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Friday, May 21, 2010

Biotech tax credit appears perfectly designed for cell therapy companies to recoup research dollars spent in 2009-10

Stewart Lyman of Lyman BioPharma Consulting posted a great article in today's Xconomy summarizing some key points and links to more information about the rules governing the Therapeutic Discovery Project Credit which have now been released by the US Treasury Department. Today, a detailed fact sheet was released about the tax credit program and it seems almost perfectly designed for most cell therapy companies.

Lyman points out a few important details about the application schedule including:
1. The Formal IRS applications (Form 8942) will not be available until June 21st or thereabouts.

2. The application period opens on June 21 and ends on July 21. The postmark on the application is deemed to be the date of delivery. Preliminary review of the applications is to be completed by Sept. 30; this is to ensure that applicants are eligible taxpayers and that their applications are complete. Applicants will receive determinations as to whether or not they qualify for credits and/or grants, and how much they will receive, by Oct. 29.
By way of a little more background, the following is excerpted from a March article by Dean Zerbe:
What does the credit cover?

The credit/grant covers research in tax years beginning in 2009 and 2010. The taxpayer is provided a 50% credit/grant for qualified investments in "qualifying therapeutic discovery projects." What expenses count as qualified investments? The aggregate amount of costs paid or incurred in the taxable year for expenses necessary for and directly related to the conduct of a qualifying discovery project. What doesn't count? The pay of employees covered by 162(m)(3) of the tax code--think CEOs--doesn't count. Other excluded items: interest expenses; facility maintenance expenses (e.g. mortgage or rent payments, insurance, utility and maintenance and costs of employment of maintenance personnel); and certain indirect costs (basically general and administrative costs) as defined in the Treasury Regulations at 1.263A-1(e)(4).

What is a qualifying therapeutic discovery project?

According to the legislation, it's a project designed to do one of three things:

--Treat or prevent diseases or conditions by conducting pre-clinical activities, clinical trials and clinical studies, or carrying out research protocols for the purpose of securing federal government approval by the FDA.

--Diagnose diseases or conditions or to determine molecular factors related to diseases or conditions by developing molecular diagnostics to guide therapeutic decisions.

--Develop a product, process or technology to further the delivery or administration of therapeutics.

Finally, to qualify, a venture may not have more than 250 employees in all businesses of the taxpayer--meaning a small biotech project at a big company wouldn't qualify.

Which biotech companies might benefit?

Those that are investing significant resources in pre-clinical or clinical studies, which may take years to come to fruition to ultimately satisfy FDA requirements, could now recoup a significant portion of their expenses. Additionally, biotech start-ups focusing on the development of diagnostic assays or applications to advance therapeutics and treatments can also benefit. Finally, companies currently engaged in basic or applied research which may ultimately contribute to curing caner within the next 30 years may also be excellent candidates. Along these lines, companies studying signal transduction pathways, gene therapy and stem cell research seem like prime candidates.
The Cell Therapy Group will be collecting more information about the tax credit and service providers who might be recommended to assist in the application if needed. Contact CTG for more details or watch here for more information.

Wednesday, May 5, 2010

Google to Invest in Regenerative Medicine

While the US government prints money to shore up failing and broken business models which no one likes but are considered simply too big (not too important or significant or even useful) to fail, Google is making money and investing it in start ups who expect nothing less than to create "disruptive, even world-changing technologies".

No suggestion here that GOOG is being altruistic, just that this is the way the new entrepreneur and investor class thinks. Opportunity and money are to be found in technologies that improve the way we live, work, play, eat, and think... and perhaps even improve the world.

To Google Ventures this has already meant wind farms, carbon emission reduction systems, green vehicles, and medical cures. To former Microsoft chief scientist Nathan Myhrvold and his high-level think tank, Intellectual Ventures, this means creating TerraPower - a company intending to revolutionize the nuclear power by developing reactors run on waste uranium - and also actively looking at regenerative medicine technologies.

Having formed the fund a little over a year ago, Google is only now starting to make a splash with the fund. Officially the fund has no specific industry focus saying on the Google Ventures website FAQ:
We are interested in a wide range of industries, including (but not limited to) consumer Internet, software, hardware, clean-tech, biotech, health care and others. First and foremost, we're looking for entrepreneurs who are tackling problems in creative and innovative ways, with the potential for significant financial return.
Unofficially and yet not so quietly, Google has named a few broad areas of interest. An article in Monday's New York Times quoted Google Ventures' managing partner, Bill Maris as saying that while they were not going to name particular investment themes, a few broad ares of interest include:
regenerative medicine, bioinformatics, cloud storage, companies that use large data sets, online monetization and mobile.
There it is. Regenerative medicine right there front and center.

In typical Google tradition, Maris, who looks all of 30 years old on the website, has a successfull and multidisciplinary track record. He was involved in founding Web hosting pioneer (now part of, where he built much of the key computing, network and technological infrastructure.Prior to that, Bill was a biotechnology and healthcare portfolio manager for Stockholm, Sweden-based Investor AB. Bill’s background also includes research at the Duke University Medical Center, Department of Neurobiology.

Google Ventures is said to be aiming at investing about $100 million a year. Any portion of that for regenerative medicine is more than welcome.

While traditional VC money remains reticent to back RM in any signifant way, Google's move confirms a trend we've been seeing and talking about at the Cell Therapy Group for the past 12 months or so. The multinational lifescience, biopharmaceutical, and healthcare companies along with strategic investors all now have regenerative medicine on their radar. They are all quietly and not-so quietly developing internal and external regenerative medicine strategies.

Please join us in welcoming regenerative medicine to the radar screen. It's bound to be an exciting ride ahead.