Maryland Budget Accord: Biotech Tax Credit Survives Intact; Stem Cell Fund Cut Yet Again
Maryland lawmakers earlier this week approved a $32.3 billion budget for the fiscal year starting July 1 that mostly satisfied the state's life sciences leaders by preserving intact funding for one key incentive program valued by the industry, while trimming spending for a second key program less than originally discussed.
The House of Delegates and state Senate kept funding for the state's Biotechnology Investment Incentive Tax Credit at the same $6 million level as the current fiscal year in the FY '10 spending plan, as recommended by a House-Senate conference committee. That's a victory for life-sci leaders, who succeeded in staving off a $2 million cut to the program initially agreed to by the House [BRN, March 30].
But budget cutters prevailed, somewhat, in slicing $3 million from the state Stem Cell Research Fund, bringing its budget to $15.4 million in FY '10 from $18.4 million in FY '09. The cut was the third sustained by the stem cell program in the past year. In April 2008, funding dipped from $24 million in FY '08 to $19 million. That money was cut again as part of a $300 million package of spending cuts in October 2008 to $18 million, before Gov. Martin O'Malley added $400,000 in his proposed FY 2010 budget [BRN, Feb. 2].
Budget cutting was also evident in another economic development program available to life-sci companies. The Maryland Economic Development Assistance Authority and Fund — credited by officials with providing more than $160 million in loans, grants and other aid to help companies expand or relocate to the state over the past decade — will have $6 million less to work with in FY '10.
Among companies that have benefited from the fund are Novavax, a vaccine developer in Rockville, Md. The fund has been a "workhorse" tool used by the state Department of Business and Economic Development to retain and attract companies, Jim Henry, managing director of finance programs for DBED, told Maryland Community Newspapers.
State lawmakers and O'Malley were scrambling this year to plug more than a combined $1.1 billion in budget shortfalls this fiscal year and next, reflecting diminished tax collections that officials blamed on the economic slump.
Washington State Lawmakers Eyes Moderate, Severe Cuts to Gov. Gregoire's $350M Life Sciences Discovery Fund
Washington State lawmakers are considering a cut in the $65 million installment of the state's $350 million, 10-year Life Sciences Discovery Fund originally planned for the two-year budget starting July 1. The state Senate Ways and Means committee has set aside just $38 million, a 41 percent cut, while the House Appropriations committee would all but gut the fund by setting aside just $5 million over the coming two-year period, with the remaining $60 million diverted to the general fund, Lee Huntsman, the fund's executive director, told Xconomy Seattle.
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A conference committee will forge a compromise, he told the news website, adding that if the House prevails, “it isn’t clear to me what you can do with that. On the face of it, you can’t be in the grant-making business at that level."
The cutback comes as state lawmakers and Gov. Chris Gregoire are struggling to close a budget shortfall projected as high as $9 billion. Senate Democrats have publicly discussed laying off 8,000 state employees and educators and eliminating 10,000 slots for students at state colleges and universities.
Established in 2005 from state tobacco settlement funds, the Discovery Fund is a pillar of Gregoire's state economic development strategy, and professed commitment to growing the state's life sciences industry: “I fundamentally want and believe we can be the epicenter of life sciences and global health,” she declared Oct. 28, 2008, addressing the Washington Biotechnology & Biomedical Association’s annual meeting.
“In light of some of the other budget limitations, it would be hard to say we shouldn’t contribute” to the cuts, Rivera says. “We all have to contribute, given the state of the economy we’re in,” WBBA President Chris Rivera told Xconomy Seattle.
Last week Rivera and Tom Clement, WBBA's chairman, called for the Discovery Fund of no less than the state Senate's proposed $38 million for the two years starting July 1, in an April 13 Seattle Times op-ed column. Rivera and Clement said that since 2008, 17 grants have been awarded through the Discovery Fund out of more than 200 applications, ranging from discovery research to healthcare innovation. That $31 million has generated more than $112 million of additional funding, with more expected, they added.
