BioWorld Perspectives Contributing Writer

Biotechnology, pharmaceutical and medical sectors of the economy have weathered the recession better than many other industries. Some large companies are beginning to show growth, and small companies and research centers of all sizes are reaping the benefits of government funding. This fall, President Barack Obama announced the release of $5 billion in stimulus funds for the National Institutes of Health. The funds are part of the $10.4 billion the NIH is slated to receive through the American Recovery and Reinvestment Act of 2009 (ARRA). (See BioWorld Today, Oct. 5, 2009.)

An Overview of Stimulus Funding and Requirements

According to the Pittsburgh Medical Technology Examiner, some parts of the ARRA, also known as the 2009 Economic Stimulus Package, are designed to revamp economic aid for small businesses. These include the Business Stabilization Program, a federal initiative offering emergency loans to small businesses struggling to pay off debt, and Challenge Grants, two-year NIH grants designed to fund highly innovative ideas that may result in productive collaborations between small pharma/biotech companies and academic institutions.

In addition, both the Senate and the House have approved extending the Small Business Innovative Research and the Small Business Technology Transfer (SBIR/STTR) program and significantly increasing the amount of funding available for both Phase I and Phase II awards, which is necessary to offset the pace of inflation. (See BioWorld Today, Nov. 6, 2009 and Aug. 31, 2009.)

These federal programs award as much as $2 billion per year to small high-tech businesses in the form of highly competitive grants, a valuable lifeline at a time when venture capital is difficult for small companies to garner. The ultimate objective of the SBIR/STTR program is to support ideas that may lead to the marketing of a novel medical or biotech product, induce economic growth, create jobs and improve human health by funding innovative, seed-stage, but high-risk scientific ideas from small financially disadvantaged biotech companies.

To apply for the funding, companies need to satisfy the following requirements: 1) Venture capital supported companies cannot own more than 50 percent of the applicant organization/company (however, only 10 percent to 15 percent of funds have been allocated for these companies); 2) Start-up technology companies cannot employ more than 500 employees and must have their operating headquarters in the U.S.; and 3) The owners (principal investigators) of the company must be American citizens or permanent resident aliens.

Hopefully the government will continue to provide grants and technology transfer awards to fund innovative ideas while not being overly restrictive in terms of qualifications. After all, the biotech industry is a critical component of the U.S. health sector and the overall economy, employing hundreds of thousands of workers and exporting billions of dollars worth of products.

Research Revs up as Money Rolls in

Federal funds are boosting research as far away as Guam, where a $79,000 stimulus grant is being used to purchase a desktop scanning electron microscope at a university, according to an NPR blog. Also, money being pumped into biomedical research as part of the federal stimulus package – to the tune of $178 million in federal money – is spurring hiring in Massachusetts, second only to California in the number of extra grants from the NIH. The agency has an interactive map that shows projects funded through the federal stimulus.

In Massachusetts, research projects that had been dormant are being revived and others are accelerating, according to The Boston Globe. About 660 new grants have been awarded across the state's hospitals and university laboratories as part of the Obama administration's campaign to revive the sputtering economy. With additional money coming in daily, researchers said they have begun hiring junior scientists and technicians and buying new equipment. Massachusetts received a disproportionate share of the $10 billion the NIH plans to distribute, while California received 927 grants totaling $244 million, according to the Globe's analysis of NIH data on funds awarded through the ARRA. NIH stimulus funding reflects geography and concentration of large research centers. Although the stimulus funds are much less than what Massachusetts researchers get annually from the NIH – $2.25 billion last year – federal funding for biomedical research has been flat for most of this decade, so the new money is having a significant effect at research universities, teaching hospitals and private labs.

In the biotech industry, numerous companies already have reported stimulus-funded research:

• Nabi Biopharmaceuticals, of Rockville, Md., started a 1,000-patient Phase III trial of NicVAX (nicotine conjugate vaccine) with the help of $10 million in stimulus funds. Nabi and the National Institute on Drug Abuse started a partnership in 2001. (See BioWorld Today, Nov. 4, 2009.)
• Pacific Biosciences Inc., of Menlo Park, Calif., received grants totaling more than $1.9 million from the NIH as part of the ARRA. Of that, $1.2 million will support development of a direct DNA methylation detection method and $714,406 will support development of the company's single-molecule real-time DNA sequencing technology. (See BioWorld Today, Oct. 9, 2009.)
• Asuragen Inc., of Austin, Texas, received more than $3.8 million in new grant funding for 2009 from the SBIR, STTR and ARRA initiatives for continued development of molecular diagnostics for oncology and genetic disease. (See BioWorld Today, Oct. 8, 2009.)
• Sequella Inc., of Rockville, Md., received a $694,000 grant supplement as part of the ARRA, issued through the National Institute of Allergy and Infectious Diseases (NIAID), for manufacturing of lead drug candidate SQ109, a small molecule for tuberculosis in Phase I. (See BioWorld Today, Oct. 6, 2009.)
• Emergent BioSolutions Inc., of Rockville, Md., was awarded $4.9 million under an agreement with the NIAID, funded under the ARRA, for development of anthrax vaccine candidate dmPA7909. (See BioWorld Today, Oct. 1, 2009.)
• Cleveland BioLabs Inc., of Buffalo, N.Y., was awarded a $5.3 million grant from the NIAID, under the ARRA, for studies of molecular mechanisms by which Protectan CBLB502 mitigates gastrointestinal damage from radiation exposure. (See BioWorld Today, Sept. 30, 2009.)
• Antigen Discovery Inc., of Irvine, Calif., was awarded a $1.8 million Phase II STTR grant under the ARRA from the NIAID for testing and validation of the firm's candidate antigens. (See BioWorld Today, Sept. 22, 2009.)

Money, the Root of Some Problems

While the new funding is welcome, it can raise as many concerns as the accolades it generates. Typical federal government grant funding for biomedical research through the NIH can be used over a three- to five-year period, while the stimulus funding typically has to be used much faster. After a long period of not being able to spend money, companies are required to make very quick decisions on hiring people and buying equipment.

In addition, SBIR/STTR funding has requirements that make it harder for companies with venture capital or a long history to compete for the dollars. Although the concept is to make money available to underfunded start-up companies, the requirements may make it hard for many other companies who have suffered the effects of the economic downturn to qualify for much-needed capital.

In addition, BioWorld Today reported that NIH Director Francis Collins said one of the agency's greatest challenges is fiscal year 2011, when the $10 billion-plus in stimulus funding will run out. He said it could send the NIH off a financial cliff. (See BioWorld Today, Aug. 18, 2009.)

In any case, the availability of any funding at all in the economic climate of 2009 is good news. The biomedical research community always works on the basis of a promising future. Now, thanks to an infusion of money, there can be a manageable present as well.