 Despite a $4.5 billion budget shortfall, the 2009 Session of the North Carolina General Assembly adjourned August 10th leaving the State’s key life science programs intact. Funding for the North Carolina Biotechnology Center was cut by 4% in FY 2009-10 to $14.8 million. NCBioImpact, the State’s signature biomanufacturing and pharmaceutical worker training program received similar cuts. Funding scale-ups for growing programs at the North Carolina Research Center in Kannapolis and cancer research at the University of North Carolina at Chapel Hill continued largely as scheduled. Funding for the State’s new Biofuels Center was continued with federal stimulus monies.
The 2009-11 State Budget ultimately adopted by the Assembly included more than $1 billion in tax increases and more than $2.5 billion in budget cuts. Federal stimulus funding and fee increases at state agencies also contributed to balancing the budget.
For the North Carolina Biotechnology Center, total funding in FY 2009-10 was reduced by $617,651. For FY 2010-11, the Center must plan to absorb an additional 2% cut, bringing total funding for that fiscal year to $14.5 million, or a total reduction of $925,661 from levels budgeted by the 2007-08 General Assembly. “At one time, the Assembly was considering cuts as deep as 9% for the Biotechnology Center,” said Sam Taylor, President of NCBIO. “We feel very good that the final reductions were only 4% in the first year of the 2009-11 biennium. Naturally, we’ll be working hard in 2010 to stave off the planned 6% reduction and instead achieve an overall funding increase for the Center.”
“The fiscal environment in 2009 was one of the worst in recent memory,” Taylor continued. “Holding funding for key initiatives in this environment was very challenging. Fortunately, most legislators recognize the life science industry as a major contributor to North Carolina’s economy – as well as our quality of life – and worked to protect programs that support this sector.”
For the NCBioImpact worker training program, legislators reduced funding for the North Carolina Community College System’s BioNetwork by $1.44 million in each year of the biennium. The cut will shave $1 million from BioNetwork’s grant programs and $380,000 from the program’s marketing budget. The Biomanufacturing Training and Education Center (BTEC) at North Carolina State University and the Biomanufacturing Research Institute and Technology Enterprise (BRITE) at North Carolina Central University received funding reductions on par with other core academic programs of the university system.
Funding for the North Carolina Research Campus at Kannapolis was increased by $3 million to support hiring of researchers and purchases of equipment. Seven campuses of the University of North Carolina system are now participating in collaborative research at the campus. Total funding for the Research Center increases to $22.5 million annually with the 2009-10 appropriation. The university system’s budget also included $3.4 million in additional funding for cancer research at the University of North Carolina at Chapel Hill. The increase completes the Assembly’s four year commitment to increase cancer research by $50 million.
Click here for a complete summary of life science-related provisions in the 2009-11 North Carolina state budget.
 The North Carolina State Senate and two committees of the State House gave approval to NCBIO’s proposed Life Science Development Corporation (LSDC) in 2009, but a final House vote on the program was delayed until 2010. The Corporation, which would provide up to $70 million in loans for life science facilities and equipment in North Carolina, would be backed by state tax credits designed to offset any losses incurred by investors in the Corporation.
“The North Carolina Biotechnology Center and NCBIO worked very hard on the LSDC proposal this year,” said Sam Taylor, President of NCBIO. “We made excellent progress in both crafting authorizing legislation and in winning support from key legislators. However, this program is very complicated and some legislators still had questions about the proposal. We’ll be doing more work with members of the Assembly during the autumn and winter months, and I think we have a good chance of winning enactment of this groundbreaking program in 2010.”
The LSDC is designed to address the shortage of debt financing for facilities and equipment acquisition by later-stage life science start-up companies. Because many such companies do not yet have regulatory approval or product revenues, banks and other traditional sources of debt financing are often reluctant to lend. The LSDC would provide up to $20 million in financing for borrowing companies, backed by security interests in the borrower’s facilities, equipment, and other tangible and intangible assets. The LSDC would also likely seek warrant coverage for the loans. Current plans call for interest-only financing for as much as three years at rates approximately four-points above prevailing municipal bond rates. Loan durations would be between five and ten years.
