Hawaii Caps High-Tech Investment Tax Credits at 80 Percent; Ends Transfer of Credits Among Investors
[This brief has been updated from a previous version to correct. Gov. Lingle's political affiliation.]
Hawaii has tightened its High-Technology Investment Tax Credits program by capping at 80 percent the credit on investment in life sciences and other tech-based startups the state has allowed since 2001.
The Aloha State hopes the move will allow it to gain $150 million in new revenue at a time when Gov. Linda Lingle and other state officials are scrambling to plug a $2.8 billion budget gap projected between last month and June 30, 2011. The projected shortfall is likely to grow later this month, after the Council on Revenues issues its next forecast, TV station KHON2 reported this week.
Last month, without her signature, Lingle allowed the enactment of a bill permitting Hawaii to scale back its 100-percent-over-five-year tax credit to 80 percent on all investments made after May 1, 2009, and ending before January 1, 2011 — as well as end its practice of allowing investors to transfer their credits to other investors. The revisions will apply through December 2010, when the tax credit program is scheduled to expire.
Lingle and supporters of limiting the tax credits prevailed over Lt. Gov. James Aiona Jr. and business advocates, who argued the rule changes would hurt Hawaii's standing with investors. Lingle and Aiona are both Republicans.
Hawaii created the program as a 10-percent, up-to-five-year tax credit for investments of up to $500,000 in 1999, and two years later expanded the High-Technology Investment Tax Credits by creating the 100-percent credit and raising the investment limit to $700,000. Three years later, Hawaii limited the credits to tech businesses certified by the state Department of Taxation as Qualified High Technology Businesses.
Hawaii added reporting requirements in 2007 that included data about the QHTBs and their investors. According to SSTI, the rules produced reports cited by critics of the program in arguing that the investors who benefited were wealthy and could afford to shell out capital without the tax shelter afforded by the credit program; Hawaii has calculated the total in credits it awarded investors at $657.5 million since 1999. Critics of the tax credits also argued that non-tech companies unfairly benefited from the program — such as media companies that created jobs that disappeared once their productions had ended.
Intrexon Confirms Shift of HQ from Blacksburg, Va., to Maryland
Intrexon is planning a "transition" of its headquarters from Blacksburg, Va., to an undisclosed Maryland location, the company's vice president of business development, Robert Beech, told the Roanoke (Va.) Times.
Beech said the Maryland site would be near the Potomac, Md., residence of Ronald Herberman, whose appointment as chief medical officer-oncology Intrexon announced on Thursday. Herberman has residences in Potomac and in the Pittsburgh region, near his most recent position as professor of medicine at the University of Pittsburgh School of Medicine. Herberman is the founder and former director of the university's Cancer Institute.
"Rather than me coming to the company, the company is going to end up coming very close to our Maryland home," Herberman told the Times.
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Asked by the newspaper what functions and people, if any, will transfer from Blacksburg to Maryland, Beech declined to elaborate, saying decisions are still being made.
Herberman told the Times it was his understanding that Intrexon will keep a presence in Blacksburg.
New Executive VP, Lobbyist Will Help San Diego's Connect Pursue Help for Startups from Uncle Sam
Connect, the group that promotes advancement of life sciences and other tech industries in the San Diego region, has tapped local tech and venture capital veteran Moya Gollaher as executive vice president to lead the group's pursuit of new sources of funding for startups, and will hire a lobbyist to chase new funding — and build relations with lawmakers — in Washington, DC, the North County Times of Escondidio, Calif., reported.
"Access to capital for early-stage companies has always been important. It's now critical, because the sources of those funds are getting tighter and tighter. For early-stage companies, it's especially painful," Gollaher, a former partner at San Diego-based Enterprise Partners, told the newspaper.
Gollaher is the wife of David Gollaher, CEO of the California Healthcare Institute, a San Diego-based nonprofit that lobbies for California's biomedical industry. Until now, CHI's vice president of public policy, Todd Gillenwater, has informally kept an ear to the ground for Connect, the newspaper noted.
Gillenwater represents a "prototype" of what Connect wants its DC lobbyist to do, the organization's CEO Duane Roth told the Times: "You have to be there at the right time and at the right place to have impact. You can't do that from 3,000 miles away. It's impossible to stay in that day-to-day network."
Gollaher said the lobbyist's main job will be to represent "San Diego's unheard voice, the voice of those early-stage entrepreneurs who don't have an advocate," in ways that go beyond securing capital: "We want to have feet on the street there, working with other folks from San Diego, but representing the voice of the early-stage companies."
"They're too small, busy, too young, too underfunded," to spare any time for DC politics, Gollaher said. "But collectively, it matters to them where their employees are coming from, work-force issues. It matters to them that they get intellectual property protection for their ideas," she said. "Those are the kinds of things they just don't have the time or the wherewithal to do. That's really our charter."
