BIO Applauds Sens. Tillis, Sinema, Peters, and Perdue for Introducing the Fostering Innovation Act
BIO Applauds Sens. Tillis, Sinema, Peters, and Perdue for Introducing the Fostering Innovation Act
Washington, DC (February 13, 2019) - The Biotechnology Innovation Organization (BIO) applauds Sens. Thom Tillis (R-NC), Kyrsten Sinema (D-AZ), Gary Peters (D-MI), and David Perdue (R-GA) for introducing the Fostering Innovation Act (S.452) to build on the success of the Jumpstart Our Business Startups (JOBS) Act. The Fostering Innovation Act extends one vital JOBS Act provision – the temporary exemption from Section 404(b) of Sarbanes-Oxley (SOX) – for an additional five years for qualifying pre-revenue small businesses.
The following statement may be attributed to BIO President & CEO Jim Greenwood:
“I commend Sens. Tillis, Sinema, Peters and Perdue for championing the Fostering Innovation Act. Over 300 biotechnology companies have gone public since the JOBS Act was enacted, and this important legislation will further promote capital formation while preserving investor protections. Most biotechnology companies remain pre-revenue for a decade or more until they receive their first product approval, long past the original five-year exemption from SOX 404(b) granted by the JOBS Act, causing a damaging diversion of capital from science to compliance. By extending this commonsense exemption of the JOBS Act to qualifying companies, emerging biotechnology innovators will be able to devote more of their limited resources to potentially lifesaving research and development activities.”
Background
The JOBS Act provides emerging growth companies (EGCs) with a five-year exemption from Section 404(b) of Sarbanes-Oxley (SOX), which requires a costly external attestation of a company’s internal financial controls. The Fostering Innovation Act would extend the JOBS Act’s SOX 404(b) exemption for an additional five years for EGCs that maintain a public float below $700 million and average annual revenues below $50 million. The additional five years of cost-savings would allow growing companies to focus their capital on groundbreaking R&D rather than one-size-fits-all regulatory burdens.
In recognition of National Inventors’ Day earlier this week, BIO published a new white paper authored by renowned economists Craig Lewis and Joshua T. White of Vanderbilt University. Their findings point to mounting evidence that links Section 404(b) compliance to reduced market capitalization, higher audit fees, exiting of public markets, and a direct reduction in innovation such as R&D that results in fewer patents. Failing to extend the exemption from Section 404(b) compliance for Bio-EGCs would have a negative impact on America’s economy and society for generations to come, the study concludes.