Legislators substantially reduced funding for North Carolina’s innovative SBIR matching grants program in the 2009-11 budget. In one of its few major cuts to innovation-economy programs, the General Assembly allocated only $700,000 for the One North Carolina Small Business Funding SBIR matching grants program in 2009-10 – down from $3.5 million in 2008-09. As in the past, the appropriation was non-recurring, and will require program backers to once again seek funding for the program from the 2010 legislature.
“We are very disappointed by this funding cut,” said Sam Taylor, President of NCBIO. “The SBIR matching grants program is one the very few technology-agnostic platforms we have in North Carolina to get useful cash into pre-venture start-up companies with promising technologies. We’re going to have to work very hard in 2010 to restore funding for this program.”
As usual, the SBIR matching grants program faced strong competition for its appropriation. “As a non-recurring budget item, this program has to compete every year for state budget dollars,” said Taylor. “Most other economic development programs are in the state’s continuation budget, and are automatically renewed unless the Assembly takes affirmative action to cut them.” In the 2009 session, the SBIR program competed unsuccessfully against new proposals for broad-based assistance to save jobs in traditional small businesses and requests downtown redevelopment support in small communities.
 Senator Kay Hagan (D-NC) along with Senators Orrin Hatch (R-UT) and Mike Enzi (R-WY) pushed the amendment adopted by the Senate Health, Education, Labor and Pensions (HELP) Committee that provided 12 years of data exclusivity for innovative biologics.
BIO President and CEO Jim Greenwood stated, “Their leadership was masterful. Ultimately we succeeded in defeating an amendment offered by Senator Brown (OH) that would have limited data exclusivity to 7 years and then winning support for the Hatch/Enzi/Hagan amendment by a vote of 16-7.”
Greenwood added, “This is a vote for our nation’s innovation economy. Biotechnology helps drive more than 7.5 million high-wage, high value jobs across the nation. With this vote, the HELP Committee has embraced our long held belief that a minimum of 12 years of data exclusivity establishes a fair and reasonable period to ensure continued biomedical innovation and provide the benefits of expanded competition.”
“This vote combined with growing support in the House for H.R. 1548 (The Pathway to Biosimilars Act), which now boasts 129 cosponsors, shows strong bipartisan support for at least 12 years of exclusivity. In contrast, the competing bill, H.R. 1427, has attracted only 13 cosponsors,” Greenwood said.
"We thank Senators Orrin Hatch (R-UT), Mike Enzi (R-WY) and Kay Hagan (D-NC) for offering the critical amendment, and we thank the bipartisan group of senators such as Senators Barbara Mikulski (D-MD) and Judd Gregg (R-NH) who advocated openly for the amendment. Last, we thank HELP Committee Chairman Ted Kennedy (D-MA) for voting for the amendment, as he has always been a supporter of biotechnology and life sciences," stated Greenwood.
Meanwhile the House Energy and Commerce Committee has approved a proposal similar to the Senate amendment. The Committee gave overwhelming approval by a vote of 47 to 11 of an amendment to create a regulatory pathway for biosimilars by the House Energy and Commerce Committee in the mark-up of the America’s Affordable Health Choices Act (H.R. 3200).
Greenwood stated, “The strong bipartisan support in the Energy and Commerce Committee for a fair and balanced pathway for the approval of biosimilars is a decisive win for the patients of today and tomorrow. The approved amendment, introduced by Representatives Anna Eshoo (D-CA), Jay Inslee (D-WA) and Joe Barton (R-TX), strikes the appropriate balance among ensuring patient safety, expanding competition, reducing costs and providing necessary and fair incentives that will provide for continued biomedical innovation.”
 Efforts in the North Carolina State Senate to make broad reforms to North Carolina’s tax structure stalled in the final days of the 2009 legislature. The Senate legislation, which was designed to broaden the state’s tax base and reduce tax rates, was considered by many legislators as too complex for end-of-session consideration. Since the Assembly’s adjournment, however, key legislators and Governor Beverly Perdue have suggested that comprehensive tax reform is needed, and that a broad package of changes could be considered in 2010, or possibly in an earlier special session of the Assembly.
