State pulls back on stem cell funding
by by Josh Margolin and Ted Sherman/The Star-Ledger
Sunday June 22, 2008, 3:33 PM
Eight months after state officials broke ground on New Jersey's new center for stem cell research, the once-heralded $150 million project has quietly been put on indefinite hold.
Despite continuing assurances that the 18-story tower in New Brunswick would remain on track -- even after voters rejected proposals last year to finance $450 million in stem cell science grants -- state officials behind the scenes pulled back millions in construction funding for the research facility late last year. They now acknowledge they are re-evaluating the entire project.
Gov. Jon Corzine said the project is in limbo and could not offer a concrete timeline for getting it restarted.
"I'd like to have a director and I'd like to see what our options are on making sure that New Jersey continues to be the leader, or among the leaders on biotech research -- particularly as it relates to stem cells," he said. "And then we'll work together on our rollout of what our plans are."
As of now, the Stem Cell Institute of New Jersey is little more than a web page and scattered lab research in three existing locations.
Under the joint oversight of the University of Medicine and Dentistry of New Jersey and Rutgers University, UMDNJ officials say more than 50 faculty members from both universities are doing grant-funded stem cell research through the institute.
The site of the proposed research center itself, though, is just a gravel parking lot with a lone sign featuring a drawing of a building that now may never be built.
In October, Corzine and others put shovels in the dirt for a ceremonial groundbreaking of what was to be called the Christopher Reeve Pavilion. Surrounded by relatives of the late actor, who became a strong advocate of stem cell research after he was paralyzed in a horse-riding accident, Corzine predicted the new center would serve as a nexus of cutting edge science.
"To the future!" he proclaimed, turning a silver-colored spade in a boxed patch of loose dirt.
A few weeks later, though, the project was abruptly halted after the failure of a controversial ballot initiative to borrow nearly half a billion dollars to fund the actual research.
The statewide bond proposal -- bloated by Trenton lawmakers to include money for four additional research centers in Camden, Newark, Belleville and Allendale -- was unexpectedly turned down by voters. Many blamed the rejection on anger with the state's borrowing, fanned by a vigorous campaign by conservatives and religious leaders staunchly opposed to stem cell research on moral grounds.
New Jersey has been pushing for years to become a center for stem cell research -- even before Corzine made it a central plank in his campaign for governor in 2005.
Stem cells have the potential to develop into many different types of cells in the body and scientists believe they hold the key for developing cures and treatments for now hopeless ailments like Lou Gehrig's disease and Alzheimer's. Economists for Rutgers University also say investment in such research would generate billions in economic activity.
A CHANGE IN PLANS
After the bond issue was rejected, senior administration officials said publicly that the New Brunswick research facility -- which had already incurred more than $2.3 million in planning expenses -- would proceed as planned, using money previously earmarked by the state.
The Legislature in 2006 had authorized the state to borrow up to $270 million in construction costs for the five stem cell labs across the state. At the same time, NJ Transit continued planning work on a federally funded, $10 million platform extension to serve the new research tower.
With the failure of the bond issue, discussions were initiated within the administration to save the New Brunswick lab by shelving the other four research facilities that had been added by the Legislature under political pressure and using the $120 million earmarked for that construction to pay for the actual science, according to senior administration officials.
But last November, the administration pulled back a funding proposal before the state Economic Development Authority, which was ready to approve $3.7 million in preliminary expenditures for the Reeve Pavilion. EDA officials refused last week to discuss the issue, referring all calls to the governor's office.
Many officials, however, were unaware the project has been put on hold. Rep. Frank Pallone (D-6th Dist.) referred to the "ongoing construction" of the stem cell research center in congressional hearings he chaired last month.
U.S. Sen. Robert Menendez (D-N.J.), who has been pushing for federal transit aid for the site by convincing federal officials that the stem cell institute would yield hundreds of high-tech, well-paying jobs for Central Jersey, was surprised to learn the project was halted months ago. He said he would go back to federal officials and try to convince them to apply the money to another New Jersey project.
