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To constrain the use of intangible assets in tax-motivated state income shifting and thus crack down on corporate tax avoidance, many U.S. state governments adopted addback statutes. Addback statutes reduce the state tax benefits that firms can gain from creating intangible assets such as patents. Using a large sample of U.S. public firms, we examine the effect of addback statutes on corporate innovation behavior. First, the adoption of addback statutes leads to a 4.77 percentage point decrease in the number of patents and a 5.12 percentage point decrease in the number of patent citations. Second, the “disappearing patents” resulting from addback statutes have significant economic value. Third, after a state adopts an addback statute, a firm with material subsidiaries in that state assigns fewer patents to subsidiaries in zero-tax states, whereas the number of patents that the firm assigns to the other states does not change. Overall, our findings suggest that addback statutes impede corporate innovation.

To constrain the use of intangible assets in tax-motivated state income shifting and thus crack down on corporate tax avoidance, many U.S. state governments adopted addback statutes. Addback statutes reduce the state tax benefits that firms can gain from creating intangible assets such as patents. Using a large sample of U.S. public firms, we examine the effect of addback statutes on corporate innovation behavior. First, the adoption of addback statutes leads to a 4.77 percentage point decrease in the number of patents and a 5.12 percentage point decrease in the number of patent citations. Second, the “disappearing patents” resulting from addback statutes have significant economic value. Third, after a state adopts an addback statute, a firm with material subsidiaries in that state assigns fewer patents to subsidiaries in zero-tax states, whereas the number of patents that the firm assigns to the other states does not change. Overall, our findings suggest that addback statutes impede corporate innovation.

Immunoglobulin-like transcript 4 (ILT4) is an immunosuppressive molecule predominantly expressed on myeloid cells. Recent studies combining ILT4 suppression with programmed cell death 1 (PD-1)/programmed cell death ligand 1 (PD-L1) blockade have shown promising signs of activity in immune checkpoint inhibitor refractory patients. We theorized that coupling ILT4 and PD-1/PD-L1 blockade in a bispecific antibody (bsAb) may provide greater immune activating properties than combining the individual mAbs due to enhanced bridging of APCs to T cells. To test this approach, we developed CDX-585, a tetravalent ILT4xPD-1 IgG1-scFv bsAb from novel PD-1 and ILT-4 mAbs. CDX-585 is a potent antagonist of both PD-1 and ILT4. CDX-585 promotes M1 macrophage polarization and enhances pro-inflammatory cytokine secretion in response to lipopolysaccharide or CD40 agonist mAb treatment. In mixed lymphocyte reaction (MLR) assays, CDX-585 is more potent than the combination of parental antibodies. In a humanized NCG mouse SK-MEL-5 tumor model, CDX-585 exhibits greater antitumor activity than the combination of parental mAbs. A pilot study of CDX-585 in cynomolgus macaques confirmed a mAb-like pharmacokinetic profile without noted toxicities. These studies demonstrate that CDX-585 effectively combines ILT4 and the PD-1 blockade into one molecule that is more potent than the combination of the parental antibodies, providing the rationale to advance this bsAb into clinical studies. [ABSTRACT FROM AUTHOR]