Montgomery County officials gave a Gaithersburg company a $1.5 million taxpayer-funded grant based on support for the startup by a venture capitalist who leads it.
County Executive Ike Leggett also asked the County Council to support state funding for Zyngenia, writing in a letter that the venture capitalist, David Mott, “supports the funding of this company.”
Mott was named chairman of Zyngenia in November when the Maryland venture capital firm where he is a partner, New Enterprise Associates, announced that it was investing $10 million in the company. Zyngenia, which was founded in 2008, seeks to develop new anti-cancer and autoimmune drugs.
The County Council recently approved Leggett’s proposed resolution that paves the way for a $1 million loan from the state’s economic development fund to the company.
Mott is the chairman of Montgomery County’s Biosciences Task Force, which Leggett established in 2008. He also is the former chief executive officer of Gaithersburg biotech company MedImmune, which produces FluMist and was sold to pharmaceutical giant AstraZeneca in 2007 for $15 billion. He did not return a call seeking comment.
The county approved the $1.5 million grant for Zyngenia in December. The task force also released its recommendations that month, emphasizing that the county partner with venture capital firms to invest in local biotechnology startups.
Common Cause Maryland Executive Director Ryan O’Donnell said Mott’s roles as both an adviser and benefactor might “raise some eyebrows,” but county officials said they saw no problem.
“I don’t think this is an ethics issue at all,” said county Economic Development Director Steve Silverman. “We would love to have more opportunities like that, whether it’s [New Enterprise Associates] or someone else.”
Silverman said the public funds helped persuade Zyngenia’s founders to locate in Gaithersburg instead of California.
The scientific founder of Zyngenia is from the San Diego area, but the three other members of the company’s management team, including the CEO, worked in Montgomery County and have ties to MedImmune.
Silverman said the county saw Zyngenia as a good investment precisely because of NEA’s financial backing and said the venture capital firm’s total commitment to Zyngenia is $50 million.
“They’re not putting $50 million into something they think is questionable science,” he said.
County officials said they don’t expect Zyngenia to create many jobs at first, but hope for large-scale job creation if the company becomes successful.
