North Carolina's 2007 General Assembly wrapped up its budget process in early August with an outstanding array of appropriations for biotechnology and the life sciences. The final budget plan, approved by the Assembly, included expanded spending for research, facilities and commercialization programs for a host of life science-related technologies. The final budget has substantially more life science spending than a preliminary version passed by the state House in May. NCBIO advocated aggressively for many of the expansion items included in the final budget. Key items include:

• $3 million in funding for the North Carolina Biotechnology Center's proposed Centers of Innovation program, a new initiative designed to accelerate commercialization of biotechnology-related technologies across North Carolina.
• $4.83 million in additional funding for North Carolina's new SBIR/STTR matching grant program, the One North Carolina Small Business Fund.
• $27 million over 2007-2009 for the North Carolina Research Campus at Kannapolis, including $8.5 million in annually recurring funding for university research operations.
• $1 million in expansion funding for North Carolina Central University's drug and process development teaching programs at the Biomanufacturing Research Institute and Training Enterprise. The appropriation is the last installment of a four-year ramp-up of funding for the Biomanufacturing and Pharmaceutical Training Consortium.
• $12 million in non-recurring funding over the 2007-09 biennium for Wake Forest University's Institute for Regenerative Medicine. The monies will be used to attract federal dollars for research into tissue engineering and other regenerative medicine technologies to address battlefield injuries of soldiers.
• $6.5 million in non-recurring funding for biofuels research and economic development programs, including a $5 million allocation for a new North Carolina Biofuels Center at Oxford. The Center was proposed as part of a comprehensive biofuels strategic plan developed by the North Carolina Biotechnology Center in cooperation with other leading state research and economic development institutions. North Carolina State University received $1.5 million for research into various alternative and "bioenergy" technologies.
• $25 million in FY 2007-08 and $40 million in FY 2008-09 for cancer research at institutions of the University of North Carolina. Funding for the initiative is scheduled to reach $50 million annually in 2009-10 and beyond.
• $5 million in annually recurring funding for expansion of North Carolina State University 's bioengineering program within the NCSU School of Engineering.
• $1.4 million in annually recurring funding for a new joint Graduate School of Nanoscience and Nanoengineering operated by the University of North Carolina at Greensboro and North Carolina A&T State University at the school's new Millennium Campus in Guilford County.

In addition to funds for new and expanded programs, the Assembly also approved construction or planning money for a number of important new university research facilities, including:

• Funding to complete construction of a new 210,000 square-foot, $160 million Genomics Sciences Building at the University of North Carolina at Chapel Hill.
• $8 million in planning money for a proposed 275,000 square-foot, $135 million Biomedical Research Imaging Center at the University of North Carolina at Chapel Hill.
• $5 million in planning money for a new 95,000 square-foot, $58 million Nanoscience and Nanoengineering building at the Millennium Campus, of the University of North Carolina at Greensboro and North Carolina A&T State University.

NCBIO President Sam Taylor congratulated legislators on their generous commitment to expanding North Carolina's life science research and economic development infrastructure. "The General Assembly's commitment to these projects recognizes North Carolina's international leadership position in biotechnology and the life sciences, as well as the vigorous competition our state faces from competing locations. The funding approved by this Assembly will help assure that North Carolina retains its current position among the country's top three biotechnology states – and positions us to move higher in those rankings in the years ahead."

State tax provisions aimed at spurring innovation were continued and expanded by the 2007 General Assembly. In July, legislators voted to extend through 2010 North Carolina's Qualified Business Venture Tax Credit, which provides a 25% tax credit for investments in qualifying small companies. The Credit had been scheduled to expire at the end of this year. The Assembly declined, however, to increase the current $7 million statewide cap on the credit. The extension legislation, House Bill 1598 (Qualified Business Venture Tax Credit Extension) , was sponsored by Representatives Pryor Gibson (D-Anson) Bill Owens (D-Pasquotank), Bill Daughtridge (R-Nash) and William Wainright (D-Craven). NCBIO led a multi-party effort to extend the tax credit.

Legislators also created an innovative new tax break for research and development. Budget legislation enacted at the end of the session included a 50% rebate for sales taxes paid by medical testing laboratories for medical reagents. The same provision also established a broader 50% rebate for increases in sales taxes paid by medical and other testing laboratories for supplies used or consumed in analytical activities. Click here for the text of the rebate legislation. NCBIO worked with legislators to draft early versions of the proposal, which included rebates for a broader array of life science research. Legislative leaders curtailed the original proposal to fit within funding made available for a broader package of tax reductions.

