The importance of what innovative science does for the public cannot be understated.  Biotechnology innovations have already provided the public with breakthrough therapies and treatments and have unfathomable potential to bring relief to those who suffer directly or indirectly from diseases such as cystic fibrosis, cancer and Alzheimer’s disease.  Additionally, biotechnology is poised to be an asset to the American economy – as the industry grows a new job market grows. 

It is our hope this blog will provide a catalyst for discussion on how biotechnology innovation should be supported, current biotechnology discoveries that have the potential to improve public health, as well as serve as a forum to discuss legislative policies that could impact biotechnology discovery.  In that vein, there is currently debate occurring on Capitol Hill regarding the reauthorization of the Small Business Innovation Research Program. 

This program, historically, provided a venue for small biotechnology companies to fund early stage research that has the potential to improve the public health and assist in moving these discoveries toward commercialization.  However, since a ruling by the Small Business Administration in 2003 most of the small biotechnology companies are currently unable to participate in the program due to their capital structure.  This blog will provide informational clips and blogs on this issue and we look forward to seeing your comments. 

Sincerely  Cartier aka ‘cartier@bio’

E. Cartier Esham, Ph.D.
Director, Emerging Companies Health and Regulatory Affairs
Biotechnology Industry Organization (BIO)

NOTE: We have highlighted a few of Weingarten’s answers below. Please follow the links for the full interview.

OBR: HOW HAS THIS PROGRAM BEEN ADMINISTERED TO THIS POINT?

Typically, at the NIH, the average size of an award for a Phase 1 is about $150,000. After a company has demonstrated the feasibility of the technology they apply for a Phase 2 follow-on award. That’s a much larger dollar size award at the NCI – on average, about a million dollars. It cuts across everything that the NCI does in terms of technology that supports cancer patients. At the NCI it’s a $100 million program.

OBR: WHY ISN’T THIS MONEY COMING FROM THE STREET?

Phase 1 and 2 dollars is really only enough to take a company maybe halfway through preclinical development. Unfortunately, after the SBIR money runs out, you might have promising data but haven’t advanced the technology far enough to where the private sector will step in and fund the ongoing development process. Typically, venture capital (VC) and other investors come in some time during Phase 1 or Phase 2 clinicial trials, so we have this big funding gap we call “the valley of death” – that’s where the project hasn’t advanced far enough for the company to raise capital, yet, results look promising. They just need a bit more cash to cross that valley. They need a bridge.

OBR: OKAY, SO WHAT EXACTLY IS THIS BRIDGE MADE OF?

We’re going to provide a company up to $3 million dollars in additional funds over a three year period, but in order to receive those funds a company is expected to go out and raise funds to match the NCI investment. That’s what the National Science Foundation (NSF) found with their award, that the most successful aspect of it was this requirement for matching funds.

OBR: IS THE PROGRAM EMPHAZISING CERTAIN TECHNOLOGIES?

Two areas that we’re focusing on right now are cancer therapies, and cancer imaging technology. New, effective therapies and imaging technologies will ultimately help prevent, detect, and treat cancer.

Ultimately, patients benefit from the therapies and technologies developed by successful SBIR awardees, with the help of small businesses and the NCI.

The SBIR Program was established under the Small Business Innovation Development Act of 1982 and, by way of several reauthorizations, has since provided seed money for small companies involved in the development of innovative technologies. SBIR funding promotes a broad range of scientific activities and is available through such agencies as the Departments of Defense, Energy, and Health and Human Services (HHS). The National Cancer Institute (NCI), part of HHS National Institutes of Health, confers SBIR grants and contracts (these are not loans) specific to the development and commercialization of oncology research. As of May 2008, the NCI SBIR Program now includes a new pilot initiative referred to as the SBIR Bridge Award. This enhancement of the SBIR Program was highlighted at the Biotechnology Industry Organization (BIO) Convention in San Diego.

Hopes and Cures spokes to John Risner, President of The Children's Tumor Foundation about the group’s work, in particular about funding for research.  CTF is a non-profit 501(c) (3) medical foundation, dedicated to improving the health and well being of individuals and families affected by the neurofibromatosis (NF).

