Innovative biotech companies stand to gain from legislation—passed by the House Friday—that, if approved and signed, would help startups obtain the capital they need and spend more of that capital on research.
The Expanding Access to Capital Act (H.R. 2799), sponsored by House Financial Services Committee Chair Patrick McHenry (R-NC), would reduce various regulatory burdens for small, emerging companies. For example, it would allow a firm to forgo securities registration when a company’s security offering over 12 months totals $250,000 or less.
Why it matters: BIO supports the bill’s incentives to invest in innovation because biotech is one of the most research-intensive industries in the world.
“This legislation is especially important for biotech startups who are often in the lab without a Food and Drug Administration (FDA) approved product for a decade, and therefore generating no revenues,” says David Lachmann, Senior Director, Federal Government Relations at BIO.
Building on JOBS: The bill incorporates the text of Rep. Bryan Steil’s (R-WI) Helping Startups to Grow Act (H.R. 2624), which would increase the number of firms eligible for Emerging Growth Company (EGC) designation. Under the 10-year-old JOBS Act, EGC firms can forgo certain costly regulatory requirements.
Enabling investment: An amendment offered by Reps. Ann Wagner (R-MO), Gregory Meeks (D-NY), Wiley Nickel (D-NC), and David Scott (D-GA) would help free investment by changing rules for closed-end investment companies.
BIO’s view: “By successfully balancing sound market protecting regulations with enhanced access to capital, Congress can promote early-stage innovators who are the source of most innovation in the biotechnology field,” according to Lachmann. “BIO looks forward to Senate action on these important measures.”
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