Lab expansion in BioTech Park bringing 653 new jobs

Richmond Mayor Dwight C. Jones announced today a planned expansion by Health Diagnostics Laboratory Inc. that would bring $68.5 million in capital investment and 653 new jobs to the Virginia BioTechnology Research Park.

The health-management company started in 2009 and has experienced such rapid growth that it realized in September that it would need to relocate or expand its 30,000 square-foot presence in the downtown research park, said Tonya Mallory, the company's president and chief executive officer. The company decided to remain in Richmond at the BioTech park in light of its proximity and existing relationships with VCU Medical Center.

The Jones administration said it had followed the company's growth and worked aggressively to support the two-phase expansion when it learned other locations were being considered.

"This has been a company that's been on our radar for a long time," said Peter H. Chapman, the city's deputy chief administrative officer for economic and community development.

Pending approvals by City Council, including a 10-year, $1.35 million performance-based grant, site work will begin early next year to demolish two buildings and replace them with a pair of six-story buildings along Jackson Street near Fifth Street, across from Altria's massive research facility.

The two-year expansion of Health Diagnostics Laboratory will represent the largest investment in the 16-year-old BioTech park behind Altria's, said Robert T. Skunda, president and chief executive officer of the park.

By Will Jones
Richmond Times-Dispatch

Tracking Horse Health Wirelessly

Check out this video on technology developed by Charlottesville company Empirical Technologies.

VABIO Welcomes 9 New Members So Far in October

The VABIO team is thrilled to welcome nine new members so far this October! The enthusiasm in the Virginia bioscience community is truly contagious! Companies joining this month include: Greenbrier Wealth Management of Raymond James; NIH Federal Credit Union; Kilpatrick Townsend and Stockton LLP; AIBiotech; SNBL Clinical Pharmacology Center; Zansors LLC; Extinction Pharmaceuticals; Bode Technology; and Williams Mullin Clark and Dobbins.

There is still a few days left to join in October!

November 8 will have an Impact on Bioscience Companies

Every four years, all 140 seats in the Virginia General Assembly are up for election at the same time. Every ten years, the district lines change after the decennial United States census. The election coming up on Tuesday, November 8th is just such an occasion and members of the Virginia House and Senate are all trying to get to know their new constituents, fend off challengers, and get reelected to their seats.

These final two weeks before Election Day are a great time to talk with your life science colleagues in your office and around your community about how critical good public policies are for the growth of the bioscience industry in Virginia. Volunteers from member companies of VABIO have been working hard over the last several years to pass legislation to help emerging technology companies grow in the Commonwealth.

For example, in the last three years, VABIO (along with partners such as the NVTC) successfully lobbied for the passage of Virginia’s Refundable R&D Tax Credit, $2 Million in state matching funds for SBIR awards, a 100% capital gains tax exclusion on investments in bioscience companies in Virginia, the $4 Million CRCF fund for commercialization, $8 Million for clinical trials at UVA and VCU, as well as an overhaul of the state’s “Angel Investor Tax Credit” that provides a 50% credit on a bioscience investment up to $50,000.

These are huge victories for the bioscience industry in Virginia and never would have occurred without the active help of individuals, working in the industry, who took a few minutes to make a call to a legislator, sent an email or walked the halls of the legislature with the VABIO staff.

If you would like to see these programs continue or be expanded, now is a great time to let your Delegate or Senator know. Take a moment and tell them who you are, what you care about, and that you will be voting on November 8th. Encourage your co-workers to do the same.

Here are links to help you identify your legislators:
Who are my legislators? http://conview.state.va.us/whosmy.nsf/main?openform
VABIO Public Policy Page: http://VaBIO.org/public-policy

If you have any questions or want to get more involved, please contact the VABIO staff at 804-643-6360.

Eric Cantor To Host Jobs Panel Thursday at Biotech Park in Richmond

RICHMOND, VA – On Thursday, October 20th at 10:00 a.m. Congressman Eric Cantor (VA-07) will host a roundtable with representatives of the Virginia BioTechnology Research Park to discuss ways to create jobs and spur economic growth through innovation and entrepreneurship. Following the roundtable, Congressman Cantor will hold a brief press availability and then tour the Health Diagnostic Laboratory, Inc.

WHO: Congressman Eric Cantor (VA-07)

WHAT: Hosts Jobs Roundtable & Tours Health Diagnostic Laboratory, Inc.