California Investment Board OKs $295M for Stem Cell Agency, including $43M for San Diego's Sanford Consortium Facility
California's Pooled Money Investment Board on April 15 approved $295 million for the California Institute for Regenerative Medicine, including $43 million in additional funds for CIRM to be placed in an escrow account toward construction of a planned $115 million, 100,000-square-foot stem cell research facility for the Sanford Consortium for Regenerative Medicine in San Diego, the San Diego Union-Tribune reported.
The Sanford Consortium is an umbrella group for four institutions engaged in stem cell research — Burnham Institute for Medical Research, Salk Institute for Biological Studies, Scripps Research Institute, and University of California, San Diego. The consortium still needs to raise on its own $60 million to $65 million toward construction of its research facility on North Torrey Pines Road.
The escrow account should address concerns raised by some potential lenders about whether California could make good on its promise to provide the consortium's funding given the state's fiscal woes of recent years, Louis Coffman, the consortium's vice president, told the Union-Tribune.
The $295 million is part of $500 million California has set aside for infrastructure projects from $6.5 billion in bonds the state sold last month.
Tech Tax Credit in Limbo as Missouri Lawmakers Balk at Economic Incentive Package Backed by Gov. Nixon
Efforts to enact a new tax credit for early-stage life-sciences and other technology companies were in limbo earlier this month after the state Senate balked at voting on a package of economic incentives sought by Gov. Jay Nixon and legislative leaders, following 10 hours of debate on April 9, the Associated Press reported.
It was the fifth time in two months that the legislation was debated without a vote taken. The measure would give biotechnology employers a tax credit equal to a percentage of their research expenses, and allow companies to receive a credit equal to 3 percent of research costs up to $2.5 million; 5 percent between $2.5 million and $5 million; and 7.5 percent for costs exceeding $5 million. Individual companies could not receive more than $2.1 million in credits each year.
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"The Senate is, in my opinion, being held hostage by one or two people," an angry Sen. John Griesheimer (R-Washington) said soon after the end of debate in the early hours of April 9, according to the wire service. Griesheimer directed his anger at Sen. Jason Crowell (R-Cape Girardeau), who has delayed the bill in hopes of gaining greater legislative control over how the tax credits would be awarded.
Addressing reporters later, Crowell accused Griesheimer of engaging in "a tirade of personal accusations" and added: "He has accused me of a crime that I am being paid to insist upon oversight and fiscal review of how we spend Missouri taxpayer dollars. I take offense at that."
Crowell has prevailed on one provision of the bill — a rule requiring the state legislature to allocate a specific sum each year for each program in the incentive package. But Crowell also wants to limit the ability of the Missouri Development Finance Board to issue tax credits, following its decision to approve $25 million in tax credits for a new training facility in St. Joseph, Mo., for the Kansas City Chiefs football team.
Crowell has also sought to set a hard limit on how much could be awarded in tax credits annually. The current bill creates an annual tax credit cap of $10 million — but that cap could be raised up to $25 million annually if House and Senate budget committee chairs join three executive branch officials in agreeing to do so.
One argument made by Crowell and other tax credit critics: Missouri passed up nearly $505 million of revenues due to tax credits, a more than 40 percent increase over the previous five years. In response, supporters like Griesheimer contend that business tax credits can have an overall positive effect on the economy.
The incentive package — which has passed the state House of Representatives — would eliminate the $60 million cap on the amount of tax credits imposed by the state's Quality Jobs Act, Missouri's key vehicle for recruiting companies to the Show Me State. The Senate version would raise the cap to $75 million for the program, which ties incentives to the creation of jobs that pay at least state average, as well as provide health insurance.
The package also includes a new tax credit for companies engaged in agricultural biotechnology, plant genomics, medical devices, pharmaceuticals, aerospace and alternative energy. Supporters have said the new research tax credit could encourage St. Louis-based Monsanto to expand in Missouri instead of Iowa [BRN, April 6]
Madison Stem Cell research Company Wins $250K Loan from Wisconsin's Technology Venture Fund
Cell Line Genetics of Madison, Wisc., has been approved for a a $250,000 loan from Wisconsin's Technology Venture Fund toward the $2.1 million cost of developing stem cell related quality assurance products, and expanding the company’s technology capabilities, Gov. Jim Doyle recently announced. The state Department of Commerce also certified Cell Line Genetics as a Qualified New Business Venture eligible for investor tax credits under the state's Angel Investor and Venture Fund Tax Credit programs.
