Wednesday, June 10, 2009

A Bridge To Cross The Chasm

An innovative funding program at the National Cancer Institute could prove a model for other National Institutes of Health divisions to follow.

By Daniel S. Levine

The National Cancer Institute is known for funding innovative research, but one of the Bethesda, Maryland center’s most recent breakthroughs isn’t a drug or new imaging agent. Instead, the latest burst of creative thinking has led to a new financing strategy to enable a host of new treatments. The initiative involves providing funding to help companies avoid the so-called valley of death. That’s the a gap in between the early-stage financing that the National Institutes of Health divisions such as the NCI typically provide for basic research, and the later-stage capital that investors supply when promising technologies are sufficiently developed.

Nearly two and a half years ago, then acting NIH Director Elias Zerhouni asked NCI Director John Niederhuber to consider enhancing the Small Business Innovative Research program. NIH was wrestling with concerns that the roughly $650 million invested each year into research through the SBIR program and the Small Business Technology Transfer Program weren’t getting the expected bang for the buck when it came to commercialized technology down the road.

The task of seeking new approaches fell in part on the NCI’s Michael Weingarten and Andy Kurtz. One of the most significant ideas to emerge from the effort was the establishment of a new grant program that could bridge the point at which the SBIR grants end and private investors are prepared to provide funding. At any given time, the NCI funds about $100 million worth of projects with some 350 companies through its SBIR program. That program allows companies to apply for funding through an initial funding to test the technical feasibility of a concept for grants that average around $150,000. If successful, a follow-up grant, which averages about $1 million, funds research and development of a technology.

“If we looked across our portfolio of grants, many of our Phase II awardees nearing the end of their Phase II awards—which in the SBIR model is the end of the line—hadn’t advanced enough to attract investment from downstream investors,” says Kurtz, program manager for the NCI’s Small Business Innovation Research Development Center. “A lot of projects die on the vine when they exhaust the usual funding through the SBIR program. The idea with the Bridge Awards was to provide additional funding for the most promising projects.”

The NCI’s new SBIR Phase II Bridge Award has just issued its first set of grants and is now reviewing a second set. Already, the program has generated enough interest that the NIH is expected to broaden the program throughout its other institutes to help commercialize more of the basic discoveries it funds.

The NCI Bridge awards are for $1 million a year for three years, for a total of $3 million. That’s more than triple the amount available to applicants through the NCI’s SBIR program. The funds are used for such things as pre-clinical research and development needed for regulatory filings to begin human clinical trials, or conduct the trials themselves. The NCI expects to award up to $10 million in fiscal 2009 under the program. The Bridge grants are open to current and recently expired NIH SBIR Phase II projects in the area of cancer therapies or cancer imaging.

One catch is that applicants must provide at least a dollar-for-dollar match from an outside source of funding. For the NCI, this provides not only validation of the commercial potential of a technology, but serves also as an important means of leveraging its own investment. And, for companies, having such a grant is a tool that can help raise money. It not only shows investors that government experts think enough of the technology to help fund the development, but it also reduces investor risk by providing non-dilutive capital.

“It’s money that buys you some runway or buys you time to a next milestone where you can get traditional venture capital,” says Glen Giovannetti, global biotechnology leader for Ernst & Young. “With NIH, there’s a process by which you have to qualify, so there is a scientific review and validation that comes from that.”

For Lpath, a San Diego-based developer of Asonep, an anti-angiogenic monoclonal antibody that targets S1P, a lipid that fuels the growth and spread of cancer, the funding will help it satisfy its financial obligations under an alliance with Merck Serona and provide it with a little independence. Lpath has entered into a worldwide agreement with Merck Serono to develop and commercialize Asonep. Under the agreement, Merck Serono will pay up to $23 million in upfront payments and R&D funding to support Lpath’s completion of the Phase 1 clinical trial.

“Every licensing deal acts in effect like an option,” says Gary Atkinson, Lpath’s vice president and chief financial officer. “The big company that licenses in a product can put a halt on the program at anytime. We have a critical juncture coming up with Merck Serono. We feel this award will be validating, help in their decision making, and give us a little more leverage.”

The Bridge Awards are perhaps the most significant part of a broader set of changes put into place by the NCI to address the challenges of translating discoveries into commercialized products. In addition to establishing the Bridge Awards, the NCI has centralized the management of grants through a newly created center, rather than rely on scientists throughout the institute to manage grants among their other responsibilities. The institute has also brought in people with industry experience and knowledge of how to commercialize technology to staff the center and manage the grant programs. Among other things, the center is helping advise companies on everything from how to improve failed grant applications to what preclinical preparations need to be done to win regulatory approval to begin clinical trials.

“Before we set up the center, it was a much more hands-off process for both managing and interacting with the companies that were being funded under the SBIR program,” says Weingarten, director of the NCI’s Small Business Innovation Research Development Center. “We have a much closer working relationship with the companies we are funding now and we are helping mentor them along the way and helping them be successful.”

From BIO Enews with Burrill Insights

1 comment:

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