Trends in Money Doled Out
A BIO analysis of QTDP winners offers some interesting observations. One is that the number of grants won when counted state by state correlates roughly to the amount of biotech activity in those states. California topped the list of winners with $281 million in tax credits or grants awarded, followed by Massachusetts with $131 million, then New Jersey at $52 million, Pennsylvania and Maryland tied with about $49 million each, and New York with $48 million.
The next tier of winners is the next tier of biotech states: North Carolina, Texas, Washington, Florida, and Minnesota. In all, the top 10 states won 74% of the total tax credits and grants available.
As befitting its name, drug discovery projects won the bulk of QTDP awards, with 71% going to drug or drug formulation/delivery work. Another 16% of winners were diagnostic companies and 11% specialized in making devices for implanting or delivering drugs. And nearly three-fourths of winners (72%) received tax credits or grants through QTDP for a single project.
Forman noted that QTDP winners fell into two categories: very small startups with fewer than 25 employees and companies close to the 250-employee limit. The wobbly economy has tightened the supply of funds for all businesses, helping generate interest for the program. Forman added that it was, however, less a key factor in driving applications than the fact that startups pursue funding just about anywhere they can find it. “I don’t think there would have been leftover money even if the economy had been booming,” he added.
William Kitchens, a lawyer with Arnall Golden Gregory, told GEN that QTDP is especially needed by earlier-stage life science companies. “The recession has affected capital investment in biotech, just like it has in a lot of other parts of the economy. This program is pretty critical, especially for the smaller companies, which this program is totally designed for.
“If those companies don’t get funding, they have to shut down even if they have some great technology. If they don’t have the capital to commercialize the technology, then it’s not going to go anywhere. And that capital has been pretty hard to get.”
Venture capital, for example, is harder to come by than before the recession, forcing many startups to either pursue huge first rounds or wait for funding until they have results from at least some clinical trials. And while the amount of VC awarded in Q1 was higher than a year earlier, as reported here in May, the number of deals fell during the same period.