WHEN: Thursday, October 20, 2011
10:00 AM – Roundtable
11:15 AM – Tour

WHERE: Virginia BioTechnology Research Park
Biotech Center – Atrium
800 East Leigh Street
Richmond, VA

Rough Day on Wall Street for Former VA Biotech Companies

It has been a tough day on Wall Street for two former Virginia bioscience companies. Details from BusinessWeek:

Allos Therapeutics Inc. (ALTH US) slumped 17 percent, the third-most in the Russell 2000 Index, to $1.46. The cancer drug developer said an anonymous bidder has withdrawn a takeover offer of $2.20 a share in cash and stock. Amag Pharmaceuticals Inc. (AMAG US), which is also vying to acquire Allos, gained 2.4 percent to $13.49.

Insmed Inc. (INSM US) fell the most in the Russell 2000, plunging 31 percent to $3.01. The maker of drugs for endocrine disorders said the U.S. Food and Drug Administration is continuing a clinical hold on its phase 3 trials for Arikace in cystic fibrosis patients with lung disease.

Both of these firms started out in Richmond, Virginia. Hang in there! It is always darkest before the dawn.

If you’re a scientist looking to build a startup, good management is key

Check out the article regarding the VaBIO Greater Richmond Bioscience Luncheon that took place yesterday.

Research officers at Virginia’s universities grapple with a difficult task every day: helping scientists turn laboratory inventions into marketable products.

The trick, according to a group of bio-technology experts who gathered for a luncheon Thursday at the Virginia Biotechnology Research Park, is helping highly-trained scientists hone their business skills. The lunch was part of a monthly series organized by the Virginia Biotechnology Association.

“At the end of the day, if you’re looking to raise money, you’re in a sales mode,” said Mike Drzal, an attorney at LeClairRyan. “If you don’t have the basic sales tools nailed down, you are in for a rough ride.”

Drzal, who represents life-science entrepreneurs, said there are three key tools: an executive summary about your business idea, a business plan and a slide deck that explains your product. Drzal said he’s amazed how many would-be startups prepare for meetings with potential investors without a formal business plan. He said he always tries to stop them and make sure they’ve got well-designed plan.

Erika Smith, CEO of BioTherapeutics, has spent time on both sides of the investing scene. After years of working for small life-science companies, she now works as an angel investor. She said entrepreneurs should be sure to understand what drives different investors.

“What motivates angels can vary,” she said. “There’s some interest in [return on investment], of course, but there are other reasons for why people want to give their time, money and energy.”

One angel investor might have a special interest in funding companies pursuing cancer drugs or treatments, she noted. The interest in that sector may be motivated by personal experiences, such as losing a family member to cancer.

Mark Crowell is executive director for innovation partnerships at the University of Virginia. He said that when his office is working to help one of the school’s researchers, it prefers to back products that have “multiple applications across multiple markets.” But it’s even more important, he said, to find scientists who can be effective partners with investors and business executives, people who are “teachable” and willing to admit their ability to decode a genetic sequence may exceed their ability to prepare a balance sheet.

Smith, the angel investor, said the mantra of venture capitalists and other investors is “management, management, management. That’s what it all comes down to.”

Drzal said investors are looking for a “bankable” CEO, someone with proven business experience who can help guide the inventor. Not many people, he noted, can handle both tasks, especially if the person is continuing with other teaching and research duties.

“The other thing we look for is the King’s English,” Drzal said. “I see 50 presentations a year, and if I can’t understand it, an investor who doesn’t see that many of these definitely can’t figure it out. Don’t forget the importance of communicating effectively.”

Ken Carter, CEO of Nobel Life Sciences, says the inventor must understand that everybody has to win and get a return on the product for it to really grow and succeed.

“I tell folks that instead of owning 100 percent of a grape, you and the world will be better off if you own 10 percent of a big, juicy watermelon.

Drzal urged the scientists in the audience to “spend your time on what you know” and let other professionals handle the nitty-gritty details surrounding accounting, incorporation structures and other business issues.

“I often tell my clients, ‘I won’t be a biophysicist if you won’t practice law,’” he said.

Written by: Jacob Geiger
WorkItRichmond

Ceres Nanosciences' scientist awarded Popular Science's "Brilliant 10"

When Alessandra Luchini was a girl growing up in Italy, she visited the Museo Galileo in Florence, where she saw the telescope that Galileo Galilei had invented four centuries before, in 1610. She was struck by its simplicity. with a just a couple of pieces of curved glass, anyone could see whole new worlds.

In 2005, Luchini, now an engineer at George Mason University, came to the U.S. on a grant from the Italian National Health Service to study ways to detect molecular signs of cancer. Some diseases, early on, release faint hints of their presence into our bodily fluids. These “biomarkers” are ephemeral—our enzymes chew them up within minutes, so they’re undetectable in most lab tests. If doctors had a way to catch and stabilize those biomarkers, they could detect diseases more quickly and begin treatment at a stage when the chances of recovery were much higher.

