In an attempt to facilitate capital raising, the SEC announced that it was expanding the ability of issuers to submit draft registration statements for confidential review by the staff. Historically, this procedure was mostly available for IPOs and follow on offerings launched within a year of the IPO. While the new accommodations affect various types of SEC filings, I think the most interesting piece for life sciences companies will be for smaller cap issuers who cannot take full advantage of simplified Form S-3 shelf registration statements. 

A Form S-3 shelf allows for rapid fundraising by capital-hungry life science companies. However, if an issuer's non-affiliate float is less than $75 million, it cannot raise more than one-third of its non-affiliate float in public offerings in any 12-month period via that Form S-3. With many life sciences companies currently suffering through low market capitalizations, they may not be able to raise sufficient funds this way. Instead, these companies have had to publicly file extensive Form S-1 registration statements and wait through a longer SEC review process. That public filing of the initial Form S-1 mayresult in a lengthy financing overhang with the potential to drive down the issuer's stock price while it winds through the process. 

Under the new rules, the issuer may now file a Form S-1 confidentially and work with the SEC behind the scenes before publicly disclosing the offering. Or, for market or other reasons, such as alternative paths to capital, the issuer maydecide to abandon the offering and not disclose it at all. If the company does decide to move forward, all filings after the initial one would have to be shown publicly and at least twobusiness days before final pricing and selling of the stock. This new process mayprovide much needed fundraising optionality for small life sciences companies and a reduction in unnecessary financing overhang.