A record number of biotechnology, life sciences and other tech-related companies with a presence in New Jersey stand to benefit from private investments spurred in part by tax credits approved by state officials last year — a sign the Garden State continues to serve as the nation’s medicine chest.
The New Jersey Economic Development Authority announced Tuesday it has approved 251 applications from “angel investors” who are eligible for state income-tax credits to help offset the more than $96 million in private funding they funneled to Garden State tech firms during 2016 — the highest annual total since the program launched three years ago.
Nearly four-fifths of these applications were OK’d in the last quarter alone, according to the EDA, which uses tax credits, loans, bond sales, and other public financing mechanisms to help businesses and nonprofits grow in New Jersey.
The Angel Investor Tax Credit Program, which also requires sign-off from the state Division of Taxation, is designed to encourage private investment in new and growing tech companies of all kinds. Approved applicants can receive credits equal to as much as 10 percent of their investment in firms that conduct research, manufacture products, or work to commercialize new technology in New Jersey. (The companies can be based elsewhere, as long as they have a real footprint here.)
Garden State an ideal location for biotech
Biotech leaders said the Garden State is an ideal location for their growth, given the experienced and well educated pool of employees, the location and easy access to New York and Philadelphia, and funding opportunities — both public and private.
One example is Taxis Pharmaceuticals, a Monmouth Junction-based company now working on an antibiotic designed to treat MRSA, a highly resistant bacterial infection, based on technology developed at Rutgers University. Taxis benefitted from a number of private investments in 2015 and another in 2016 that involved the EDA’s tax credit program.
Taxis president and CEO Gregory Mario said at a conference in September hosted by BioNJ, an industry advocacy group, that New Jersey’s advantages included a strong labor pool, “some of the greatest scientists in the world,” and other top-tier pharmaceutical companies ripe for collaboration. He also praised “the very healthy relationship between public and private entities,” including academic institutions like Rutgers and state agencies like the EDA, “which has been instrumental in our ability to incubate our young technology.”
While New Jersey has long been home to pharmaceutical giants like Merck & Co. and Johnson & Johnson, the larger biotech sector — which explores how living organisms can benefit medicine, agriculture, industry, and other technologies — has grown from 50 to nearly 400 companies statewide, according to a study by BioNJ. The industry directly employs more than 212,000 people in the state, and also supports thousands of service companies based here.
“The expertise you need to develop a drug is in New Jersey,” Pamela Demain, a former Merck executive, said at the BioNJ conference.
Some lawmakers say state should do more to help the industry
Despite this reputation, some lawmakers insist the state should do more to build biotech-related business. A task force to promote the industry was formed in the 1990s but the former Commission on Science and Technology, which provided grants to start-up firms, has not been funded since then Gov. Jon S. Corzine eliminated its budget in 2010.
Gov. Chris Christie signed a bill to create a nine-member New Jersey Biotechnology Task Force in August, but it is not clear if any members have yet been appointed to fill these posts.
In the meantime, interest in the EDA program appears to have skyrocketed. Since 2013, the EDA has approved 673 applications that helped investors channel $220 million into 51 tech and life sciences companies. (Most companies benefit from multiple investments offset by these tax credits.)
The credits available for investors range from just over $1,000 to $500,000; state officials were still calculating on Tuesday the total value redeemed. Investors can apply the credits to personal or business income tax payments; if they don’t live in the state, or don’t owe tax, they could be eligible for a refund.
Another benefactor of the program, Agile Therapeutics of Princeton, focuses on female contraception. The company received two investments in 2014 that triggered tax credits, including one for $425,000 — one of the highest ever awarded by the EDA.
“Our roots are in New Jersey,” said Agile president and CEO Al Altomari, explaining that their work grew out of research at Rutgers University. “New Jersey is a great place for us to recruit talent, to be close to investors, to be close to the thought leaders and have virtually everything we need for our organization,” he said.