Kelly M. Schulz, Maryland Secretary of Commerce

When Maryland Gov. Larry Hogan visited Novavax recently, President and CEO Stanley C. Erck shared some welcome news for the governor publicly: Novavax had more than doubled its workforce so far this year, adding 116 people to the 100 that it employed at the start of 2020.

“The plan is to double that again, to add another 200 in the coming six months just in the U.S.,” Erck said, part of an expansion plan by Novavax to grow its workforce to 1,000 people worldwide. Novavax recently expanded into a third building at its Gaithersburg, MD, headquarters, and is also in talks for an additional 200,000 square feet of lab space locally.

The vaccine developer says the extra people will help the company further develop its front-running COVID-19 vaccine candidate, NVX-CoV2373, which is advancing into Phase III trials. Washington has a substantial stake in Novavax’s success, having awarded the company $1.6 billion  toward late-stage clinical trials and large-scale manufacturing to produce 100 million doses of NVX-CoV2373 through the federal “Operation Warp Speed” program.

Novavax is one of seven COVID-19 vaccine developers to which a combined more than $11 billion has been committed through Operation Warp Speed, the Trump administration’s program that aims to deliver 300 million vaccine doses protecting against SARS-CoV-2 by January 2021. Warp Speed has awarded 13 companies with Maryland operations a combined $6.461 billion toward R&D, manufacturing, and services related to vaccines and diagnostics.

“We are so proud to have you in our state, and we’re very proud of the life-saving work that your incredible team is doing here,” Hogan told Erck. The governor noted that Novavax was one of nearly 40 Maryland companies developing COVID-19 drugs and vaccines, and its expansion further reflected a May 4 headline in The Washington Post he was happy to share: “Maryland plays an outsized role in worldwide hunt for a coronavirus vaccine.”

Among officials accompanying Hogan on the visit was Maryland’s Secretary of Commerce Kelly M. Schulz, whose department shepherds state efforts to attract and retain businesses in biopharma and other industries.

To assist biopharma and other life sciences companies, the Department of Commerce maintains an Office of BioHealth and Life Sciences whose leadership includes two bioscience professionals, Director Ulyana V. Desiderio, PhD, and Senior Manager Ernesto Chanona, PhD. They and colleagues work with Commerce regional reps who are often the first contact for a company interested in expanding to Maryland.

Schulz discussed Maryland’s efforts to attract biopharma employers and their jobs, and how the scramble to develop COVID-19 drugs and vaccines has solidified the state’s life sciences industry with GEN Edge in a recent interview that was lightly edited for length and clarity.

GEN EDGE: The tour of Novavax received a fair amount of local news coverage. What was that like, and what took place there?

A researcher inside Novavax’s Gaithersburg, MD, lab. The company has more than doubled its workforce this year. [Novavax via Office of Governor Larry Hogan]
It was a small group, and as you may imagine, they obviously wanted to limit the footprint of who was going to be coming in and out. It was a very, very healthy, very safe type of environment that they put us in. And just knowing that they were starting their Phase II of their clinical trials and their analysis of that, it was pretty hard to describe knowing that what those scientists were working on behind the glass that we were watching them could actually be developing the vaccine that is going to have a global impact in a very major way, and something that none of us ever knew that we were going to have to have this type of approach.

For them, saying that as soon as they heard on January 9 that there was an issue that was happening in China, and on January 11 or January 12 they were already starting their research to find the best vaccine before there was ever a lot of talk about it coming to the US, it was inspiring. And it was extremely humbling knowing how closely they are they are to a winning product.

Maryland has had some of the larger vaccine and drug developers established beachheads or planning to do so. Kite, a Gilead Company, is an example of expansion. To what extent does Maryland still want these anchor tentpole companies, as opposed to the up-and-comers that you mentioned earlier?

You can’t have a complete ecosystem if you don’t have the larger companies working as mentors and meeting those different types of supply chains and support systems. Novavax talks frequently about looking at some of their other partnering companies in the area to be able to assist them in their quest for a COVID-19 vaccine.

We have a very good relationship with all of them. Since I’ve been at Commerce, I’ve worked very closely with Kite on their new manufacturing plant in my home county of Frederick County, and we continue to expand in other areas as well. So, we do everything we can in order to be able to make sure that those large headquarters-type corporations remain here and make sure that they know that Governor Hogan wants them to be here, and that the Department of Commerce is going to do what we can in order to be able to retain them.

When it comes to COVID-19, to what extent is Maryland simply making the best use of assets that already existed, and have for a long time: Johns Hopkins University, the NIH, the FDA, The University of Maryland? And to what extent is this more of an active positioning of the state as a center of R&D in COVID-19?