Luchini’s solution was to build a nanoparticle trap. The concept, like Galileo’s telescope, is simple: “It’s like a net for catching very small fishes,” Luchini says. The spherical nanoparticle, which took two years to perfect, uses hydrogel as its backbone. Inside, a crisscrossing polymer net holds bait, such as acid or dye, which chemically attracts various biomarkers. when lab technicians mix the nanoparticle in with a fresh blood sample, it traps the biomarkers and protects them from enzymes. The sample can then be tested at leisure. So far, Luchini has used nanoparticle traps to produce an early diagnosis of infectious diseases such as Lyme disease and tuberculosis. (The traps can also reveal the presence of human growth hormone in urine, and thus offer a novel way to reveal illegal doping by athletes.) She and her team are also working on nanotraps to find the skin-cancer biomarkers that exist in a person’s sweat.

Luchini’s next step is to modify the nanoparticles so they can trap biomarkers in a body, giving doctors a realtime view of what’s going on inside their patients.

By Madhumita Venkataramanan
Popular Science

VABIO Entrepreneurship Event 9/8 to be Streamed on the Web

The Virginia Biotechnology Association (VABIO) is pleased to offer an opportunity to view the sold out Greater Richmond Bioscience Luncheon live on the web through our new LiveStream channel. The program will take place tomorrow, Thursday, September 8, from 12:00-1:30 p.m., program details are below. The program is called “Entrepreneurship Failures and Successes: The Perspective of Entrepreneurial Faculty.”

Tune in to our blog (http://vabio.blogspot.com/) at noon and the program will begin shortly thereafter.

We are testing this new technology with the intent of making our valuable program available to those that are unable to attend this sold out event. Please bear with us if we experience any technical difficulties, we will work through them as quickly as possible.

“Entrepreneurship Failures and Successes: The Perspective of Entrepreneurial Faculty.” The panel will lead a frank discussion about the risks and rewards of commercialization activities in a university environment. What aspects about university “culture” either encourage or discourage commercialization activities by faculty? The panel will cover topics such as tenure, wealth creation, equity, royalties, managing conflicts of interest, and raising money (angels, grants and venture capital).

Speakers: Mike Grisham, CEO of GPB Scientific, Richmond (Moderator); Dr. Curt Civin, Dean, University of Maryland School of Medicine and Director of Regenerative Medicine; Dr. Martin Chapman, CEO of Indoor Biotechnologies, Charlottesville (former tenured UVA faculty); Dr. Chip Petricoin, Co-Director of the Applied Proteomics Center at GMU (and serial entrepreneur); Dr. Jim Bennett, Chair of Department of Neurology at VCU; and Dr. Gordon Archer, Associate Dean for Research and Training at VCU.

VA Business Mag: Virginia's Refundable R&D Credit Makes News

Great article on Virginia's R&D Tax Credit in Virginia Business:

Check’s in the mail
Virginia joins a handful of states to offer tax rebates for tech-based R&D

September 01, 2011 6:00 AM
by Garry Kranz
Virginia’s high-tech companies no longer are among the have-nots. This year state lawmakers created a refundable income tax credit designed to help startup companies defray the costs of research and development.

Before the move, Virginia was one of 12 states that did not offer a tax credit for R&D expenses. That had put Virginia at a disadvantage — especially since competing neighbors Maryland, North Carolina, Pennsylvania and West Virginia offered similar breaks, say state economic leaders.

The initial investment is capped at $5 million. Despite the modest sum, business leaders say it marks an important step in helping Virginia compete in an increasingly innovation-driven economy. “Technology companies create high-paying jobs, and we want to make sure those jobs are created here,” says Mark A. Herzog, executive director of the Virginia Biotechnology Association.

The new law also shifts Virginia into another, albeit more desirable, minority: one of only seven states to offer a tax credit in the form of a cash refund.
As a result, Virginia companies that perform “qualified research and development” could be eligible to claim a tax credit equal to 15 percent of the first $167,000 of research expenses they incur during the taxable year. If the company has yet to turn a profit, it could receive a state refund check for the equivalent amount, worth up to $25,000.

Also, companies pursuing research in tandem with a state college or university can claim up to 20 percent on the first $175,000 of R&D expenses, or a refund check worth as much as $35,000. The slightly higher amounts reflect a push to promote greater collaboration between academic and private-sector researchers, state officials say.

“The refundable aspect is what makes it special,” Herzog says. “Without that element, the credit has zero value to the vast majority of Virginia’s advanced technology companies.”

In dollar terms, the total amount of tax credits available to qualified businesses in Virginia is capped at $5 million for each fiscal year from 2012 through 2016. The money will come from the state’s general fund.

Technology-based companies typically absorb the full costs of research but may have to wait years for a product to hit the market and begin generating sales revenue. The tax credit softens the financial blow a bit, says state Sen. Mark R. Herring (D-Loudoun), who co-sponsored the bill with Del. Ben Cline (R-Rockbridge).

