emerging Growth Companies Act (S. 1933) to create an “on-ramp” to the public market for emerging growth companies to allow a transition period for certain accounting and disclosure requirements, including Sarbanes-Oxley Section 404(b).
--The Small Company Capital Formation Act (S. 1544) to reform SEC Regulation A by expanding its eligibility requirements to include companies conducting direct public offerings of up to $50 million.
--The Private Company Flexibility and Growth Act (S. 1824) to increase the limit that requires private companies to register with the SEC from 500 to 2000 shareholders.
--The Access to Capital for Job Creators Act (S. 1831) to require the SEC to revise Rule 506 of Regulation D to permit general solicitation in direct public offerings, broadening the investor base.
In his testimony, Mr. Waddill stated the following:
“Congress has the opportunity to inspire biotechnology breakthroughs and allow innovators and entrepreneurs to continue working toward delivering the next generation of medical breakthroughs – and, one day, cures – to patients who need them.
“Entrepreneurs across the biotech industry are conducting groundbreaking science like ours, and are deeply invested in treating the severe illnesses that families around the nation face. At the same time, biotech leaders must deal with the day-to-day challenges of running a small business. Of great import in the biotechnology industry is the constant struggle to find working capital.
“It can take over a decade and more than $1 billion to develop a single biotechnology therapy. Venture capital fundraising is stagnant and the IPO market is largely closed, forcing innovative companies to delay research on promising scientific breakthroughs.
“Startup companies depend on venture capital fundraising to finance the early stages of research and development. In fact, many companies, including mine, rely on venture financing to fund even middle- and late-stage clinical trials. However, the current venture landscape has made this type of funding difficult. Small, startup companies are the innovative heart of our industry, but depressed financing means that potential cures and treatments are often left on the laboratory shelf.
“The U.S. biotechnology industry remains committed to developing a healthier American economy, creating high-quality jobs in every state, and improving the lives of all Americans. Additionally, the medical breakthroughs happening in labs across the country could unlock the secrets to curing the devastating diseases that affect all of our families.”
For more information on emerging biotechnology companies, please visit http://www.bio.org/category/emerging-companies.