There's a new government funding program for biotechs, but it's not a bailout. To qualify, startups must bring in matching funds from private investors.
The first two recipients of the $3 million small-business awards are on opposite sides of the U.S., in San Diego and North Carolina. The
program
is only available to companies that have already received Small Business Innovation Research grants from the National Institutes of Health. The National Cancer Institute is running the pilot program and has chosen LPath Inc., a San Diego developer of a monoclonal antibody called Asonep currently in testing to choke off the blood supply to cancerous tumors, and Optisonics Inc. of Oriental, N.C., a developer of a high-resolution scanner that takes images of animals being used in drug testing.
The SBIR bridge awards are small, $1 million a year for three years, and doled out only as the awardees hit milestones. One requirement is to raise matching funds from the private sector. "They have to show us how funding from the third parties will directly support their project," Michael Weingarten, National Cancer Institute director of small business programs, told The Deal.
If successful, the awards could serve as a model for other institutes at NIH. They come at a time when funders in the public and private sectors are looking for ways to stretch their cash. The state of Massachusetts is pressing forward with its own $1 billion biotech fund that looks to leverage private money., as The Deal
reported here.
When the economy went south last fall, the biotech industry pressed Congress for its own bailout -- a break on taxes based on net operating losses -- but the proposal never came to fruition.
LPath has corralled $18 million from corporate sponsor Merck Serono SA to help with clinical development of Asonep. Optosonics has raised one-to-one matching funds from Enlight Biosciences, a Boston firm that invests money pooled by major drug firms.
With VCs choking off cash, NIH officials hope the new bridge program and its promise of nondilutive cash will attract VC-backed firms. Overall venture investing in the first quarter hit $3 billion, its lowest total since 1997. The life science sector saw a drop of 40% to $989 million,
according to a regular survey by PricewaterhouseCoopers and others. -
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