Puerto Rico on Gene & Cell Therapy: An Unparalleled Proposal for Non-Dilutive Funding

Puerto Rico: A Hub of Opportunity for Non-Dilutive Funding

Puerto Rico is a prime location for research and technology industries, with a strong presence of top pharmaceutical companies, such as Amgen, AbbVie, and Bristol Myers Squibb. It leads the U.S. in exporting bioscience products, accounting for nearly 20% of total U.S. exports in pharmaceutical and medicine manufacturing in 2020. Due to numerous tax credits, incentives, talent, and secure financing options, Puerto Rico is becoming a hub for emerging technology and biotech companies wanting to maximize funding while safeguarding equity.

Non-dilutive funding is a significant advantage for businesses. It secures capital as it brings in additional cash without selling ownership shares or equity. William Rosellini, president of CytoImmune Therapeutics, Inc., has successfully utilized non-dilutive funding for his company in Puerto Rico since 2016. This approach optimizes cash flow for rapid growth by leveraging grants, prizes, licensing, and tax credits, eliminating the need to dilute ownership through share sales. By combining tax credits and grants at the right stage of funding, significant capital can be accumulated.

Puerto Rico offers a best-in-class approach to promoting economic development through tax credits and grants. The government has enacted laws and funding programs that reduce taxes, subsidize operations, and encourage investment. Businesses in Puerto Rico benefit from the legal protections of the U.S. government while operating within an autonomous tax jurisdiction. Establishing a company or subsidiary in Puerto Rico provides opportunities for U.S. federal funding and eligibility for Puerto Rico tax incentives, creating an optimal mechanism for leveraging growth.

Annually, the U.S. allocates approximately $50 billion for grants that come from various sources such as HHS, NIH, BARDA, FDA, DARPA, the U.S. Army, and private foundations like Gates, MJ Fox, and other international grants. The NIH alone had a budget of $34 billion in 2017, with 3% designated for small business innovation. Additionally, around 50% of FDA-approved drugs have received federal funding.

Puerto Rico's taxation policies, particularly Act 60 (Tax Incentives Code), reduce costs and foster investment. Act 60, combined with U.S. grants, can lead to a reduction in total capital expenditure by 40-60%. The benefits offered include up to 50% reimbursement on R&D expenses, 30%+ cash grants for equipment and job creation, a 4% flat corporate tax rate (1.0% for novel industries), 0% dividend distribution tax for individuals, 75% property tax exemption, 75% construction tax exemption, 50% municipal license tax exemption, 100% capital gains tax exemption, 4% fixed income tax rate on eligible income, and a 12% withholding tax rate on royalty payments (creditable against the 4%). Companies can secure cash grants and generate monetizable tax credits, allowing them to reinvest non-dilutive capital into their businesses.

Puerto Rico also offers employment benefits for businesses that require professionals whose recruitment may be challenging. Potential employees will be exempt from income tax, including the alternate basic tax, for wages and benefits above $100,000. Puerto Rico has the highest concentration of pharmaceutical and medical device manufacturing professionals in the U.S. Moreover, the island has a strong university system, with 50% of graduates holding STEM or healthcare degrees and a talent pool of 20.5K STEM graduates annually. These advantages make Puerto Rico an appealing location for businesses seeking specialized professionals.

Puerto Rico boasts well-developed infrastructure and logistics that adhere to U.S. standards. Operational security, stability, and regulatory support are comparable to the U.S. market. Additionally, there are nearly 200 FDA agents in Puerto Rico to ensure quality and regulatory compliance. Strong legal protections safeguard intellectual property and patents, while the island follows U.S. banking regulations, including the protection of the Federal Deposit Insurance Corporation (FDIC). With its strategic location, Puerto Rico is a global logistics leader, boasting a high-volume port system. It has obtained a waiver for an international cargo and passenger transfer hub, opening new commercial routes. Moreover, all products manufactured in Puerto Rico bear the prestigious "Made in the U.S." label, guaranteeing quality and credibility. The combination of world-class talent, robust infrastructure, and advantageous logistics makes Puerto Rico an attractive destination for businesses.

Puerto Rico offers an unparalleled proposal for non-dilutive funding, making it an exceptional choice for businesses in the research and technology industries. With its thriving pharmaceutical sector, leading position in exporting bioscience products, and attractive tax credits and incentives, Puerto Rico provides a supportive environment for emerging technology and biotech companies. The island's robust ecosystem, with numerous accelerators and incubators, along with the backing of the Puerto Rico Science, Technology & Research Trust, fosters entrepreneurship and innovation. Furthermore, Puerto Rico's world-class talent, infrastructure, and logistics add to its appeal as a businesses destination. Puerto Rico is not only a tropical paradise but also a hub of opportunity and growth.

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