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September 01, 2010 (Vol. 30, No. 15)

Tax Credits Support Therapeutic Discovery

QTDP Targets Programs Focused on Unmet Medical Needs and a Host of Chronic Diseases

  • Application Statistics

    In terms of applications, based on our experience, the average applicant submitted between two and three applications. Within those applications, they claimed about $21 million, with an average claim of about $9 million per application. Based on the initial wording of the program, this would have resulted in about $11.25 million in aggregate benefit for each applicant, however, based on the guidance released later we know that the maximum will be $5 million, and most applicants are expecting significantly less.

    The average number of employees per company was 20. In general, we found that applicants had very few employees (under 15), or were close to the 250 limit. Based on these numbers, it appears as though the program reached its intended target—small, innovative life science and pharma firms.

    Applicants are now waiting for word from Treasury about whether they were approved or not. When approvals are publicized we will know the details about the number of applicants as well as who was approved. Between now and then, however, there is much speculation about the future of the program.

    The general consensus is that the program should be renewed; there was an overwhelming amount of interest in the program, and those who qualify are genuinely excited about it. For companies with fewer than 15 employees in early-stage development, this type of funding can mean the difference between successfully completing a project and terminating it.

    That’s not to say, however, that the program was perfect. As with most programs, there is room to grow and improve. The most common suggested area for improvement is in the method of allocating the funding. Companies have suggested that a pro-rated approach would be more fair than the equal amount determined by Treasury under the current guidelines.

    Overall, the program has been successful and well received. Companies partaking in QTDPs are looking forward to hearing from Treasury about whether or not they have been approved.

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