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NC Biotech Center, Other Programs Receive Double-Digit Funding Boost in State Budget

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North Carolina’s new $20.7 billion budget for the year that began July 1 includes a total $15.6 million for the state’s principal biotech industry organization — including money to help create three new centers, each to house academic-industry collaborations in emerging technologies — as well as another $18.3 million on economic development programs for which biotech businesses are eligible.
 
The nonprofit North Carolina Biotechnology Center will receive $15.6 million from the state General Assembly toward its operating budget. That’s a 30 percent increase over $12 million for the fiscal year that ended June 30, and the fulfillment of a major wish the center conveyed to state lawmakers when they began considering the budget in January.
 
The center operated this past fiscal year on a $17 million budget. The size of the center’s budget for 2007-08 won’t be known until its board approves a new spending plan in October. In the meantime, the center will operate under a preliminary $13.5 million budget.
 
More importantly for the center’s future, the larger budget earmarked by Raleigh includes $3 million to establish new “Centers of Innovation” statewide, each targeted to an emerging technology deemed vital to the state’s economic future.
 
“A Center of Innovation will focus on the identification, development, and commercialization of research within a specific biotechnology-dependent industry. These Centers are intended to catalyze the state’s efforts in the research and commercialization of strategically-selected biotechnology-dependent industries for the statewide benefit of North Carolina,” the biotech center said in its announcement of the program in March 2007.
 
The biotech center plans to create three innovation centers in any of several industries, such as nanobiotechnology, marine biotechnology, medical devices, natural biotechnology and integrative medicine, and biofuels — “along with other sectors to be determined later,” said Barry Teater, the center’s director of corporate communications.
 
“These Centers of Innovation may be based in regions where there are existing strengths (for example marine biotechnology in the East, near the coast),” Teater said in an e-mail exchange with BioRegion News. “They will unite institutions and resources across the state in common pursuit of advancing specific industry sectors for the benefit of the entire state.”
 
The $3 million will pay for part of the second phase of the Center of Innovation program — namely the awarding of up to three grants, each totaling $2.5 million over four years and based on achieving milestones, to the industry-academic consortia that will operate each planned center of innovation.
 
Second-phase applicants must develop quarterly milestones for their innovation center’s first five years, as well as a preliminary strategy for that center’s financial independence within that period.
 
First-phase funding, Teater said, would come from parts of the center’s research budgets this fiscal year and last. The program’s first phase will entail awarding a 12-month, $100,000 planning grant to up to three consortia of universities and nonprofit research institutions based in the state, toward a five-year business plan and an organizational plan.
 
Phase I funds can be used for market research, salary, and benefits for a project director and other key personnel, travel for project-related planning meetings, project-related conference and event expenses, limited legal fees and consultant costs. First-phase funds cannot be used for costs of construction or renovation, out-of-state collaborators, office supplies, overhead, indirect costs, tuition, or direct lab research.
 
$18.55M in Additional Grants
 
The budget included $13.35 million for so-called One North Carolina grants — a 33.5 percent hike over the $10 million set aside for that program in the year that ended June 30 — as well as $4.8 million for One North Carolina grants targeted to smaller businesses.
 
One North Carolina economic-development grants are available to a broad range of businesses the state deems “value-added, knowledge-driven industries,” as well as businesses deemed “vital to a healthy economy that are making significant efforts to move facilities to the Tar Heel State or expand operations there,” after considering incentives from other states.
 
Since 2001, 14 pharmaceutical and biotech companies have received a total $724.6 million in One North Carolina grants, according to the state commerce department.
 
Life Science Companies Receiving "One North Carolina" Grants, 2001-2007
Company County Date
New/
Existing
co.
Amount Jobs
Amount
per job
Eon Pharma, LLC Wilson
4/5/2001
N
$25,500,000
135
$75,000
Abbott Laboratories Nash
3/22/2002
E
$16,000,000
50
$50,000
West Pharmaceutical Lenoir
5/13/2003
N
$16,000,000
209
$250,000
Synthon Pharmaceuticals Wake
6/3/2004
E
$10,300,000
157
$200,000
Novo Nordisk Johnston
10/27/2004
E
$100,000,000
187
$250,000
GlaxoSmithKline Wake
8/15/2005
E
$92,000,000
200
$500,000
Eisai Durham
2/27/2006
E
$90,000,000
59
$150,000
United Therapeutics Durham
3/27/2006
E
$54,300,000
160
$175,000
Sandoz Wilson
4/27/2006
E
$10,000,000
65
$150,000
Parata Durham
7/13/2006
E
$15,000,000
130
$100,000
Novartis Vaccines and Diagnostics Wake
7/18/2006
N
$267,500,000
350
$3,000,000
Quintiles Martin
8/8/2006
N
$400,000
60
$120,000
Metrics Inc Pitt
9/18/2006
E
$17,500,000
77
$150,000
Quintiles Durham
11/29/2006
E
$10,100,000
1,000
$2,000,000
SOURCE: North Carolina Department of Commerce
 
Companies can receive funds for installing or purchasing equipment; for structural repairs, improvements, or renovations of existing buildings to be used for expansions; for construction of or improvements to new or existing water, sewer, gas or electric utility distribution lines, or equipment for existing buildings. One North Carolina requires city and county governments to match the state’s offer of financial help to participating businesses.
 