The 2007 budget legislation also included small increases in the State's existing research and development tax credit. The bill increased the state's tax credit for private-sector spending on university-based research from 15% to 20%. Credits for in-company research spending were increased by 0.25%, bringing the total available credits for such research to 3.25% for small businesses and companies conducting research in economically distressed counties. Similar increases were approved for research at larger companies, raising the credit rate to between 1.25% and 3.25%, depending on total R&D expenditures. Click here for the text of R&D tax credit changes.

Funding approved by the 2007 General Assembly will allow the North Carolina Biotechnology Center to move ahead with its aggressive new Centers of Innovation Program for commercializing biotechnology-related innovations throughout North Carolina. The Program, which is earmarked for $3 million in annually recurring funding in the legislature's 2007-08 state budget, will be used to launch specialized regional partnerships of research and educational institutions, governments, and other non-profits to focus on research and technology transfer in fields such as marine biotechnology, nano-biotechnology, natural biotechnology and integrative medicine, biofuels and advanced medical technologies.

Monies from the program will be used to support research necessary to make scientific discoveries useful in the creation of new products and services, and to assist businesses with product development, initial production, regulatory approvals, marketing, and distribution challenges.

"NCBC's Center of Innovation will supercharge our state's existing life science technology transfer opportunities by amassing critical levels of expertise and funding necessary to move new technologies to market," said Sam Taylor, President of NCBIO. "Partnerships created by the program will be able to readily reach out to both public and private research universities, businesses, and government agencies to find the shortest and most reliable path to practical application for life science discoveries and innovations."

NCBIO worked closely with the North Carolina Biotechnology Center to educate legislators about the exceptional economic potential of the proposed centers. "We are pleased to have been able to partner closely with NCBC to win funding for this important initiative," said Taylor.

Legislators have approved two major new initiatives in biofuels research and economic development. The Assembly's 2007-09 provides $5 million in non-recurring funding to establish the North Carolina Biofuels Center, a new non-profit corporation established to provide direction and impetus to North Carolina's developing biofuels economy.

The Center, which was recommended as part of the Strategic Plan for Biofuels Leadership developed by a partnership of state research and economic development agencies in 2006 and early 2007, will assist universities, companies, and agencies in implementing various aspects of the Strategic Plan. Priorities for the Center will include encouraging the growth and production of biomass in rural North Carolina, encouraging and funding research, identifying potential biofuels crops and supporting field trials, as well as seeking and supplementing federal funding for research, development and facilities. The Center will also work to ensure that North Carolina takes a unified approach to state incentives for agricultural and manufacturing production, biofuels distribution, job creation, public education and workforce preparation.

The new Center is expected to be located at the State's existing agricultural research station at Oxford.

In addition to funding for the BioFuels Center, the Assembly provided $1.5 million in non-recurring funding to North Carolina State University for the establishment of a new Center for Bioenergy Technologies. Besides conducting a broad array of energy research, the Center will operate a new Southeastern Energy Field Laboratory in Duplin County. The Laboratory will be the focal point for production and bioprocessing of various agricultural substrates into biofuels.

Legislation clarifying that North Carolina's statewide building code does not apply to industrial machinery has passed the General Assembly. The bill, which was sponsored by Senator David Hoyle (D-Gaston), was filed after the North Carolina Department of Insurance directed local building inspectors to begin confirming that manufacturing equipment in new industrial facilities is approved or listed by Underwriters Laboratories. While UL listing is a common means of verifying industrial machinery's compliance with applicable electrical and other standards, federal law allows for other mechanisms for demonstrating safety. Manufacturers argued that the Department's requirements placed North Carolina at a substantial disadvantage to other states, where building approvals are not linked to UL certification of machinery.

Senate Bill 490 (Industrial Machinery/Building Code) authorizes building inspectors to report concerns regarding safety of electrical machinery to the North Carolina Occupational Safety and Health Administration, but prohibits inspectors from denying certificates of occupancy based solely on machinery safety concerns.

