Phylogica looks to recoup $1.9m from R&D Tax Incentive

The first wave of companies is beginning to take advantage of the government’s recently installed R&D Tax Incentive, with Phylogica (ASX:PYC) lodging an application to recoup $1.9 million in research and development costs.

Innovation Australia has approved the registration of Phylogica's application for the tax rebate on R&D drug discovery activities based on its portfolio of phylomer peptides.

Phylogica CEO Dr Paul Watt said this confirmation from Innovation Australia “is a key step towards receiving our estimated rebate, which will provide a valuable influx of cash as we strive to achieve our development and commercial goals for this year.”

Watt praised the government’s program. “The new R&D Tax Incentive legislation offers a tangible near-term benefit to Phylogica,” he said.

The R&D tax incentive program took effect this financial year. It allows eligible companies to apply for a 45% non-refundable tax offset on R&D expenses if their annual turnover is under $20 million, or a 40% offset if their turnover is higher.

Phylogica claimed $4.2 million in eligible R&D expenditure during FY12. Under the program, this makes Phylogica eligible to apply for a tax rebate of $1.9 million.

The R&D activities conducted during the year included scaling up its phylomer drug discovery capabilities to support its collaborations with Pfizer and future potential partners, as well as progressing its in-house development programs, Phylogica said.

The company concentrated on identifying or developing cell-penetrating phylomer peptides to carry therapeutic cargoes across cell membranes, anti-cancer phylomers targeting the Sonic Hedgehog cancer pathway, and anti-inflammatory phylomers for autoimmune disorders.

Industry Minister Greg Combet was last month forced to reaffirm the government's support for the R&D tax program, amid concerns that its scale may be limited.

The Business Tax Working Group had proposed several methods to cut back the program, including limiting eligible R&D expenditure at $100 million and reducing the size of the rebate to 37.5% of expenditure for companies with an annual turnover above $20 million.

Phylogica yesterday revealed it had secured a licensing agreement covering the use of one of its phylomer peptides in anti-aging creams developed by Le Métier de Beauté.

Phylogica (ASX:PYC) shares grew 16% on Wednesday to $0.029, but had dipped to $0.028 as of 2:30pm on Thursday.