Official guidelines for One North Carolina can be found here.
 
The largest single One North Carolina grant was awarded in 2006 to Novartis toward the $600 million vaccine manufacturing plant it is now constructing in Holly Springs, NC. Novartis chose North Carolina over sites in Maryland and Georgia for the plant, which was projected to generate 350 jobs.
 
Funding for the One North Carolina Small Business Program actually dipped $200,000 from last fiscal year, as state lawmakers shifted the money into other economic-development funds. But North Carolina’s Department of Commerce will actually spend about the same $5 million on smaller-business grants as it did this past fiscal year because it saved the difference and can carry the money over to 2007-08, said John Hardin, who oversees the smaller-business grant program as deputy director and chief policy analyst with the North Carolina Board of Science and Technology.
 
Smaller businesses — defined as those with fewer than 500 employees — that have qualified for a federal Small Business Innovation Research Program or Small Business Technology Transfer Program Phase I award are eligible for matching funds from the state under the One North Carolina Small Business Matching Funds Program.
 

“These Centers of Innovation may be based in regions where there are existing strengths (for example marine biotechnology in the East, near the coast). They will unite institutions and resources across the state in common pursuit of advancing specific industry sectors for the benefit of the entire state.”

The smaller-business grant program matches — but only up to $100,000 — the grants that eligible entrepreneurs receive through the federal SBIR/STTR Phase I programs. Last year North Carolina’s smaller-business grant program awarded grants to 50 entrepreneurs statewide, of which about 30 percent were small biotech businesses, Hardin said.
 
“The vast majority of our companies that receive our matching grants have five to 10 employees,” Hardin told BioRegion News.
 
Guidelines for the small business matching grant program can be found here.
 
Under a new “incentive” program to begin this year, businesses that obtained SBIR/STTR grants, and even those turned down for the federal funding, can be reimbursed by the state for up to $3,000 of the costs incurred in preparing and submitting their SBIR/STTR Phase I proposals.
 
While the incentive program had been previously authorized, the state was unable to launch the program until now because the science and technology board needed time to develop procedures that wouldn’t overburden its small staff, Hardin said.
 
“We expect to have probably a couple of hundred [applicants] in the incentive program,” Hardin said in an interview.
 

 
NC Budget Includes More than $100M for Life Sciences Research, Facilities
 
North Carolina’s $20.7 billion budget for the fiscal year that began July 1 — signed into law July 31 by Gov. Mike Easley — included more than $100 million for life sciences research programs and facilities statewide.
 
The largest share, at $75 million over two years, is the funding planned toward cancer research at University of North Carolina at Chapel Hill’s School of Medicine. The subsidy will start at $25 million this fiscal year, and double to $50 million in 2008-09 and every fiscal year thereafter. The money is intended to create a statewide cancer assessment and prevention program, continue existing basic and translational research, and strengthen multidisciplinary clinical care and research teams.
 
The fund will benefit the North Carolina Cancer Hospital, now under construction and set to open in 2009 as the clinical home of UNC’s Lineberger Comprehensive Cancer Center; as well as UNC and its not-for-profit UNC Health Care System. Spending details have yet to be finalized, said Dianne Shaw, a UNC Lineberger spokeswoman.
 
Last year, the UNC Health Care System saw 15,000 cancer patients, with the number of cancer visits doubling over the past nine years. Cancer’s toll in North Carolina includes 41,000 new cases contracted statewide, as well as 17,000 deaths among more than 560,000 annual deaths nationally.
 
“With the support of the General Assembly for construction of the North Carolina Cancer Hospital in 2004, and now this extraordinary cancer research fund, UNC has been provided an opportunity — and a challenge — to become the nation’s best university cancer center,” said Shelley Earp, director of UNC Lineberger, in an Aug. 1 press release issued by the university.
 
UNC’s total cancer research effort will receive another $5.6 million from the state’s General Fund
 
Other research and facility funds for life science programs in the budget:
  • North Carolina Research Campus —The Kannapolis facility will receive $16.5 million toward operating funds, equipment and faculty startup funds for UNC programs, and another $1.3 million toward community college programs.
  • Wake Forest Institute for Regenerative Medicine — $12 million over two years to attract federal investment for research at the facility, located at Piedmont Triad Research Park.

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