ABOUT NF

Neurofibromatosis (NF) is the term for three distinct genetic disorders, NF1, NF2 and Schwannomatosis.   The most common form, NF1 (1-3,000 births), has a wide range of severity, ranging from café au lait spots to learning disabilities, bone abnormalities, and brain and spinal tumors.  NF2 (1-25,000 births) is characterized by multiple brain and spinal tumors, commonly causing deafness, severe balance problems, decreased mobility and vision loss.  Schwannomatosis (1-40,000 births) causes nerve tumors associated with chronic pain.   NF affects both sexes and all races and ethnic groups equally.  NF is more prevalent than cystic fibrosis, Duchenne muscular dystrophy and Huntington’s disease combined. 

Ed. Note: The University of Utah describes possible symptoms of NF1

The Children’s Tumor Foundation focuses on four areas:

1) Research.  We fund, lobby for, and promote collaboration to increase research.  We are the largest non-government funder for this type of research.  We provide very early funding, what we call phase 0.5, and develop grant mechanisms to fill gaps in the research landscape where small amounts can have a large impact.  Projects we support in early stages often count on SBIR funding for phase 1 and 2 research.  

2) Public education.  We do a lot of advocacy work as well as family-oriented events to raise awareness of this illness.  Our website is a place that brings together patients, family members and scientists in a meaningful way. 

3) Clinical centers.   In an effort to increase the clinical centers for NF patients, CTF has followed the model developed by the Cystic Fibrosis Foundation.  We have developed a grant program to fund clinic coordinators in hospitals so that they can provide increased patient support, counseling and better track patient data.  Data is a key asset for clinical trials, and this step is important to enhance the appeal of NF to pharmaceutical companies to encourage more trials.  In addition, it provides the hospitals with assistance in supporting their physicians and coordinating the multidisciplinary needs of the NF community. 

4) Patient support.  The website itself is a great tool to help patients and parents of patients connect with each other, through chat rooms and discussion boards.  While the work done is focused nationally, it is not uncommon for international patients to also use the discussion board.  Also our Chapters and Affiliates nationwide provide a wealth of patient support group meetings and local services.

Drug Discovery Initiative

Currently there is no effective drug treatment for NF.  Because of this, we provide seed grants to encourage early-stage research for preclinical testing.  We launched this program in response to declining federal funding of research over the past few years.   The program has a simple 2-page application and a quick (3 month) turnaround.  These grants aren’t large (11-55k), but they can help get research for a treatment off the ground. 

As a requirement of funding, researchers post their models on our website.  It’s like Craigslist for research.  By posting the research to a public area, researchers are able to find each other easily and work can be a collaborative effort.  It’s a way to open up the drug pipeline.  This model is also similar to what other foundations have adopted, but on a smaller scale and at an earlier stage in the research.  One of the projects we funded last year at Ohio State was to test their small molecule compound, OSU03012 in NF mouse models.  Earlier this year, Arno Therapeutics, a biotech startup, licensed the compound from Ohio State.   This is the first one licensed, but we hope to see more. Because this program focuses on early stage research, we have not funded Phase I or II trials; we fund before SBIR can.   However, a lot of the work that we fund does end up being accomplished at the biotech level.  

The Children’s Tumor Foundation is very supportive of the House-passed SBIR bill.  We believe that the previous changes – to disallow VC-backed firms from competing for this Federal funding cut out the heart of the program.  Restoring funding for VC-backed firms makes sense, and will encourage continued investment in drug discovery and development.

The National Neurofibromatosis Foundation was founded in 1978 by Allan E. Rubenstein, M.D., Lynne Courtemanche Shapirio R.N., and Joel Hirschtritt, Esq.  In January 2005, the Foundation changed its name to the Children's Tumor Foundation. The Foundation has a membership of over 50,000 constituents in all 50 of the United States, Washington, D.C., and 55 other countries.

