What Your Failed Experiments Could Be Worth: SR&ED in Biotechnology
Biotechnology, Canadian SR&ED Case Study
Introduction
Biotech teams expect experiments to fail. It’s part of the work. What many don’t realize is that the cost of working through those failures may qualify for SR&ED and come back to them as a tax credit.
Some of the strongest biotech claims don’t come from discovery at all. They come from getting a product, a process or a test you undertook when nobody knew how.
Three Biotech Scenarios That May Qualify
1. A probiotic that didn’t survive the shelf. A company developed a probiotic powder that met its live cell count at production, then lost most of its viability within three months. Changing the protective ingredients helped in the freeze-dryer but caused clumping in storage. The team tested different protectants, drying cycles and moisture limits to find a combination that kept the cells alive through the full shelf life.
2. A culture process that wouldn’t scale. A team had a microbial strain that produced an enzyme well in shake flasks. In a 50-litre bioreactor, yield dropped by more than half. Increasing agitation improved oxygen supply but damaged the cells, and changing the feeding strategy caused the enzyme to break down before harvest. Fourteen bioreactor runs later, they had a process that gave consistent yield and a stable product.
3. A rapid test that gave false positives. A diagnostics company built a rapid assay to detect a pathogen in food samples. It worked in clean lab samples, but ingredients in real food interfered with the signal and produced false positives. The team tested sample preparation steps, antibody pairs and reaction conditions until the assay gave reliable results across different sample types.
The difference comes down to one question: did your team know the answer at the start of project? In the above scenarios, they didn’t, and they had to experiment to find it.
What Usually Doesn’t Qualify
- Running established, validated assays or routine QC and release testing
- Transferring a known process to a new site or contract manufacturer
- Scale-up once the process is known and working
- Regulatory submissions and quality documentation
- Buying and installing standard lab equipment
- Market research, sales and commercial production
In these examples, the answer was already known or could be worked out using standard practice or conventional methods.
Conclusion
Don’t overlook potential SR&ED in Biotech projects. If you are overcoming technological challenges during research and development, it is worth an evaluation for SR&ED eligibility. Failed runs count. They show the problem was real and the answer wasn’t obvious. Keep your lab notebooks, batch records, run data and assay results, including the ones that didn’t work.
Did a product lose stability, a process refuses to scale, or a test fail in real samples in your last fiscal year? That is where SR&ED begins.
If this sounds like your experience, it’s worth a conversation before your Filing Deadline.
Not sure where to start? We can help you identify and track eligible activities, optimize your SR&ED claim, and explore additional funding for costs not covered by SR&ED tax credits.
Our team brings decades of combined experience in successfully preparing and filing SR&ED claims for clients year after year.
For assistance in preparing your submission and to position your application for approval contact EVAMAX Group to help you with the process. You may also email us at info@evamax.com or call 1-877-711-7733.