The Securities and Exchange Commission (SEC) has expanded confidential submission privileges for Form S-1 filings, benefiting many life sciences companies. As of March 3, 2025, public companies, including those that became public through reverse mergers and those subject to “baby shelf” limitations, can now submit draft registration statements for confidential review.
Why This Matters for Life Sciences Companies
Many biotech and life sciences companies face unique challenges when raising capital, often due to long product development cycles, regulatory approvals, and market volatility. Extending the ability to submit a draft Form S-1 confidentially to certain previously excluded issuers provides key advantages:
- Reduces market risks – Companies can prepare their public offerings without exposing their fundraising plans to lengthy period of market speculation and short-selling pressure.
- More flexibility for post-reverse merger companies – Previously, companies that went public through a reverse merger had to wait 12 months before using Form S-3 and could not confidentially file a Form S-1 (as distinct from issuers that went public via IPO), limiting their fundraising options.
- Larger financing opportunities – Companies with a public float under $75 million, subject to “baby shelf” limitations under Form S-3, often prefer Form S-1 to raise more capital. However, without the ability to file confidentially, many hesitated due to potential stock price impacts.
- Alternative to PIPE deals – Life sciences issuers frequently turn to private investment in public equity (PIPE) transactions for fundraising. With confidential Form S-1 filings now available, some companies may opt for a public offering instead of a PIPE deal, attracting a broader investor base and avoiding post-Closing obligations with respect to resale registrations.
Key Changes Under the New SEC Rule
Previously, only Emerging Growth Companies (EGCs) and issuers within 12 months of their initial Securities Act or Exchange Act Section 12(b) registration could submit confidential draft registration statements. Now, any issuer—regardless of how long they have been public—can use the confidential submission process.
Additional key changes include:
- The SEC now allows nonpublic review for any offering under the Securities Act or for the registration of a class of securities under Sections 12(b) or 12(g) of the Exchange Act.
- Issuers must publicly file their registration statements at least two business days before the requested effective date, meaning the process is still more confidential than a standard Form S-1 filing but not as immediate as a Form S-3 shelf registration.
What Life Sciences Companies Should Do Next
To take advantage of these expanded accommodations, companies should:
- Evaluate their eligibility for confidential submission under the new guidelines.
- Assess their fundraising strategy – Determine whether a traditional public offering is now preferable to a PIPE transaction.
- Engage with legal and financial advisors to ensure compliance with SEC rules and optimize fundraising timing.
By leveraging these expanded accommodations, life sciences companies can better navigate the public offering process while mitigating market risks and optimizing capital-raising strategies.