ATO blocks biotech access to Jobkeeper wage subsidy
Health & Biotech
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Pre-revenue biotech and medtech companies are still not eligible for the Jobkeeper wage subsidy according to the ATO, a double whammy for a swathe of research-driven ASX businesses with large staff costs.
The Jobkeeper program allows businesses that have seen a 30 per cent or more drop in revenue year-on-year, due to COVID-19 disruptions, to apply for a $1500 flat wage subsidy for their employees for up to six months.
About half of the ASX’s 100-odd small cap biotech and medtech companies are pre-revenue.
Industry lobby group AusBiotech asked the ATO to include biotechs in the Jobkeeper scheme on the grounds that they have a unique business model that does not generate revenue for years before a drug is sold and for their contributions to society and the economy.
This week the ATO denied the application, saying the legalisation did not allow the tax commissioner to make class rulings on Jobkeeper payments.
“The ATO response is hugely disappointing, with pre-revenue biotech and medtech companies hurting badly,” AusBiotech CEO Lorraine Chiroiu said.
“With venture capital and cash-flow that life sciences companies rely on drying up during the COVID-19 crisis, access to government support is critical in retaining Australia’s world class life science talent while managing the crisis.”
Ausbiotech had not considered the issue in late March when asked by Stockhead. It launched the ATO application in mid-April.
AusBiotech says 86 per cent of the Australian biotechnology sector falls into the startup or SME category and it employs around 65,000 people.
The risk is more to the unlisted space where capital for pre-revenue companies has dried up, according to PKS Holdings (ASX:PKS) chief Ron van der Pluijm.
However, most ASX small cap biotechs did not raise money during the April rush.
Stem cell hopeful Cynata (ASX:CYP), cancer researchers Kazia Therapeutics (ASX:KZA), Race Oncology (ASX:RAC), Paradigm Biopharmaceuticals (ASX:PAR) and Immutep (ASX:IMM) were the only small cap biotechs to raise funds from the market in the last two months.