Washington DC—Congressman Ben McAdams (D-UT) and Congressman Trey Hollingsworth (R-IN) have introduced bipartisan legislation to provide commonsense regulatory relief for America’s growing companies, including many in the bioscience sector. The Fostering Innovation Act is a narrow fix that allows small emerging growth companies to keep public capital working to fund business needs, such as innovative medical research, rather than expensive regulatory filings.
“The initial years after a company goes public are a critical time for that company’s success and every penny counts. This bill narrowly targets a subset of public companies that would receive an additional five years of cost-savings through an exemption from an expensive regulatory requirement. That money can then be plowed back into product-testing and development and move them towards becoming more stable and sustainable businesses,” said McAdams.
“America has always been a leader in scientific and medical innovation,” said Rep. Trey Hollingsworth (IN-09). “The Fostering Innovation Act will update our federal regulations, ensuring they do not get in the way of allowing America to develop the next generation of cures.”
The bill extends a Securities and Exchange Commission (SEC) exemption from an external audit requirement for an additional five years for a small subset of emerging growth companies with annual revenue of less than $50 million and less than $700 million in public float. The legislation would be particularly important for Utah’s life science industry, as most biotechnology companies lack revenue for at least a decade as they work towards their first product approval.
“For emerging biotech companies, one-size-fits-all compliance burdens present a costly roadblock to growth and medical progress,” said Biotechnology Innovation Organization (BIO) President and CEO Jim Greenwood. “These companies typically operate for many years without product revenue, meaning that funds needed to comply with unduly burdensome regulations are diverted from their intended purpose – scientific advancement for the benefit of patients and consumers. The Fostering Innovation Act would reduce the cost of Sarbanes-Oxley compliance for these companies – without undermining important investor protections – allowing them to utilize investment capital to spur job creation and advance their potentially life-saving research.”
BioUtah President & CEO Kelvyn H. Cullimore said the legislation will allow capital provided from public financing to more effectively sustain promising companies.
“I commend Representatives Ben McAdams and Trey Hollingsworth for championing the Fostering Innovation Act. Many of Utah’s emerging biotech companies are small start-ups and do not yet generate product revenue. Accessing capital through public financings can be a key tool in sustaining the efforts of these companies in developing technologies that extend and save lives. This pro-business bill will enable those companies to focus critical resources in the lab and not on unnecessary regulatory burdens,” Cullimore said.
“The Fostering Innovation Act makes good business sense for Indiana and our state’s emerging biotech companies by reducing the cost of burdensome regulations,” said Kristin Jones, President and CEO of the Indiana Health Industry Forum. “This bill builds upon the success of the JOBS Act and will enable emerging biotechnology innovators to devote more of their limited resources to potentially lifesaving research and development activities. On behalf of Indiana’s innovative biotechnology companies, I commend Representatives Trey Hollingsworth and Ben McAdams for their leadership.”
A bipartisan companion bill has been introduced in the Senate.