Venture-backed firms faster at growing jobs, revenue

Venture-backed firms in the United States grew both revenue and jobs faster than non-venture backed companies and accounted for 21 percent of the U.S. GDP in 2008, according to a report by the National Venture Capital Association.

The report, based on IHS Global Insight research, shows that venture-backed companies employed more than 12 million people - 11 percent of the total private sector employment - and generated nearly $3 trillion in revenue in 2008.

"These findings extend trends regarding venture capital’s outsized impact – or “ripple effect” – on the U.S. economy that stretch back to the first edition of this report, published in 2001," the report says.

"Venture-backed companies outperformed the overall economy in terms of creating jobs and growing revenue...and continues to produce some of hte U.S. economy's best performers," it adds.

It points out that the VC industry continues to grow entire new industries from scratch, playing an instrumental role in creating and nurturning the IT, biotech, semiconductor and online retailing industries, while investment data suggests that social media and clean tech will join that list.

The report says that for every dollar of venture capital invested from 1970 to 2008, it generated $6.38 in revenue in 2008, creating one U.S. job for every $37,702 invested.

In the Southeast Georgia came in at number 5 on the top ten list of employment at VC-backed firms in 2008, with Tennessee number 7 and Florida at 11.

In revenue produced by VC-backed companies, Virginia ranked 7, Florida 9, Tennessee 11, and Maryland 14 in 2008.

Maryland had the second highest rate of growing revenue and employment at VC-backed firms from 2006-2008.

For the full report see: http://bit.ly/2iyl0A.

September 17, 2009

By Allan Maurer From: TechJournal South

Sign Letter Now to Support the Federal R&D Tax Credit!

Take action today to support the extension and enhancement of the Federal R&D tax credit that expires on December 31.

The effort is spearheaded by the R&D Credit Coalition. The objectives of the R&D Credit Coalition are: a strong, permanent R&D credit of commensurate rate for all companies; a 20 percent simplified credit; and an extension of the traditional credit.

To add your company to a letter to be sent in late September to all members of Congress, both Senators and Representatives, please click on the link below to 1) read the letter, and 2) electronically authorize your company/organization name EXACTLY as it should appear on the letter. (NOTE: only the Company/Organization name will appear on the letter; the contact name & phone number will Not appear on the letter.)

Company-Organization R&D Credit Letter

Deadline: September 23, 2009

For more information, click here: http://www.investinamericasfuture.org/index.html

VA Biotech Companies Urged to Sign Up for Tax Credits

Another great article by Vandana Sinha.

Virginia biotechs urged to register for tax credits
Washington Business Journal - by Vandana Sinha Staff Reporter

Virginia bioscience leaders are urging companies to register to be eligible for new state investor tax credits targeting their industry for the first time.

Virginia lawmakers narrowed a $3 million pot of tax breaks for angel investors down to those investing in only bioscience and advanced technology companies. The money will be available this calendar year to companies that register by the end of December.

“It was so broad before that in many cases you could be investing in a restaurant and get a tax credit,” said Mark Herzog of the Virginia Biotechnology Association.

With the newly revised tax credits, which both the companies and investors must apply for each year, Virginia joins Maryland by focusing such incentives on an industry where early-stage investments are too crucial to do without, but too risky to attract much attention from established funds. In Maryland, the state allotment is $6 million.

In the Virginia fund, half is reserved for biotech and tech spinoffs from universities. Herzog said all qualified companies would split the available funds equally, unlike the first-come-first-served system in Maryland.

“Going forward, as we reach out to a broader group of investors, that’s something that will be attractive,” said Ross Dunlap, chief operating officer of Ceres Nanosciences LLLP, a Manassas-based George Mason University spinoff that has raised $1.5 million from mostly friends and family in the last year.

The Virginia bill also provides for up to $100,000 in matching federal Small Business Innovation Research grants, though not for firms that work with embryonic stem cells.