Although the amount per company is modest, it’s sufficient to help pay for research equipment costs, lab space, supplies and similar items, Herring says. It will “incentivize companies to invest in the research and development” needed to commercialize products and, ultimately, spur job creation and economic growth across Virginia.

The Northern Virginia Technology Council and the Virginia Biotechnology Association led an intense lobbying effort to get lawmakers to approve the R&D tax credit, which Gov. Bob McDonnell swiftly signed into law.

Virginia’s law piggybacks on a federal R&D tax credit signed into law by President Reagan in 1981. But the tax break is not a handout, says Josh Levi, vice president of policy for NVTC. “Think of it like a rebate on expenditures already made,” which companies recover if their current-year’s research expenditures eclipse the previous year.

Virginia’s approach is a different direction than that taken by most states. Giving a company cash to reinvest sends a much stronger message than simply letting them carry forward expenses year to year on a balance sheet, says Jay Langston, senior project support manager with the Virginia Economic Development Partnership.

“It’s not a huge sum of money, but if it helps a company pay for a piece of equipment, it’s a positive in their mind,” says Langston. Plus, it reinforces Virginia’s pro-business stance.

Should the applied-for tax credits exceed $5 million, the Virginia Department of Taxation would pro-rate the credits and assign them on a pro-rata basis. The idea is to prevent a handful of companies from quickly exhausting the available funds, Herring says. Conversely, the legislation allows companies to apply for an additional tax credit if the $5 million is not consumed, although officials concede that seems unlikely to happen.

The R&D tax credit generated the biggest headlines, but state technology companies have other news to celebrate as well. Lawmakers added $4 million to the Commonwealth Research and Commercialization Fund. It also provided $4 million for the Center for Innovative Technology’s “Gap” Fund, which provides seed funding to promising startups, and $2 million in matching funds for companies that win federal Small Business Innovative Research grants.

http://www.virginiabusiness.com/index.php/news/article/checks-in-the-mail/313978/

Audit Requirement for Commercial Enterprises Receiving STTR/SBIR Grants

Guest authored by Robert Tobey, CPA, Keiter Stephens

Commercial enterprises (i.e., for profit organizations) which expend at least $500,000 in STTR or SBIR funds during an enterprise’s fiscal year are required to have audits conducted in accordance with Office of Management and Budget (OMB) Circular No. 133, “Audits of States, Local Governments and Non-Profit Organizations”. However, commercial enterprises are provided two options regarding the type of audit which will satisfy this requirement.

To read the complete article, click here.

VABIO Presents Award to Va House Speaker Bill Howell

The Virginia Biotechnology Association (VABIO) announced that the Speaker of the Virginia House of Delegates, William J. Howell (R-Stafford) received the Virginia Bioscience Legislative Leadership Award on August 23^rd for his outstanding efforts on behalf of the bioscience industry during the 2011 Session of the Virginia General Assembly. The Virginia Biotechnology Association has only recognized a handful of state legislators with this special distinction.

“I have had the privilege of knowing the Speaker for nearly twenty years,” said Mark A. Herzog, executive director of VABIO. “He has always been a stalwart supporter of small businesses in Virginia and that continues today with his enthusiastic efforts to ensure that the Commonwealth can compete for 21^st Century, advanced technology jobs.”

Previous recipients of the award include: Delegate Scott Lingamfelter of Prince William; Delegate Steve Landes of Weyer’s Cave; Delegate Mark Sickles of Fairfax; Delegate John O’Bannon of Henrico; former Delegate Sam Nixon of Chesterfield, Delegate Joe May of Loudoun; and Senator Mark Herring, also from Loudoun.

Speaker Howell played an instrumental role in supporting the 2008 joint legislative subcommittee to review the Commonwealth’s policies to advance the growth of the life science industry in Virginia. The recommendations from that group were incorporated into the first legislation in many years to accelerate the growth of the biosciences in Virginia. Most recently, in 2011, the Speaker strongly advocated for the passage of the Virginia Refundable Research and Development Tax Credit, a key recommendation of the Governor’s Economic Development and Jobs Commission.

“The Speaker is a good friend to the bioscience industry and we are grateful to him for his public service and commitment to ensuring that future generations of Virginians have access to the knowledge-economy jobs of tomorrow,” said Mr. Herzog.

The Virginia Biotechnology Association (VABIO) is the statewide non-profit organization that promotes the scientific and economic impact of the life sciences industry in the Commonwealth of Virginia. Approximately 200 biotechnology, pharmaceutical and medical device companies are based in Virginia, mainly clustered around universities in Blacksburg, Charlottesville, Richmond, Norfolk and Northern Virginia. For more information about the impact of the bioscience industry in Virginia, please visit www.vabio.org

Qualified Small Business Stock Changes Explained

An explanation of the recent IRS changes impacting qualified small business stock.

