The Mass. Life Sciences Center reveals that half of the 28 companies that received tax incentives last year in exchange for promises of job creation failed to reach the staffing numbers stipulated by the deals.
The Mass. Life Sciences Center doled out $24.5 million worth of tax incentives to 28 life science companies in the Bay State, aiming to foster the creation of 918 new jobs, but half of the firms failed to create the jobs they promised.
The Commonwealth created the MLSC as a quasi-government agency to administer the $1 billion allocated by Gov. Deval Patrick’s 2006 life sciences bill.
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The agency may now look to claw back the financial awards it gave to eight companies because they haven’t met a 70 percent job-creation threshold stipulated by the MLSC’s Tax Incentive Program, according to a report from the agency.
Those companies are Facet Solutions Inc., Interlace Medical Inc., Morgan Advanced Ceramics, TEI Biosciences Inc., Alnylam Pharmaceuticals, Constellation Pharmaceuticals, Cubist Pharmaceuticals and Infinity Pharmaceuticals. Together the firms, which received $4.3 million in incentives, had promised to create 161 jobs.
Another company, InfraReDx Inc., fell one job short of the 21 it promised in order to get a $630,000 tax break, but will keep the funding because it surpassed the 70 percent minimum threshold.
Five of the companies that failed to meet staffing targets are voluntarily returning their incentive funds to the Commonwealth. NeuroMetrix Inc. (NSDQ:NURO), GTC Biotherapeutics Inc. and Genzyme Corp. (NSDQ:GENZ) all agreed in January to return $6.6 million in incentives after they realized they couldn’t meet their job creation numbers. Two more firms, Zoll Medical Corp. (NSDQ:ZOLL) and FoldRX Pharmaceuticals are forfeiting $510,000 and $267,500, respectively, an MLSC spokesman told MassDevice in an email.
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The “bottom line” is that “the 21 companies that ended up taking a total of $17 million in incentives in 2009 created 607 jobs,” which was 106 percent of their target, according to the spokesman.
The tax awards, which were granted by MLSC in Dec. 2009, also came with the stipulation that jobs added as a result of the incentives must last at least five years.
Interlace Medical, Lightlab Imaging Inc., Organogenesis Corp., Still Rivers Systems Inc., Merrimack Pharmaceuticals, Nova Biomedical Corp., Shire HGT Inc. and Sunovion Inc. (formerly Sepracor Inc.), all recipients of the 2009 awards, made enough of an increase to their staffing numbers to have met the program’s demands. Each of the companies, including InfraReDx, also won tax incentives in late 2010 as part of the MLSC’s $24 million round for 2011.
Massachusetts is not the only state that may be looking for clawbacks from companies that have benefited from job-creation incentives.
The Ohio Dept. of Development is moving to recover Buckeye State grants that went to companies that failed to create the jobs that made those grants possible in the first place.
ODOD Director Mark Kvamme signed 11 clawback notices last week in an effort to recoup $900,000 worth of state grants, The Columbus Dispatch reported.
“If [companies] promised the citizens of Ohio they were going to do this, and they didn’t, there’s got to be consequences,” Kvamme said.
The efforts could be largely symbolic, however, because many of the companies on the ODOD’s list have gone bust. The companies that ODOD is pursuing include Toledo paint shop Haden Prism ($250,000); Warren-based Leedsworld ($163,000); and Columbus-based DVD-kiosk developer e-Play ($182,000). All are no longer in business.
Material from MedCity News was used in this report.
The Massachusetts Medical Devices Journal is the online journal of the medical devices industry in the Commonwealth and New England, providing day-to-day coverage of the devices that save lives, the people behind them, and the burgeoning trends and developments within the industry.
