32 early-stage companies share $58.1M in latest round of Net Operating Loss program

In an example of how the state is looking to make it easier for early-stage companies to survive and thrive in New Jersey, the New Jersey Economic Development Authority announced Thursday that 32 early-stage companies have been approved to share a combined $58.1 million in funding through the state’s 2021 Net Operating Loss program.

The NOL program, jointly administered by the NJEDA and the New Jersey Department of Treasury’s Division of Taxation, enables qualified companies to sell up to $20 million in benefits generated from their unused New Jersey net operating losses and research & development tax credits for cash to unaffiliated, profit-generating corporate taxpayers in the state of New Jersey.

The cash can then be used for working capital or to fund research.

To date, more than $1.126 billion in funding has been distributed to over 570 technology and biotechnology companies since the program’s inception in the late 1990s. The average benefit award for approved companies in the program 2021 was $1.82 million.

The NOL program got a boost in January 2021, when the Economic Recovery Act of 2020 increased the program’s annual cap from $60 million to $75 million. Of this $75 million, $10 million is reserved for the surrender of transferable tax benefits exclusively by eligible companies operating within the boundaries of the state’s three Innovation Zones (technology clusters fostering business-university collaboration located in Camden, Newark and the greater New Brunswick area).

Next round of awards

The application process for the 2022 Net Operating Loss program is scheduled to open in May. On this next round of awards, the $10 million reserved for the surrender of transferable tax benefits exclusively by eligible companies operating within the boundaries of the state’s three Innovation Zones will be expanded to $15 million and include qualified companies located in Opportunity Zone-eligible census tracts, as well as eligible companies certified as women- and minority-owned businesses in New Jersey.

The act also increased the lifetime cap for an individual company from $15 million to $20 million.

“The NOL program has a long and successful history of helping early-stage technology and life sciences companies by providing the resources they need to become profitable and prepare for long-term growth in New Jersey,” CEO Tim Sullivan said.

“In line with Gov. (Phil) Murphy’s commitment to making New Jersey the most diverse, inclusive innovation ecosystem in the nation, the NOL program will lead to additional job creation within New Jersey’s innovation ecosystem and to the advancement of life-saving and life-enhancing technologies.”

In addition to being vital to emerging companies, the NOL program also provides enormous benefits to the profitable companies that are buying the net operating losses and unused R&D tax credits.

A profitable company can purchase tax credits at a discount, based on the market price at the time. These tax credits have traditionally traded somewhere between 88 and 94 cents on the dollar. Once purchased, the tax credits can then be applied to potentially reduce the buyer’s state tax obligation.

A look at the 32 companies:

  • Acuitive Technologies (Annendale)
  • Agile Therapeutics (Princeton)
  • AIM ImmunoTech (New Brunswick)
  • Angel Medical Systems (Eatontown)
  • Bellerophon Therapeutics (Warren)
  • BioAegis Therapeutics (North Brunswick)
  • Brilliant Light Power (Cranbury)
  • Caladrius Biosciences (Basking Ridge)
  • Celldex Therapeutics (Hampton)
  • Celsion Corp. (Lawrenceville)
  • Cormedix (Berkeley Heights)
  • Cytosorbents Medical (Monmouth Junction)
  • ElectroCore (Basking Ridge)
  • Gadget Software (Newark)
  • Hope Portal Services (Holmdel)
  • IoTecha Corp. (Piscataway)
  • Malbec Solutions (Somerset)
  • Matinas BioPharma Holdings (Bedminster)
  • Nanotech Industrial Solutions (Avenel)
  • Ocean Power Technologies (Monroe Twp.)
  • OncoSec Medical (Pennington)
  • PDS Biotechnology Corp. (Florham Park)
  • Provention Bio (Red Bank)
  • Rafael Pharmaceuticals (Newark)
  • Scynexix (Jersey City)
  • Solidia Technologies (Piscataway)
  • Soligenix (Princeton)
  • Svelte Medical Systems (New Providence)
  • Teligent Pharma (Buena)
  • TLC Products (Blackwood)
  • United Silicon Carbide (Monmouth Junction)
  • VectraCor (Totowa)