Md. Code Regs. 24.05.03.14

Current through Register Vol. 51, No. 24, December 2, 2024

Section 24.05.03.14 - Criteria for Certification of Qualified Maryland Biotechnology Companies

A. The Department shall assess the merits of a company's application for certification as a qualified Maryland Biotechnology company according to:

(1) The criteria set forth in this chapter;

(2) The definition of biotechnology stated in §C of this regulation; and

(3) Other metrics and measures that the Secretary may adopt for uniform application under this chapter.

B. The Department shall apply a facts and circumstances analysis on a case by case basis to determine whether a company meets the criteria of this chapter.

C. Biotechnology.

(1) Definition.

(a) "Biotechnology" means innovative and proprietary technology that comprises, interacts with, or analyzes biological material including biomolecules (DNA, RNA, or protein), cells, tissues, or organs and includes the application of scientific and technical advances to develop commercial products.

(b) "Biotechnology" includes the following:

(i) DNA/RNA: Genomics, pharmacogenomics, gene probes, genetic engineering, DNA/RNA sequencing/synthesis/amplification, gene expression profiling, and use of antisense technology;

(ii) Proteins and other biomolecules including sugars, lipids, vitamins and metabolics; sequencing, synthesis, or engineering of molecules; improved delivery methods for drugs; isolation; purification, and identification of cell receptors;

(iii) Cell and tissue culture and engineering: Cell/tissue culture, tissue engineering (including tissue scaffolds and biomedical engineering), cellular fusion, vaccine/immune stimulants, embryo manipulation;

(iv) Process biotechnology techniques: fermentation using bioreactors, bioprocessing, bioleaching, biopulping, biobleaching, biodesulphurisation, bioremediation, biofiltration, and phytoremediation;

(v) Gene and RNA vectors: gene therapy, viral vectors;

(vi) Bioinformatics: construction of databases on genomes, protein sequences; modeling complex biological processes, including systems biology and mechanism of actions of drugs; and

(vii) Nanobiotechnology: Applies the tools and processes of nano/microfabrication to build devices for studying biosystems and applications in drug delivery, diagnostics, and other applications.

(2) Single Definition.

(a) Section C(1)(a) of this regulation is referred to in this chapter as "the single definition". The single definition is deliberately broad, general, and provisional. The single definition applies to the word "biotechnology" as used in the term "biotechnology company" stated in Tax-General Article, §10-725(a)(2), Annotated Code of Maryland.

(b) The single definition connotes the manipulation of living organisms or their components to produce useful commercial products and the innovative and proprietary technologies of biological science used in this manipulation.

(3) List"Based Definition. The list-based definition is based on the list of biotechnology techniques in §C(1)(b) of this regulation and will function for the Department as an interpretative guideline to the single definition. The list is indicative rather than exhaustive and is expected to change over time as biotechnology techniques evolve.

(4) The single definition covers all modern biotechnology but also many traditional or borderline activities. In application by the Department under this chapter, the single definition will always be accompanied by the list-based definition stated in §C(1)(b) of this regulation when the Department applies the single definition to particular facts and circumstances for the purposes of this chapter. The single definition and the list definition will be applied in conjunction under this chapter to take account of and to consider biotechnology techniques that fit the single definition but may not fit the list"based definition, with a view to constantly updating the list-based definition.

D. Criteria for a Biotechnology Company.

(1) A biotechnology company is a company primarily dedicated to turning the biological sciences into a commercial product and to commercialize the results. The Department shall apply the single definition and the list definition to determine whether a company's activities or products constitute biotechnology for the purposes of the Act and this chapter.

(2) The scientific biotechnological basis of the company's activities and plans is defining, but not conclusive.

(3) The company shall demonstrate that the investment it will attract by reason of the tax credit available under the Act and this chapter will be likely to:

(a) Materially advance and support the business viability of the company; and

(b) Result in the production of a biotechnology product that will contribute to economic development and employment growth in the State.

(4) Stage of Development. The company shall:

(a) Have begun active activities and operations and fairly be characterized as actively engaged in a biotechnology business;

(b) Be fully legally organized under the laws of the jurisdiction in which it was organized;

(c) Have competent management;

(d) Own or have immediately available and useable rights in biotechnology-related intellectual property; and

(e) Be actively engaged in research, development, or production of a commercially oriented, innovative, and patent protectable biotechnology product.

(5) Eligibility: "Active Business".

(a) Except as provided in §C(5)(b) of this regulation, a company is eligible for certification as a qualified Maryland biotechnology company if it has been in active business not longer than 10 years.

(b) A company that has been in active business for up to 12 years may be eligible for certification as a QMBC if the Department determines that the company requires additional time to complete the process of regulatory approval of a biotechnology product.

(c) "Active business" means that the Department can reasonably determine and establish the nature of the Company's commercial biotechnology research, development or production operations. The mere legal organization, appointment or election of officers or managers, initial capitalization, and establishment of business offices of a company, alone or in combination, are not sufficient to establish that the company is engaged in active business for the purposes of this chapter and the Act.

(d) The Department shall apply a facts and circumstances analysis on a case by case basis to determine whether a company has been engaged in active business and for what period of time.

(6) Commercialization of an Identifiable Biotechnology Product.

(a) The company shall have a developed, focused plan for:

(i) Research and development of an identifiable biotechnology product; and

(ii) The company's growth.

(b) A biotechnology product will generally be:

(i) Used for human health, as in a therapeutic or diagnostic setting (for example, to treat, detect, or prevent diseases or to improve treatment outcomes);

(ii) Used on domesticated or farm animals, as in a therapeutic or diagnostic setting (for example, to improve animal health); or plants (for example to increase agricultural production); or

(iii) An application originally derived from use of a living organism, as in production of alternative energy (e.g., biofuels) or engineering or chemistry derived from nature to improve properties of products (for example, re-engineering of attachment molecules used by mollusks for the next SuperGlue-®).

(c) In general, companies will not be certified that provide a service (e.g., analytical services or consulting services, etc.) or develop software, or develop or manufacture products or technology that do not involve use or application of biotechnology.

(d) A device may constitute eligible biotechnology if:

(i) It delivers a direct therapeutic effect through biological interaction; or

(ii) It performs a diagnosis through analyzing biological material.

(7) Innovative Biotechnology Projects and Products. The company shall provide evidence with its application that its existing or proposed biotechnology product is innovative and has the potential for commercial sale. The company must generally own the intellectual property or have exclusive rights to the use of the intellectual property.

(8) Maryland Location.

(a) The company shall demonstrate that its headquarters and the base of its biotechnology operations are entirely located in the State.

(b) The company shall provide with its application evidence that it will maintain its headquarters, the base of its biotechnology operations, and the sites, buildings, and facilities in which its headquarters and biotechnology operations are or will be conducted, in the State for a period of not less than 48 months after the date on which its application for certification as a qualified Maryland biotechnology company is submitted to the Department.

Md. Code Regs. 24.05.03.14

Regulations .14 adopted effective September 17, 2012 (39:18 Md. R. 1197)