The Therapeutic Discovery Project Credit has been the talk of the bioscience community since the legislative text was released on May 21st. The program will infuse the industry with both tax credits and cash grants for qualified investments in therapeutic R&D. The hope is to stimulate continued growth and progress for therapeutic discovery, including diagnostics and delivery vehicles.
Over the past month there has been much debate over the potential rules and regulations. One such topic of discussion revolved around the inclusion of Federal Grants, such as SBIR/STTRs, as a qualified investment. How can you claim a Federal Grant as a qualified investment? To many that seems as double dipping. According to the IRS, not if you claim that Federal Grant as gross income.
The IRS form, NIH form and final instructions, including FAQ’s from the IRS, were released on June 18th. This question is specifically answered by the IRS.
Q. Can a company apply for the new credit or grant for a project for which the company is already receiving other grant money (e.g., an SBIR award), or does the project have to be completely self-funded to qualify?
A. A taxpayer must reduce the amount of a project’s qualified investment for any grant that is not included in gross income, unless the grant can only be used for costs not included in the definition of a qualified investment. See Notice 2010-45 § 4.01(4).
This could significantly increase the amount of award to many small companies that are funded both privately and through SBIR/STTR grant awards.
SoloHealth, a technology company that develops and deploys interactive health screening kiosks, today announced that the company has been awarded a $1.2 million grant by the National Institute of Health (NIH) through its Small Business Innovation Research (SBIR) program to advance SoloHealth’s initial product, EyeSite®, a vision screening kiosk, into a more comprehensive self-service health and wellness station. The new product will address highly problematic areas such as hypertension, obesity, eye health and vision, nutrition and diabetes. This FastTrack SBIR grant, which is funded by the NCMHD, will aid SoloHealth in bringing free medical screening technology, education and wellness programs to a wider audience, including traditionally underserved communities.
SBIR grants and contracts are a non-dilutive form of R&D funding provided by 11 agencies of the Federal government. The application process is highly competitive and requires a qualified scientific team, innovative approach, and a rigorous R&D plan. While not a strict R&D firm, SoloHealth worked with SBIR GA, a service of ATDC, to construct a compelling proposal and bring together a highly qualified team. The result of these efforts is non-dilutive funding to develop their next generation product.
Together with Georgia Bio, ATDC will be hosting a workshop, tomorrow 5/11, to discuss the “nuts-and-bolts” of the Therapeutic Discovery Project Credit. Lined up to join our panel session are Russ Medford of Salutria Pharmaceuticals, Russ Plum of Inhibitex, Katherine Breaks of KPMG, Bill Kitchens of Arnall, Golden and Gregory, Robert Craig an Executive Consultant, and Jeff Trent of Paradigm Partners.
These panel members will bring a wealth of experience on the topic. Several panelists have had direct working experience with the similar 48 sec C Advanced Energy Credit and will be able to provide specifics on how the program may unfold. Russ Medford, CEO of Salutria Pharmaceuticals, was integral in working with BIO to lobby directly for the legislation, and Russ Plum, CEO of Inhibitex, has been interviewing consultants to assist Inhibitex is applying for the Project Credit.
This two hour working session will consist mostly of Question and Answer. So join us tomorrow on the 3rd floor of 75 5th Street, NW, and be ready to ask our panelists your specific questions.
To register:
http://www.gabio.org/event_details.aspx?id=204
While ATDC works with lots of bioscience entrepreneurs, we can’t do it all! We are very pleased to welcome the new Georgia Bioscience Commercialization Center (GBCC) that will help connect bioscience entrepreneurs with experienced executives, including ATDC’s Harold Shlevin, former CEO of Solvay and two time bioscience entrepreneur. In addition, the GBCC’s web site will provide “how-to” information and links to important resources. The primary contacts for the GBCC, Laurence Downey and Robert Dericotte, describe the GBCC as “a one-stop shop for life science entrepreneurs in Georgia”. Be sure to give this free service to entrepreneurs a try…or two.
