March 27, 2013
I am the Sr. Director/Controller of Zogenix, Inc., a small pharmaceutical company. I do not believe it is necessary to require NASDAQ listed companies to have an internal audit function. I believe the requirements of regulation 404 are sufficient for public companies, and a requirement to have an internal audit function in addition to the other requirements of 404 seems to be duplicative and adds unnecessary cots to NASDAQ listed companies.
Zogenix chose to list on the NASDAQ exchange because of their outreach to and support of emerging growth companies. We are a small company with less than $40m in annual revenues, not yet profitable and employ 155 people, mainly in the US. We have raised over $150m as a NASDAQ listed company to fund our ongoing RD and commercial efforts to bring new drug products to patients.
We incur significant annual costs to comply with public company rules and requirements. These include a fully staffed finance function, SEC reporting personnel, legal costs, Board of Director fees, public company DO insurance fees, annual audit fees, etc. The list and the costs are significant, particularly for a company like ours that is investing heavily in new product development and approval.
The proposal creates further inequities between companies such as ours and those that are allowed to go public under the JOBS Act, since the threshold for being an accelerated filer is $75m in market cap yet the JOBS Act exempts recent public companies with market caps of $1B from complying with section 404.
As a small company, we need to focus on growing our companies, employing more US workers and creating shareholder value, not adhering to, and incurring significant cost to comply with, duplicative government and NASDAQ mandated regulations.
I hope you will reconsider this proposed rule.
Thank you for your consideration.