Peters & Tillis Introduce Bipartisan Bill to Cut Red Tape for Bio-Tech Startups
WASHINGTON, D.C. – U.S. Senators Gary Peters (D-MI) and Thom Tillis (R-NC) introduced the Fostering Innovation Act, bipartisan legislation that would provide commonsense regulatory relief for many innovative startup companies in scientific and medical research fields. This industry faces additional burdens when complying with federal regulations because of the resource-intensive research and development costs associated with bringing new scientific and medical developments to consumers.
“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.”
Michigan is home to more than 600 bioscience companies, academic research centers and clinical institutions that support over 124,000 jobs. This growing industry launched 150 new startups within the past decade and registered over 1,800 bioscience patents from 2004-2009, putting Michigan tenth in the nation for patenting these innovative treatments.
“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.”
“MichBio applauds the efforts of Sens. Peters and Tillis in introducing the Fostering Innovation Act,” said MichBio President and CEO, Stephen Rapundalo. “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.”
Current regulations provide startup firms with a five-year grace period from required financial compliance reporting for publicly traded companies. Bioscience startups typically require significant amounts of capital and many years to take a product through human clinical testing and to market. As a result, many bioscience companies go public through an initial public offering (IPO) at the early to mid-stages of clinical testing, triggering the start of the five year grace period. However, these companies may not start earning a profit on their product until well after the five year period had ended, putting additional strain on their limited resources. The Fostering Innovation Act temporarily extends the current exemption for an additional five years for small startups with annual average revenues of less than $50 million and less than $700 million held in stock owned by public investors to ease the regulatory reporting burden for small startups that have not fully realized their earnings or recouped their research and development costs.
“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,” said Jim Greenwood, President & CEO of BIO, the world’s largest biotechnology trade association. “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.”
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