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Legislation Aims to Foster Investment in Biotech

Biotech companies across California and the nation are facing critical issues raising capital. An extraordinary amount of time and money goes into uncovering the next scientific breakthrough; it is estimated that developing a single therapeutic can cost well over $1 billion.

Congress is now considering new legislation that would help address the ongoing issues biotechs face in raising capital, while strengthening the biotechnology industry and benefiting many companies. The Start-up Jobs and Innovation Act, sponsored by Sens. Robert Menendez and Pat Toomey, would encourage private investment in small research-and-development-focused companies by allowing investors to partner with small business innovators on research projects.

These partnerships, called R&D partnership structures, aim to incentivize investment by allowing investors to utilize certain tax credits and losses generated by the research project. The investor incentive would work to offset some of the many risks associated with long-term capital investment in small, R&D-focused companies. Because a number of investors focus only on short-term returns, incentives like those found in the Start-up Jobs and Innovation Act that encourage longer-term investment could have a crucial, positive impact on research-intensive industries such as biotechnology.

Fortunately, in the last several years, we have witnessed significant legislative advancements that have provided a more efficient way for small companies to access the desired capital to fund their scientific development needs. The Start-Up Jobs and Innovation Act can continue on this success.

My current company, Regulus Therapeutics Inc., (NASDAQ: RGLS) was one of the first biotechnology companies to enter the public markets under the Jumpstart Our Business Startups Act — known as the JOBS Act — in October 2012. Since then, multiple companies have followed suit, and we saw a renewed enthusiasm in 2013 and 2014 to fund new technologies in the biotechnology space.

As a serial entrepreneur and a scientist, I have been immersed in the biotechnology industry for almost two decades, starting several companies from the ground up and leading key scientific research projects that have contributed to our biological understanding of the human genome. In our industry, one quickly learns that while we discover unbelievably exciting and useful facts about human diseases, the pace of research and development for new medicines can move excruciatingly slow, and the cost can be remarkably high.

Regulus, for example, is focused on the discovery and development of microRNA therapeutics, a regulatory RNA species that was only discovered in 2001. So while we are advancing our biological knowledge in this field with research-and-development activities, the promise of this new and transformative class of medicines based on microRNAs is only now approaching clinical proof of concept.

And while we believe our therapies in development for life-threatening diseases in oncology, fibrosis and metabolic diseases have the potential to change and save patient lives around the world, obtaining critical capital to fuel such innovation can be challenging.

The Start-up Jobs and Innovation Act would benefit small R&D driven businesses like Regulus by allowing companies to focus their time on what’s really important — exploring the frontiers of science to develop new and powerful medicines. I believe that industries like biotechnology are helping our economy and ensuring that our nation is competitive on the world stage.

Congress can create access to the funding we need in order to pave the way for the next great scientific discoveries and breakthrough medicines. As the biotechnology industry gathers in San Diego June 23-26 for the annual BIO International Convention, we will certainly discuss the financial challenges our capital-intensive industry is facing. In the meantime, I respectfully call on our lawmakers here in California, the birthplace of biotech, to stand alongside our companies by supporting the Start-up Jobs and Innovation Act.

Kleanthis Xanthopoulos is president and CEO of San Diego-based Regulus Therapeutics Inc.

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