Today, the Department of Treasury ("Treasury") issued the much anticipated guidelines for emerging growth life sciences companies looking to take advantage of the non-dilutive funding opportunity provided by the new Therapeutic Discovery Project Program ("TDPP") created by the Patient Protection and Affordable Care Act. TDPP provides up to $1 billion in tax credits and cash grants for small and mid-sized life sciences companies to defray the costs of investment in qualifying therapeutic discovery projects undertaken in 2009 and 2010.
Key Highlights:
- $5 million aggregate tax credit/grant limit per company
- Applications to be made on IRS Form 8942, which will be released by June 21, 2010
- Separate applications required for each qualifying therapeutic discovery project
- Deadline for applications is July 21, 2010
- Preliminary review of applications will conclude on September 30, 2010
- Applications to be approved or denied no later than October 29, 2010
Select Application Disclosures:
- R&D Investment: A description of the applicant's qualified investments for 2009, 2010 or both, as applicable, and the amounts thereof. Such qualified investments may include expenses for wages, supplies and lab costs, depreciable property, contractor costs, and any other costs that would be considered part of the qualified investment for the project.
- Jobs: The number of full-time and part-time employees and contractors in the United States whose work is related to the project and the average pay and hours of the workers in each category.
- Project Status: Whether, as of the date on which the application is submitted, the project is active, terminated, or suspended and, if the project is terminated or suspended, whether this is because the project failed a clinical trial, failed a pre-clinical research milestone, or failed to secure FDA licensure.
- Project Information Memorandum: Form 8942 will also require a Project Information Memorandum ("PIM"), which sets forth a variety of required disclosures, including those relating to how the project meets the various medical, scientific and economic criteria required under TDPP.
Guidance for Medical Device Companies:
Additionally, today's notice provides some guidance to important questions regarding what type of diagnostics and whether medical device technologies will be eligible. Eligible relevant products include point of care diagnostics for infectious agents as well as certain medical products, processes or technologies that further the delivery or administration of therapeutics.
Sonnenschein
As one of the few national law firms at the convergence of life sciences, public policy and government finance, Sonnenschein is uniquely positioned to help emerging growth life sciences companies take advantage of this extraordinary opportunity to obtain non-dilutive financing. A multidisciplinary team of attorneys, leveraging deep expertise on Capitol Hill, is currently advising clients on how best to prepare qualifying tax credit and grant applications. Our commitment to emerging growth companies gives us the ability to tailor flexible pricing structures that address the needs of companies looking to capitalize on this attractive financing option.
Sonnenschein will continue to keep emerging growth companies in the life sciences sector abreast of important developments regarding this Treasury program through a series of client alerts and informational presentations.
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May 25, 2010
$1B for Emerging Growth Life Sciences Companies Through
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
