Wednesday March 26, 2014 0 comments
By Steve Porter
FORT COLLINS - Colorado probably won't be considered a mecca for life science companies until the state can come up with bigger tax incentives, a panel of bioscience CEOs said Tuesday.
"If you want a pharmaceutical base, you can't just talk about it," said Mike Duncan, CEO of TOLMAR. "You've got to give a real incentive."
"The tax structure has to be changed," agreed Mike Handley, CEO of CHD Bioscience. "Life science is incredibly capital-intensive, and until you do that it's going to be very difficult."
Handley said he knows of many Colorado-based life sciences companies considering a move to a bigger, more populous state that could offer more substantial tax incentives.
"All the states are trying to attract life science companies," he said. "There's a lot of pressure to look at other states.
"It's basically bribing companies, and Colorado doesn't have the tax base to do that."
Duncan said his company looked at the possibility of relocating to a state with more generous tax incentives several years ago but decided it would not be feasible.
"Once you're established like us, it's very difficult to move," he said. "You're planted. We're entrenched here and we're not going anywhere."
But for some life science companies that do call Colorado home, business has been looking up recently.
"We grew by 68 percent last year, and we see a number of big projects and some strong demand on the horizon over the next year," said Chris Kay, CEO of Integware, a provider of product lifecycle management services to businesses, which recently raised $1.5 million in new funding.
CHD Bioscience, a client company of Colorado State University's Research Innovation Center on the Foothills Campus, is developing a line of anti-microbial products. Handley, who took on the CEO position with the company after moving to Colorado from San Francisco, said startups need early-stage funding and C-level people who can make the funding connections they need.
Handley noted that his company recently raised $8 million in new funding, which he said wasn't that difficult with the right product and connections.
"I think a lot of what I see out here is a lot of people (who) feel there is a lack of capital, but if you have an experienced C-level person on your team, raising it isn't that difficult," he said.
Handley said he's seen "a lot of pent-up (investment) opportunity due to the recession."
"I think there's a lot of capital sitting on the sidelines willing to look at interesting companies," he said. "There's still a lot of investment interest in health care."
Kay agreed. "We've largely bootstrapped ourselves with SBA loans, but if you have someone on your staff that can do that, that's essential," he said.
Duncan said the recent recession resulted in many big companies downsizing, with skilled workers thrown into the workforce. That's been a boon to companies like TOLMAR, which makes the second-biggest-selling prostate cancer drug in the world, he said.
"With that industry consolidation, it's helped us and we've been able to pick a lot of those people up," he said.
The three CEOs agreed that Colorado won't be known as a haven for life sciences companies - in spite of its quality of life, relatively low taxes and educated workforce - until a critical mass of life science startups is reached and some grow to anchor a significant life sciences industry.
"You need to have a critical mass of startups and some will stay, like TOLMAR," Handley said. "You're probably not going to be the next Silicon Valley, (and) it's going to take a lot of heavy lifting to reach that critical mass of startups."
The panel discussion, "NoCoBio: Advancements in Northern Colorado," was organized by NoCoBio and the Colorado BioScience Association.