NEW YORK — The U.S. government outlined plans for a $1 billion stimulus for small biotechnology, medical-device and diagnostics developers that could hand up to $5 million to qualifying companies, both public and private.
The program, part of the health care overhaul approved in March and detailed by the Treasury Department on Friday, is aimed at producing new therapies and creating jobs in a sector that has been hard hit in the economic slowdown and credit crisis because of its high capital needs.
The funds will come in the form of tax credits or as a grant for unprofitable companies. It will cover 50 percent of development costs in 2009 and 2010, giving up to $5 million to companies with qualifying projects and fewer than 250 workers.
“Funding for these stages is critical, but it is not always easy to find, especially in the current climate where venture capital is harder to come by,” Francis Collins, director of the National Institutes of Health, said in a press briefing.
The $1 billion will be evenly divided among those companies that are deemed to qualify. Applications for multiple programs are allowed, but the amount awarded cannot exceed $5 million per firm over the two tax years.
Although the government’s details refer specifically to the biotech industry and efforts to cure cancer, an administration official made it clear that the program is also open to medical device and diagnostics companies.
Under the plan, a “qualifying therapeutic discovery project” is one that has “significant potential” to produce a therapy, address unmet medical needs, and cut the growth of health care costs.