When the Health Care Reform Bill (H.R. 3590) was passed on March 23, 2010 it included a Tax Credit or Cash Grant for qualifying small businesses developing therapeutics, molecular diagnostics or delivery vehicles. This tax credit will reimburse eligible companies for 50% of all expenditures spent on a Qualifying Therapeutic Discovery Project during calendar year 2009 and 2010 or fiscal year 2010 or 2011.
The most compelling part of this legislation is the ability to exchange the tax credit for a cash grant. Many small biotech and pharma companies do not have a tax liability and would not benefit from a tax credit. The cash grant option will allow more companies to receive an immediate return.
For example, a $1 million qualified investment will lead to either a $500,00 tax credit or $500,000 check.
The program solicitation will be released by the Department of Treasury, IRS on or before May 21st, 2010. Applications will be be due within 30 days and funds disseminated beginning mid-June.
While the mechanics of the program will be described by the IRS, qualified projects will selected by the Department of Health and Human Services. All eligible companies should receive some assistance, but it is currently not clear how the proposals will be judged and selected, and whether there will be a maximum allocation per project and/or per company.
What we do know:
A Qualifying Therapeutic Discovery Project (Sec 9023 or H.R.3590) includes:
- Therapeutics designed to treat or prevent diseases or conditions (investments made in R&D to further a 505(b) or 351(a) application to the FDA).
- Molecular diagnostic products to be used in direct diagnosis, or in determining molecular factors related to the disease.
- Therapeutic delivery or administration vehicles.
Specifically excluded from this legislation are projects for the development of medical devices. However, we will not know until May 21st whether a medical device used in the delivery or administration of a therapeutic would be considered a qualifying project.
In addition to the above qualifying criteria, selected projects will also result in new therapies, reduce long-term healthcare costs or advance the cure for cancer AND have the greatest potential to result in high-paying job creation and retention, and advance the competitiveness of the U.S. in the fields of life, biological, and medical sciences.
The legislation was modeled after a similar program distributed by the Advanced Energy Manufacturing Credit distributed by the Department of Energy. We anticipate that a similar process will be followed which could include:
- A 1 page preliminary application due within 30 days of the solicitation release.
- A final application due within 60 days of solicitation including an executive summary, scientific eligibility criteria, selection criteria including job creation/retention and U.S. competitiveness, as well as a spreadsheet detailing costs incurred.
If you are attending the 2010 BIO International Convention, a session held on May 5th from 2:00 to 3:30 will provide additional information.
Over the last two years the NIH has implemented new guidelines and procedures to “enhance peer review”. For instance, reviewer comments and scores for each of 5 criteria are indicated on the summary sheet. The research proposal section has also been restructured, to more closely match the criteria by which the reviewers critique a proposal.
For those submitting SBIR/STTR applications to the NIH, April 5th is the first time the restructured proposal will be in effect. This is daunting for both first time and returning SBIR/STTR applicants.
The NIH has been inundated with questions and comments concerning these new processes. In an effort to address these questions they are holding a webinar (through GoToMeeting). This will be an opportunity for NIH staff to discuss the restructuring of the Research Plan, new page limits, new scoring, and other changes resulting from Enhancing Peer Review and to provide a forum for you to ask questions.
When: March 15, 2010 – 2:00 to 4:00 PM EST
REGISTRATION: https://www2.gotomeeting.com/register/735602218
(Note: the session is free, but you must register to participate)
For those Phase I SBIR awardees developing therapeutics targeted toward neurological disorders, and planning on submitting for a Phase II SBIR award to fund pre-clinical trials, check out the NINDS Cooperative Program in Translational Research (U44). This special funding opportunity is directed at translating basic science research into new drug candidates for neurological disorders. These awards are not intended for early stage discoveries such as high throughput screening, but will fund later stage projects. Even those sufficiently advanced that an IND or IDE application would be filed at the end of the project period.
These awards are larger than traditional Phase II awards, with allowable budgets up to $1M per year and a 3 year max. Phase I applications are not allowed, however, a FastTrack application may be submitted as long as the Phase I portion is in preparation for a Phase II to fund pre-clinical trials. If you have already received a Phase II, this mechanism can also be used to fund a competing renewal application with the same allowable budget as above.
