Thanks to your generous Uncle Sam, the runway before cash runs out is being extended for some development-stage drugmakers. Tucked inside the hundreds of pages of the health-care reform bill, is a nice little bonus for a select group of drugmakers.
For many years, the government has offered a research and development tax credit that helps drugmakers offset some of the cost of drug development. That's free money for large companies like Pfizer
However, the money set aside by the health-care reform bill is more like a grant because it can be claimed even if the company doesn't owe taxes. If you get a $500,000 "tax refund," does it come as one of those oversized checks with a photographer to take the CEO's picture?
As with everything in Washington, there are a couple of catches. First, the grants are only available to companies with 250 or fewer employees. According to their most recently reported headcounts, that would eliminate companies like Exelixis
Also, there's a limited amount of money available for the two years the grants are being offered; $1 billion to be exact. Like the tax credit that helped buyers of Honda's
Exelixis is a Motley Fool Rule Breakers pick. The newsletter is always on the hunt for hot drug stocks and other cutting-edge picks. Click here to see all of our latest discoveries with a free 30-day trial subscription.
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a recommendation of the Inside Value newsletter. The Motley Fool owns shares of Exelixis and has a disclosure policy.