Affymetrix and Illumina earlier this month launched efforts designed to help customers apply for National Institutes of Health funding following last month's passage of the American Recovery and Reinvestment Act of 2009.
That act, signed into law on Feb. 17, will provide the NIH with a $10 billion infusion aimed at supporting health research. NIH will distribute the funds via several mechanisms, two of which are to particular interest to instrument vendors: Between $100 million and $200 million of the stimulus money is expected to fund a new program called NIH Challenge Grants, and the National Centers for Research Resources will use $300 million to help researchers buy equipment and instruments.
The NIH Challenge Grants program will solicit applications in focus areas determined by the agency's institutes and base its awards on peer review through a process that is currently under consideration at the NIH. The NCRR, meantime, will use its High-End Instrument program to help groups of NIH-supported investigators purchase a single major item of equipment that costs at least $600,000 that will be used for biomedical research.
Applications for NIH Challenge Grants are due by April 27. NCRR will accept applications for High-End Instrument Grants between April 6 and May 6.
In response to the passage of the NIH stimulus, Illumina and Affymetrix have both made efforts to reach customers to encourage them and, when necessary, assist them in their grant applications.
An Illumina spokesperson told BioArray News this week that the company's "outreach campaign" is designed to inform customers of the NIH programs and to help them with their grant-application requirements.
As part of that effort, the San Diego-based firm has launched a web portal where customers can request help in applying for federal money. Pledging "stimulus funding resources and support," the firm will help provide "instrument descriptions, job justification, and pricing promotions" for customers filing grant applications.
The spokesperson said that Illumina is also offering promotional pricing for certain instruments, including the Genome Analyzer, its second-generation sequencer; its iScan system for running BeadArrays; and its digital microbead-based BeadXpress system. She added that customers can use the stimulus portal to request specific information and support from an Illumina account manager.
Illumina CFO Christian Henry recently described the availability of new government funds as a "significant opportunity," and told investors recently that the stimulus "is going to be a fundamental shift in spending in our field."
"We are still in the early days of understanding how the [stimulus] money will be rolled out, but our customers are working on determining optimal ways to get access to those funds," he said March 18 at Cowen and Company's Healthcare Conference in Boston.
Henry cautioned, though, that it would take months for grants to be approved, and that Illumina might not see any financial benefit from the stimulus for several quarters. "We do believe the stimulus package will be a significant opportunity for the company, but that it will manifest itself from a revenue perspective in the later part of this year, and primarily in 2010," Henry said. "People should be thinking about some impact in the fourth quarter as some of these grants get funded."
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According to Henry, about 80 percent of Illumina's annual revenue comprises sales to government and academic customers. Commercial revenue, which comprises 20 percent of Illumina's annual receipts, is split evenly between agricultural biotechnology companies and pharmas and large biotechs.
"Our exposure to government funding is very significant relative to our commercial exposure," Henry said.
Last year Illumina posted total revenues of $572.3 million, and the company has forecast full-year 2009 revenue to be between $690 million and $720 million. Henry said that Illumina made its forecast before Congress passed the NIH stimulus package, but added that the company is unsure of how the additional funding might effect its financial performance this year (see BAN 2/10/2009).
"We don't really know how the stimulus will play into our revenue numbers for 2009, but we do think there is an opportunity to obtain some of that stimulus money," he said.
Meantime, up the coast in Santa Clara, Affy is also encouraging its customers to apply for a piece of the NIH stimulus. A spokesperson told BioArray News this week that the firm is "actively working with our customers and collaborators to support their grant proposals.”
In an e-mail sent out to customers on March 24, Affy asked them to apply for NIH Challenge Grants and offered to "provide any information or supporting materials" to customers preparing grant applications.
In that e-mail, the company singled out its GeneChip Exon 1.0 ST and Gene 1.0 ST whole-transcript gene-expression microarrays for expression profiling studies and biomarker discovery; its GeneChip miRNA array; its Cytogenetics Solution; its DMET drug metabolism enzymes and transporter microarray and assay for ADME and pharmacogenomic studies; its GeneTitan automated microarray platform; and its QuantiGene branch DNA-based expression assays from Panomics.
"There is clearly a lot of money slushing around here, and a lot of it has been designated for instrumentation and infrastructure," said CFO John Batty, who also spoke at the Cowen and Company conference. "A lot of these proposals have to be submitted at the end of April, so there is a frenetic amount of activity going on."