Colorado Losing All 139 Gilead Staffers as Company Consolidates in California
Gilead Sciences will shut down its Colorado offices in Boulder and Westminster by year's end, and lay off at least 66 people in a consolidation of its operations within California.
Nathan Kaiser, a spokesman for the Foster City, Calif.-based Gilead, told the Daily Camera of Boulder that the decision to shutter the Colorado offices followed Gilead's $1.4 billion acquisition of Palo Alto, Calif.-based CV Therapeutics earlier this year.
"We suddenly had two geographically separated, talented groups with expertise in cardiovascular [research and development], but with many areas of functional overlap," Kaiser told the newspaper via e-mail. About half of the Colorado employees were offered the opportunity to relocate to California, he added,
Gilead employs 139 people between the two sites. Company officials hope to relocate 73 of the employees to Palo Alto and Foster City and lay off the rest, according to a filing made with the Colorado Department of Labor made in accordance with the federal Worker Adjustment and Retraining Notification Act.
The site closures and termination date for the affected employees — who were notified in June — will be Dec. 31 or within the first two weeks of January, according to the filing.
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Frances Draper, executive director of the Boulder Economic Council, told the Camera the Boulder site has about 90 employees — a figure Gilead won't confirm, since it considers the two Colorado facilities as a single site of employment.
Gilead is the second life sciences company to close its Boulder offices. Last month, OSI Pharmaceuticals said it would consolidate its city-based office, which employs 145 people, as a new headquarters campus it purchased in the New York City suburb of Greenburgh, NY, along with operations now in Cedar Knolls, NJ, Farmingdale, NY, and the company's current HQ site of Melville, NY. In return for the job shifts, OSI received the promise of $3 million in sales tax breaks from New York state and Westchester County, plus a state commitment to shoulder the company's $1.8 million annual rent to the State University of New York system [BRN, July 17].
Earlier this year, Draper noted, Boulder-based anti-cancer agent developer Clovis Oncology racked up an unprecedented-for-the-region $145 million in financing.
Pennsylvania's BioAdvance Awards $550K to Drug/Diagnostics Developer Treventis
BioAdvance, the Biotechnology Greenhouse Corp. of Southeastern Pennsylvania, has committed $550,000 in seed-stage funding to Treventis, a developer of small-molecule drugs and diagnostics designed to treat early stages of Alzheimer’s disease and other neurodegenerative disorders.
Treventis is based in Bryn Mawr, Pa., with research operations in Halifax, Nova Scotia, Canada. The company's technology targets protein misfolding to inhibit the aggregation of amyloid proteins, including beta-amyloid (plaque) and tau proteins (tangles), both associated with the neuronal loss in Alzheimer’s disease.
Treventis CEO L. William McIntosh said in a statement that BioAdvance's funding "will allow us to develop a lead compound through proof of concept in animal model systems."
The funding raises to $16.3 million in 26 seed-stage life sciences companies and 17 pre-seed investments the amount of money committed to startups by BioAdvance. That funding, in turn has allowed the companies to obtain an additional $981 million through capital raising and M&A activity.
Delaware Officials, Business Leaders Mull How the First State Can Live Up to Its Name in Life Sciences
Delaware Gov. Jack Markell told an audience of life sciences leaders from across the state this week that the First State has numerous assets that should make it attractive to industry employers, from a high concentration of PhDs, to a strong sense of community, to easy access to government officials, the News Journal of Wilmington, Del., reported.
But with numerous larger states and countries also scrambling for the same companies and jobs, Markell said during his keynote address at a Delaware Bioscience Business Roundtable event, tiny Delaware is not going to win a bidding war to attract new companies: "We have a lot to build on. The real question is, where we go from here?"
Those building blocks include the nearly 12,000 people employed in Delaware's biopharmaceutical and related sectors as of last year, according to a study released earlier this year by the University of Delaware's Center for Applied Demography & Survey Research.
According to the newspaper, Alan Levin, director of Delaware's Economic Development Office, acknowledged that Delaware lags behind other states in its economic development policies. As a result, Levin said, Delaware is "playing catch-up" after losing two auto assembly plants, and seeing its main engine of job growth in recent years, financial services, shrivel with the economy over the past year.
"We just fell asleep at the switch for a number of years," the News Journal quoted Levin as saying.
Levin cited the challenge of training students for jobs in the life-sci industry, given the US' 17th place ranking on a scale of 29 affluent nations when it comes to scientific literacy — a statistic cited by Patrick Kelly, vice president for state government relations with the Biotechnology Industry Organization, at the event, which drew about 200 attendees to Christiana Hospital in Newark, Del.
Delaware “has to focus more on home-grown efforts to compete within the global marketplace, producing the type of people that will allow the companies to be competitive and make sure to attract the type of funding and type of companies that will increase the industry in the region," Frank Howard, executive director of the Bioscience Business Roundtable, told WHYY radio.