Massachusetts Enacts Comprehensive $1 Billion Life Sciences Initiative

Life sciences and biotech companies should evaluate the

opportunities for their businesses.

On June 16, 2008, Massachusetts Governor Deval Patrick

signed into law an "Act Providing for the Investment in

and Expansion of the Life Sciences Industry in the

Commonwealth" (the "Act"). The Act brings to

fruition a proposal made by Governor Patrick more than a year

ago to invest $1 billion in the life-sciences and biotech

industries in Massachusetts. The Act provides tax incentives

for companies to embark on expansions or new initiatives and

addresses federal funding shortfalls by providing seed money to

develop new ideas and provide financial aid for graduate

students. The Act also provides money for the state's

vocational and technical high schools and colleges to purchase

new equipment to train life sciences workers.

The Act authorizes $1 billion in spending. Of that, $500

million is earmarked for the Massachusetts Life Sciences

Investment Fund, $250 million for the award of grants, and $250

million in tax credits.

Administration of the Act and Certified Life Sciences

Companies

The Act delegates its administration to the Massachusetts

Life Sciences Center (MLSC), a quasi-public agency of the

Commonwealth of Massachusetts, created by the Massachusetts

legislature in June 2006.

Only "certified life sciences companies" are

eligible for the grants and tax credits established by the Act.

To become certified, a company must apply to the MLSC, and its

application must be approved by a majority of the MLSC's

board. Applications must contain a certification proposal,

which must include, but is not limited to, (1) an estimate of

the projected new state revenue the company expects to generate

during the period of certification and a plan to achieve that

new state revenue (also, the plan should include certain

information, including an estimate of new commercial revenue,

new full-time employees, projected average salaries of the new

employees, and so on), (2) documentation of any agreement

between the company and any banking institutions by which the

company has agreed to establish accounts with the bank (and by

which the banking institutions shall have agreed to commit a

specified percentage of the funds deposited in the accounts for

loans made to companies under the small business capital access

program), and (3) if appropriate, documentation that the life

sciences company has received approval for a certified

project.

In acting upon a company's application, the Act directs

the MLSC to consider the likelihood that the company will meet

any other requirements the MLSC may impose and the likelihood

that the company will meet the new state revenue and employment

growth projections, as specified in the certification proposal.

The MLSC also may consider whether the life sciences company

has sufficient business contacts within Massachusetts, whether

the company has potential to offer breakthrough treatments and

technological advances, and other similar criteria.

Once certified, a life sciences company is entitled to a

variety of benefits and assistance from the MLSC. The benefits

include: (1) the tax incentive program established by the Act;

(2) grants, loans and other investments from the Massachusetts

Life Sciences Investment Fund; (3) investments from the Mello

Fund (described below); (4) assistance from regional technology

and innovation centers; (5) assistance from the center to

obtain designation as a certified project; (6) assistance from

the center in accessing...