Guest written by: Robert Tobey, Keiter Stephens

In an effort to stimulate the economy and to help innovation economy companies grow, Internal Revenue Code (IRC) §1202 provides an incentive to investors who risk their funds to finance these businesses.

A BRIEF HISTORY
For qualified small business stock (QSB) acquired after August 10, 1993 and before February 18, 2009 and held for a minimum of five years, non-corporate investors may exclude 50% of the gain realized from the disposition this stock. As part of the American Recovery and Reinvestment Tax Act of 2009, in order to stimulate the economy, the exclusion percentage was raised to 75% for QSB stock acquired after February 17 and before September 28, 2010 and held for a minimum of years. The Creating Small Business Jobs Act of 2010 further amended IRC §1202 to exclude 100% of gain from QSB stock acquired after September 27, 2010 and before January 1, 2011. Finally, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 extended the deadline to QSB stock acquired before January 1, 2012. The President’s 2012 budget proposes to make this exclusion permanent.

IN NON-TECHNICAL TAX TERMS, WHAT DOES THIS ALL MEAN?

COMPANY CONSIDERATIONS

How does corporate stock qualify as QSB stock?
Corporate stock is treated as QSB stock only if it satisfies all of the following conditions:
1. the stock was originally issued after August 10, 1993, the original enactment date of IRC §1202;
2. the corporation issuing the stock is a domestic C corporation (i.e.: S corporations, partnerships, and LLC’s taxed as partnerships do not qualify);
3. the stock satisfies the original issuance requirement (i.e.: stock is issued by the corporation to the shareholder directly or through an underwriter);
4. the corporation issuing the stock meets the QSB requirements; and
5. the corporation issuing the stock satisfies the active business requirements.

How does a domestic C corporation qualify as a QSB?
In order to qualify as a QSB, a domestic C corporation must meet the following tests:
1. The corporation’s aggregate assets must not exceed $50 million at any time on or after August 10, 1993 and before the issuance of the stock for which IRC §1202 treatment is sought.
2. Immediately after the issuance of the stock for which IRC §1202 treatment is sought, the corporation’s gross assets, including amounts received for the stock, must continue to be no more than $50 million.

Describe the active business requirement.
A corporation meets this test if it uses at least 80% of the value of its assets in the active conduct of a qualified trade or business. As of this writing guidance has not been issued regarding when and how the 80% of assets determination is made.

What is a qualified trade or business?
A qualified trade of business is one other than:
1. A heath care provider; law, engineering, architecture, or accounting firms; actuarial or brokerage services, or any trade or business where the principal asset of such trade or business is the reputation of skill of one or more of its employees.
2. Any banking, insurance, financing, leasing, investing or similar business.
3. Any farming business
4. Any business involving the production or extraction of products subject to depletion.
5. Any hotel, motel, restaurant or similar business.

Will a corporation meet the active conduct of a qualified trade or business if it is only conducting
research and development activities with the hopes of producing a product (i.e.: start-up phase)?
Yes, if assets are used in start-up activities, activities resulting in the payment or incurring expenditures which qualify as IRC §174 research and experimental (R&E) expenditures, or activities with respect to in house research expenditures described in IRC §41(b)(4) assets used in these activities shall be treated a used in active conduct of a qualified trade or business. This determination is made without regard to whether or not the corporation has earned any income from its intended trade or business.

Are options or warrants to acquire QSB stock considered QSB stock?
No.

Can the QSB gain exclusion be preserved in tax-free reorganizations and in contributions to controlled corporations?
Yes in certain circumstances. A discussion of these circumstances is beyond the scope of this summary. If you would like more information about this, please telephone me.

Are there any types of transactions between shareholders and the corporation which would make the gain on the QSB stock ineligible for the exclusion?
Yes.
If the issuing corporation purchases any of its stock directly or indirectly from the taxpayer or a person related to the taxpayer within a four year period commencing two years before the stock was issued, the taxpayer cannot qualify for the exclusion. There is a safe-harbor de minimis amount which will not disqualify the gain from exclusion.

Stock will not qualify for the exclusion if the issuing corporation engages in a significant redemption. A redemption is significant if the corporation, within a two year period beginning one year before issuance of the stock, redeems stock with an aggregate value exceeding 5% of the aggregate value of all of the corporation’s stock. There is a de minimis exception for this also.

