Hollingsworth Passes Bill to Cut Red Tape, Help Hoosier Companies Making Life-Saving Breakthroughs

FOR IMMEDIATE RELEASE Contact: Katie Webster
February 14, 2018 (202) 225-5315
 

 

WASHINGTON, D.C. – Today, the U.S. House of Representatives passed H.R. 1645, the Fostering Innovation Act, introduced by Rep. Trey Hollingsworth (R-IN) and Rep. Krysten Sinema (D-AZ), as part of a bipartisan legislative package to provide financial regulatory relief to Americans. H.R. 1645 helps ensure that costly regulations don’t stand in the way of successful biopharmaceutical research.

 

“This country has led the world in biotechnology innovation, successfully pushing limits to find cures for some of the deadliest diseases,” said Representative Hollingsworth. “The Fostering Innovation Act will right-size the regulatory environment that detracts from advancements, enabling America to develop the next generation of cures to combat illnesses that plague Hoosiers.”

 

Read the full text of the legislation, here.

 

The bioscience and biotechnology sector in Indiana has expressed strong support of the Fostering Innovation Act:

 

Kristin Jones, President and CEO, Indiana Health Industry Forum: “While the Fostering Innovation Act will be of broad benefit to companies in the bioscience sector across the country, Hoosier companies and patients also stand to benefit.  By eliminating a costly administrative burden, pre-revenue biotech companies will be able to focus more of their scarce investment funding on developing new therapies and adding high-wage jobs, instead of paying for expensive internal audits.  As more Indiana bioscience companies mature and look to IPOs as a viable fundraising option, we expect the benefits of the Act to accrue quickly.  We commend Rep. Hollingsworth for his leadership on this issue.”

 

Jeff Schwegman, Ph.D., Founder & CEO of AB BioTechnologies, Inc. (Bloomington, IN): “The Fostering Innovation Act eliminates the costly burdens of extensive audits to many of our clients, allowing them to invest further in drug development in Indiana. Ultimately these savings will be passed on to patients which benefits the community as a whole. Thanks to Representative Hollingsworth’s depth of understanding of the life sciences sector in Indiana, he was able to pass meaningful legislation that will provide a benefit to Hoosiers at all levels.”

 

 

Background

 

Currently, emerging growth companies (EGCs) are exempt from certain regulatory requirements for the first five years after their 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.  This reporting requirement is both costly and unnecessary because management is still required to assess internal controls, and these EGCs have limited public exposure.

 

H.R. 1645 is a narrowly-tailored fix that temporarily extends the Sarbanes-Oxley Section 404(b) exemption for an additional five years for a small subset of EGCs with annual revenue of less than $50 million and less than $700 million in public float. This legislation does not prohibit an external audit if the company or the majority of shareholders determine an audit is benefit.

 

 

 

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Office of Representative Trey Hollingsworth  |  1641 Longworth House Office Building, Washington, DC 20515

P: (202) 225-5315 |  www.hollingsworth.house.gov

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