Washington Editor

WASHINGTON – As the July 21 deadline fast approaches for applications to be submitted for the qualifying therapeutic discovery tax credit, biotechs appear eager for the opportunity to have a piece of the $1 billion pie, results of a new survey have shown.

Under the program, created by Congress in the Patient Protection and Affordable Care Act of 2010, companies can obtain a tax credit or grant equal to 50 percent of eligible qualified investments made during the 2009 and 2010 tax years for therapeutic discovery projects. (See BioWorld Today, April 19, 2010, and May 24, 2010.)

The credits and grants have a $5 million maximum threshold.

Fred Dorey, special counsel at Palo Alto, Calif.-based Cooley LLP, said a survey of biotech and medical device executives conducted late last month by his firm found that nearly 90 percent of respondents indicated they intend to complete an application in hopes of obtaining some of the program's available funds or tax credits.

But even more surprising, Dorey told BioWorld Today, is that 40 percent said they planned to submit multiple applications seeking the tax credits or grants.

Of those who responded to the survey, 64 percent said their submissions would be for projects involving therapeutics, while 27 percent said their applications were for device or combined device-drug projects.

Only 9 percent involved diagnostics, according to Cooley, one of the largest biotech law practices in the U.S., and the group that incorporated both Amgen Inc. and Genentech Inc.

While the aim of the tax credits and grants is to speed promising therapies into the marketplace, fill unmet medical needs, reduce the long-term growth of health care costs and cure cancer within the next 30 years, the program's other goals are to create and sustain high-quality, high-paying jobs in the U.S. and advance the nation's competitiveness in the fields of life, biological and medical sciences.

Dorey noted that 52 percent of respondents to the Cooley survey said they anticipated creating at least one job and up to 10 new positions if their projects received the full grant or credit amount, while 28 percent said they expected to hire 11 to 50 new employees.

Additionally, one-third of the respondents said they expected to contract out for up to 10 positions, while 16 percent said they would likely contract 11 to 50 outside positions.

The Cooley survey also found that 47 percent of the projects seeking the grants and tax credits are preclinical, while 34 percent were Phase I and Phase II projects. Just under one-fifth said their projects were Phase III or beyond.

Dorey said his company is considering conducting a follow-up survey in the fall after the awards have been made by the Departments of Treasury and Health and Human Services.

Treasury spokeswoman Sandra Salstrom said the applicants will be notified by letter of the grant and credit awards, with those decisions coming by no later than Oct. 29.

She told BioWorld Today that no decisions have been made about making the recipients' names public or if that information will be posted online.

Jim Greenwood, CEO of the Biotechnology Industry Organization, said last week that his group also planned to follow the money from the program in an effort to inform Congress of what is expected to be positive results of the allocated funds, with the hopes lawmakers will be inspired to extend the program. (See BioWorld Today, July 1, 2010.)

Given the experience and familiarity biotechs have of applying for grants and program support, Dorey said he envisioned his firm having to provide only a "light touch" in assisting its clients with the applications, adding that the forms are relatively "user-friendly."

But he urged companies not to wait until the last minute to submit their applications or seek advice about completing the forms.

Companies that pass by the opportunity for the cash and credits, Dorey warned, are going to have a hard time explaining to their boards why they did so.

House Passes Pay-for-Delay Ban, Again

The House last week approved a measure prohibiting drugmakers from entering into agreements aimed at delaying the entry of generics into the marketplace.

A similar measure had been passed by the House last year as part of the health reform package, but that chamber's provision never made it into the final legislation.

The Senate Judiciary Committee last October also passed a version of the bill, but it too failed to make it into the reconciliation package. (See BioWorld Today, Oct. 19, 2009, Jan. 15, 2010, March 19, 2010, and March 30, 2010.)

Federal Trade Commission (FTC) Chairman Jon Leibowitz has long-sought to end the so-called pay-for-delay deals, insisting that the practice costs the government and consumers billions of dollars.

"Congress has taken a critical step toward ending a practice that is dramatically increasing the cost of prescription drugs," Leibowitz said last week.

The Generic Pharmaceutical Association, however, argued that the settlements "actually help bring lower-cost generic drugs to market much sooner than patent expiration dates, saving millions of dollars for consumers and the health system."

Cubist, Celgene Drugs on FDA Watch List

Cubist Pharmaceuticals Inc.'s Cubicin (daptomycin), Celgene Corp.'s Vidaza (azacitidine), Gilead Sciences Inc.'s Ranexa (ranolazine) and Jazz Pharmaceuticals Inc.'s Xyrem (sodium oxybate) were among the drugs the FDA added to its quarterly watch list of products having potential safety issues.

Regulators stressed that the appearance of a medication on the list does not mean that the FDA has firmly concluded that there is a causal relationship between the drug and the risk or signal noted on the agency's quarterly updated table.

The FDA identified 13 drugs this quarter that the agency said it is continuing to evaluate to determine if there is a need for any regulatory action.