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Up and Down the Aisles at BIO 2008: Biotechnology Industry Organization 2008 International Convention, Economic Incentives Act for the Development of Puerto Rico, Georgia Department of Economic Development, Southwest Michigan First

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BIO 2008 Turnout: Down 10 Percent from Last Year’s Boston Confab; Up 36 Percent from Last SD Conference
 
SAN DIEGO — The Biotechnology Industry Organization said its 2008 BIO International Convention, held at the Convention Center here, drew 20,108 attendees — down 10 percent from the 22,366 attendees of last year’s convention held in Boston.
 
BIO’s announcement of the attendance, available here, highlighted the 36 percent increase in attendees from the last time it held the convention in San Diego, when it drew 14,731 attendees — as well as the fact this year’s attendees came from 70 countries, up from 64 last year.
 
The number of partnering meetings held at BIO 2008 set a new record at “more than 14,500,” the organization said, compared with 12,103 trumpeted by BIO last year — though participation at the convention’s business forum stayed steady at more than 6,000 attendees, and the number of participating companies inched up to 1,503 this year from 1,500 at BIO 2007.
 
Also up this year was the number of exhibitors, to “more than 2,100” from “more than 1,900” a year ago. Both years saw “more than 60” domestic, country and regional pavilions.
 
BIO 2009 will take place in Atlanta from May 18-21, at the Georgia World Congress Center.
 

 
Puerto Rico Extends Life-Sci Tax Breaks Beyond Manufacturing; Mulls Tax-Free Status for Researchers
 
SAN DIEGO — Puerto Rico is counting on one set of new tax incentives signed into law — as well as another potential tax break under discussion — to help transform it from a life sciences manufacturing mecca to a full-service cluster also capable of carrying out top-flight research and development, Gov. Anibal Acevedo Vila told BioRegion News last week.
 
As of July 1, the island commonwealth will award tax credits of 50 percent for research and development, clinical trials, and for using renewable energy, under the Economic Incentives Act for the Development of Puerto Rico signed into law recently by Acevedo Vila. The law will also cut the corporate tax rate for many businesses to 4 percent, with a withholding tax on royalty payments of 12 percent. The income tax rate can fall to 1 percent for “pioneer” companies that invest in and develop the life sciences and other new technologies in Puerto Rico. That rate can even drop to zero for companies that use IP created or developed in Puerto Rico including, but not limited to, activities geared to the commercial viability of products.
 
Acevedo Vila also told BRN that Puerto Rico officials are considering a new economic incentive expected to jumpstart recruitment of new researchers — an exemption from paying provincial taxes on their incomes.
 
“We have been successful in getting investment from the companies because, among other things, of our tax benefits since we are a commonwealth, not a state. We are now thinking of how we can do that bring in that brainpower, using our tax autonomy, our fiscal autonomy as an attraction,” Acevedo Vila said last week in an interview at Puerto Rico’s pavilion at the 2008 Biotechnology Industry Organization’s 2008 International Convention.
 
“Our intention is to mirror what we’ve done with what we call the pioneer products and pioneer technologies in bringing in world-class scientists and researchers. We have the top technologies. Now we need the top researchers,” Acevedo Vila added.
 
It’s the approach Puerto Rico used starting in the 1940s to reel in dozens of pharmaceutical, and later, biotech companies, noted Jose Auger Marchand, an advisor to Acevedo Vila for economic development, government management, and energy policy who sat with the governor during the BRN interview.
 
The new tax law effectively extends to the R&D operations of life sciences companies the tax breaks their manufacturing operations have long enjoyed.
 
“It has many of the good things that the current law has had for the last 20 years, with some new additions that are very much in tune with what we want to do in terms of research and development and biosciences,” Acevedo Vila said. “We have to compete. Puerto Rico has some natural advantages because of the fact that we’re a commonwealth. Nevertheless, we’re competing with many other countries.”
 
The current law is credited with drawing to Puerto Rico dozens of manufacturing plants by pharma and biotech companies — more than $4 billion in biotechnology investment since 2004. 
 
The current law also limited energy tax breaks to companies engaged in manufacturing, while the new law extends that break to all value-chain activities, including export of services and R&D.
 