Alzheimer’s Drug Discovery Foundation

A new way to look at funding

The Alzheimer’s Drug Discovery Foundation (ADDF) raises money and awards grants to academic and biotechnology industry scientists who are conducting drug discovery research for Alzheimer’s Disease, related dementias and cognitive aging.

The way research is funded is evolving and by employing a venture capital model, we are able to take risks and fill the funding gap. We can do this because we are a philanthropic organization and are focused on disease-specific research.  The ADDF funds biotech companies --  startups from universities, and early stage companies. We prefer to fund alongside or before venture capital investors take action, and we often fund alongside SBIR (Small Business Innovation Research grants).  We see our role as a way to fill the funding “valley of death” for companies.  We are proactive and entrepreneurial in what we choose to fund.

Our Successes

To date, we have awarded $28.7M for 195 research programs and conferences in 12 countries.  Our Academic Drug Discovery Program has provided $22.5M to 148 international academic scientists, who have created entirely new classes of drugs in development for AD, screened millions of compounds, identified hundreds of new leads, executed many patents and licenses, and are approaching or entering clinical trials with several new drugs.

In the case of Allon Therapeutics, we had been funding the scientist for several years in her academic laboratory, and we were then able to provide the first funding of $252,000 in 2002 for the creation of a biotechnology company. Recently, Allon announced the results of a successful phase 2 clinical trial showing that its new drug has a positive impact on memory function in patients with amnestic mild cognitive impairment. When the company went public (TSX:NPC), we got our investment back.  More importantly, this is a drug will help a number of people.

Comentis was originally spun out of the Oklahoma Medical Research Foundation.  We gave this biotechnology company the seed money to start as well. The company is engaged in the discovery and development of small-molecule drugs to treat Alzheimer’s disease, age-related macular degeneration (AMD) and cognitive disorders.

Our approach

There are 18 million cases of Alzheimer’s worldwide, and this number is expected to increase to 34 million by 2025. It is our goal to try to find relief any and every way we can; we look for the best way forward.  When therapies cost roughly $1.3 billion and take 12-15 years to develop, we have to promote innovation. 

 We support reauthorizing SBIR funding.  Our country should not be siloed in terms of its approach to developing new therapies.  All segments of society – government, business, academic, nonprofit -- need to work together to find cures for diseases like AD, otherwise, it is counterproductive to society’s goals.

Howard Fillit, MD, is the Executive Director of the Alzheimer’s Drug Discovery Foundation.  The ADDF is an affiliated public charity of the Institute for the Study of Aging (ISOA), a private foundation founded by the Estèe Lauder family in 1998. The charity was established in 2004 to enable the public to work with us in advancing our common mission of supporting scientists pursuing drug discovery research for Alzheimer’s disease, related dementias and cognitive aging.

What is the scope of your work?

There are over 100 types of autoimmune related diseases, including lupus, type I diabetes, scleroderma, celiac, multiple sclerosis, Crohn's disease, autoimmune hepatitis, rheumatoid arthritis, Graves' disease, and Sjogren's syndrome. The NIH estimates that 23.5 million people are affected by these diseases. The diseases can be diagnosed at any age, but most people affected fall between the ages of 15 to 50. Significantly, women make up 75% of the people with autoimmune diseases. We don’t know the reason for this; it could be genetic, environmental, have to do with the hormonal system, or perhaps be something else all together.

Autoimmune diseases all share a common disease pathway and genetic background. In this case, the body attacks its own tissues, instead of the bad bacteria or viruses. Only recently have they been included as a “disease category.”

Tell us about the research for new therapies.

For the most part, there has not been a new therapy for these diseases in 45 years. We’ve been relying on the same therapies: hormone replacement, such as insulin for type I diabetes, steroids, or IVIG treatments. There are a few new biologics, but they are only indicated for about 5 of these diseases. The biologics tend to be used off label (Please note: BIO does not support off-label use of biologics). They are very expensive and may not be covered by insurance.

