WASHINGTON, D.C. – Today, Senator Thom Tillis (R-NC), a member of the Senate Banking Committee, and Senator Gary Peters (D-MI) introduced the Fostering Innovation Act, bipartisan legislation that would provide commonsense regulatory relief for many innovative companies that are in scientific and medical research fields.
“North Carolina has a rich and diverse biotech landscape, and is the home of many companies that are on the cutting edge of scientific and medical research. Unfortunately, some of the expiring JOBS Act exemptions are going to harm the ability of some companies to access capital and continue to grow by diverting critical investments away from science towards compliance,” said Senator Tillis. “I am proud to join Senator Peters to introduce the bipartisan Fostering Innovation Act, and I look forward to working with my Senate colleagues to advance this critical fix.”
“Michigan is a growing hub for bio-technology startups that are creating jobs and developing cutting-edge cures. Many cures take years of trials and testing to reach patients in need, tying up precious resources for these small businesses,” said Senator Peters. “This bipartisan, commonsense legislation would cut red tape for emerging bio-technology companies so they can focus their resources on the critical research and development that will provide innovative treatments and save lives.”
According to the North Carolina Biotechnology Center, North Carolina is home to more than 650 Life Science companies, including 350 research and development companies, 125 contract research and testing companies, and 110 production and manufacturing companies. These companies employee 63,000 North Carolinians and posted a 6.6 percent employment growth from 2012-2014, three times the national average.
The Fostering Innovation Act is receiving praise of industry organizations such as:
· North Carolina Biosciences Organization (NCBIO) President Sam Taylor: “North Carolina is home to more than 650 biotech companies, directly employing 63,000 North Carolinians in jobs with an average wage of $95,000. The biotech industry in our state has already benefitted tremendously from the JOBS Act, which incentivizes the capital formation necessary to fund life-saving research and clinical trials. The Fostering Innovation Act would build on the JOBS Act’s success and further support small businesses in North Carolina by allowing them to focus valuable innovation capital on their groundbreaking R&D rather than government red tape. NCBIO applauds Sen. Tillis for introducing this bipartisan legislation, which we believe will support the growth of emerging innovators across our state.”
· MichBio President and CEO Stephen Rapundalo: “MichBio applauds the efforts of Sens. Peters and Tillis in introducing the Fostering Innovation Act. If enacted, the legislation would reduce the significant costs that small pre-revenue companies, like those in Michigan’s biosciences industry, incur to comply with Sarbanes-Oxley regulations as they go into public markets. Relieving them of that burden would encourage more of them to commercialize, grow their companies, create new jobs and be impactful to both the Michigan and national economies.”
· BIO President & CEO Jim Greenwood: “BIO commends Sens. Tillis and Peters for introducing the Fostering Innovation Act. More than 230 emerging biotechs have gone public under the JOBS Act, and this bill would further support their growth. By allowing innovative small businesses to focus their investment capital on science rather than compliance, the Fostering Innovation Act would allow these emerging innovators to remain focused on delivering groundbreaking cures and treatments to patients. The targeted nature of the Fostering Innovation Act, which would only benefit pre-revenue companies, represents an important move away from one-size-fits-all regulations. BIO strongly supports this vital legislation, and we applaud Sens. Tillis and Peters for their efforts to reduce compliance costs for emerging biotechs and support small business capital formation.”
Background:
· Currently, emerging growth companies (EGCs) are exempt from certain regulatory requirements for five years after their initial public offering (IPO). One of the requirements EGCs are exempt from is Sarbanes-Oxley Section 404 (b) – which requires public companies to obtain an external audit on the effectiveness of their internal controls for financial reporting.
· The Fostering Innovation Act is a very narrow fix that temporarily extends the Sarbanes-Oxley Section 404(b) exemption for an additional five years for a small subset of EGCs with annual average revenue of less than $50 million and less than $700 million in public float.
· Similar legislation has been introduced in the House of Representatives by Congresswoman Kyrsten Sinema (AZ-09) and Congressman Trey Hollingsworth (IN-09).
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