Commonwealth officials credit the new tax law with stimulating investment interest and activity on the island. That interest, Acevedo Vila said, has not waned due to either the US economic slowdown or the US prosecution against him.
 
Acevedo Vila was among 13 people indicted in March by the US Attorney’s office on charges that include conspiracy to violate US campaign finance laws, and giving false testimony to the FBI. Acevedo Vila responded with a statement insisting he is innocent, and has denounced the indictment as politically motivated due to his public criticism of an FBI raid that resulted in the death of a fugitive Puerto Rican independence militant.
 
The indictment has not stopped Acevedo Vila, who is seeking re-election to a second term this November under the Popular Democratic Party banner.
 
As for the effects of the economy, Acevedo Vila replied: “The slower economy is everywhere. In that sense, I would say that our competitive edge, this is the right time to tell them, you have to invest in a place where you can get more [talent], which is Puerto Rico.”
 

 
Georgia Pursues One-Stop Shop, Conference Center to Boost Life Sciences
 
SAN DIEGO — Georgia officials and life sciences industry leaders are hammering out details of a new agency that will be a “one-stop shop” for life sciences employers seeking to relocate to the Peachtree Sate or expand existing facilities there, state Commissioner of Economic Development Kenneth Stewart told BRN.
 
“We can take a company at any stage that’s seeking to incubate or to expand, bring them into our one-stop shop, and accelerate their growth in Georgia,” Stewart said of the agency, which for now is being called the Georgia Bioscience One-Stop Shop.
 
“Our motto in the state is ‘faster, friendlier, easier,’ when it comes to our customers,” Stewart added. “When it comes to a one-stop shop, we believe life sciences companies will appreciate having one person that they could go to meet all their needs, to either establish their company in the state or to grow it.”
 
It’s the same approach, Stewart said, that prompted his department in March to hire a multi-lingual  “international business concierge,” Nico Wijnberg, charged with assisting Georgia companies in navigating state government, including startups seeking to comply with permitting and other laws.
 
The one-stop agency envisioned by Georgia would be similar to the state-funded North Carolina Biotechnology Center — a public-private model for nurturing a state life sciences industry that Maryland Gov. Martin O’Malley announced last week it will also copy as part of the $1.1 billion, 10-year Bio 2020 initiative [See report on Maryland’s Bio 2020 in this issue].
 
The one-stop agency is one of several efforts by Georgia to boost its biotech, pharma and medical device sectors. The state is gearing up for next year’s BIO 2009 convention, set for Atlanta. And earlier this year, Georgia officials approved spending $7.5 million toward creation of a $40 million Georgia Research Alliance Venture Fund, intended to finance seed-stage university spinouts with an emphasis on vaccine developers and other life-science specialties. The remaining money will come from private investors.
 
“It puts us in a position to support and fund and incubate companies that otherwise might have gone outside the state for their funding,” Stewart said. “It puts us in a position where we can truly leverage the public-private partnership that’s so critical in growing any industry. This is a unique model that we think other states will follow.”
 
Two more signs of industry progress cited by Stewart: Life sciences companies account for about 20 percent, or seven of the roughly 40 tenant “member” companies at the state-funded Advanced Technology Development Center, headquartered in Atlanta within the Technology Square campus of the Georgia Institute of Technology [BRN, May 12]. Three years ago, only a single such business was based there.
 
And in Soperton, Ga., Range Fuels is constructing the nation’s first commercial cellulosic ethanol plant. The $225 million facility is being funded in part through a $76 million Technology Investment Agreement with the US Department of Energy — $50 million for the first phase, set to produce 20 million gallons per year; and $26 million for the second phase.
 
Stewart discussed two other life-sciences-related topics with BRN:
 
No mega-bill: Stewart said Georgia had no plans for a billion-dollar package of incentives for biotech, as other states have done — either through legislation, as Massachusetts and now Maryland have entertained; or by a succession of economic subsidies, as neighboring state Florida has carried out in recent years.
 
“We believe in being focused in our efforts at having steady growth and steady funding,” he said. “We don’t have any large announcements to come about big spending for any industry segment. But we do spend every single year, on a regular basis, to grow a good solid foundation for all of our strategic industries.”
 
Bioscience is at the top of that list, which includes energy, logistics, advanced communications, advanced manufacturing, financial services-insurance, and agri-forestry.
 
