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The New Road to IPO in the Age of the JOBS Act

October 9, 2013
Not surprisingly, sessions discussing the topic of IPOs at this year's BIO Investor Forum, tend to fill the room. Furthermore, it should surprise no one that this year's IPO discussions were upbeat.

That is mostly attributable to the dramatically higher number of IPOs that have already occurred this year. Furthermore, according to Jeff Baumel, moderator of a panel covering this very topic, deals are closing faster this year - with a median time of just 97 days.

Baumel, who is an attorney specializing in securities law, attributes much of the positive climate to JOBs Act, which removed bureaucratic hurdles that challenged many emerging companies.

This was echoed by Paul Hastings, President and CEO of OncoMed Pharmaceuticals, who credited the JOBs Act with alleviating many of the most challenging elements of the Sarbanes-Oxley Act.

Through the JOBS Act, emerging companies have a five year exemption from the compliance burdens of Sarbanes-Oxley, following their IPO. According to the U.S. Securities and Exchange Commission (SEC) this saves U.S companies up to $2 million per year.

While the JOBs Act can't take all the credit for the resurgence of biotech IPOs, the law has certainly incentivized formation for small, emerging biotechnology companies that do not yet have products on the market.

By allowing companies to focus their limited funds on research rather than on compliance, the JOBs Act has sped the development of new cures and treatments for debilitating diseases such as as cancer, diabetes, Parkinson’s, and HIV/AIDS.