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Propel Small Business Innovation through Tax Reform

August 12, 2013
As CEO of an emerging clinical-stage biotech company, I lose over $10 million each year. Over the lifetime of my company, I have lost over $100 million. But constantly losing money in an effort to advance discoveries should not overshadow the real lifeblood of biotechnology, which is the reward of seeing patients treated, lives saved, and families healed.

Some of the biggest challenges companies like mine face include high research and production costs, coupled with the difficulty of raising capital, particularly for products in the early stages of development.

Tax proposals aimed at helping American small businesses gain access to private investment to incentivize pre-revenue innovation will positively impact the economy, create jobs and stimulate investment.

Innovative R&D requires substantial start-up costs and a lengthy experimentation period. For small businesses working to sustain the R&D needed to make key breakthroughs, the ability to secure capital is the only way to keep progress moving. The development process for a single breakthrough medicine can cost more than $1 billion and take 10 years or more.

There just isn't enough capital right now to fund all of the tremendous ideas out there. CEO’s like me spend so much of their time trying to find the next investment dollars to be able to keep things moving along. Tax reform should encourage investment to keep the most important discoveries moving forward and to hopefully bring those cures to the American public in the future.

If tax reform focuses on stimulating new investment in pre-revenue companies that will give companies like mine the ability to expand the product pipeline and will also promote highly innovative jobs.

Federal tax policy that recognizes the special demands placed on pre-revenue companies and highly innovative industries will speed the development of products to vastly improve the lives of Americans and people around the world.

Also, a lower corporate tax rate will benefit the life sciences ecosystem, as large commercial-stage companies will have more capital available to conduct research or to license innovations from early-stage companies like mine. All of these proposals are not industry specific, nor are the mutually exclusive. But they all would apply to all research-dominated innovation.

Through the tax code, Congress and the Administration should enact policies that promote small business innovation to build a better future for America, attract the brightest minds from around the world, stimulate the economy and create jobs.

Jeff Hatfield is Chief Executive Officer of Vitae Pharmaceuticals.

Vitae Pharmaceuticals is a clinical-stage biopharmaceutical company discovering and developing a portfolio of novel, small molecule, best-in-class compounds that address important disease areas, including chronic kidney disease, diabetes, Alzheimer’s disease, and inflammation / immunology. Vitae excels at structure-based drug discovery and combines a proprietary technical platform with the insight of world class scientists to advance best-in-class compounds for high value, hard-to-drug targets. The accuracy and speed of Vitae’s drug discovery platform has enabled the company to discover and advance attractive compounds in multiple therapeutics areas in a rapid and highly capital efficient manner.