Want to maximize the impact of the technology your startup is building? Federal grants provide much-needed capital for small businesses, introduce founders to government stakeholders, and can help small businesses identify new use cases and possibly markets for the tech they’re building. Sevahn Vorperian, Stanford PhD Student & SBG Board Member interviews Dr. James Coates, a Principal at Decisive Point Capital for a brief introduction and to learn more about Decisive Point
Interview with Dr. James Coates
Sevahn Vorperian, PhD Candidate at Stanford & Board Member at SBG
A Guide to Federal Grants for Biotech Startups
James Coates, PhD, Decisive Point
Brief Overview of the NIH SBIR Program
The Small Business Innovation Research (SBIR) program is part of the United States’ largest source of early-stage funding for start-ups and is structured as a competitive award system. SBIR provides startups with opportunities to innovate in areas that meet the specific research and development needs of the federal government’s various agencies. These include the Army, Navy, Air Force, Defense Health Agency, Defense Innovation Unit (DIU), Defense Advanced Research Projects Agency (DARPA), National Institutes of Health (NIH), and NASA — each of which have their own own strategic priorities and interest in health and life sciences.
Between 2015 and 2020, funding for health and life science projects through the government’s SBIR program increased by 49%. By 2020, the average awarded amount for the NIH SBIR grant was $1.8 million, roughly half the size of the median seed round last year. A multi-year review on the impact of the NIH’s cancer research SBIR program revealed that startup grants led to, on average, $24.8 million in future revenue for each recipient small business, enabling them to continue innovating life-saving technology without having to sell equity to investors to raise more cash. NIH SBIR success rates range from 10% to 40% – decidedly better odds than a startup receiving a venture capital check altogether.
The NIH’s SBIR program has resulted in multiple successes. Orlance Vaccines received $9.6 million to deliver nucleic acid vaccines with no cold chain restrictions, applying its technology to address a major shortcoming of current mRNA COVID-19 vaccines. As a testament to breast cancer being a congressional research priority, Immunomedics received 47 SBIR grants between 1985–2013 to treat aggressive breast cancers that preferentially occur in younger and more socioeconomically disadvantaged African American women. Last year, they were acquired by Gilead in a $22 billion all-cash transaction.
Grant Funding from the Federal Agencies
Numerous federal agencies offer funding for small business commercial R&D efforts. The master list of current and upcoming opportunities across all federal agencies is at grants.gov, but here are some to take note of:
Congressionally Directed Medical Research Program (CDMRP) is an Army program that recognizes that soldiers and their families suffer from hard-to-treat diseases and funds high-risk research proposals on cancer, Alzheimer’s, autism, multiple sclerosis, skin regeneration, and more, receiving hundreds of millions of dollars each year from Congress.
National Science Foundation (NSF) broadly supports medical devices and related innovation through SBIR grants that enable the delivery of high-quality, economically-efficient healthcare.
If you’ve applied for an NIH SBIR, chances are you’re eligible to apply for one from the NSF as well.
Biomedical Advanced Research and Development Authority (BARDA) funds startups conducting research relating to public health emergencies through their Division of Research, Innovation, and Ventures (DRIVe).
Interests include diagnostics, treatments, and preventatives for chemical, biological, radiological, and nuclear (CBRN) accidents but also sepsis and infectious diseases including HIV and influenza.
This grant is a two-step application; you’ll know if your technology is a good fit before you submit a full proposal.
DARPA’s Biological Technologies Office (BTO) funds early biotechnology and is especially interested in “operational biotechnology” that can make water, food, and medical supply chains more resilient for our armed forces while abroad.
Vaccine innovation is perhaps the most recognizable of recent life science successes – in 2012, Moderna received $9.4 million from DARPA as part of a project that led directly to the first-ever human trial for an RNA vaccine.
The Air Force Commercial Solutions Opening (CSO) SBIR program solicits open calls for applications from companies engaged in medical research.
Requires small businesses to solicit a letter of support from ranking officers from within the Air Force before they apply to demonstrate the need for the proposed R&D project; there are no topic constraints.
The Air Force is collaborating with New York-based Neurovation Labs through this program to develop a quantitative tracer for diagnosing post-traumatic stress disorder (PTSD).
The Air Force is also engaged with OURA to deploy their biometric ring to record vital signs and measure human performance in an era of biomarkers and human performance tracking.
The Translational Research Institute for Space Health (TRISH) funds commercial health research projects that also address questions relevant to space and space travel.
Examples include doctor-less diagnostic devices and point-of-care technologies, most having clear civilian applications as well.
Alignment & Timing
Your grant proposal should closely align with your company’s near- and long-term strategic interests and timeline. It is critical to make sure you always continue to steer steadily toward your commercial objective to drive growth while preserving your company’s goals.
A federal grant can help your company through its inflection and create real value for society and your company; however, it should not programmatically detract from your company’s primary commercial mission.
Some programs will only disburse awards according to pre-agreed upon milestones from an R&D work plan. In these cases, ensure that the R&D work you propose when you apply is going to still be your priority when you hear back about your funding decision months later. After all, the only thing worse than not having any funding to begin with is being unable to deliver on milestones to get the award you’ve already competed for and won.
Framing Technology in the Application
Adequately contextualize and frame your technology. This is critical in winning government funding since reviewers might not immediately understand potential future use cases. Help the reviewers to see the broader value in your underlying innovation.
When exploring applications for your life science innovation, focus on your company’s value-add to the public and contextualize it within the priority areas for the agency you are applying to.
Look for dual-use opportunities: funding for technologies that benefit the public and have strong commercial application. Platform technologies are broadly useful across federal mandates and commercial use.
Assess your technology from the view of an outsider and in a broad context. Look further out in time past your first use case for agencies that may be interested in your second, third, or fourth ones, and frame your applications accordingly.
DARPA’s funding of Moderna in 2012 directly supported mRNA technology that led to their COVID-19 vaccine years later, even though that certainly wasn’t the aim of the initial funding.
Identifying a Funding Agency
If applicable, your product’s development program should be designed in compliance with the Food & Drug Administration (FDA) regulatory and compliance requirements in mind; other agencies follow the FDA guidelines and evaluations.
Know which Federal agencies offer small businesses grants versus contracts and which is most suited to your technology and corporate development plan. Grants are more attractive for high-risk, early-stage medical research, but more challenging to obtain due to peer review requirements.
Contracts may be more attractive if your technology has the potential to be procured and deployed by the government in the short- to medium-term or if you have a federal end-user that already wants your innovation.
Receiving funding from federal government agencies can supercharge your biotech startup’s growth, drive commercial traction, and create value for society and the government. Given the importance of health across numerous agencies, it is just a matter of finding the proper alignment between your technology and funding programs.
About the author
Dr. Coates leads the Health & Human Performance portfolio at Decisive Point. Previously, he was at Bain Capital Life Sciences and a fellow at Harvard Medical School. Dr. Coates graduated from McGill University in Biomedical Engineering, received an MSc in Nuclear Medicine (with honors) from the University of Oxford, and a PhD in Drug Discovery also from Oxford.
About the interviewer
Sevahn is a graduate student in the Quake lab and a PhD candidate in the Department of Chemical Engineering. She is enthusiastic about all things sequencing and leveraging various measurement techniques to gain quantitative insights into human health and disease. Sevahn is supported by an NSF Graduate Fellowship, a Benchmark Stanford Graduate Fellowship, and ChEM-H CBI. She graduated in 2018 with her Bachelor of Science in Chemical Engineering from Columbia University, completing internships at Cold Spring Harbor Laboratory and Illumina.