NCBIO worked closely with Senate tax policy writers to address the proposed reform package’s potential impacts on life science companies. “Our goal was to avoid new tax provisions that would have a disproportionately negative impact on the life science sector,” said NCBIO President Sam Taylor. “We also sought to preserve and enhance existing innovation-economy tax provisions such as the R&D and Qualified Business Venture tax credits.”
Changes considered in the reform bill included sales taxes on services, including repair and maintenance, and expansion of the state franchise tax to limited liability entities. The Senate’s proposed reforms would have also repealed most corporate tax credits – with the notable exception of credits targeting the state’s innovation economy.
As part of its tax reform efforts, NCBIO worked to exclude research and development equipment from sales tax on maintenance and repair services, and with North Carolina venture funds to protect venture capital under management from franchise taxation. NCBIO won the support of Governor Beverly Perdue for including the Organization’s proposed capital gains tax exclusion for founders stock in innovation economy-related tax provisions of the reform package.
North Carolina mayors from large life science communities gathered in Winston-Salem in August to review ways of promoting the cluster’s growth. The meeting was hosted by Winston-Salem Mayor Allen Joines. NCBIO and the Pharmaceutical Research and Manufacturers of America (PhRMA) presented recommendations at the meeting.
"From an economic development perspective, we collectively believe innovators of today, will bring North Carolina new growth tomorrow," Joines said. "We must identify needs and resources in industries with great promise such as with biotechnology and biopharmaceuticals."
The mayors reviewed North Carolina’s recent track record in life science growth, including North Carolina Biotechnology Center estimates that the sector contributes nearly $46 billion in direct, indirect and induced economic activity in North Carolina and some 180,000 jobs. The mayors endorsed recommendations for expanded funding for innovation, educating citizens about life science opportunities, and benchmarking best practices in communities across the State.
"It's more important than ever to be competitive in biotechnology and life sciences," said Concord Mayor Scott Padgett. "It's more important to be aggressive with innovations. But it's equally important to provide these companies with what they need--an educated work force and infrastructure--so that our communities can retain what we help grow and nurture.”
The mayors asked NCBIO to organize a follow-up meeting for the group in 2010 for the purposes of planning for next year’s General Assembly session.
 NCBIO will hold its 16th annual meeting of members Tuesday, September 29, 2009, beginning at 8:15 a.m. at the North Carolina Biotechnology Center. The meeting will feature an in-depth analysis pending health care reform proposals and their potential impacts on the life science industry. NCBIO President Sam Taylor will provide an annual report on the Organization’s work and objectives and members will elect the NCBIO Board of Directors.
The national debate on health care reform will be entering its final months in late September, and our panel of experts will be sharing their insights regarding likely outcomes of the debate and their impacts on life science,” said Taylor. “We’ve worked closely with our strategic partner, the Pharmaceutical Institute, to assemble this program and I am very excited about the caliber of our panelists.”
Leading the discussion will be Pharmaceutical Institute General Manager Gary O’Grady. Other panelists will include Andy Hartsfield, Vice President for Public Policy and Advocacy at GlaxoSmithKline; Kevin Schulman, MD, MBA, Director of the Duke Fuqua School of Business’ Health Sector Management Program and Professor of Medicine at Duke University School of Medicine; and Kevin Barnett, Senior Vice President at Campbell Alliance.
Members are invited for a networking breakfast beginning at 8:15 a.m. The health reform program will start at 8:30 a.m., followed by the annual NCBIO business session. Following the Annual Meeting, NCBIO Board members will meet to elect the Organization’s 2009-10 Executive Committee.
NCBIO would like to thank our Gold Level Sponsors CRB, Forma Life Science Marketing, and Wyrick Robbins Yates & Ponton. Sponsorship opportunities are still available. To find out more about our Silver ($750) and Bronze ($500) sponsorships and ways your company can be recognized at the event, contact Jennifer Fong or Brenda Summers.
NCBIO members can receive a new benefit through the BIO Business Solutions sm program. FreeMind Group, a consultancy firm specializing in government funding and other non-dilutive sources of capital, is now offering a 20% discount to NCBIO members through the Business Solutions program In 2008, FreeMind Group assisted companies in winning over $300 million in grants and contracts for life science companies of all sizes. The success rate of winning grants is not only significantly higher for clients of FreeMind Group compared to the average NIH grant success rate, but the size of the average annual grant award for FreeMind Group’s clients is significantly higher than the average NIH grant award.