In a statement, Lorraine Meisner, Cell Line Genetics co-founder and chief science officer, said the loan "allows us to accelerate our product development effort and improve the research process for our customers."
Established in October 2005, Cell Line Genetics provides cell line characterization services to stem cell researchers nationwide.
Camden Medical Device Maker Biopticon Wins $200K from New Jersey's Edison Innovation Fund
Biopticon, a medical device company within the New Jersey Economic Development Authority’s Waterfront Technology Center at Camden, recently received $200,000 from the state's Edison Innovation Fund to support commercialization of the TumorImager — a project expected to create 11 new jobs and leverage a total $450,000 in public and private funds.
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The TumorImager is designed to capture a three-dimensional image of an under-the-skin tumor, determine its volume, and record the data. The initial target market for the device is the scanning of tumors on small animals in pre-clinical cancer research.
Biopticon was formed by Ibrahim Cem Girit in June 2004 to develop laser scanning technology for three-dimensional imaging of surface features on live tissue such as tumors, lesions, and wounds. The first prototype was developed in collaboration with Bristol-Myers Squibb in 2005.
The Edison Fund, a component of Gov. Jon Corzine’s Economic Growth Strategy, was created in October 2006 to advance innovation, create new higher-paying jobs, and cultivate an entrepreneurial environment for life sciences and other technology companies in New Jersey.
Philadelphia's University City Science Center Debuts $1.2M Proof-of-Concept Fund for Academic Life-Sci Projects
Philadelphia's University City Science Center and area academic partners last week officially launched the first round of a pilot program to provide funding for proof-of-concept studies performed by researchers at regional academic institutions who seek to commercialize their life-science discoveries.
As part of the first round of funding, a grant committee overseen by UCSC and comprising members of the local life sciences community will choose three applications submitted by 10 institutions from the greater Philadelphia area, Delaware, and New Jersey to receive one-year grants worth up to $200,000 each.
Competition for the grants could be stiff, however, as the pilot program, called QED, could receive as many as 300 applications according to pre-solicitations submitted to the UCSC, its president and CEO, Stephen Tang, told BRN sister newsletter Biotech Transfer Week last week.
Under the first phase of QED, which is thus far financed with $1 million from UCSC and another $200,000 from regional economic-development engine Ben Franklin Technology Partners, researchers from participating academic and research institutions are to submit project proposals including the amount of money needed to achieve proof of concept.
Academic institutions eligible to submit proposals for the first round are: Children's Hospital of Philadelphia, Drexel University, the Lankenau Institute of Medical Research, Rutgers University, Temple University, Thomas Jefferson University, the University of Delaware, the University of Pennsylvania, the University of the Sciences in Philadelphia, and the Wistar Institute.
UCSC said that it anticipates funding three projects from this group. The university or research institute associated with a winning project would be required to provide 50 percent of the project budget through a combination of in-kind and cash contribution, Tang said.
Projects are required to fall under the life sciences umbrella but can be in any category, from research tools to therapeutics to medical devices. Researchers interested in applying should do so in conjunction with their institution's tech-transfer office, but can find more information on the UCSC website. Though it hasn't provided a deadline for applications, the organization said that funding for round one would be available in September.
Tang disclosed plans for the proof of concept center during a presentation to journalists this past winter [BRN, Feb. 9], more than a month after outlines of the center, and a broader tech-commercialization campaign, surfaced at a Dec. 15, 2008, conference whose speakers included Pennsylvania Gov. Edward Rendell [BRN, Jan. 5].
QED is the abbreviation for "quod erat demonstrandum," the Latin phrase appended to mathematical or philosophical proofs.