Many start-up biotechnology companies looking for money totranslate science into commercial technology consider SmallBusiness Innovation Research (SBIR) grants from the NationalInstitutes of Health (NIH) the lifeblood of their early stage researchefforts.

Industry advocates, however, said those funds, which totaled $174million for 830 grants in 1995, may be threatened by a proposal inthe fiscal year 1997 budget plan from the House AppropriationsCommittee.

The proposal, part of an appropriations bill to be sent to the Housefloor July 8, 1996, could put the funds out of reach for biotechnologycompanies by altering the way applications are judged.

The changes were advocated by the Federation of American Societiesfor Experimental Biology (FASEB), which represents academicinterests.

More that 90 percent of the NIH's research budget is funneled toacademic scientists. But with Congress chipping away at governmentspending, critics of FASEB suggested the group is worried SBIRgrants _ whose funding is scheduled to increase next year _ couldreduce money available for basic science.

FASEB officials, however, have said they are motivated by concernabout the merit and quality of research applications being supportedby the SBIR program.

Biotechnology Industry Organization (BIO) President Carl Feldbaumsaid nearly 80 percent of the SBIR grants in 1995 were awarded tobiotechnology companies for research into innovative areas such asgenomics, gene therapy and new vaccine development.

The funds _ dispensed in Phase I and Phase II grants of up to$100,000 and $750,000, respectively _ account for 2 percent of thetotal NIH research budget, but are supposed to increase to 2.5 percentin 1997.

For some companies, Feldbaum said, availability of the grants is"almost a survival issue, keeping lines of research alive."

Review Criteria Different

The SBIR grants, he added, help small biotechnology companies"bridge the gap" from the earliest stages of research to the pointwhere they have proven technology to attract investment from theprivate sector.

In awarding the grants, the NIH judges companies differently thanacademic researchers. For example, among the criteria for winning anSBIR grant is demonstration of the technology's potentialcommercial application.

In addition, academic researchers are not eligible for the SBIR grantprogram, which was set up 15 years ago to help small businessescommercialize their technological ideas. The NIH is one of 10government agencies dispensing SBIR grants and is second only tothe U.S. Department of Defense in total funds awarded.

If the money is not dispensed under the SBIR grant program, thefunds could not be allocated elsewhere by the NIH.

In the fiscal 1997 appropriations bill scheduled to reach the Housefloor in two weeks, the Labor, Health and Human ServicesSubcommittee, which oversees the NIH, approved language thatwould subject companies and academic researchers to the samereview standards.

Based on scoring used to select academic research winners in 1995,very few biotechnology companies would have qualified for funds.

BIO officials, who are working to strike the language, said acompromise proposal would keep the funds available for SBIR grantsat 2 percent of the NIH research budget, instead of raising the amountto 2.5 percent.

Martek Biosciences Corp.'s Steve Dubin said his Columbia, Md.,company has received 35 SBIR grants over the past 10 years totalingabout $6 million.

The funds were "fundamental" to building Martek from a companywith 5 employees to 100 and helping it bring to market a leadproduct, Formulaid, which makes infant formula more like nutrition-rich human breast milk.

Dubin, who is Martek's chief financial officer, said the SBIR grantsnot only provide seed money for start-up companies, but they"credentialize your science," giving it credibility for attracting privatesector investment. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.