State program has leveraged $50 million for Maryland’s bio industry
BALTIMORE, MD (May 24, 2010) – The Maryland Department of Business and Economic Development today announced that 14 Maryland biotechnology companies received investments in FY 2010 from the state’s Biotechnology Investment Incentive Tax Program, which encourages investors to provide seed and early-stage funding to qualified, privately held Maryland biotechnology companies.
Investors, many of whom have benefitted from the program since it was first funded in FY 2007, received a portion of the $6 million in credits that was available this fiscal year. The program, which is being funded in FY 2011 at $8 million, is a key part of the BioMaryland 2020 plan, the 10-year, $1.3 billion strategy for which the Governor was recently honored as BIO Governor of the Year.
“The Biotech Tax Credit program has become one of State’s most important tools for giving fledging biotechnology companies the chance to mature and commercialize oftentimes life-saving discoveries,” said Governor Martin O’Malley. “Over the past four years, we have invested $24 million in this program, which has leveraged more than $50 million in private investment for Maryland’s biotechnology community.”
“Through follow-up surveys with the companies who have received investments through this program, we have found that many have been able to create new jobs, increase their revenues and access additional capital to conduct clinical trials and research and development,” said Secretary Christian Johansson.
Many of the biotechnology companies that have received investments from the tax credit year after year have been able to leverage the funding to attract venture capital, private investments and federal grants.
For example, Sequella Inc., a clinical stage biopharmaceutical firm based in Rockville, has used the biotech tax credit to raise $5.4 million, which paid for significant toxicology studies required by the FDA and Phase 1 clinical trials for a promising new drug candidate for tuberculosis and multi-drug resistant tuberculosis (TB). In addition, the company was able to secure additional equity investments of $7 million, NIH grants worth $6.3 million, and a €12 million grant to pay for Phase 2 clinical studies in Africa later this year.
“The Biotechnology Investor Tax Credit was critical for us and we simply would not be where we are today as a company without it,” said Marty Zug, Sequella’s CFO. “In an environment where capital is tight and tough to find, the tax credit reduces the investment risk and results in significant company-saving infusions of equity to an industry that is the growth engine of Maryland. In our case, the tax credit gave us the ability to secure funding to continue to develop one of the first new TB drugs in 40 years, reduce the spread of multi-drug resistant TB, and potentially save the 2 million people who die from TB each year.”
Baltimore-based Gliknik, which started operations in 2007, has already identified drug candidates for cancer and autoimmune diseases from a newly developed platform that improves upon existing cancer drugs and from synthetic equivalents of IVIG, a $3 billion product derived today from pooled human blood.
“Making new drugs like these is challenging to finance in the current economic environment,” said Dr. David Block, founder and CEO of Gliknik. “The Biotech Tax Credit lessens the financial risk for our early investors and provides the necessary lifeline that has allowed us to get to the point where numerous potential corporate collaboration partners are engaged.”
Companies receiving investments from the program in FY 2010 include BioMarker Strategies (Baltimore City); Zymetis (Prince George’s County); Sequella Inc. (Montgomery County); Gliknik (Baltimore City); FASgen (Baltimore City); 20/20 Gene Systems (Montgomery County); Noxilizer (Montgomery County); MaxCyte (Montgomery County); Blue Torch Medical Technologies (Montgomery County); Arginetix (Baltimore County); Alper Biotech (Montgomery County); Creatv MicroTech (Montgomery County); Rafagen (Montgomery County); and A&G Pharmaceutical (Howard County).
To qualify, companies are required to: be less than 12 years old; have their headquarters in Maryland; employ fewer than 50 people, and have a valid certification from the Department of Business and Economic Development. Investors are required to submit applications prior to making an investment. DBED reviews the applications and issues initial credit certifications within 30 calendar days. For more information on the program, visit www.marylandbiocenter.org.