Comprehensive energy reform legislation adopted by the General Assembly in the last days of the 2007 legislative session includes a four-year phase out of North Carolina's existing sales taxes on electric power, natural gas and other fuels used in manufacturing and Agriculture. Senate Bill 3 (Promote Renewable Energy/Base Load Generation), introduced by Senator Charlie Albertson (D-Duplin), phases out all such taxes by July 1, 2010. The bill, which passed the General Assembly August 2, was awaiting Governor Easley's signature as this newsletter was published.

The bill reduces the state sales tax on electricity used by manufacturers from 2.83% to 1.80% effective October 1, 2007. The remaining tax is phased out in annual increments of between 0.4% and 0.8% ending July 1, 2010. Taxes on piped natural gas are reduced by roughly one-third for all classes of manufacturing users beginning October 1, 2007. The taxes are reduced by additional increments annually until July 1, 2010, when they are eliminate entirely. Other fuels used in manufacturing are also reduced annually beginning October 1, 2007 and ending July 1, 2010. The reductions are worth an estimated $12 million to manufacturers statewide in fiscal year 2007-08, increasing to more than $50 million annually in FY 2010-11. Click here for a summary of the tax reductions.

North Carolina Congressmen David Price (NC-4), Brad Miller (NC-13) and Bob Etheridge (NC-02) have announced the selection of a Triangle-area location as a finalist for the federal Department of Homeland Security's proposed National Bio- and Agro-Defense Facility (NBAF). A consortium of North Carolina entities, including the North Carolina Biotechnology Center and the College of Veterinary Medicine at North Carolina State University, have been working to recruit the facility to North Carolina.

The facility is expected to provide hundreds of new high-tech jobs and generate billions in revenue for the local economy over the next 20 years.

Research at the high-security lab would be aimed at protecting domestic agriculture, the food supply and public health from a bioterrorist attack involving the intentional introduction of foreign animal diseases such as foot-and-mouth disease.

Deputy Secretary of Homeland Security Michael Jackson informed the local congressmen that a site in Butner was selected as one of five finalists throughout the country for the NBAF. Sites in Kansas, Georgia, Texas and Mississippi also advanced to the final round of selection. A total of seventeen sites were originally under consideration. The Department of Homeland Security is expected to pick the final site in October 2008.

TCG BioPharma's client, Addrenex Pharmaceuticals, has successfully signed a definitive agreement with Sciele Pharmaceuticals under which Sciele will market Addrenex's new hypertension and ADHD product.

Aldagen, Inc., a biotechnology company advancing a pipeline of clinical-stage regenerative therapies, has announced the addition of three new sites for its clinical trial of ALD-301 for the treatment of critical limb ischemia. The three additional sites are Duke University Medical Center, Indiana University ( Indianapolis, IN ) and Saint Joseph's Research Institute ( Atlanta, GA ). These sites join Texas Heart Institute at St. Luke's Episcopal Hospital in Houston, Texas, which was the original site on the study.

GlaxoSmithKline and Targacept, Inc. have announced a strategic alliance to discover, develop and market novel therapeutics that selectively target specified neuronal nicotinic receptors (NNRs). Under the terms of the agreement, GSK will make an initial upfront payment of $35.0 million to Targacept, which includes an investment of $15.0 million for the purchase of 1,275,502 shares of Targacept common stock. In addition, Targacept is eligible to receive up to $1.5 billion in payments from GSK, contingent on the achievement of specified discovery, development, regulatory and commercial milestones. Targacept is the subject of a recent two-page feature article in Forbes magazine.

The National Center for the Biotechnology Workforce at Forsyth Community College has a new video about the R&D training center and the Triad Life Sciences industry.

Cures for Diseases Important to Voters

Voters rate the importance of finding cures to diseases as a top national issue, ahead of the war on terrorism and dealing with illegal immigration, according to a public opinion research project conducted by two prominent national pollsters for the Biotechnology Industry Organization.

The two surveys, which were conducted jointly by the nationally recognized Republican and Democratic strategy firms Public Opinion Strategies and Peter D. Hart Research Associates, compared the views of nationwide voters and senior-level biotechnology industry executives on a number of issues, including health care, the environment, alternative fuels and stem cell research.

Both groups of respondents said they were optimistic that cures to major diseases will be found within the next 10-15 years. According to the survey results, industry leaders and voters share high levels of optimism about the potential for finding cures for serious diseases and, have similar perspectives on the likelihood and importance of finding cures, developing clean technologies to reduce pollution, and creating "green drug factories." For more information.

