PhillyDeals: Montgomery County firm to testify for permanent audit exemptions

Jeffrey S. Hatfield, CEO of Vitae in Fort Washington, will tell Congress he supports the exemption.
Jeffrey S. Hatfield, CEO of Vitae in Fort Washington, will tell Congress he supports the exemption.
Posted: July 27, 2012

Since the economy went south, President Obama and Congress have been chipping away at the detailed audits that public companies have been forced to produce under the 10-year-old Sarbanes-Oxley law.

U.S. Rep. Mike Fitzpatrick (R., Bucks) wants to go further.

In 2010, the Dodd-Frank law exempted low-value companies from SarbOx audits. The so-called JOBS Act, passed several months ago, gave many larger companies a five-year SarbOx audit delay.

Fitzpatrick's "Fostering Innovation Act" would make the audit exemption permanent, for companies with shares of less than $250 million, or sales of less than $100 million.

A Montgomery County biotech CEO is going to Congress on Thursday to testify in favor of the plan. In prepared remarks, Jeffrey S. Hatfield, chief executive of Fort Washington-based kidney-drug developer Vitae Pharmaceuticals and a member of the anti-audit Biotechnology Industry Organization (BIO), says he would like to raise money from public investors through an initial public stock offering. But SarbOx audits would cost Vitae a million dollars a year, he says, and that's too much for a firm with just 55 workers.

Columbia University law professor John Coffee will also testify - ridiculing Fitzpatrick's bill as the "Mature Mediocrities Act."

Previous SarbOx cuts have allowed firms such as Britain's 135-year-old, money-losing Manchester United soccer club to file a U.S. IPO and win audit exemption as an "emerging company," making the United States an object of "mockery," Coffee warns. Instead of attracting capital and jobs, relaxing the law too much could scare investors away from U.S. stocks.

The cure?

Armando Anido, former boss at Malvern-based drugmaker Auxilium Pharmaceuticals, is the new chief executive at brain-medicine developer NuPathe Inc., of Conshohocken.

He replaces Jane Hollingsworth, who had run NuPathe since 2005. "This is turning into a commercial company," and it's time for managers with a commercial focus, Anido told me. "The board got to a point where it wanted this to be done now. Jane is remaining on as a consultant."

NuPathe, which employs about 35 and is backed by locally based Quaker Partners Management L.P., Safeguard Scientifics, and GlaxoSmithKline, burned through more than $2 million a month for the last two years as it worked to bring its NP 101 treatment for migraines to market. Shares debuted at $10 two years ago, but have lately traded below $4.

Anido says his job is to raise money to market the new drug to neurologists and to find a partner company who can help market NuPathe drugs to the larger primary-care market - whether by license, by investment, or by selling the business.


Sandy Weill, who paid himself hundreds of millions of dollars after persuading President Clinton and the Republican-led U.S. Senate and Federal Reserve to retroactively bless his acquisition of Citibank by his Travelers insurance and high-risk-loan conglomerate, now says his kind of giant bank is a mistake.

"What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that's not going to risk the taxpayer dollars, that's not too big to fail," Weill said Wednesday on CNBC's Squawk Box.

Weill hasn't offered to give back his Citi fortune, or repay the losses that shareholders, clients, and taxpayers suffered since he took the money and went.

While Weill was blowing bankers' minds, Treasury Secretary Tim Geithner was in Congress defending his failure to warn the public or prosecutors that bankers were artificially lowering the London Inter-Bank Offered Rate (Libor), the world benchmark used to set loan, bond, and derivative rates, when, in 2008, he was head of the New York Federal Reserve.

Geithner saw Libor-lying as "something akin to jaywalking, as opposed to highway robbery," said Rep. Jeb Hensarling (R., Texas).

"The regulators," Geithner said, "did the necessary appropriate thing in this context."

Contact Joseph N. DiStefano at 215-854-5194 or, or follow on Twitter @PhillyJoeD.

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