SHAREHOLDER CONSIDERATIONS

What are the dollar limits on the exclusion?
The amount of gain is subject to a per-issuer limitation. The cumulative per issuer limit is the greater of $10 million or 10 times the adjusted basis (i.e.: what you paid for the stock) of all qualified stock of the issuer that the taxpayer disposed during the year. Additions to basis are disregarded. This limitation can severely restrict the tax benefit of IRC §1202 in the event of a truly substantial windfall. These are shareholder by shareholder limitations. Taxpayers filing married separately split the $10 million limitation.

How is any gain in excess of the exclusion taxed?
As mid-term capital gain income taxed at 28%

How long do I have to hold (i.e.: own) the stock in order to qualify for the exclusion?
For more than five years.

When does my holding period start if I acquired the stock my converting notes or exercising warrants or options?

The holding period starts the date the note is converted or the date the options or warrants
are exercised.

How is the holding period measured if I exchange one type of QSB stock for another (e.g.:
convert preferred into common)?
The holding period of the old stock tacks on to the new stock. So the holding period commences when you first acquire QSB stock.

How is the holding period measured if QSB stock is acquired by gift or inheritance?
If QSB stock is acquired by gift or inheritance, the beneficiary’s holding period includes the period the QSB stock is held prior to the gift or bequest.

How is the holding period measured if the QSB stock is received from a partnership?
If a partner receives QSB stock from a partnership in which the partner held an interest when the partnership acquired QSB stock, a partner’s holding period generally includes the period the QSB stock is held by the partnership.

How is the holding period measured if the QSB stock is received in a tax free reorganization or
in return for a contribution to a controlled corporation?
The holding period of the QSB stock received in either of these transactions apparently does not include the holding period of QSB stock surrendered in the transaction.

How is the excluded gain treated for AMT purposes?
It depends on when the gain is realized. Effective with a taxpayer’s 2003 tax year, the fraction of excluded gain treated as a preference is 7%. This percentage is applicable for stock sales occurring on or after May 6, 2003. The 7% preference is scheduled to sunset at December 31, 2012. Unless this changes, for tax years 2012 and after, the preference will be 28% for QSB stock with a holding period beginning after December 31, 2000, 42% for other stock. For QSB stock acquired between September 28 and December 31, 2011, none of the gain excluded under IRC §1202 is a preference for purposes of calculation AMT income.

A detailed write-up, including examples, explaining the provisions of IRC §1202 is available by sending a request to rtobey@kshgs.com or ring me at 434.220.2800.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction(s) or tax-related matter(s) addressed herein. 1202

Video: News Clips from Around US on CNBC #1 State for Business

Sunday RTD - Bioscience: Discovery is in Virginia's DNA

The Sunday Commentary Section of the Richmond Times-Dispatch features VABIO's opinion piece on the growth of the bioscience sector in Virginia.

Founded in 1607 by a venture-backed company in London, Virginia has long been the destination of choice for entrepreneurs and start-up companies. That same tradition of discovery continues today with nearly 300 biotechnology and medical device firms that are expanding the frontiers of modern medicine.

These dedicated scientists, clustered around research universities such as Virginia Commonwealth University, are pioneering new therapeutic medicines, more effective diagnostics and life-saving medical devices.

According to a new study by Miami-based Archstone Consulting, there were more than 1,500 active clinical trails conducted last year by Virginia researchers on new medicines, including those targeting cancer,diabetes, HIV/AIDS, mental health disorders and respiratory diseases.

In addition to the National Science Foundation and biopharma companies with facilities in Virginia (such asPfizer, Merck, Novozymes, Abbott Laboratories, Boehringer Ingelheim, and Teva Pharmaceuticals), the commonwealth is also home to the Janelia Farm Research Campus of the Howard Hughes Medical Institute(HHMI). This $500 million, world-class biomedical research complex in Loudoun County houses several hundred of the world's top scientists who use emerging and innovative technologies to pursue biology's most challenging problems.

Clearly, biotechnology has asserted itself as a vital contributor to Virginia's economic growth.

Click here for the rest of the article: http://bit.ly/jpBOEi

Virginia Student to Compete in International BioGENEius Challenge in D.C.

Riley Ennis of Fairfax County, Virginia, was named one of the ten finalists of the 2011 U.S. National BioGENEius Challenge. The Virginia, U.S. National and International BioGENEius Challenges are competitions for high school students who demonstrate an exemplary understanding of biotechnology through science research projects. The ten U.S. National finalists will join students June 27th from Canada and Australia to compete in the International BioGENEius Challenge at the 2011 BIO International Convention in Washington, D.C.

Mr. Ennis, aged 17, is a recent graduate of Fairfax County’s Thomas Jefferson High School for Science and Technology. His winning presentation was titled, “Cancer Immunotherapy Research Vaccine: Mannose Glycoprotein Encapsulated PLGA Fluorescent Nanoparticles Biotinylated for Conjuga.”