Increased Funding Will Help Ensure Food and Drug Safety

Biotechnology Industry Organization President and CEO Jim Greenwood applauds the markup of the FY 2009 Department of Agriculture Appropriations bill by the U.S. Senate Committee on Appropriations' Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies:

"The Subcommittee has taken an important step toward ensuring the Food and Drug Administration (FDA) has sufficient resources to continue to accomplish its mission of quickly and effectively reviewing and approving novel therapies, foods and medical devices, and ensuring the safety and public confidence in those products," Greenwood stated.

"The proposed funding increase of $186 million represents the most significant increase in the FDA's budget in recent memory.  The proposal includes additional funds for essential programs such as the Critical Path Initiative and drug safety measures which will help ensure efficient and thorough approval of safe and effective drugs and devices.  This will greatly enhance the ability of biotechnology pioneers to get life-enhancing and life-saving therapies out of research labs and into the hands of patients as quickly as possible.

"The proposal will add badly needed resources to allow the FDA to hire additional food inspectors, providing the public with further confidence in the safety of the nation's food supply."

USDA Releases Draft Environmental impact Statement (EIS) on agricultural biotechnology regulations

"In the decade since biotech crops have been commercially available in the United States, the U.S. Department of Agriculture's (USDA) Animal and Plant Health Inspection Service (APHIS) has done an outstanding job in regulating agricultural biotechnology and ensuring biotech crops are safe for agriculture and the environment," stated Jim Greenwood, Biotechnology Industry Organization CEO and President regarding the draft statement. "Few industries have enjoyed the safety record of agricultural biotechnology, in large part due to the strong science-based federal regulations for this technology."

"As any industry continues to progress, and newer and more beneficial products become available, it is inevitable that regulations and government oversight concurrently advance. BIO and its members support USDA's plans to review and revise agricultural biotechnology regulations commonly known as APHIS Part 340 regulations so that the Agency may continue to ensure the safety of this exciting and important technology. Today's release of the draft programmatic Environmental Impact Statement (EIS) is an important first step in revising the Part 340 regulations. The biotechnology industry appreciates the opportunity to review the EIS and provide industry comment to USDA to ensure that regulatory policies continue to be science- and risk-based."

August 8. UBS Financial Services is hosting a State of the Industry/State of the Markets presentation for local members of the pharmaceutical/biotechnology/healthcare industries. C. J. Sylvester, Co-Head of Corporate Research for UBS Wealth Management and lead analyst for Biotechnology and Healthcare and Michael Ryan, CFA(r), Head of Wealth Management Research - Americas for UBS will speak. This breakfast presentation is scheduled for 8:00 a.m. August 8th at the Hamner Conference Center, North Carolina Biotechnology Center, 15 T. W. Alexander Drive, RTP. RSVP to Veronica Green at 919-286-8606.

September 10-11. Opportunity 2007, SunSpree Resort, Wrightsville Beach, NC . More information.

September 13, Bio NC Life Science Career Fair . Hosted by HireHealth.com and BioSpace.com, the Fair will give job seekers an opportunity to meet face-to-face with the region's elite biopharmaceutical employers and to interview for hundreds of open positions. Sheraton Imperial Hotel, RTP, 11:00 a.m. to 4:00 p.m. More information.

September 14, NCBIO Executive Committee, 8:15 a.m., NCBIO office.

September 20, NCBIO Board Meeting, 8:30 a.m., CED classroom, 100 Capitola Drive, Durham.

October 10-11, 2007. CED's Tech 2007 Conference. The Friday Center, Chapel Hill, NC. CED's 17th annual Tech Conference will explore ways to live, think, communicate, and do business. Tech 2007 will unite the best in disruptive thinkers and tech industry professionals to converse on clean tech, med tech, new tech, and more. The Tech 2007 Demo Room will showcase pioneering technologies from entrepreneurial companies, universities, corporations, and research institutions across the Southeast and Mid-Atlantic regions. More information.

November 5, Nanotechnology in Biology and Medicine. Hosted by the North Carolina Biotechnology Center, UNC -Charlotte, and the Carolinas Medical Center, the conference will feature experts with state-of-the-art presentations on nanotechnology as it relates to biology and medicine. Cannon Research Center Auditorium at Carolinas Medical Center, Charlotte, 8:30 a.m. to 7:00 p.m. More information.

November 6, SEBIO 2007 Venture Conference. Pinehurst. More information.