Virginia Biotechnology Association

Together, We're Working Wonders in Virginia

Vision 2010

Originally identified by the Governor’s Advisory Commission to develop a statewide biotechnology strategy in 2002-03, these have been adopted by VaBIO as the key actions which Virginia must undertake if the state is serious about being a competitor.

Address Facility Needs

Need: Biotechnology companies often require highly specialized and expensive space in order to develop commercial products. Wet laboratory space has considerably different requirements from standard office space and costs between $250-$350/ft2 or more for build-out, versus $50-$75/ft2 for standard office space. Most multi-tenant buildings cannot accommodate the specialized requirements for wet labs because the mechanical and/or electrical systems are not sized to accommodate the loads wet labs require. Furthermore, the private sector is reluctant to finance wet lab and specialized space build-outs for biotechnology companies without lengthy lease terms that fully amortize the improvements and most early-stage biotechnology companies cannot project their space needs much beyond a few years, let alone the long-term that most landlords require.

Action Item:

  • Direct appropriation or the authorization for the sale of up to $100 million in revenue bonds over the next decade to finance construction of biotechnology laboratory and production facilities. Understanding facility needs, offering low- cost access to such facilities, and leveraging existing infrastructure are the critical first steps to expanding Virginia’s life science community.

Improve Access to Funding

Need: Biotechnology is a capital-intensive industry and policies must encourage investment, not limit the freedom of capital to move into the sector. The lack of access to capital and financing for start-up and early stage biotechnology companies is the greatest barrier to building and sustaining a successful life sciences industry in the state. To increase the availability of seed and pre-seed capital, thirteen states have invested in targeted private venture capital funds dedicated to growing new biotechnology companies. Neighboring states including North Carolina, Maryland and West Virginia have each invested $10-20 million or more in such venture funds. The question is, why hasn’t Virginia? A $10-20 million investment by the Commonwealth could create more than $30 million in available funds for Virginia companies.

Action Item:

  • Authorize direct investment by the state into a number of private venture capital funds. This will attract existing venture capital (VC) funds to the state and/or provide the cornerstone for raising new VC funds in Virginia. The Commonwealth’s funds used for this purpose could come from existing sources, such as the VRS, state university endowments, tobacco funds, general appropriations or from a combination thereof. Eligible venture capital funds would be required to have an office in the Commonwealth, an established history of investing in businesses that are in the early stages of development, and enter into a contract with the state under which it invests three times the amount of principal it receives from technology firms located in Virginia.

Provide Tax Reform and Transferable Tax Credits

Need: The unique biotechnology company life cycle – where the lag between R&D and commercial viability is long and expensive – increases the need for targeted tax credits. Tax credits are not an incentive for early-stage biotechnology firms who, due to extensive research and development costs, often spend years generating net operating losses before becoming profitable. Transferable tax credits helps decrease the burden on entrepreneurs, investors and emerging companies.

Action Item:

  • Allow technology companies to transfer or sell unused qualified research and development tax credits to another corporation taxpayer.

Approve the Sale of Net Operating Losses

Need: Forward-thinking fiscal reforms will have a great impact on Virginia’s long-term competitiveness in the biotechnology arena, helping to increase the number of new companies formed in Virginia. The ability of smaller, non-profitable biotechnology companies to trade earned net operating loss (NOL) deductions for needed operating capital works to encourage continued innovative research. Thirty states allow companies to carry forward NOLs. Success often requires risk, and Virginia’s life sciences community ought not to be penalized (and suffer the loss) for such risks.

Action Item:

  • The Commonwealth should authorize biotech companies to sell unused NOLs to a profitable taxpaying corporation.

Accelerate Business Growth and Product Commercialization

Need: The life sciences industry depends upon the flow of ideas from research and development into the marketplace. Indeed, furthering scientific discovery and technological knowledge into useful, marketable products is the prime driver of the industry. For every $1 million in research funding spent in Virginia, more than 30 full- time and part-time jobs are created, according to the U.S. Department of Commerce. In 2001, Virginia universities received more than $595 million in research funding, leading to the creation of more than 18,700 jobs, directly and indirectly, according to the Association of American Universities.Action Items:

  • Increase the Commonwealth’s R&D funding to $1 billion by 2010.
  • Fund one or more “SmartBio” regional partnerships that integrate Bio-IT research, workforce development and commercialization support.
  • Fund the Virginia Biotechnology Commercialization Loan Fund.

Attract the Best and Brightest Faculty to Virginia’s Universities

Need: Properly harnessed and leveraged human capital drives innovation and growth in every company, every industry, and every region. As Virginia’s life sciences industry matures, sustainable competitive advantage increasingly depends on how the state, its educational institutions, and companies develop, train and manage the CEOs of tomorrow. To attract and retain the caliber of people required for a thriving biotechnology industry, the Commonwealth should expand its “Eminent Scholars Program” at Virginia’s research institutions. It is well established that eminent faculty attract federal research dollars, leading in turn to additional graduate students and high prospects for the development of technologies for eventual commercialization.

Action Item:

  • Create an “Eminent Life Sciences Scholars” program at Virginia’s research universities. Direct $8 million ($2 million per endowed professorship, plus support funds) from the Commonwealth’s Tobacco Indemnification and Community Revitalization and CTRF funds to recruit at least “Eminent Life Science Scholars.”