Is it time to worry about biotech IPOs?

The federal shutdown has literally decimated the SEC, which means there’s no one around to provide advice to the dozen biotech companieswith open plans to go public. And that could mean the sector’s long-forecast boom of early-year IPOs could evaporate entirely.

The issue, Duke University law professor James Cox explained on a recent podcast, is that pre-IPO companies rely on feedback from the SEC before actually selling shares to the public. Going forward without having those conversations is “almost an invitation on their registration statement [saying] ‘sue me,’” Cox said.

So what’s wrong with just waiting on the SEC to return to work? The problem is that registration statements, called S-1s, contain time-sensitive financial information. That means if the shutdown goes on long enough to allow new earnings results to roll in, companies would have to completely redraft their S-1s to reflect the new numbers, a prospect that could turn January IPOs into March ones and disrupt an entire quarter’s worth of listings.