Through the BIO Business Solutions sm program, NCBIO and BIO partner with industry suppliers and service providers to provide members with discounts and special benefits on the suppliers' products and services. For more information about NCBIO’s discounts, contact Jennifer Fong.
IBC's BioProcess International Conference & Exhibition (BPI) is coming to the Raleigh Convention Center on October 12-16, 2009. BPI has become the largest, most well respected forum focusing on technical, regulatory and strategic planning challenges in the manufacture of biotherapeutics. BPI allows you to interact with industry experts and colleagues across various disciplines of biopharmaceutical manufacturing to develop valuable partnerships and gain a competitive advantage for continuous improvement. For a complete event details download the conference brochure. This event is sure to book quickly so register early and take advantage of early registration discounts. You may register online or by calling 800.390.4078. Please be sure to mention your priority code of B9171NCBIONS when registering.
The expanded exhibit hall (sold out in 2008) is a worldwide marketplace of 150+ suppliers allowing you the unique opportunity to meet the people behind the products, tell them what you think and explore and evaluate the latest technologies, products and services first-hand to help you achieve your company’s development and production goals. Visit the website for complete exhibit hall details.
Please have your organization’s media/marketing coordinator send news about your company to Brenda Summers - bsummers@ncbioscience.org
AlphaVax, Inc. has completed process development and preclinical immunogenicity studies of its H1N1 (swine) influenza vaccine and planned to manufacture clinical trial material by the end of July. This vaccine has shown good production yields as well as excellent immunogenicity, even after just a single inoculation. “Our vaccine platform provides several potential advantages over other influenza vaccine approaches in that vaccines can be rapidly constructed and tested, and are produced in cell culture systems rather than eggs. In addition, our vaccines do not require the use of an adjuvant, and they raise not only strong antibody responses but robust cellular responses, both of which could be important in the face of a developing pandemic where there are several variant virus forms circulating” said Jonathan Smith, AlphaVax’s Chief Scientific Officer.
Bayer CropScience is the 2009 winner of the North Carolina Industrial Biotechnology Leadership Award. The award was given by the NC Biotechnology Center at a breakfast reception during the sixth annual World Congress on Industrial Biotechnology & Bioprocessing. "We are proud to honor Bayer CropScience for its strong support of university research and science education as well as its scientific and technical excellence," said E. Norris Tolson, president and CEO of the Biotechnology Center. "Bayer CropScience is an icon in the field of agricultural biotechnology and a preeminent member of our own North Carolina life-science community."
Biolex Therapeutics, Inc. made a presentation at the XXII Congress of the International Society on Thrombosis and Haemostasis (ISTH) in Boston demonstrating that the thrombolytic activity of the Company's full-length recombinant human plasmin (BLX-155) was superior to t-PA in a preclinical study. BLX-155 is a direct-acting thrombolytic (clot dissolving) agent currently in preclinical development and is designed to break up blood clots in patients with diseases or conditions such as acute peripheral arterial occlusive disease and deep vein thrombosis, each of which currently lacks an approved thrombolytic agent. "The development of BLX-155 using the LEX System may allow exploitation of the natural binding, efficacy and safety attributes of native plasmin without the limitations or risks associated with truncated plasmin, plasma-derived plasmin, t-PA, or alfimeprase," said Jan Turek, President and Chief Executive Officer of Biolex.
Eisai Inc. has hired Steven C. Sembler as Senior Vice President, Oncology and Institutional Care. Mr. Sembler, who has nearly 25 years of experience within the oncology and specialty care therapeutic areas, will be responsible for all aspects of the U.S commercial business for Eisai's oncology and institutional care therapeutic arenas. Eisai has also hired Ann C. Miller, M.D., as Senior Vice President, Primary Care & Specialty Business Unit. She will oversee the commercial business of Eisai's Primary Care & Specialty Business Unit, with responsibility for more than $3 billion in sales and over 700 sales, marketing and medical affairs employees. Both new employees will be located in Eisai's Woodcliff Lake, New Jersey, facility. Eisai Inc. is a U.S. pharmaceutical subsidiary of Tokyo-based Eisai Co., Ltd., and has a facility in the Research Triangle Park.
