"It was unbelievable, it was like a rock concert," he said
Staffers from Rockville's Correlogic Systems Inc., which makes diagnostics tests, started it all. They set up sometime around 4 p.m., soon followed by representatives from College Park's Zymetis Inc., which works with enzymes. By most accounts, Zymetis was the best prepared. They hired an off-duty police officer to act as all-night security and used a nearby hotel room as a home base.
Scott Allocco, president of Baltimore's BioMarker Strategies LLC, cased the DBED parking lot all day, just in case something went down. He drove by a few times during daylight and again at 9:30 p.m., and that's when he saw his competition. He quickly parked the car, and in his shorts and flip-flops took up residence in position No. 3.
"I just leapt in line," Allocco said. He then called on a colleague to relieve him for a few hours so he could go home and get the qualifying applications. Allocco had 20 investors looking to put more than $1 million in his company, and all of them wanted the credit.
It works like this: Investors can put as much as $500,000 into a Maryland biotech company and get half back in tax credits. In previous years, only qualifying venture capital funds were allowed to invest that much; the cap was much lower for individual investors.
The rules also changed this year to allow out-of-state investors to participate, and a new limit of 15 percent - or $900,000 - was put on how much of the $6 million any company could get. That meant you had to act fast or risk losing out, Allocco said.
He called some of his friends to warn them, including Marty Zug, chief financial officer of Rockville's Sequella Inc. The last time Zug stood in line overnight for something, he was 17 and angling for Beastie Boys tickets. That was 21 years ago. But he was there yesterday at 4 a.m. standing next to Allocco in a spot one of his scientists held for five hours until he could get there from his home in McLean, Va.
"[The credit] easily moves the needle for a lot of investors because it mitigates part of the risk," said Zug, who raised a little more than $2 million during the past two years through the tax credit program. Yesterday, he stood in line for three investors, each of which were offering a half-million dollars. In other years, the dollar figures were smaller.
William B. Mead, a retired writer from Bethesda, invested $25,000 in Sequella two years ago because of the available credit.
"I'm not a risky investor. I'm 74 years old, a retired guy and prosperous, but not real rich," Mead said. "It was the tax credit that made the decision; that pushed us over the top."
tricia.bishop@baltsun.com
Biotech Tax Credit
What: A $6 million pool of tax credits available to those who invest in qualifying biotechnology companies. A minimum of $12,500 and a maximum of $250,000 are available.
Who: Qualified investors are those who invest at least $25,000 in a qualified Maryland biotech. Qualified biotechs have their headquarters in the state, have fewer than 50 employees and have been in business for less than 10 years generally.
When: Applications are accepted in July each year and take roughly 30 days to review.
Next: : The competition should ramp up in coming years if Gov. Martin O'Malley's plan to double, and eventually quadruple, the available credits is approved.
