Biotech Leader Testifies at Congressional Hearing on ‘Reducing Barriers to Capital Formation’
Washington, DC (July 10, 2013, 11:00am EST)– Today, the House Financial Services' Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing on “Reducing Barriers to Capital Formation, Part II.” Kenneth I. Moch, President and Chief Executive Officer of Chimerix, Inc. and a member of BIO’s Emerging Companies Section Governing Board,presented testimony at the hearing on market structure reforms that can decrease the cost of capital and increase liquidity for emerging biotech companies trading on the public market.
In his testimony, Mr. Moch stated:
“The public market plays a pivotal role in financing the search for groundbreaking cures and treatments, as growing innovators often turn to an IPO to fund late-stage clinical trials.
“At a time when venture capital financing of biotech is at an historic low, the ability to access public capital is increasingly important. We have seen the clear appetite for capital formation on the public market in the wake of the Jumpstart Our Business Startups (JOBS) Act. The rise in biotech IPOs in the last year is a clear indication that public fundraising is fundamental in the search for groundbreaking medical advancements.
“However, capital formation does not end with an IPO. With late-stage trials beyond the capital reach of private investors, companies entering their final stages of R&D often turn to the public market for financing. A healthy public market bolstered by strong small company liquidity and reasonable regulatory obligations will ensure the success of public financing throughout the decade-plus biotech development cycle.
“Allowing tick size flexibility, reducing regulatory burdens, and addressing the broad portfolio of other market structure issues, including off-exchange trading transparency and high-frequency trading, will stimulate both trading and IPO activity and improve the overall health of the public market.
“The financing challenges that emerging biotechs face are unique, but when our industry is successful it has the potential to deliver life-saving cures and treatments. I urge the Congress to consider these reforms to help save lives and treat patients in desperate need of hope.”
The hearing focused on several bills that aim to support emerging biotechnology companies, including:
The Fostering Innovation Act, sponsored by Rep. Michael Fitzpatrick, which would amend the filing status classifications in U.S. Securities & Exchange Commission (SEC) Rule 12b-2 to classify companies with a public float below $250 million or revenues below $100 million as non-accelerated filers.
Tick size flexibility for emerging companies, which would increase small issuer liquidity and address the needs of growing businesses hamstrung by decimalization.
The Audit Integrity and Job Protection Act, sponsored by Reps. Robert Hurt and Gregory Meeks, which would prevent the Public Company Accounting Oversight Board from mandating that public companies periodically rotate their external audit firms.
Small issuer exemption from eXtensible Business Reporting Language (XBRL) compliance, which stalls the development process by unnecessarily diverting funds to reporting and away from R&D.
Effective and expeditious implementation of the JOBS Act, the capital formation impact of which has been blunted by delays at the SEC.
Chimerix undertook a successful IPO in April 2013 using key provisions in the JOBS Act. Twenty-seven biotech companies have taken advantage of the JOBS Act to go public, and many more are on file with the SEC.
For more information on emerging biotechnology companies, please visit http://www.bio.org/category/emerging-companies.
About Chimerix, Inc.
Chimerix, a biopharmaceutical company based in Durham, NC, is committed to the discovery, development and commercialization of novel, oral antiviral therapeutics designed to transform patient care in areas of high unmet medical need. Chimerix's proprietary lipid technology has given rise to two clinical-stage nucleotide analog lipid-conjugates, CMX001 and CMX157, which have demonstrated the potential for enhanced activity and safety in convenient, orally administered dosing regimens. CMX001 has shown broad-spectrum activity against double-stranded DNA viruses, including herpesviruses, adenoviruses and polyomaviruses. Chimerix anticipates beginning the Phase 3 SUPPRESS trial in the third quarter of 2013 for the prevention of cytomegalovirus infection in hematopoietic stem cell transplant recipients. Chimerix's second product candidate, CMX157, an oral nucleotide analog for the treatment of HIV infection, was licensed to Merck in July 2012.