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NCI's SBIR Initiatives Aiming to Strengthen Startup Support

By Matt Jones

NEW YORK (GenomeWeb News) – The National Cancer Institute has been updating its Small Business Innovation Research program over the past couple of years, launching a variety of new initiatives and increasing funding, as it aims to fulfill the unique funding and guidance needs of startups.

"SBIR really is NCI's major tool for funding development and ultimate commercialization of technologies in the cancer space," Michael Weingarten, director of the NCI's SBIR Development Center, told GenomeWeb Daily News in an interview recently.

To do that, Weingarten has overseen new programs aimed at helping small businesses prepare for the next steps and to move them across the so-called 'Valley of Death' that haunts biomedical businesses between their early stage of federal or private funding and the oases of venture capital investments.

Chief among these new initiatives is the Phase II Bridge award program. NCI's Bridge Award program more than triples the amount of funding available through the SBIR program to up to $3 million over three years.

Weingarten said that applications for the SBIR program have been going up as other sources of funding have been more difficult to capture. For example, he said NCI's Phase I SBIR applications rose 68 percent from 2008 to 2009.

"There certainly is a significant reduction in the amount of money coming into venture capital, and an increased focus from venture capital on what can return investments," Casper Declercq, a venture partner at US Venture Partners, told GWDN in a recent interview.

"And so I think there's a very important need for public funding with respect to innovation, because there's not a lot of private capital available for basic innovation, basic science. I think the SBIR program in that respect is incredibly important," Declercq added.

The National Institutes of Health as a whole must mark 2.8 percent of its extramural research budget for the SBIR program, which amounts to $616 million in 2010.

Weingarten said that NCI's budget for the SBIR program, including the .3 percent of its budget that it also must set aside for the Small Business Technology Transfer program, totals around $110 million this year.

Just this week, NCI, along with the other SBIR participating institutes at NIH, released its most recent contract solicitation for the innovation research program.

This contract solicits technology proposals in a range of areas NCI is interested in supporting including companion diagnostics and predictive and prognostic tests for use in personalized cancer therapy; molecular diagnostic assays to detect basal-like breast cancer; alternative biospecimen stabilization and storage solutions; development of devices for point-of-care analysis of circulating tumor cells; tools for measuring non-coding RNAs; and development of quantitative multiple monitoring mass spectrometry assays for cancer detection tools, among others.

Weingarten said that of the roughly 480 active SBIR projects that NCI is funding right now, around 24 percent are funding diagnostics, roughly 19 percent are supporting cancer imaging, and 31 percent are being used to support development of new cancer therapeutics.

Weingarten said that the Bridge program is aimed at companies that have gone through phases I&II, which have "promising initial data" and are now preparing to drive their therapeutic or diagnostic tool into clinical trials.

"We've really ramped up the attractiveness of the program with the much larger award size ($3 million)," he said. "We're finding with companies that we're currently funding under the Bridge award that they're actually getting their drug or device into human clinical trials and they're getting some promising data from it."

The award also requires that small businesses bring a matching $3 million from another source, such as a venture capital firm. Weingarten said that the idea behind the matching award is to "take some of the risk out of that technology to the VC community, because we're partners, in effect, in helping move that technology forward."

After its first year, the Bridge program has given out around $17 million to support six awards, according to Weingarten. "In return, the companies have been able to go out and raise around $50 million from investors, so we're getting about the three-to-one leverage for the funds that we're putting into the program."

Additional Efforts

Among the other initiatives undertaken by NCI has been the creation of a recurring series of investor forums that introduce small businesses to biotech and life sciences investors and provides guidance on ways to secure venture capital funding. It is aimed at connecting the top Phase II-funded companies with potential investors and partners, such as pharmaceutical companies.

"So, we're giving them the funding opportunity through the Bridge award, but we're also providing the opportunity through the investor forum to help link them with investors who would be their third-party investors to compete under the Bridge award," Weingarten said.

Last year's investor forum in Boston included 14 NCI-funded companies, and hosted VCs, big pharma companies, and device companies in the area. This year's investor forum will be in November in San Francisco and will partner with the San Jose Biocenter.

NCI has another new program — the NCI Regulatory Assistance Program — under which it provides regulatory assistance and advice on developing tools that will win clearance from government agencies such as the US Food and Drug Administration or the Centers for Medicare and Medicaid Services.

The program is expected to launch in the fall and is designed to target another need of the small business community, offering help for small companies putting together their regulatory strategy, or as Weingarten puts it: "What's their plan for getting their drug or device through the FDA toward FDA approval?"

NCI will bring in regulatory consultants who will provide up to 30 hours worth of consulting to between 30 and 40 Phase II-funded companies in NCI's SBIR portfolio in order to improve their chances at getting regulatory approval.

"The goal is that by providing this expertise we think we can help companies choose the optimum regulatory path that they should pursue, and as a result move their product towards the market faster," Weingarten said.

Another SBIR effort, the 'Fast-Track' Initiative, enables small businesses to submit both a Phase I and Phase II proposal for concurrent peer review, which could save time and minimize any funding gap between the two support phases.

In addition to these new programs, NCI has increased the amount of its SBIR grants, for the first time since 1992, from $100,000 to $150,000 for its Phase I grants and from $750,000 to $1 million for Phase II projects.

These new programs are still not fully road-tested over the long-term, so it is unknown whether they will help NCI achieve its goal of helping more companies gain funding and move toward clinical trials, clearance, and commercialization. But US Venture Partners' Declercq suggests that they are aimed in the right direction and that they "fulfill a market need."

"Often there's a real chasm between SBIR grants and getting venture funding, so [the Bridge program] introduces a very nice transition for small companies to be able to keep going and further prove the commercial utility of what they've developed under the SBIR grant," he said.

"Venture capitalists don't think of themselves as funding basic science — the time frames are too long," Declercq added.

"In the research component it's very difficult to predict success, but it's a public good," he said. "The role of venture capitalists is to help commercialize the innovation. If those roles are clearly delineated then one really understands the role of NIH, SBIR, and the SBIR program."

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