We would love to raise the level of research for autoimmune diseases. It lags way behind other types of research. Our current “pipeline” includes 311 drugs for 38 of 100+ autoimmune diseases. Of these, 62% are for the seven most well known autoimmune diseases. This is the major problem. About 92% of the diseases depend on steroids or older therapies.

What position does the American Autoimmune Related Diseases Association take on SBIR legislation?

We are supportive of SBIR. These grants are very important for innovation. It encourages small biotechs to get their ideas out there to build a platform for this research. Right now, our pipeline is too thin for the majority of the autoimmune diseases. It’s the little biotech companies that understand what we are talking about.

How can others join your cause?

People often have a difficult time being diagnosed. Patients are not asked about autoimmune related diseases on their medical histories. Just by asking this simple question, doctors would be able to see if there is a history or a family cluster of these illnesses. But right now, it is not thought of as a disease category by the public. If the public were more aware of the importance of the family connection, they could volunteer this information to their doctors. Also, we are working to have May recognized as “Autoimmune Diseases” month. Of course, people can always write to their elected officials or get involved with our group.

The American Autoimmune Related Diseases Association is dedicated to the eradication of autoimmune diseases and the alleviation of suffering and the socioeconomic impact of autoimmunity through fostering and facilitating collaboration in the areas of education, public awareness, research, and patient services in an effective, ethical and efficient manner.

In the world of biotechnology, the principle at stake is the United States’s claim to be an innovation engine in the global economy.  Our members and their scientists are developing disease treatments and cures at a rapid rate, but because these cutting-edge treatments are so new, it takes 10-15 years before they reach the market.  In the meantime, they thrive on traditional venture capital and the government’s version of VC:  the SBIR program.

If Congress wants to perpetuate the image – and reality – of the US as the center of innovation, they must adapt the criteria for SBIR grants to match the reality for these budding treatments and burgeoning companies. 

Quoted is Susan Reiss:

One Hill observer says that the venture-capital issue will boil down to whether Congress wants to emphasize the “S” or the “B” in SBIR.

While Reiss offers an interesting perspective, it is one I disagree with.  The biotech companies that have lost out on SBIR grants easily meet the definition of a small business, and they comprise the vast majority of BIO’s membership.    Most of them have fewer than 100 employees and only a few have yet to have a product on the market. 

I don’t see how Reiss can reconcile her claim that the investment of venture capital somehow makes these companies ‘not small’ – and therefore disqualified for the SBIR program - with the fact that these very companies have absolutely no market income. In fact, it can take up to $1billion for a single product to become available to the people who need it most – those suffering from MS, Parkinson’s, HIV/AIDS and the like.

The second fallacy Reiss tries to perpetuate is that biotech companies should apply for the other 97.5% of funding at NIH.  This is a fiction.  SBIR grants are not awarded to businesses (0.4% of these grants were awarded to businesses – small and large – in 2006).  That’s because this money is preserved for proof of concept/hypothetical research, which is traditionally carried out by university and research institutions.  This is the way it should be – funding proof of concept projects is an essential part of the continuum discussed above – these funds are used to discover the new genes and new cellular mechanisms that are then explored to determine potential development into drug therapies and treatments.  

The Dallas Business Journal, also quoted, suggests not all biotech companies are supportive of including VC backed companies into the SBIR program.  If there are some companies with concerns they should know the National Research Council found no indication that companies with majority financial backing (not operational control) from VCs had crowded out other small companies.  The awards should be given to small U.S. companies based on scientific merit not capital structure. I would be curious to know if these are companies that are involved in health care or kinds of technology development (high tech computers/machines etc) where the industry has completely different capital needs and timelines of development (8-10 years for 1 drug therapy).

BIO, as well as patient organizations and the venture capital community, has supported numerous proposals that would include ownership limitations to ensure these small companies are not controlled by VCs such as limitations to board control and prohibiting majority ownership by 1 VC company. 

This is not a big pharma issue – this is an issue important to small, emerging biotechnology companies in the health care space – a sentiment that has strong support from the patient advocacy community such as the Cystic Fibrosis Foundation and the Parkinson’s Action Network. 

