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Last July 1, David S. Block went to work a bit earlier than usual — 4:45 a.m.

The CEO, president and founder of Baltimore biotech Gliknik was among the executives who stood in line outside the Maryland Department of Business and Economic Development's offices to turn in application packets from his company's investors who wanted a share of the state's biotech investment tax credits. When Block arrived, he was greeted by several counterparts sitting in lawn chairs, also waiting for the DBED offices to open. Among them were representatives from Correlogic Systems of Rockville and Zymetis of College Park, who had been there all night.

"I think I was fourth or fifth in line," Block said this week. "That's another barometer of how successful the program is."

Block and others may have to get up even earlier this July 1. While the General Assembly this week approved the tax credit program's full funding of $6 million for next year after some legislators sought to cut that money, more biotechs are expected to apply this year. Last July, the credits ran out on the first day, with $8.5 million worth requested.

"I expect [the funds] to go as quickly as last year," said Richard A. Zakour, executive director of MdBio, a division of the Tech Council of Maryland and a key advocate for the tax credit program.

The recession makes raising money from venture capital and other sources for biotechs difficult, to say the least, said Marty Zug, CFO of Rockville biopharmaceutical company Sequella, which develops products to improve the diagnosis and treatment of infectious diseases such as tuberculosis. His company, which plans to apply for the program again in July, gets funding from multiple sources, including grants from the National Institutes of Health.

"You have to have many financing plans and hope a few pan out," Zug said.

Added Block: "Venture capital money is scarce and incredibly expensive. The terms these days are very bad for those who obtain venture funding."

The first-come, first-served program, which started in 2006, allows investors in Maryland biotechs to take a 50 percent credit against state income taxes. The company must be privately held with headquarters in Maryland, have fewer than 50 employees and be in business less than 12 years.

The program caps the credits at $900,000 for each biotech, or 15 percent of the total program budget. Last year, 18 biotechs in Montgomery, Prince George's, Frederick, Baltimore and Howard counties, as well as Baltimore city, received investments under the program, according to a recent DBED report.

The program has attracted investment money to Maryland companies from across the world, Block said. "It's a terrific way to reduce taxes from an investor's perspective," he said.

Hoping for more funds

When the legislative session began in January, biotech executives hoped to see the program's funding doubled to $12 million. Gov. Martin O'Malley (D) last year pledged to double the money, but did not when he released his proposed fiscal 2010 budget, citing economic changes.

In February, the Tech Council of Maryland and its MdBio division organized a special lobbying day in Annapolis for executives to meet with legislators to encourage them to increase funding of the program in a proposed supplemental budget stemming from new federal stimulus money.

But biotech executives became alarmed when a House committee recommended trimming the program by $2 million, and the full House voted to do so last month. Aided by MdBio, the Tech Council and the Greater Baltimore Committee, biotech executives lobbied for full funding of the program.

Their efforts were rewarded after the Senate voted to retain full funding, and a conference committee chose the Senate's route.

"It was a bit of a scare," Zug said. "The Tech Council and Greater Baltimore Committee really stepped up to advocate for the biotech industry. There were employees of companies who lived in certain legislators' districts who contacted their own House and Senate representatives to tell them how important this program was."

While biotech executives definitely want to see the program expanded, it was an accomplishment to persuade enough lawmakers not to cut funding during the recession, Block said.

"Everyone I've talked to wants to expand it, but economically, it's not the time to do it," he said. "Everyone seems to agree it's the best program we have for sustaining and nurturing young biotech companies."

Gliknik, which is developing drugs for autoimmune diseases and cancer, has two cancer vaccines in clinical trials and is moving new molecules forward to treat cancer and autoimmune diseases, Block said.

The investments have helped biotechs leverage millions more in private investment, executives said.

With Maryland in the forefront of biotech research, it's important that the state not lose ground, said Donald C. Fry, president and CEO of the Greater Baltimore Committee. The Baltimore business organization made full funding a priority in its legislative agenda.

"It's a very competitive environment among states," Fry said. "Maryland is seen as the top two or three states in the country in this industry."

The legislature clarified certain parts of the program — such as in which year the credit can be claimed and which individuals are qualified investors — that will improve the program, Fry said.

Lawmakers killed other bills that would have authorized Montgomery and Baltimore counties to allow credits against county income taxes for investing in local biotechs.

If the application process is the same this year, there will be at least one change — the location where the executives will camp out. DBED has moved its headquarters from East Redwood Street to the World Trade Center building at Baltimore's Inner Harbor.

To learn more

Information: www.choosemaryland.org/businessservices/taxincentives/BiotechnologyInvestmentTaxCredit.html