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Maryland tax credit program draws interest from biotech startups

Washington Business Journal - by Sue Schultz Contributing Writer

Fourteen Maryland biotechnology companies applied for up to $6 million in state tax credits to help boost investments from individuals, companies and venture capital groups.

Under the program, a biotechnology company could apply for up to $900,000 in tax credits this year for a total $1.8 million investment in the company. Individuals, companies and venture capital groups could get up to 50 percent of a maximum $500,000 investment in a company in tax credits under the program. The state could make its final decisions on the tax credits by August, said Mark Vulcan, director of tax incentives for the Department of Business and Economic Development.

Biotech companies said the state's program provides critical dollars for early stage companies facing declining federal research dollars, and more cautious investors.

"It's often called the valley of death," David Block, CEO of Baltimore startup Gliknik, said about young biotechs' early fundraising efforts.

Block was in line by 5 a.m. Tuesday to apply for the tax credits. The company received the credits last year and was able to use the private investments to launch the company in August 2007. Gliknik is among the first emerging companies to locate at the University of Maryland, Baltimore BioPark.

"Our investors may not have invested as much if it weren't for the tax credit program," Block said after submitting the application.

He declined to say how much the company was seeking in tax credits this year.

The tax credits helped Rockville-based Sequella raise more than $2 million in private investments over the last two years, said Marty Zug, the company's chief financial officer. He said Sequella applied for up to $750,000 in tax credits for a total $1.5 million in private equity July 1.

Gov. Martin O'Malley unveiled plans in June to double the state funding for the tax credit program to $12 million by 2010 and to $24 million by 2013 to make Maryland more attractive to growing life science companies.