"The money just can't hang out there forever," Menendez said. "It's obviously a disappointment because it is exactly the type of entity we're trying to attract to New Jersey -- high-end jobs with low impact on the state's services. And we want to be a center for research and development excellence."
Marie Tasy, executive director of New Jersey Right To Life and a prominent opponent of the stem cell labs, said voters "clearly spoke loud and clear last November" in voting down stem cell research funding and said the project should be abandoned. She said the initial construction funding for New Brunswick was done without ever going to the public.
"They put the cart before the horse. They assumed the people of New Jersey would support the research," she said. "At the time, it made no sense at all."
Tasy said they should use any money already appropriated to reduce the state debt.
Senate President Richard Codey (D-Essex), who has championed stem cell research funding long before he served as acting governor in 2004-05, conceded that the defeat of the bond issue last fall effectively killed construction of the institute, despite public statements to the contrary. Once the voters turned down the referendum, Corzine and his staff felt that proceeding with the institute would be perceived as a slap in the face, Codey said.
"It's unfortunate but it's obviously the governor's decision to make and, hopefully, it can get back on track," Codey said.
Asked whether the administration should have proceeded because the money had been approved by the Legislature, Codey said "that's a decision that he (Corzine) made. I respect it. I understand it. I'm not going to second-guess it. Am I disappointed? Sure. I want to save lives. Of course I'm disappointed, but not with him."
Thursday, June 26, 2008
at 1:21 PM
Published on HamptonRoads.com | PilotOnline.com (http://hamptonroads.com)
LifeNet tissue bank nears deal to expand headquarters
City officials are renegotiating a million-dollar deal to sell 6 acres of land to LifeNet Health, one of the largest tissue banks in the country and an anchor of the burgeoning medical village along Princess Anne Road.
The deal is expected to be settled next month, said Douglas Wilson, executive vice president of LifeNet.
The biomedical firm and the city first started talking last year about redoing the contract, said Steve Herbert, the Beach's chief development officer.
LifeNet had an option to buy 6.57 acres adjacent to its corporate headquarters on Concert Drive, but the discounted deal was to expire on June 10. The City Council approved a 30-day extension that day so talks could continue.
Wilson said there is no doubt LifeNet will buy the land - the second phase of a deal first announced in 2003 - but the company needed time to work on development plans.
He wouldn't go into detail, but said the company would likely invest at least $2 million and expects to create up to 100 jobs in the next three years. LifeNet, founded in 1982, already employs more than 550 people, spokeswoman Dena Reynolds said.
"The negotiations have moved very efficiently," Wilson said. "We're very pleased to be where we are in this corridor of Virginia Beach. It's gone well for us."
In 2003, LifeNet bought roughly 16 acres along Concert Drive for $1.97 million. The land is in the area known as Princess Anne Commons, a series of medical and athletic villages stretching from Tidewater Community College to Dam Neck Road.
LifeNet's deal included a five-year option to buy the adjacent six-acre plot for $125,000 an acre, plus an annual increase based on the consumer price index. Those increases have pushed the price under the deal to about $150,000 an acre, said Warren Harris, Virginia Beach's economic development director.
When LifeNet buys the parcel, the cost is expected to be around $1 million. The City Council must approve the deal.
Without a final plan on what to do with the new acreage, Wilson said, LifeNet isn't quite finished with the contract. He added that talks with the city have been amicable.
"It's not an unusual request," Councilman Bob Dyer said. "They've been a good friend to the city. To really promote a friendly business environment, these are the type of things we need to do."
Herbert said the extension request gave the city a chance to strengthen the contract with investment thresholds and firm time -lines for construction.
"We're trying to find a middle ground here where they can continue to enjoy the benefits of the option agreement," he said, "and the city can get... a little more certainty about the nature of the investment."