GlaxoSmithKline has completed its acquisition of Stiefel Laboratories, Inc. GSK has acquired the total share capital of Stiefel for a cash consideration of $2.9 billion. GSK also assumed $0.4 billion of net debt. Under the terms of the agreement, GSK may be obligated to make additional cash payments of up to $0.3 billion depending on the future performance of the business. The new dermatology business unit within GSK will operate under the name Stiefel, a GSK company. Deirdre Connelly, President, North American Pharmaceuticals, GSK, said, “The Stiefel acquisition demonstrates how we are implementing our strategy to grow and diversify our business through targeted acquisitions. We now have established a new world-leading, specialist dermatology business that will immediately generate new revenue flows to GSK.”
Tim Gupton, partner at Hughes Pittman & Gupton, LLP, the largest CPA firm headquartered and staffed in the Research Triangle Park region, has been named a 2009 CFO of the Year by Triangle Business Journal. During the inaugural luncheon on July 14th, Gupton was honored for his work on behalf of AlphaVax Inc. and CoLucid Pharmaceuticals Inc. Gupton manages the day-to-day financial activity, budgeting and financial reporting at AlphaVax and CoLucid. His key role is to focus the financial forecasting and finance resources with the strategic direction of the companies. He has seen AlphaVax through five rounds of international investor backing and $100 million of NIH grants and corporate collaborations. In addition, Gupton has guided Colucid through two rounds of venture financing. Both companies have products in Phase 2 clinical trials. "I'm grateful to be recognized by Triangle Business Journal for doing what I love," says Gupton. "The work I do can be challenging, but it is incredibly rewarding. I have had the honor of serving as start-up CFO for seven biopharmaceutical companies during the past 16 years. Two are public companies and one was sold to a pubic CRO."
Inspire Pharmaceuticals, Inc. President and CEO, Dr. Christy L. Shaffer, has informed the Board of Directors that she plans to step down once a successor is in place. Based on Dr. Shaffer’s plan, Inspire's Board has initiated an external CEO search process, which is well underway. Dr. Shaffer has committed to the Board that she will remain in place during the hiring of her successor, ensure a smooth and orderly transition process and be available in an advisory role, as needed. Inspire’s Chairman of the Board, Kenneth B. Lee, Jr., commented, “As Inspire’s first full-time employee in 1995 and CEO since 1998, Christy has been the driving force in the company’s development and she will be greatly missed. We respect Christy’s decision to transition leadership from her entrepreneurial, scientific expertise to a chief executive with strong global commercial biopharmaceutical experience. We believe our current portfolio of marketed products and multiple potential product approvals related to late-stage clinical programs position Inspire very well for future growth.”
Thomas R. Staab, II, Chief Financial Officer and Treasurer of Inspire was named CFO of the Year in the Small Public Company category in Triangle Business Journal's 2009 CFO of the Year Award program. Awards were presented to professionals in the Triangle area of North Carolina who exemplify excellence as corporate financial stewards.
McGuireWoods LLP, a full-service law firm with 18 offices worldwide, has launched a quarterly series of Lunch Breaks to bring together compliance officers, CEOs, in-house counsel and business development managers of pharmaceutical, medical device and biotech companies to discuss the most pressing issues facing this growing community. While these networking sessions are informal and interactive, each will be structured to address a specific topic. These Lunch Breaks will be by invitation only. Questions can be directed to Candace Eastman.
Novozymes is once again on the list of the world’s top 20 leading companies within sustainability and finance compiled by SustainableBusiness.com. The purpose of the SB20, now in its eighth year, is to showcase innovative, model companies that are leading us towards the ultimate goal of a sustainable society. The list is presented in the Progressive Investor newsletter published by SustainableBusiness.com, which tracks and analyzes sustainable stocks.
