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New Regulations Could be a Boon to Bio-Tech
Could the 1990s surge of biotech investment be happening again?
With new legislation, mergers and IPOs all helping lead the way, the biotech industry is seeing levels of investment not seen in recent years.
Earlier this year, the industry gained notice with several big-name mergers and acquisitions, such as GlaxoSmithkline's acquisition of Human Genome Sciences for $3 billion in August, and Spectrum Pharmaceuticals Inc.'s $206 million purchase of Allos Therapeutics in April. There also has been a surge of new FDA approvals that have attracted investor attention--including a drug from Onyx Pharmaceuticals to treat a rare blood cancer and an obesity drug from VIVUS Inc.
On top of all that, an avalanche of IPOs have occurred in the industry since July, with companies such as Durata, Hyperion, Regulus, Kythera, and Intercept going public.
However, new legislation introduced on Capitol Hill could help bring the biggest boon to the industry.
The recently introduced High Technology Small Business Research Incentives Act would allow private investors in small biotech companies to use the losses of a research and development project as a tax benefit--exempting the investor from passive loss rules.
The bill would apply to entities that devote a significant percentage of their expenses to research and development, have fewer than 250 employees and have less than $150 million in gross assets.
The bill, however, still has a long way to go before becoming law. In September it was referred to the House Committee on Ways and Means, but has not been considered by either bodies of Congress. Less than 2 percent of bills introduced in Congress in 2012 have been enacted.