NJEDA Program Offers Non-Dilutive Funding for Working Capital or Research
TRENTON, N.J. (October 11, 2022) – Twenty-four technology and biotechnology companies that are in the building and investing stages of their business have been approved to participate in the state’s Technology Business Tax Certificate Transfer Program, more commonly known as the Net Operating Loss (NOL) Program, the New Jersey Economic Development Authority (NJEDA) announced today. Combined, these companies were approved to receive a total of approximately $75 million through the program to fund working capital or research and development (R&D), the maximum amount available through the program.
Now in its 23rd year, the NOL Program enables participants to sell their New Jersey net operating losses and unused R&D tax credits to unrelated profitable corporations for cash. The NJEDA and the New Jersey Department of Treasury’s Division of Taxation jointly administer the NOL Program, which has routinely been hailed as a “lifeline” by entrepreneurs seeking capital for their companies.
The average award for companies approved to sell their net operating losses through the program in 2022 was over $3.1 million. Thirty-six percent of program applicants are private businesses, while the remaining 64 percent are publicly traded companies. Two applicants are located in an Opportunity Zone, and three are located in an Innovation Zone. Three of the 24 approved companies are participating in the NOL Program for the first time this year. To date, more than $1.17 billion in funding has been distributed to over 570 technology and life sciences companies since the program’s inception in the late 1990s. The complete list of approved participants can be found following this news release.
“One of the many advantages of the NOL Program is that it enables growing companies to obtain cash without sacrificing equity,” said NJEDA Chief Executive Officer Tim Sullivan “Bolstering the amount of extra capital that these businesses can use to create jobs, buy new equipment, or further R&D is a key way that we are working to fulfill Governor Phil Murphy’s goal of cementing New Jersey’s role as a national leader in innovation.”
In January 2021, Governor Murphy signed the New Jersey Economic Recovery Act of 2020 (ERA) which, in part, increased the program’s annual cap from $60 million to $75 million. It also increased the lifetime cap for an individual applicant from $15 million to $20 million. This marks the second year that technology and life sciences companies have been able to benefit from the expanded NOL Program.
“Legislation created under the ERA has been extremely beneficial to New Jersey’s innovation community and to NOL Program participants in particular,” said NJEDA Chief Economic Transformation Officer Kathleen Coviello. “Companies that had previously maxed out of the program are able to participate once again due to the increased cap the Act provides to individual businesses. That extra capital has been instrumental in helping young companies commercialize their products and bring them to market.”
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 be applied to potentially reduce the buyer’s state tax obligation. The names of the buyers who chose to be publicly listed are on the NOL Program’s website.
Citius Pharmaceuticals is participating in the NOL Program for the first time this year. The Cranford-based biopharmaceutical company is focused on developing and commercializing critical care products with its diversified pipeline consisting of two late-stage assets. In May, Citius Pharmaceuticals announced it would expand the ongoing Phase 3 trial of its proprietary Mino-Lok therapy internationally. Mino-Lok is used to treat patients with catheter-related bloodstream infections. The Phase 3 trial of its oncology asset was completed at the end of 2021. Citius Pharmaceuticals expects to submit a biologics license application for this asset for the treatment of cutaneous T-cell lymphoma (CTCL) by the end of this year.
“Participating in a program that will connect us with cash in a non-dilutive manner will have a positive impact on our company,” said Citius Pharmaceuticals Co-Founder, CEO and Chairman Leonard Mazur. “As a serial entrepreneur, I know that the most successful businesses use every available resource to grow and scale. We are grateful to the NJEDA, and the State of New Jersey as a whole, for their commitment to emerging companies like ours.”
CytoSorbents Corporation (Nasdaq: CTSO), a Princeton medical device company focused on treating life-threatening conditions in the intensive care unit (ICU) and cardiac surgery with blood purification, has repeatedly benefited from the NOL Program. The company’s flagship product, CytoSorb®, is approved in the European Union and distributed in 75 countries around the world to treat deadly inflammation common to many lethal conditions in the ICU, such as sepsis and infection, COVID-19, trauma, liver failure, and complications of open-heart surgery, by removing inflammatory toxins from the bloodstream. Just recently, CytoSorbents announced final ISO 13485 certification of its new state-of-the-art manufacturing facility at its headquarters in Princeton that has the capacity to support up to $400 million in sales.
“It’s an exciting time for CytoSorbents as we work to positively impact critical care for patients worldwide,” said CytoSorbents Chief Financial Officer Kathleen Bloch. “The funding that we have received from the NOL Program over the years has been instrumental in our global expansion and was vital to our decision, as a vertically integrated manufacturer, to stay in New Jersey. We greatly appreciate the NJEDA’s ongoing support.”
IoTecha Corp. is a Cranbury-based clean technology company that has developed an integrated smart charging platform, including hardware, software, and cloud-based services, for the electric vehicle charging infrastructure. The company, which was recently listed on venture-capital firm Tracxn’s list of Top Electric Vehicle Startups, has benefited from the NOL Program twice in the past.
“New Jersey’s transformation to a green economy, combined with our ability to access state resources like the NOL Program, has been extremely beneficial to our company,” commented IoTecha Corp. CEO Oleg Logvinov. “We thank the NJEDA for its continued support and look forward to leveraging the funding announced today to further expand our activities in the state in the years ahead.”