Following the announcement of his selection by the judges at the awards banquet at the Omni Shoreham Hotel on Sunday night, Mr. Ennis said, “As an international finalist for the BioGENEius Challenge, I am so honored to be part of the competition; surrounded by amazing students all with the same passion as me. I would like to thank the Virginia Biotechnology Association and the Chesapeake Bioscience Education Foundation for their incredible help and support. Hopefully in the next few years, cancer vaccines will be at the forefront of cancer therapeutics; and it is at competitions like the BioGENEius Challenge where ideas become reality.”

Mr. Ennis was one of three outstanding students who won the 2011 Virginia BioGENEius Challenge, co-sponsored by the Chesapeake Bioscience Education Foundation (C-BEF) and the Virginia Biotechnology Association (VABIO). "I know I can speak for the entire bioscience community in Virginia when I commend Riley for his achievement," said Mark A. Herzog, VABIO executive director. “Virginia had an outstanding group competing for the national title and we are very pleased that Riley Ennis will be representing Virginia and the United States at the International Competition.”

“Two years ago, I couldn't have imagined arriving at the point of being selected as a U.S. National Finalist and now a competitor in the International BioGENEius Challenge in Washington DC,” continued Mr. Ennis. “I have developed an innovative cancer vaccine that harnesses the innate abilities of the human body in order to battle cancer, without deleterious side effects or invasive procedures. I was able to take my project to the next level of pharmaceutical relevance with the help of experts in the biotechnology field, who helped me file for a provisional patent, and start RC Molecular Innovations: a biotechnology company focused on the development of this vaccine platform technology.”

“We are so proud of Riley, Prasannappa and Venkatesan,” said Dr. Martin Chapman, chairman of C-BEF and president of Indoor Biotechnologies in Charlottesville, Virginia. “All three of the winners of the Virginia BioGENEius Challenge who competed for the U.S. National title are outstanding students and will be a credit to the industry in the days ahead.”

Also competing in the U.S. National BioGENEius Challenge from Virginia were:

• Prasannappa Rithvik, Age 17, Thomas Jefferson High School for Science and Technology, Fairfax County: “Investigating wingless-mediated signaling in class specific dendrite morphogenesis.”
• Venkatesan Radha, Age 14, York High School, York County: “Study of over expression of C-MET Receptor Tyrosine Kinase signaling in liver cancer.”

The International BioGENEius Challenge competition will be held June 27, at the 2011 Biotechnology Industry Organization (BIO) International Convention in Washington, D.C. The BIO International Convention is the largest global event for the biotechnology industry attracting approximately 15,000 attendees each year. The convention attracts the biggest names in biotech, offers key networking and partnering opportunities and provides insights and inspiration on the major trends affecting the industry. Winners of the competition will be announced at the June 28th keynote luncheon session featuring Virginia Governor Robert McDonnell, Maryland Governor Martin O’Malley and former British Prime Minister Tony Blair.

The panel of judges will include scientists, researchers, educators and key members of the biotechnology industry and academia. Judges will select the top four winners from 14 U.S. National, Western Australia, and Canada finalists. The first place winner of the BioGENEius Challenge will receive $7,500; second place will receive $5,000; third place will receive $2,500 and fourth place will receive $1,000. Each remaining participant will receive an honorable mention award and $500.

At the Local, U.S. National and International competitions, students are evaluated on the quality of their research and display, as well as on their responses to questions relating to their scientific knowledge and potential commercial applications of their research.

Biotech breakthrough: Industry emerging in Central Va.

They research the drugs and machines that are in your future to diagnose ailments, cure ills, ease your pain and reattach your limbs.

They are the increasing number of biomedical companies being created, researched, financed and grown in Central Virginia, many an offshoot of research and development being conducted in laboratories of the University of Virginia.

About 15 percent of Virginia’s estimated biomedical/technology companies reside in the Charlottesville area and the segment of the region’s economy is slowly growing to become an important community asset area officials say.

Click here to read the complete article by Bryan McKenzie in The Daily Progress.

Business Rx: Tau Therapeutics

Tau Therapeutics article in The Washington Post today.

Andrew Krouse was working at the University of Virginia when he learned about a revolutionary technology his neighbor, a professor of medicine, was developing that could be the key to cancer treatment. Not long after, Krouse joined the team and is now president and chief executive of Tau Therapeutics, a life-sciences company based in Charlottesville that is developing a nontoxic pill it believes can stop cancer and block the side effects of chemotherapy and radiation.

The pitch

Krouse

“Our clinical priority for the technology we licensed from U-Va. is a program we call Interlaced Therapy. It promises to significantly enhance the efficacy of chemotherapy in a number of serious cancers. It works by halting the dividing cancer cells so that standard chemotherapies are more powerful. We have patented and received orphan drug designation on a drug that was on the market for hypertension and are repositioning this drug for the treatment of cancer. By taking our nontoxic drug in a sequential combination with a standard chemotherapy, we hope to minimize chemotherapy’s terrible side effects and greatly enhance the effectiveness of these therapies. There’s also the potential to overcome drug resistance.