RTD Editorial By CEL-SCI CEO: Don't Kill Biotech With Bad Policies

This editorial is in today's Richmond Times Dispatch.

Virginia Economy: Let’s Be Sure Biotech Has a Bright Future
GEERT KERSTEN GUEST COLUMNIST
Published: September 2, 2009

They are the 21st-century's white-coat warriors: biotech researchers determined to create cutting-edge drugs from living organisms. The resulting medicines, called "biologics," typically take over 20 years and $1.2 billion to develop.

Successful drugs can work wonders. There are biologics currently on the market treating cancer, multiple sclerosis, and a host of other illnesses. And with about 600 biologics in the pipeline around the country, more medical miracles might lie just over the horizon.

It's not an exaggeration to say that we safeguard our own health by safeguarding the health of biotechnology research.

But because biologics tend to carry a hefty price tag, they've become a tempting target for cost-cutting among some in Washington. What the politicos fail to appreciate, though, is just how much investment is required to create a biologic in the first place.

While biotech revenues have risen over the three decades since the sector emerged in the mid-1970s, profits have continued to hover near zero.

"Consumers see market prices for drugs far in excess of production costs and it looks like large profits," noted Yale economics professor Fiona Scott Morton in congressional testimony. "Government payors then face the temptation of using their power to force prices below market levels."

Morton warned that if policymakers restrict the financial return on these drugs, the venture capital so critical to funding biologic research will dry up, with investors putting their money where a higher rate of return is more likely.

THE CRUX of the controversy is over intellectual property rights: How long should the government allow biotech companies to sell a new drug competition-free, before allowing outside firms to co-opt the research data on that drug and use it to concoct cheap generic approximations?

Because atom-for-atom replicas of biologics are virtually impossible, these copycat drugs are called "biosimilars" or "follow-on biologics."

Research from Duke University suggests it takes 13 to 16 years of sales for a firm to break even on a biologic drug. Therefore, it's reasonable to grant brand-name producers a 12-year period to keep their research data private, effectively blocking the creation of competing biosimilar products for that time period. A bill recently approved in House and Senate committees does just that.

This robust protection would put U.S. biotech firms on a level playing field with biotech companies in the European Union, which currently grants at least 10 years of data privacy. Unfortunately, some lawmakers have proposed shortening data protection to as low as five years.

If that were the case, firms could churn out biosimilars well before the original manufacturer has had a chance to recoup its investment costs. Developing these medicines would become a money-losing enterprise. At that point, what investors would continue pouring money into this research?

In short, whittling away the data privacy period for biologics will result in fewer investment dollars going into biotech research, which in turn will result in fewer and fewer life-saving biologics.

That would be bad not only for patients in Virginia. The decline of the biotech industry would exact a toll on the state economy, too.

THE BIOSCIENCE sector accounts for more than $2.5 billion in annual economic activity in Virginia. This state is home to 160 biotech-related companies, including 82 biotechnology firms, 29 medical device companies, 28 contract research and support organizations, and 31 businesses that produce sophisticated equipment supporting the bioscience industry.

If data protections aren't strong, investment into these firms will dry up.

Let's use our own company as an example. We have been working with complete dedication for more than 20 years on a cancer immunotherapy that is designed to make the first cancer treatment more successful, and thereby increase the survival of the patients. The treatment has shown excellent results in human studies around the world and is not toxic.

Yet, even with this excellent data, our company has had to survive many "near death" experiences. If there is even the perception among investors that they will not be able to have acceptable returns on such a risky investment, companies such as ours will no longer receive funding and our society will be left with only those advancements that come from the big pharmaceutical companies -- and that's not much. Almost all breakthrough drugs have come from small biotechnology companies and they need the longer protection to recoup the investment costs. If they do not get it, there goes the funding for novel research and with it our hope for new breakthrough drugs.


Geert Kersten is the CEO of CEL-SCI Corp., a biotechnology company headquartered in Vienna. Contact him at (703) 506-9460 or find out more at http://www.cel-sci.com.