The questions we should all be asking of those that oppose these changes are:

• Are they mainly companies competing in the DoD technology space where there are real differences in capital needs and length of time for development of discoveries?

• Do they fear competition, or is there just an assumption that if you have VCs investing in one of your research projects (even though you have no revenue from a product and fit into a 2 lab space on 1 floor) you are not a small business?

I anxiously await the answers.

It is a national nonprofit organization based outside of Columbus, OH, that is dedicated to leading, supporting, and strengthening public-private efforts to improve regional economies through science, technology and innovation.   Part of SSTI’s mission is to serve as a neutral convener for discussion and advancement of key issues to further state and federal cooperation on science and technology.  With the reauthorization of SBIR required for the highly successful program to continue, our state members asked SSTI to explore ways to support the program’s continuation.

How important is SBIR to your organization?

SBIR over the past 25 years has evolved into a state-federal-industry partnership in ways that I do not believe are fully realized by the federal agencies and perhaps even Congress.  Today nearly every state has some form of SBIR-related outreach or assistance on its books, has localized SBIR assistance programs, or both.  In fact, as has been the case for more than a decade, SBIR assistance remains one of the most widely applied state strategies to encourage technology-based economic development.

What are the benefits of state interest in SBIR?

A seldom recognized benefit has been to help broaden the geographic and demographic reach of the federal SBIR program – explicit goals of the legislation under consideration by the [House Small Business] Committee today. 

With regards to Congress, what actions would SSTI like to see occur?

We recommend that they consider including language in the reauthorization bill that leads to timely release of information regarding federal SBIR program applicants and recipients. The result would be more small businesses receiving technical and financial assistance at earlier stages in developing SBIR-funded research and future SBIR applications, increasing the likelihood of commercial success. 

Another suggestion is the development and implementation of an intensive training and certification program for state and regional SBIR assistance efforts. The training program would address the skills that federal agencies desire in state SBIR efforts and the educational needs identified by small technology businesses and state SBIR assistance providers.  The result will be unified and higher quality technical assistance being provided everywhere in the country, helping to level the playing field for small tech firms located in areas and within populations that do not perform as well historically in the SBIR program.

Anything else?

Two of the greatest barriers to growth for small technology companies are 1) access to early stage capital and 2) adequate technical and managerial expertise to carry an innovation into commercial success.   Over the past 25 years, the SBIR program has proven to be a valuable financial tool for small technology firms during the high risk stages of research feasibility and proof of concept.

Mark Skinner is Vice President of the State Science & Technology Institute (SSTI). This post is an excerpt of his testimony to the House of Representatives Committee on Small Business (March 13, 2008).

 

The Cystic Fibrosis Foundation is the leading organization in the United States devoted to curing and controlling cystic fibrosis. We spoke with Mary Dwight about her organization and the important work they do.

 Can you tell us a bit about CFF’s purpose?  The Cystic Fibrosis Foundation is the leader in developing drugs to treat and ultimately cure CF -- as well as ensuring that CF patients receive the best care nationwide through our network of accredited care centers. The centers provide patients and families with vital treatment and other CF resources.

 Who do you represent and how large is the scope of your work?  We represent about 30,000 people with CF, as well as their family, friends, and those who take care of them. At the same time, our unique drug development business model is being adapted widely by many other voluntary health organizations in the country.

 What are some of the successes in the treatment of this disease?  The biggest success is the gains made in life expectancy for people with cystic fibrosis.  In 1955, when CFF was founded, children who were diagnosed with CF usually did not live long enough to attend elementary school. In fact, it was considered solely a childhood disease, since no one survived to adulthood.  The lifespan has doubled in the last 25 years, and the median age of survival today is 37.  More than 44% of people with this disease are adults.    CFF has been the driving force behind much of this progress.

 What does the Foundation do to promote this kind of success?  We are a nonprofit and have 250,000 volunteers in 80 chapters and offices that raise money the old-fashioned way -- dinner dances, golf outings, Great Strides walks and auctions. We invest a significant amount into drug research and development.  Ninety cents on the dollar goes to research, care and education programs.  In the past five years, $300 million went into drug discovery.

