The Michigan Bioscience Industry Association, MichBio, along with organizations around the country, supports the recently introduced Fostering Innovation Act.
The Act introduced by Sens. Gary Peters (D-MI), Thom Tillis (R-NC), David Perdue (R-GA), and Kyrsten Sinema (D-AZ) would build on the success of the JOBS Act by extending the exemption from Sarbanes-Oxley Section 404(b) for an additional five years for pre-revenue biotech companies.
Essentially the Act will allow biotech companies without an FDA approved product on the marketi.e. those still in the R&D phase of business developmentto avoid the costly compliance related disclosures required of established organizations, says Stephen Rapundalo, Ph.D, President and CEO of MichBio. It is vitally important that the emerging biotech companies formerly afforded scaled disclosure under the JOBS Act are able to continue to devote their precious capital toward science rather than compliance.
According to the Biotechnology Innovation Organization, BIO, More than 300 biotech companies have gone public since passage of the JOBS Act in 2012a 270 percent increase over the same period prior to its enactment.
As helpful as the five-year exemption was, biotech startups operate on a different timeline than most other industries. On average, innovative biotech companies spend 10-15 years in the lab or clinic developing potentially life-saving medical advances before their first therapy is approved by the FDA and put on the market, continued Rapundalo, This long period in pre-revenue operations makes the protections offered in the Fostering Innovation Act essential to continued growth in the biotech industry.
We thank Sen. Peters for his continued support of Michigans biosciences industry. We applaud him and the other bill sponsors for their leadership and encourage the Senate to advance this legislation to ensure emerging biotech companies can continue to invest significantly in research and development to discover life-saving medicines.
Without these protections, emerging biotech companies would spend upwards of $1 million per year on the 404(b) audit and other financial disclosure obligations that do not benefit their investors. Advancing this legislation will enhance capital formation and spur scientific advancement across the country for the benefit of biotech investors and patients alike.
For more information on MichBio visit www.michbio.org.
Michigan Biosciences Industry Association (MichBio) is the recognized voice as well as the foremost source of information, advocacy and resources in Michigan for the biosciences industry.
Stephen Rapundalo, Ph.D.
President and CEO, MichBio
Director of Marketing and Communications, MichBio