Science in the Triangle

The biotech industry, one of North Carolina’s premier engines for job creation, will have to do with less support from the state over the next two years.

On Tuesday, legislators finished a grueling session that had been dominated by spending cuts to close a multi-billion dollar shortfall in revenue. The cuts will reduce the amount of funding the N.C. Biotechnology Center will receive during the current fiscal year to $14.8 million, from $17.5 million in fiscal 2009.

The pool of money the biotech center will have available to loan to young, unprofitable research and development companies - to help them get off the ground and grow their business - shrunk by half to about $2 million, according to spokesman Chris Brodie.

The biotech center’s loans have long been stepping stones for very young biotech companies to prepare for venture capital investments, expand and create jobs.

Further cuts in the biotech center’s budget, which is entirely state-funded, are projected for the following fiscal year, Brodie said.

The cuts, made necessary by the fallout of one of the longest and fiercest recessions since the Great Depression, come at a time when investors are renwing their interest in biotech companies.

Several publicly traded drug development companies have been able to raise cash in stock sales recently - Durham-based Inspire Pharmaceuticals collected more than $100 million in a secondary offering Monday. The same day, Wall Street completed the first initial public offering of a pharmaceutical company in nearly two years.

This renewed interest could free up new venture capital, the lifeblood of the biotech industry, especially for very young companies.

That’s why the budget cuts, necessary as they may be, come at such an unfortunate time for North Carolina’s biotech industry just as the recession is easing. Especially budding members of the industry, which is concentrated in the Triangle, could miss out on venture capital and wither on the vine.

Life science fund to attract jobs fails to pass

Legislators also dealt a blow to another effort to create jobs in the biotech, pharmaceutical and medical device industries.

In a last minute decision Monday, House members shelved a bill that would have established an investment fund to attract to North Carolina small and mid-size companies preparing to start production.

Economic development recruiters have long wanted an incentive vehicle to attract such companies, which tend to be too small to qualify for traditional state incentives but add corporate headquarters and high-paying manufacturing jobs to North Carolina.

Filed in the Senate in March and passed to the House in July, the bill would have allowed investors, such as banks and insurance companies, to pay money into the fund. The money would have been converted into loans of up to $30 million for life science companies interested in buying or expanding manufacturing facilities in North Carolina.

Fund investors would have been eligible for tax credits in case of losses. That raised questions among some House members and prompted the bill’s sponsor to ask that the bill be shelved until the legislature returns in the spring.