Harris said any LifeNet expansion makes the Princess Anne Commons corridor more attractive to other firms. It also solidifies the city's attempts to recruit more medical companies with high-paying jobs in the Princess Anne corridor and elsewhere.
"LifeNet is an important player," Harris said. "They anchor an important piece of our strategy to attract other health science or medical device companies to Virginia Beach."
at 12:33 PM
Wednesday, June 25, 2008
Governor Tim Kaine attended the 2008 Biotechnology Industry Organization's 2008 International Convention last week. The convention drew 20,108 industry leaders from 70 different countries and 48 states. The full Convention program included four full days with 175 breakout sessions, 21 educational tracks, more than 1,000 speakers, three keynote sessions, six Super Sessions and three CEO Forum sessions. The convention featured the largest gathering of biotech exhibitors in history, with more than 2,100 companies, 126 of which were new, and more than 208,000 sq. feet of exhibition space, the largest ever at the convention. The exhibition included more than 60 domestic, country and regional pavilions representing every aspect of the biotechnology industry.
Sadly, it was also the first year that the Commonwealth of Virginia did not even have a booth. Having the governor there to walk the floor was great as he was able to see first hand what kind of competition Virginia faces to attract and develop this dynamic and high-paying industry.
Following the walk-about on the show floor, the governor was the host for a special reception for all of the Virginia attendees who where there in San Diego to represent the industry.
Here is the link to some pictures.
at 11:18 AM
Wednesday, June 04, 2008
Let Md. focus on firms it has now
June 4, 2008
It's as plain as the steely resolve in Gov. Martin O'Malley's eyes that something interesting is about to happen to the Department of Business and Economic Development.
The governor didn't tell the department he wanted to overhaul it until just before he said so in a speech last month, according to people familiar with the situation, so O'Malley and DBED Secretary David W. Edgerley haven't been reading from the same PowerPoint
The risk is that, like governors before him, O'Malley will turn Business and Economic Development Department into a deal-chasing boiler room for planning ribbon-cutting announcements with out-of-state companies.
Of course, DBED needs to play the business recruitment game. But its primary focus should be helping the companies that have already thrown in their lot with the state.
The agency's present mode is small-ball - bite-size financial deals originated through county and city development offices, along with guidance from DBED branches for any Maryland company trying to make its way.
O'Malley can't say exactly how that will change until the completion of a top-to-bottom review this summer.
But he wants to put much more focus on promoting and developing high-tech business, especially biotechnology. He wants to publicize Maryland's smart work force, its constellation of employers, its proximity to Washington.
"It's a great story, and we've never told it well," he said in an interview. Edgerley, whom O'Malley appointed at the beginning of his term "has done a pretty capable job," he said, "and has gotten DBED to become more responsive and more accountable" to local economic development officials who deal with companies every day.
Now the governor seems to want to put the state, DBED and himself back in the front office with them, trolling for deals. He just got back from promoting Maryland's biotech economy to Israelis, and he's about to head to North Carolina to see how that state has done such a good job of developing its life sciences sector.
Far be it from me to identify this as a response to Maryland Comptroller and O'Malley rival Peter Franchot, who has been making his own headlines from biotech goodwill tours. Focusing on DBED had to wait until now, the governor said, because most of last year was taken up in fixing the state's fiscal problems.
The truth is that, while biotech is important for Maryland, there's a limit to what public officials can do. The biggest government decision for Maryland biotech came in the 1930s when Washington decided to put the National Institutes of Health in Bethesda. Most of what has happened since then has been about the private sector arranging itself around the public asset.
For all the attention it gets, biotech has never fulfilled its grandiose promise. A study last year by the Sage Policy Group found only 30,000 private-sector, bioscience jobs in the state - a little more than 1 percent of total employment. Products bought and used by patients - as opposed to those in development - are few. MedImmune, the state's premier biotech company, got sold off last summer to AstraZeneca.
