A new federal tax credit that will cover up to 50 percent of the cost of ground-breaking biomedical research is good news for NewLink Genetics Corp., an Ames-based biopharmaceuticals company that’s working to develop cancer vaccines.

Last Friday, the Obama administration announced rules governing the $1 billion tax credit program, which will enable NewLink and other small biotechnology firms to apply for grants and tax credits of up to $5 million each. The funds will be awarded to companies that show promise in developing cost-saving therapies, generating or sustaining high-paying jobs and increasing U.S. competitiveness.

“We’re happy to see it,” said Gordon Link, NewLink’s chief financial officer. “We think we’re well suited to what it was designed to do. All of the hot buttons mentioned in the bill are of interest to us. We were very pleased to see it.”

The Patient Protection and Affordability Act signed into law by President Barack Obama on March 23 gave the government 60 days to establish the tax credits through the Therapeutic Discovery Project Program, available to companies with 250 or fewer employees for investments made in 2009 or 2010.

Companies without profits and tax liabilities can instead obtain grants. National Institutes of Health Director Francis Collins said the program will enable biotech firms to revive projects that were shelved for lack of capital, the Washington Post reported.

“We’ve got a couple of companies in Iowa that hopefully will use it,” said Doug Getter, executive director of the Iowa Biotechnology Association. “It’s anticipated to be a heavily subscribed federal program, so I imagine the commitments will disappear quickly.”

In addition to NewLink, Getter said that KemPharm Inc., an early-stage biopharmaceuticals company in Iowa City, is also an ideal candidate to qualify for the credits. KemPharm is developing new, safer therapies for the treatment of Attention Deficit/Hyperactivity Disorder, chronic pain, and cardiovascular disease. It’s possible a few other start-up biotechnology firms in the state may also apply, he said.

The application process will move forward quickly for the program, which will favor those projects that have the greatest potential to create and sustain high-paying research jobs in the United States, officials said.

Link said his company will be “pulling out all the stops” to meet the July 21 application deadline. The tax credits are expected to begin flowing by the end of October.

“We’ll certainly be applying for grant money, but it’s a competitive process, and I don’t think we’ll see any money in the fourth quarter, if at all,” he said. “Everyone was waiting for the (regulations). The (application) forms aren’t even out yet. We know more than we did before, but we still don’t have everything we need to apply.”

To view a fact sheet about the tax credit program, click here.