JOBS Act Deconstructed

More than 40 biotech companies have gone public using provisions made available to emerging growth companies through the JOBS Act. BIOtechNOW’s JOBS Act Deconstructed series explores why it has had such an impact on biotech offerings and how emerging companies can leverage the new law to their best advantage.

Regulatory Relief: In a Nutshell

Emerging growth companies are eligible for these regulatory allowances during their first five years on the public market, provided that they do not exceed $700 million in public float or $1 billion in revenue during that time.
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Testing-the-Waters: In a Nutshell

The JOBS Act allows emerging growth companies to conduct testing-the-waters meetings with investors prior to their roadshow. These meetings enable growing companies to get relevant information, including a fuller description of their research, to potential investors in order to generate interest in an offering. Companies can also use their interactions with investors in testing-the-waters meetings to gauge investor interest in the forthcoming IPO.
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Confidential Filing: In a Nutshell

The JOBS Act allows emerging growth companies to file their S-1 confidentially with the SEC before making it public at least 21 days before the start of a company’s roadshow. Nearly 85% of emerging growth companies have used the confidential filing process. It is important to note that these issuers are not conducting a secret IPO – their S-1 is always made available to the public well in advance of an offering, often exceeding the 21 days required by law. On average, investors have 49 days pre-roadshow to inspect a company’s filings.
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Regulation D: In a Nutshell

New SEC rules recently took effect implementing Title II of the JOBS Act, which mandates reforms to Rule 506 of SEC Regulation D to increase its utility for capital formation. Rule 506 is a popular fundraising outlet that allows issuers to raise an unlimited amount of capital from accredited investors. The JOBS Act directed the SEC to lift the ban on general solicitation for offerings conducted under Rule 506, provided that issuers sell securities only to accredited investors and take reasonable steps to verify that all purchasers in an offering are accredited.  The SEC implemented this reform by creating a new Rule 506(c) that allows general solicitation in offerings to accredited investors.
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Read our FAQ document on Rule 506(c)