Cooperative Agreements are an NIH funding mechanism that allows NIH programming staff to be more involved with the evolution and progress of a project. Specifically, go/no-go assessments can be made and funding halted if sufficient progress is not made. This is attractive to the NIH as it allows them to be more closely involved with large grant awards and use their funding more wisely.
For more information contact the NINDS SBIR/STTR Program Director, Dr. Randall Stewart, to discuss your project and it’s applicability to this program. Regular receipt dates (Apr 5, Aug 5, Dec 5) apply, and program staff should be contacted 10 weeks prior to submission.
Sub-Micro, a Georgia Tech spin-out developing magnetic nano-particles for the removal of circulating cancer cells, was recently written up by both the Georgia Tech Daily Digest and Medical Device Daily. This exciting technology is attracting attention as it provides a solution to a problem with the use of nano-particles as therapeutics. Nano-particles have been designed by many developers to target and/or destroy specific cell types including many forms of cancer. But, after the nano-particles have sequestered and/or destroyed the targeted cells, how do you remove them from the body? This question is a hurdle to receiving FDA clearance for the wide spread use of nano-particles as therapeutics. Sub-Micro’s proprietary magnetic nano-particle technology, which was developed at Georgia Tech, is uniquely designed to capture the targeted cells and remove them and the nano-particle from the body.
Ken Scarberry developed the technology as a graduate student in the lab of Dr. John McDonald, professor in the School of Biology and chief scientist with the Ovarian Cancer Institute. The magnetic nano-particles will initially be targeted toward the removal of ovarian cancer cells. But the technology can be adapted to remove a variety of cell types including HIV infected cells.
Earlier this month the NIH released several announcements associated with the Recovery Act. Of note to the SBIR community is NOT-OD-10-034.
The announcement will fund Competitive Revisions to accelerate innovation of previously funded “parent” SBIR/STTR awards in the area of basic behavioral and social science research (b-BSSR). The proposed work must significantly expand the scope or research objectives proposed in the previously funded award. Basic behavioral and social science research includes research on behavioral and social processes, interactions between biology, behavior and social processes, and/or methodology and measurement.
To qualify, the small business must have an active award, at the time of application, and propose a revision to be accomplished in one year. The work proposed in the revision must not extend beyond that of the parent award. If a no-cost extension is needed to cover the work being proposed in the revision, it must be in place prior to submission.
Up to $150,000 in direct costs may be requested with a maximum of $75,000 of those costs allocated to equipment or technology acquisition.
Letters of Intent are due February 25, 2010
Application is due March 25, 2010
Two ATDC seed funded bioscience companies complete private financings in 2009 and are honored by GABio Industry Association. Iconic Therapeutics and Visioneering Technologies, both ATDC Seed Funded companies, will be presented with a Deal of the Year award. The GaBio Deal of the Year awards recognize life science companies that have completed a significant development milestone, such as raising investment funds, entering into a partnering agreement or securing a government grant or contract.
Iconic Therapeutics, a biotechnology company developing a drug to treat wet macular degeneration, raised $3.5 million from New Haven, Conn-based Elm Street Ventures. The company has raised $13.8 million since it’s inception in 2003, mostly from angel investors. Iconic, whose technology is based on novel immunoconjugate proteins called “I-cons”, plans to conduct a Phase I trail to show that the compound is safe in humans. The technology was licensed from Yale University.
Visioneering Technologies, an Atlanta based start-up developing technology for correcting presbyopia through contact lenses and other “on eye and in eye” applications, raised $5 million from MB Ventures of Memphis, Tenn., Charter Life Sciences and Life Science Angels, both of Palo Alto, Calif., and from the State of Georgia ATDC Seed Capital Fund. Visioneering’s approach to vision correction utilizes induced aperture optics to improve the optical efficiency of the eye’s vision system. The technology has a number of on eye and in eye applications including contact lenses, LASIK, intraocular lenses and corneal inlays.
The Georgia Bio Annual Awards Dinner will be held Thursday, January 21st, 2010, at The Retreat of Dunwoody. This event recognizes Industry and Community leaders who have made a significant contribution to the Georgia Life Science community. Please see the GABio web site for more details on the Annual Awards Dinner (
www.gabio.org).