Maryland is very well positioned geographically. We’re very fortunate where we are to be surrounded by some of the best federal government laboratories, 74—more than any other state—federal labs in Maryland. And we have for many years been working on creating the ecosystem and connecting the research and innovation together.

A large part of that, of course, is that we have some of the bigger labs—we have NIH, we have FDA headquarters here we have been very blessed with our higher education system in research facilities like Johns Hopkins, which is pretty much a go-to resource as many around the country and around the globe have seen through this pandemic as well, but also Johns Hopkins and the University System of Maryland working on therapeutics, diagnostics, and vaccine research, which is ongoing.

Here at Commerce, we see all of these assets and we see all of these resources. And our job really is to be able to be that connecting piece for all of those key players, and what can we do about making sure that the resources are understood, and that they are out there working for all of the individual businesses and organizations, and with the individual companies, just being able to help them to identify what the resources are, and how to get access to them, whether it be funding, site selection for land acquisition talent and workforce. Those are all the growing needs of the businesses at this point in time that we try to really make the connecting dots of where we need to go.

To what extent is that connection function an active effort to position the state as a center of COVID-19 activity, in terms of attracting new assets or bringing folks in to the ecosystem you’ve [that is] already built?

It’s one of our primary everyday type of work responses. We have a BioHealth and Life Sciences team. We have a Life Science Advisory Board being chaired by the Chancellor of the University System of Maryland. We have lots of key players there. So we are, I would say, actively pursuing this on an ongoing basis.

COVID has obviously brought the attention to Maryland because of some of those high-profile companies that have made some advancements across the state in vaccine research. And so I will say, we’re just going to get more active in moving towards being one of the front-running states in the nation for this type of activity.

Novavax President and CEO Stanley C. Erck discusses Maryland Gov. Larry Hogan’s visit to the company’s facilities in Gaithersburg, MD

How has COVID-19 caused the state to enhance that connection to bring key players together? Maryland has a real variety of stakeholders that include agencies, universities, and obviously companies.

[On September 24], Governor [Larry] Hogan and I, and some other members of local leadership, we had the ability to tour Novavax. That was a great opportunity to just make sure that they really knew how significant they are to our economic recovery moving forward, and that is going to be a continuing theme. It’s only going to get an increased amount of attention as we move through and we get some of the larger success stories that are there.

How, more broadly, does Maryland see its role in building and advancing the life sciences? Obviously, COVID is an anchor of that in recent months, but there has also always been a broader life science focus in the state.

There has, and I think that Maryland, because of the resources and the assets that are here, and geographically just where we sit, the life sciences have always been one of our key industries that the state and many of the different local jurisdictions as well have focused on in terms of economic development.

This year, starting at the beginning of 2020, we had planned a year of innovation and entrepreneurs. Obviously, we had to scale back at the beginning of COVID in order to be able to address the healthcare crisis statewide. But we have gone full steam ahead with our “innovation uncovered” marketing opportunity, where we are going to highlight those up-and-coming entrepreneurs and those startup businesses, because we know that as they grow and expand and be more successful, they are going to be the Novavaxes of the future, and we want to be able to help to support them.

Our goal is to be able to find the “Maryland Future 20.” There’s an ongoing nomination process to be able to see where those startups are—if they got their start at one of the universities, and are in a local incubator, or they’re just working out of their basement or garage. So innovation overall, not just life sciences, but we want to make sure that they’re all together, being able to be lifted up, because that’s the type of high tech ecosystem that Maryland is going to continue to build.

What can these up-and-comers expect from the state once you identify them?

Lots of marketing from us, putting them out there, creating blog posts, getting their names out, making the connections to other types of businesses that may be looking at different types of supply chains internally within Maryland. We have a great marketing and communications team that’s able to get that information out on a very widespread type of basis–globally, actually, in order to be able to highlight those up-and-comers.

How has marketing for life sciences changed for Maryland in light of the pandemic?

At the beginning of the pandemic, we did not do a lot of marketing at all, just to be respectful of getting through those first crisis months. Since then, we’ve been going full steam ahead and being able to make sure that people do know, like the press release that we sent out about the 40 Maryland companies that are actively working on therapeutics, at this point in time, and making sure that we are relevant to the global conversations

Over the last few months, six counties—including Montgomery, which is a big magnet for life sciences companies—have formed their own economic development alliance. How much does that complement or compete with what the state is doing?