Conference venue: Also in the works, Stewart said, is a venue for medical and scientific conferences, to be built near the National Health Museum planned for Atlanta.
 
“Our expectation is that this will be used for education as well as tourism,” Stewart said. “We’ll also have a training room component to it; we’ll have meeting rooms, and conference facilities. We expect to have bioscience-related meetings there as well.”
 
Key details, such as the number of rooms and amount of conference space, have yet to be decided, he added.
 
The museum is considering several potential sites near Centennial Olympic Park for its planned 190,000-square-foot permanent facility, which is projected to cost $250 million, employ 135 people, and bring between 1.1 million and 1.4 million visitors annually to Atlanta.
 
Coca-Cola, the soft drink giant headquartered in Atlanta, has already donated $1 million in seed funding for the museum, which said in a statement its board has raised $12 million to operate its current educational programs, build an online CyberMuseum and plan for the physical museum.
 
The selection of Atlanta for the museum was announced from the Georgia Pavilion at BIO 2008 by Gov. Sonny Perdue, a Republican who took office in 2003.
 

 
Southwest Michigan First Close to Fourth Angel Award; Adds Tolera to Venture Portfolio; Eyes New Venture Fund
 
SAN DIEGO — Southwest Michigan First is close to closing a second angel financing deal this year, and the fourth to be arranged through an angel fund launched early last year, vice president Paul Neeb told BRN.
 
To date all three deals have been awards of $250,000 raised through SMF’s First Angels, a fund raised through a network of about 25 high-net-worth individuals who have each agreed to give at least $25,000. In the most recent deal earlier this year, First Angels closed on funding for Armune BioScience, an early-stage diagnostic company based in Kalamazoo.
 
In addition to continuing angel funding, SMF is also working to step up its funding of early-stage companies. Last week SMF announced that it made its ninth investment from its $50 million Southwest Michigan First Life Science Fund to Tolera Therapeutics, a Cleveland-based developer of immune suppression and modulation therapies for the oncology, autoimmune disease, and transplantation markets. SMF is participating in a syndicated investment round with Triathlon Medical Ventures of Cincinnati, which is leading the syndicate, and Hopen Therapeutics of Grand Rapids, Mich.
 
“I’d say we have room for probably two or three more, and we’ll finish that up likely before the end of this year,” Neeb said. Those extra deals are expected to be valued at under $10 million combined, since SMF puts in about $2 million to $3 million in the deals it makes.
 
Neeb said “signs are very positive” for SMF launching another life sciences fund of a similar size, but added that the group is not ready to announce that officially.
 
Neeb said the funding activity will not diminish SMF’s efforts to carry out traditional economic development activity, such as job attraction and retention efforts.
 

 
The Joke-Inator Gets Funny, And Serious, in Luncheon Keynote Talk
 
SAN DIEGO — California Gov. Arnold Schwarzenegger headlined a keynote address luncheon June 18 that drew so many people to the convention center’s Ballroom 20 that almost as many Bio 2008 attendees were turned away attended.
 
Once inside, the luncheon crowd saw the winners of the International BioGENEius Challenge, an annual competition for high school students organized by the Biotechnology Institute; then an address by J. Craig Venter, before hearing the governor’s address — which mixed earnest support for the life sciences industry with gags like these:
  • Schwarzenegger addressed what he called a question frequently asked of him by reporters: How he as a Republican and John McCain supporter is able to stay married to his wife Maria Shriver, a Democrat backing Barack Obama: “Let’s be honest: When I was at the altar, I promised to take this woman in sickness and in health. And being a Democrat is a sickness.”
  • “This is a biotech conference, and I hope that you guys find a cure for what the Lakers have done,” namely lose to the Boston Celtics in the NBA final playoff round.
  • He noted that California’s 3,000 biotech, pharma and medical device companies generated a combined $73 billion in annual revenues — “and that’s without the sales of Botox to Joan Rivers.”
Schwarzenegger got serious, however, when he mentioned another notable whom he watched deteriorate due to Alzheimer’s disease, his father-in-law, Sargent Shriver. During a stay at his house, the governor recalled, Shriver “asked if he can use the scale to weigh himself, only to come back two minutes later and again ask if he can use the scale to weigh himself, and he did it 10 times over. Really, it broke my heart to see that.”

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