Targacept, Inc. has been awarded a grant of over $600,000 from The Michael J. Fox Foundation for Parkinson's Research (MJFF). The grant, which was awarded as part of MJFF’s Therapeutics Development Initiative for Spring 2009, is designed to fund preclinical research involving the use of compounds that modulate neuronal nicotinic receptors to address Levodopa-induced abnormal involuntary movements, known as dyskinesias. The terms of the grant provide for Targacept to receive the funds as the research is performed over an expected period of one year.
Targacept has announced that AstraZeneca has informed Targacept that it plans to conduct further development of AZD3480 (TC-1734) for attention deficit/hyperactivity disorder (ADHD) and has agreed to make a $10 million milestone payment to Targacept.
Viamet Pharmaceuticals, Inc. has secured $18 million in a Series B financing to accelerate the development of its novel metalloenzyme inhibitors and to advance its Metallophile™ Technology platform. The proprietary Metallophile™ Technology is based on Viamet’s world-class expertise in bioinorganic chemistry and metalloenzymes and allows Viamet to rapidly and cost-effectively generate “best-in-class”, novel compounds by optimizing the metal-binding component of existing metalloenzyme inhibitors. The investment was led by the Novartis Option Fund and Lilly Ventures and also included Viamet’s existing investors Intersouth Partners, Hatteras Venture Partners, Lurie Investment Fund, and Astellas Venture Management. As part of the closing of the financing, Lauren Silverman, Ph.D., Managing Director of the Novartis Option Fund and Ed Torres, Managing Director, Lilly Ventures, have joined Viamet’s board of directors. “We are very pleased that the Novartis Option Fund and Lilly Ventures have elected to invest in Viamet. Their interest in our pipeline programs and Metallophile™ Technology is truly gratifying,” said Robert Schotzinger, M.D., Ph.D., President and Chief Executive Officer of Viamet.
 BIO 2010
The Biotechnology Industry Organization (BIO) invites leaders in science, finance, business, law, and government policy to submit proposals for breakout sessions at the 2010 BIO International Convention, the global event for biotechnology, to be held May 3-6 at the McCormick Place Convention Center in Chicago, IL. The BIO International Convention will highlight the latest trends and the newest opportunities for executives, investors, scientists, policy leaders, and media from around the world. Speakers at the sessions will share breakthroughs in medicine, diagnostics, the environment, energy production, business operations, financing, partnerships, policy issues and food and agriculture.
SBIR Reauthorization
The Biotechnology Industry Organization (BIO) strongly supports H.R. 2965, the measure the House of Representatives passed that will allow small companies that receive the majority of their financing from venture capital to once again be eligible to compete for Small Business Innovation Research (SBIR) grants. BIO President and CEO Jim Greenwood stated, “The passage of this bill is a critical step toward ensuring that all innovative companies can compete for SBIR grants – based on the promise of their science rather than the structure of their capital. This change will allow more small biotechnology start-ups to continue critical research and development of medical advancements and breakthroughs.”
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September 21-23, 2009.
World Stem Cell Summit. Baltimore Convention Center. The World Stem Cell Summit provides the 360-degree view of this burgeoning field while delivering focused and in-depth science, business and industry insight with unsurpassed networking and partnering opportunities. Visit the website for more information.
September 23, 2009.
MEDQUEST 2009. Wireless and Consumer Healthcare. Duke University, The Fuqua School of Business. Learn about the future impact of wireless technology on healthcare industry and understand the future trends of consumer healthcare. Expert panel discussions on business models and innovation solutions. For more information, click here.
September 25, 2009.
CED’s 25th Anniversary Celebration. Click for more information.
September 29, 2009.
NCBIO Annual Meeting. Health Care Reform Panel. Contact Jennifer Fong for more information.
October 12-14, 2009.
AdvaMed 2009, Washington, D.C. NCBIO members save on AdvaMed 2009 thru September 14th. Contact Jennifer for more information on this Discount Registration Opportunity. Conference designed by industry for industry, AdvaMed 2009 is the premier MedTech Conference for CEOs, business executives, policy-makers, media, financiers, and other MedTech leaders from around the world. In only its second year, AdvaMed 2008 attracted 1,400 industry leaders – including 500+ CEOs, Presidents and C-level executives. Visit their website for more information.
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