Biotech Leader Provides Testimony on Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens
WASHINGTON, D.C. (Thursday, April 30, 2015) - Shane Kovacs, Executive Vice President & Chief Financial Officer of PTC Therapeutics, Inc., provided testimony on behalf of the Biotechnology Industry Organization (BIO) before the United States House of Representatives Committee on Financial Services, Subcommittee on Capital Markets and Government Sponsored Enterprises.
The success of the Jumpstart Our Business Startups (JOBS) Act in the biotech industry means that the work of the Subcommittee on Capital Markets and Government Sponsored Enterprises has taken on increased importance for emerging biotech companies. Current bills being considered could help to further support the search for breakthrough treatments at the next generation of emerging growth biotech companies.
The following can be attributed to Kovacs as part of his testimony:
“A healthy public market is key to funding the search for innovative, next-generation medicines and maintaining the U.S. as a global leader in 21st century industries like biotechnology. BIO supports policies that increase the flow of capital to innovative small businesses and decrease capital diversions from the lab to unnecessary compliance burdens.
“In addition to capital formation, emerging biotech companies like PTC put a high value on capital efficiency. Every dollar spent on unnecessary regulatory burdens is an investor dollar diverted from the lab. The decades-long development timeline associated with groundbreaking science means that most small biotechs will still be pre-revenue and thus dependent entirely on investment capital when their five-year JOBS Act On-Ramp expires.
“For many innovators, the dawn of year six on the public market will bring with it a new, costly compliance burden. BIO and I believe that a move away from the existing one-size-fits-all regulatory regime will support the growth of these companies beyond the IPO On-Ramp, incentivizing scientific advancement and sustaining small innovative businesses as they continue their efforts to bring life-saving treatments to patients who desperately need them.”
During his testimony, Kovacs referenced the following bills, which BIO supports:
Small Company Disclosure Simplification Act (H.R. 1965), which would exempt EGCs and certain low-revenue issuers from the costly eXtensible Business Reporting Language (XBRL) reporting requirement while requiring the SEC to study and improve the compliance mechanism.
- Disclosure Modernization and Simplification Act (H.R. 1525), which would direct the SEC to review Regulation S-K to reduce the regulatory burden on smaller issuers and eliminate duplicative, outdated and unnecessary compliance requirements.
- Small Company Simple Registration Act (H.R. 1723), which would allow smaller reporting companies (SRCs) to use forward incorporation by reference on Form S-1.
- Reforming Access for Investments in Startup Enterprises (RAISE) Act (H.R. 1839), which would enhance the secondary market for Regulation A+ offerings.
- Encouraging Employee Ownership Act (H.R. 1675), which would reduce the disclosure burden on firms that offer stock options to their employees.
- Improving Access to Capital for Emerging Growth Companies Act (H.R. 1659), which would broaden the impact of the IPO On-Ramp.
PTC Therapeutics is a growing biotechnology company based in South Plainfield, NJ. PTC undertook a successful IPO in June 2013 using key provisions in the JOBS Act. More than 140 biotech companies have gone public as emerging growth companies under the JOBS Act, a dramatic change from the constricted IPO environment prior to the law’s enactment.
The full written testimony can be accessed here.