For economic developers, the grail has been to land a big biotech manufacturing facility to help make up for the collapse of Maryland's traditional factory base. The biotech manufacturing portion "is a piece of our cluster that's underperforming," O'Malley said.
But it hasn't happened and it's not likely to. Novartis bypassed Maryland and put its plant in North Carolina because of lower labor costs. There's little DBED can do to reverse that. Even so, O'Malley said he might be willing to put tens of millions of dollars on the table - what North Carolina gave Novartis - "for the right company" to put a plant in Maryland.
Translation: Having just raised taxes on Maryland companies, he might use some of the money to try to lure drug factories here to compete with them for workers.
A big study partly financed by Baltimore when O'Malley was mayor found that the state must "invest greater resources and implement innovative deal structures" to lure biotech concerns. Shortly after being elected governor, he was talking about founding a "statewide life sciences authority" and putting up $100 million in public money to develop biotech, according to the Baltimore Business Journal.
To his credit, O'Malley knows that Maryland's highly educated work force and existing technical institutions - from the Johns Hopkins University to the National Security Agency - are its greatest attributes. He has continued the state's tradition of investment in higher education.
He knows that today's DBED, with a strategic focus and better financial department, is superior to the agency that once flailed around from company to politically connected company. He understands the need to continue the unglamorous work of Gov. Robert Ehrlich's DBED secretary, Aris Melissaratos, in connecting academic researchers with businesses.
Edgerley is on board with the overhaul. (He likes the term "refocusing" instead.) "It creates some nervousness among staff and among our partners," he said. "We're doing what we can to let everybody know we're focused on the opportunity it presents."
So is Melissaratos, now working with Johns Hopkins' technology transfer office.
"I don't see anything wrong with reorganizing it," he says. "Any improvement is well-accepted."
But those guys would say that. It's what the governor wants. The real constituency is the larger business community, which is already quite unhappy with O'Malley's tax increases.
Markets and businesses follow their own logic. Someday Maryland biotechnology may blossom into the same kind of employment engine as, say, the defense industry. But it won't have much to do with what one governor is able to do.
If renewed promotional efforts and hunting for biotech elephants distract DBED from being a service resource for ordinary Maryland companies - something it has become very good at - it'll hurt the economy more than help.
at 2:22 PM
Monday, June 02, 2008
The Virginia Biotechnology Association's chairman, Maciek Sasinowski and Mark Herzog, the executive director, serve as members of the steering committee for the new Hampton Roads Bioscience Cluster. The first meeting took place on May 29, 2008 in the IDA board room in Hampton, Virginia. Attendees came from a wide range of organizations such as Eastern Virginia Medical School, the College of William and Mary, Arkios BioDevelopment; Old Dominion University; Soluble Systems, CIT, the City of Hampton and the Hampton Roads Research Partnership.
at 2:23 PM
States Attracting Biotech by Extending NOL Carry Forward
By Karen Pihl-Carey
Senior Staff Writer
With a federal tax benefit that allows young companies to carry forward 20 years of net losses, more states are following in papa's footsteps in order to incentivize innovation and attract the high-wage biotech industry within its borders.
A total of eight states already are there, and 10 others offer a 15-year benefit. But two of the most populous states for the biotech industry - Massachusetts and California - offer only a five- and 10-year net operating loss (NOL) carry forward benefit, respectively. The lawmakers in both states, however, are working on a change.
Since it takes up to 15 years in research and development before most biotech companies reach profitability with a marketed product, those residing in biotech's western epicenter must absorb one-third of their losses.
"This is not only unfair, but it also makes the economic rationale for a lot of these projects very, very difficult," said Frank Karbe, executive vice president and chief financial officer of South San Francisco-based Exelixis Inc.
That is why California State Assemblywoman Sally Lieber introduced in 2007 Assembly Bill 1370, which proposes doubling the time biotech companies can carry forward their NOLs from 10 years to 20 years. The state is home to 2,000 life sciences companies that would benefit, including those developing therapeutics, diagnostics, research tools and medical technology.
