New Jersey’s Edison Innovation Fund supports growth of pharmaceutical and other life sciences and technology businesses

When Axcan Pharma was choosing whether to expand its U.S. headquarters in Alabama or establish a facility farther north, a Business Employment Incentive Program (BEIP) offered by the State of New Jersey worth an estimated $580,000 over 10 years was a material factor in the specialty pharmaceutical company's decision to locate in the Garden State.

After the Detroit-based U.S. division of Sun Pharmaceutical Industries completed its purchase of Able Laboratories in Cranbury, N.J., it faced the choice of closing down its newly acquired New Jersey company and moving its operations to Michigan, or maintaining and growing the business in New Jersey. Once again, New Jersey's BEIP provided a powerful inducement in the form of a 10-year grant worth an estimated $2.4 million for Sun to remain and build its business in the state.

More than a dozen technology and life sciences companies, including pharmaceutical businesses like Axcan and Sun and others such as AustarPharma in Edison and Regeneron Pharmaceuticals in Bridgewater, executed grants with the New Jersey Economic Development Authority (EDA) under the BEIP in 2009. The BEIP is one of many programs providing support under the umbrella of the Edison Innovation Fund, which was created in 2006 to develop, sustain and grow life sciences and technology businesses that will ultimately lead to high-paying jobs for New Jersey residents.

Historical Perspective

The EDA is a state financing and economic development agency that for more than 35 years has provided businesses and communities in New Jersey with financing, real estate development and access to technical assistance to advance their economic growth. Throughout its history, the EDA has identified commercial markets in need of assistance, and then deployed its resources to ensure growth occurs within high-paying, emerging industries.

Following discussions between the EDA and technology industry leaders in the mid-1990s, it became clear that a strategy for supporting the growth of young life sciences and technology companies in New Jersey was necessary. This strategy needed to capitalize on the state's history of scientific discovery. It also needed to take advantage of New Jersey's distinction of having more scientists per capita than any other state and an infrastructure comprised of large pharmaceutical companies, established mid-sized technology and biotechnology businesses, and university research and contract research organizations, all of which could combine to create valuable synergies across the life sciences sector.

To accomplish this goal, the EDA began to reposition its products over the next decade to provide innovative financing solutions, while developing high-quality office and laboratory space to meet the specific requirements of the growing life sciences and technology industries. With this history of success providing real estate development and financial support to these sectors, the EDA was directed to manage the Edison Innovation Fund, a comprehensive approach to assisting industries of innovation through the phases of discovery, commercialization and growth.

The impact to date of the Edison Innovation Fund has been a significant example of how the public and private sectors can jointly support pharmaceutical and other life sciences and technology companies in New Jersey and creating an environment for these businesses that strengthens their ability to grow and deliver products to market.

2009 in Review

In 2009 alone, the EDA delivered more than $120 million in financing assistance, venture fund investments, business incentives and tax credits to early-stage and established life sciences and technology businesses under the Edison Innovation Fund. This assistance leveraged nearly $318 million in total public/private investment and is expected to lead to the creation of almost 2,350 new jobs to support the state's economy.

Biopticon Corporation, a medical imaging instrument company in Camden that has designed patent-pending instruments addressing the needs of the pre-clinical drug research market was one of the businesses benefiting from the Edison Fund in 2009, finalizing a $200,000 EDA investment for the commercialization of its technology. Urovalve of Newark was another beneficiary of the Fund, closing a $100,000 investment to be used as growth capital.

Another important component of the EDA's support for technology and life science companies is the Technology Business Tax Certificate Transfer Program. Since 1999, New Jersey has allowed qualified biotechnology and technology businesses to sell unused net operating losses and R&D tax credits to unrelated profitable corporations. Proceeds can be used to finance growth and operations either as working capital or to fund research. There is $60 million allocated annually, which is prorated among qualified candidates.

In July 2009, changes were enacted to improve and enhance this program, including:

• Increasing the maximum lifetime benefit per business from $10 million to $15 million.
• Increasing the amount of net operating loss carryover that may be surrendered to a corporation business taxpayer from 75% to 80%.

Since the program was established, about $565 million has been provided to almost 400 biotechnology and technology companies. Nearly 100 sellers were approved to participate in the program last year.

Additionally, the EDA has committed $15 million to two life science-only venture funds -the Garden State Life Sciences Venture Fund and the NewSpring Capital Venture Fund. This commitment builds on the more than $9 million investment in the NJTC Venture Capital Fund, which has invested in a number of life sciences companies.

Facilities Supplement Financing

The EDA's early vision of encouraging innovation with real estate and financing solutions also has been realized with the success of the Waterfront Technology Center at Camden and Technology Centre of New Jersey in North Brunswick, which includes the Commercialization Center for Innovative Technologies (CCIT). EDA most recently renovated its Tech IV Biotechnology Development Center, also located on the campus of the Technology Centre of New Jersey.

CCIT was awarded a renewal of its designation as a Soft Landings Incubator by the National Business Incubation Association. The Soft Landings designation recognizes an incubator's focus on welcoming non-domestic firms into its domestic market with translation services, help cutting through governmental red tape, access to capital, domestic market research and other programs. CCIT is one of only 15 incubators in the world to have earned this designation since the program began in 2005.

To learn more about the Edison Innovation Fund, visit www.njeda.com. For information about opportunities for business growth throughout New Jersey, access the state's business portal at www.NewJerseyBusiness.gov or call 1-(866) 534-7789.