Philadelphia-area biotech firms have high hopes for tax-credit program

Tom Hess, chief financial officer of Yaupon Therapeutics Inc. in Radnor, says his firm has targeted a treatable form of skin cancer.

James Mannion, president and chief executive of Galleon Pharmaceuticals Inc. of Horsham, hopes to produce a pill to alleviate sleep apnea.

Tim Pelura, president and chief executive of Immunome Inc. of Wynnewood, says his goal is to reduce the incidence of a deadly colon infection.

The executives, and others with local biotech start-ups, are counting on a boost in their efforts from $1 billion in tax credits that have been made available by Congress as part of national health-care legislation. Their applications have been submitted and are awaiting approval.

They gathered Monday at Temple University's Fort Washington campus for a roundtable discussion about the credits with U.S. Rep. Allyson Y. Schwartz (D., Pa.), who was credited by the group with being a prime proponent of the measure in Congress.

The tax credits are worth up to 50 percent of the costs of qualifying expenses, to a maximum of $5 million per firm. Most applicants will see much less than that, but any financial help can be crucial.

Hess, for instance, said Yaupon is burning through $400,000 a month while it conducts studies of a treatment for cutaneous T-cell lymphoma (CTCL), a chronic form of skin cancer. With its funding nearly exhausted, Yaupon sees a $1 million tax credit as the bridge it needs to complete the studies, and, if successful, apply for Food and Drug Administration approval.

Without the grant, everything falls apart.

Which is why the federal funding is critical at a number of levels, according to Jim Greenwood, the former congressman who now is the president of BIO, a national group that promotes the biotechnology industry.

Should efforts such as Yaupon's collapse just at the edge of success, they are difficult to repeat as scientific teams break up and hard-earned expertise is dissipated, he said.

"It can be little like Humpty Dumpty - very hard to put back together," Greenwood said.

BIO and Pennsylvania BIO, which promotes the biotech industry in the state, both praised Schwartz's efforts to gain passage of the tax credit.

Christopher Molineaux, president of Pennsylvania BIO, said grants under the bill were available to biotech companies with fewer than 250 employees. He estimated there were about 1,800 such firms in Pennsylvania, of which about 1,100 were in the southeastern corner of the state.

He said at least 23 of his group's members had applied for grants. Of that number, 11 were seeking more than $40 million.

Pelura was seeking a small piece of that figure, just $335,000. But that, he hoped, would keep alive his small firm's efforts to find a new treatment for C. Difficile, a deadly colon infection that has seen a dramatic rise in fatalities of late.

While Pelura said his firm was close to developing an antibiotic for the infection, it was still short of a product it could take to the FDA for approval.

The tax credit can be the difference.

"This would be huge for a company like ours," he said.