"This legislation would literally help every single biotech company operating in California," said Matt Gardner, CEO of BayBio, Northern California's life sciences association.
The bill passed 79-0 in the Assembly and is awaiting action by the Senate Review and Tax Committee. It currently is at a standstill while state legislators grapple with budget deficit discussions, but Gardner hopes they will include the bill in an economic stimulus program, under which it "could move very quickly this summer," he told BioWorld Financial Watch.
In Massachusetts, the legislature is working on Gov. Deval Patrick's $1 billion life sciences initiative that would not only extend the NOL carry forward from five to 15 years, but would earmark $500 million for capital spending, $250 million for grants and financings to encourage job growth, and $250 million in tax credits and incentives. The bill was passed earlier this year by both the House and Senate, and a committee is working on a completed package with amendments
The initiative prompted Canton, Mass.-based Organogenesis Inc., which had once planned to move out of state, to expand its headquarters and its research and development and manufacturing facilities in Canton. The regenerative medicine company expressed concerns last year over tax inequalities between states and worked closely with the Massachusetts Office of Business Development to secure a $12.9 million incentive package, as well as $5 million in low-interest loans for job growth. The company has since increased its 200-employee workforce to 325 employees and it has 50 more positions to fill this year. Its first product, the living, allogeneic, cell-based Apligraf, was approved in 1998 for venous leg ulcers and in 2000 for diabetic foot ulcers.
With 11 compounds in the clinic, four of which could move into Phase III within the next year, California cancer company Exelixis still is two to three years away from having its first marketed product. After 12 years of research and development, it is now posting net losses of about $100 million a year, money that under the current law it will never recover. Karbe is astounded that the state has not taken full advantage of investing in an industry that has brought it a high concentration of brainpower and well-paying jobs.
The current tax benefit "ultimately means less jobs, less money invested in R&D, less products coming to market, less solutions for patients," he said.
In total, it can take up to $1 billion to bring just one product to market. Once that product reaches the market and revenues begin to roll in, according to the Biotechnology Industry Organization, companies in these states - Connecticut, Delaware, Florida, Hawaii, Idaho, Iowa, Kentucky and Pennsylvania - can offset their state taxes by applying 20 years of net losses, thereby maximizing their profits.
It's an attractive benefit not only for start-up companies deciding where to set up their headquarters, but for investors that are taking huge risks that don't always pay off.
"Attracting sufficient equity capital to fund critical research is often a challenging task for biotech innovators," said Jim Greenwood, president and CEO of Biotechnology Industry Organization (BIO). "From capital gains exemptions and net operating loss considerations to tax exemptions on equipment and investment credits for individuals, states are increasingly aware of the unique challenges facing bioscience companies."
Data tracked by BIO indicate that 31 states allow sales tax exemptions for equipment used in research and development activities, including biomanufacturing, and 39 states offer NOL carry forwards for anywhere from five years to 20 years. Puerto Rico offers the benefit for an unlimited number of years; and the benefit is transferable, meaning the company can sell the exemption credit to another entity, in the states of Kentucky, New Jersey, Ohio and Tennessee.
Resistance to the tax benefit change in California appears to be minimal, but critics do point to a handful of companies like Genentech Inc. and Gilead Sciences Inc. and ask whether biotech firms really need more tax incentives. For the first quarter, Genentech posted product sales of $2.2 billion and a non-GAAP net income of $895 million, while Gilead reported revenues of $1.3 billion and a non-GAAP net income of $522.1 million.
But the majority of the biotech industry is made up of smaller and mid-size companies, most of which will never see profits like Genentech and Gilead but still are conducting solid research on high-stakes money.
"We have such a wonderful accumulation of brain power in this state," Karbe said. "I think we need to be very careful that we create and maintain an environment here that . . . keeps this industry alive."
Published June 2, 2008
at 10:42 AM