It’s very complementary. We don’t have a competitive nature with our local jurisdictions. We’re very pleased that they’re putting together these very official types of organizations to assist in their own marketing. Now the counties may be competitive with each other, but the state is there to be able to provide the resources equally along all jurisdictions, and we do so quite well.

If they have a company that reaches out to them about some sort of an expansion or an attraction type of opportunity, certainly one of the top things on their list is to be able to come to the state to talk to us about any type of incentives and resources that we have that can be assisting them. And likewise, if we have somebody that comes directly to the state, if there is a particular part of the state that these businesses are interested in, then we’ll certainly reach out to the county and we’re going to be able to create that partnership.

The six counties are all led by Democrats. Governor Hogan is a Republican. How much does that complicate policy? Or is there an effect?

No impact on us at all when it comes to economic development. Everybody wants those additional revenues in their counties, no matter what party you are. The state is neutral when it comes to that.

What if any changes is COVID leading the state to consider for programs given the financial challenges that all states face, the university system, and the governor’s commitment not to raise fees and taxes?

I think everybody is really aware of the shortage of revenues that the states have at this point in time in moving forward, probably into the next couple of years. So we have we have to work within our constraints. We also know that economic development and the funds that go into these types of incentive programs, they do have a return on an entire investment. So when we speak with legislators and we speak with the governor, we want to be able to clearly articulate where those incentives have gone, and what type of return we’re getting from those public funds.

That said, we also want to be able to make sure that we have the best incentives out there, in order to be able to complement the needs of the industry. We consistently look at our programs to see if there’s any updates or changes that need to be made because business is evolving, and we want to be able to make sure that we’re providing the type of resources beneficial to those businesses.

How much of that effort has been accelerated because of what other states have done—not necessarily nearby in Virginia or North Carolina, but elsewhere in the country as well?

We have to be competitive, right? So we are consistently looking at different types of incentives possibilities. I sit on a group, it’s the State Economic Development Executives (SEDE) Network, and it’s made up of my counterparts from across the country. And we’re continuously analyzing what some best practices are being used across in different states. Now obviously, we have to be competitive, so we’re not going to be doing exactly what everybody’s doing. But we want to be able to see what those best practices are, and how we can continue to remain the most competitive.

As I said earlier, in Maryland, we have great advantages. Some states that don’t have the advantages of those strong university and research centers federal laboratories, they may have to be a little bit more–I guess they may have to step up their incentive game, maybe a little bit more than Maryland does. And that’s all individual statewide decisions.

In Maryland, we get very positive feedback at this point in time, especially with life science with our Biotechnology Investment Incentive Tax Credit, which is very highly utilized, and we get great feedback from the life science community on something like that. And our Research and Development Tax Credit. And then, there are traditional job creation tax credits, especially with the manufacturing and how they have grown in the state as far as vaccine manufacturing, therapeutics manufacturing, and we’ve been highly successful in attracting those types of businesses because of our More Jobs for Marylanders Tax Credit, which is specific to manufacturing, whether it be life science manufacturing or otherwise.

Looking ahead, will the state be able to at least retain the incentives it has—such as the biotech tax credit, which has been very well received over more than a decade? Will that remain? 

I don’t have a crystal ball, but the Department of Commerce is going to fight for our business industries—all industries across the board, to be able to make sure that we can continue to attract and grow here in the state, and explain to all involved the necessity to have those investments of public funds, because of the return that we received back to public funds.

Earlier this year we saw some lawmakers proposing eliminating the Biotechnology Investment Incentive Tax Credit and some other incentives. Has the threat to those been subsided? Or is that still going to continue to be an issue?

Fortunately, we came out on top of that one during the last legislative session, I think they understand how important the biotech credit is to the community. We saw some legislators that were promoting just widespread reform, and what we had been told was that there were starting points and what they wanted to be able to look at within the Department of Commerce with all of our incentives and tax programs.

Overall, I think last year, it probably wasn’t as much of a real narrow shot at that specific tax credit, but looking to make sure that we’re utilizing the funds how we need to. Our team has been very involved with the legislators, doing a lot of research over the interim, in order to be able to make sure that if there are some changes that need to be made to some of our incentive programs that we’re going to do that jointly. We’re going to be very transparent about how we want to be able to go about doing that to get the most return that we can.

Looking ahead, where do you see Maryland life sciences in the next couple of years?

I’d like to say that we’re going to continue to inch our way up to be the leading state for life sciences in the country. I think we have what it takes. Five years ago, we really looked at what we needed to do in order to be able to continue to attract businesses and help them grow care. We’ve made a lot of progress since then, and I think we’re going to continue to make progress, and we are going to be formidable in the future.

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