In a nutshell: Representative Michael Fitzpatrick (R-PA) introduced H.R. 2629, the Fostering Innovation Act, to update SEC filing status classifications for public companies and help ease regulatory burdens on emerging companies and reduce the bureaucratic hurdles and red tape that lengthen the time to bring cures from discovery to patient.
Why you should care: SEC Rule 12b-2 establishes three classifications for public companies to determine their filing status, which include large accelerated filers (companies with a public float of more than $700 million); accelerated filers (companies with a public float of more than $75 million but less than $700 million); and non-accelerated filers (companies with a public float of less than $75 million).
The market has continued to evolve since the current definitions were set and the public float markers have become outdated. Due to their relatively high public floats, biotech companies often find themselves grouped with the accelerated filers despite their simple corporate structure and lack of product revenue. This can lead to burdensome regulatory requirements for growing companies.
Bottom line: Rep. Fitzpatrick’s legislation would modify these definitions by raising the minimum public float for accelerated filers to $250 million. It also would add a revenue component to the accelerated filer definition, ensuring that companies with less than $100 million in revenues are not burdened by costly regulations.