 You mention drug discovery.  Talk about your “drug pipeline”  There are more than 30 promising therapies in the CF pipeline. And, for the first time in the history of the disease, the pipeline has drugs under development that target the root cause of cystic fibrosis.  If successful, these therapies will add decades of life for people with CF. 

What role does SBIR play in CFF’s work?  The SBIR program is a valuable partner for us.  It provides the identical “spark” for early research.

PTC Therapeutics is one of the Cystic Fibrosis Foundation’s great partners in the effort to develop treatments for this disease.  The company has multiple promising CF therapies in development, including PTC-124, an innovative oral drug to treat the basic genetic defect of cystic fibrosis, and potentially 2400 other genetic disorders.  The company, like several of our partners, received an SBIR grant for the early discovery phase of the drug that ultimately became PTC-124.  The development of this ground-breaking therapy depended on the SBIR grant ,as it was considered too risky to be funded by private venture capital funding. 

They received a $150,000 SBIR grant to target the genetic defect, but because of the rule change to exclude companies with 51% ownership by venture capital firms, funding for phase II was denied.  This caused an 18 month delay in the development of the therapy.  In a disease where people have a short life expectancy caused by this disease, delays means a loss of life. 

 What can Congress do?  We ask that Congress reauthorize the Small Business Innovation Research (SBIR) program.  We support restoring funding to venture capital-backed firms.  We see VC investment in a company as a validator, as a sign that they are doing things the right way.  We also ask that Congress dedicate a portion of these grants for research for orphan and rare diseases, such as cystic fibrosis. 

"Not all start-up companies have been able to tap into venture capital to fund their businesses. Mr. Prescott of Crescent Innovations has secured federal Small Business Innovation Research funding, grants and money from individual “angel” investors to finance research. He has hired researchers on a contract basis as needed and used young interns to help. The company is based within ECI Biotech of Worcester."

This article describes the complex nature of financing medical innovations and the key role SBIR plays. SBIR provides seed money for the early stage research that is deemed to high risk for most venture capital markets. In addition, the rules of ineligibility are such that even monies received by angel investors could alter whether or not a company is not majority owned by ‘individuals’ and thus deemed ineligible. It is clear these are small companies and the government funds are not the basis for a business model but rather the initial seed money that helps develop an idea with potential and provide scientific validation that will serve to attract more private sector interest – i.e. traversing the valley of death and moving towards making the therapy/treatment available to the public. It seems ironic that by attracting venture capital a small business can be deemed ineligible instead of a good investment by the government.

"All in all, it is safe to say that SBIR is riddled with some fundamental problems that Congress would be wise to address as it evaluates the Program's future. While there is no doubt that the SBIR Program plays a valuable role in early -stage biotech start-ups, the industry should perhaps consider redirecting its efforts toward clarifying the goals of the Program and generating useful data over focusing on the more narrow issue of overturning the prohibition on making awards to venture-backed companies."

While we would certainly agree that SBIR plays a valuable role in early-stage biotech start-ups, we would take issue with the remainder of the statement. Our issue is not with the nature of the program the way it was, but with the Administrative Law Judge Ruling in December of 2004, preventing companies with venture funding from participating in the SBIR program.

The goals of the program are sound. Congress created the SBIR program in the early 80’s in order to utilize the capabilities of small, innovative, domestic companies to fulfill research and development needs. Congress recognized that early stage, promising scientific research failed to be funded by the private-sector because is was viewed as high risk. In fact among the criteria for awards in the program is “the existence of second phase funding commitments from private sector or non-SBIR funding sources.”

As for generating data I would suggest looking at studies done by The National Academies on the SBIR program. For example the National Research Council report entitled “An Assessment of the Small Business Innovation Research Program at the National Institutes of Health”

There is one thing we think is important to make clear at the outset. The SBIR program provides a funding void for small, innovative biotechnology companies that are working on early stage research that has potential to improve public health.