Click here to read the complete article in The Washington Post.

Paul B. Ferrara, pioneer of DNA use, dies at 68

Paul B. Ferrara, 68, the former head of Virginia's forensic-science laboratory who helped pioneer the use of DNA as a crime-fighting tool in the U.S., died Monday.

His wife, Dale Lynn Ferrara, said Tuesday that her husband died of complications of cancer Monday morning at their home in Chesterfield County. She said funeral and other arrangements have not yet been set.

Mr. Ferrara retired at the end of 2006 after 21 years as director of the state Department of Forensic Science, where he was credited with recognizing the forensic potential of DNA and then winning the resources to exploit it.

He began his career in 1971 and held doctoral degrees from Syracuse University and the State University of New York. He was a distinguished professor of forensic science at Virginia Commonwealth University.

A high point in his career began in the mid-1980s when he and others at his lab learned about a new tool then called "genetic fingerprinting." In a 2006 interview with the Richmond Times-Dispatch, Mr. Ferrara said they realized, "My God, we have to implement this.'"

"We just knew intuitively … that it's going to change the way police conduct investigations, collect evidence, how prosecutors and defense attorneys are going to approach their cases," he said.

In September 1987, a private New York laboratory, Lifecodes, offered to train two of Mr. Ferrara's scientists so Virginia could establish the first state DNA laboratory in the country.

Mr. Ferrara fought for roughly $300,000 from the state and, in March 1989, Virginia opened the first state DNA laboratory capable of performing DNA fingerprinting. The FBI had started its limited DNA laboratory operations just four months earlier.

That same year the state forensics laboratory also became the first to create a DNA database of previously convicted sex offenders. In 1992, the state became a pilot state for a national DNA databank.

A "cold hit," or match, from the state databank resulted in a first conviction in 1994. The laboratory's work, in addition to catching many criminals, has also cleared people wrongly convicted of crimes.

"I don't know a single person that does not think highly of Paul. That's something to say," said Peter Marone, the current director of the department.

Mr. Ferrara hired Marone as a forensic serologist in 1978. An independent agency and not a part of law enforcement, the forensic laboratory went through several iterations before becoming a department six years ago.

Marone said that in addition to his forensic-science accomplishments, Mr. Ferrara established strong working relationships with the General Assembly and with all the different gubernatorial administrations over the years.

"He never promised pie in the sky. It was always, 'You give us this — we can do that,'" Marone said.

The career of Dr. Marcella Fierro, who retired as the state medical examiner in 2008, overlapped that of Mr. Ferrara's.

"Paul made Virginia a better, safer place to live by leading and directing a laboratory whose work protected the innocent as well as convicting the guilty. I am saddened to hear the news. We had lunch a few weeks ago, and he looked so well," she said.

Fierro said Mr. Ferrara built the premier state forensic lab in the country. "It had innumerable firsts, all of which required considerable leadership when you have to persuade people to do something that has not been done before," she said.

"I used to admire him incredibly because he would get money and staff. I could try for here and hereafter and not get any," Fierro said.

"And," she said, "He's a nice guy."

Peter Neufeld, a cofounder of the Innocence Project, in New York, said of Mr. Ferrara, "He preached the gospel of DNA, both to convict and exonerate with extraordinary exuberance and the criminal justice system will be indebted for that contribution."

In addition to his wife, Mr. Ferrara's survivors include three sons, Mark S. Ferrara of Oneonta, N.Y., Paul G. Ferrara of Des Moines, Iowa, and Anthony D. Ferrara of Richmond; two brothers, Richard Ferrara of Davie, Fla., and James Ferrara of San Francisco; a sister, Mary Wyatt of The Villages, Fla.; and a grandson.

By Frank Green
Richmond Times-Dispatch

Health Diagnostic Lab Wins VABIO Company of the Year

Congratulations to Health Diagnostic Laboratory (HDL) of Richmond, winner of the 2011 Virginia Bioscience Company of the Year Award. The award, presented May 26 at a special reception at the Pfizer Consumer Products Research Laboratory in Richmond, recognizes the biotech or medical device company that has distinguished itself from its peers with strong overall performance and best exemplifies the innovative spirit of the Virginia life sciences community.

Mark Herzog, executive director of VABIO, presented the award to Tonya Mallory, CEO of HDL.

The Virginia Bioscience Company of the Year Award was presented by the Virginia Biotechnology Association and sponsored by the law firm Cooley LLP and Pharmaceutical Researchers and Manufacturers of America.