32 Early-Stage Companies to Share $58M from Net Operating Loss Program

Award for companies approved to sell their losses through the program in 2021 average $1.82 million

On Mar 9, 2022

The New Jersey Economic Development Authority (NJEDA) announced that 32 early-stage companies have been approved to share a combined $58.1 million in funding through New Jersey’s 2021 Net Operating Loss (NOL) 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 and development (R&D) 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 Gov. Phil Murphy signed the New Jersey Economic Recovery Act of 2020 (ERA). Part of the Act 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). It 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,” said NJEDA Chief Executive Officer (CEO) Tim Sullivan. “In line with Governor 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. Profitable companies interested in becoming buyers for the program can visit http://www.njeda.com/nol for details. The names of the buyers who chose to be publicly listed can also be found on that website.

Caladrius Biosciences, Inc., a clinical-stage biopharmaceutical company targeting select cardiovascular indications, is one of the companies that benefited from the program in 2021. The company’s proprietary platform technology leverages the body’s natural repair mechanisms using formulations unique to each medical indication.

“Thanks to the NOL Program’s increased lifetime cap this year, we were able to secure more funding than we would have under the program’s previous parameters,” said Caladrius President and CEO David J. Mazzo, Ph.D. “This non-dilutive capital will be instrumental to the advancement of our efforts to develop first-in-class therapies. We are grateful for the NJEDA’s continued support of the New Jersey biotech community through resources such as the NOL program.”

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