Funding Biodefense Vaccine Development - Alternative sources that spin-off companies can tap into. - BioPharm International

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Funding Biodefense Vaccine Development
Alternative sources that spin-off companies can tap into.


BioPharm International
Volume 22, Issue 4

Federal Grants

Federal grants are the most publicized source of funding, and they involve the largest pool of money. That pool was estimated at $5 billion in 2004, and since then, it has grown even larger. Most funds are distributed through Project BioShield, which was signed into law in 2004 with the goal of providing new tools to improve medical countermeasures against chemical, biological, radiological, and nuclear attacks. Project BioShield is charged with expediting research and development by the National Institutes of Health (NIH) on medical countermeasures, based on the most promising recent scientific discoveries. Proposals for funding from the US military may be directed through a number of programs; the Defense Advanced Research Projects Agency (DARPA) is probably the best starting point for a biodefense spin-off seeking funding.

The Department of Homeland Security (DHS) is funding some projects, particularly in biodetection and treatment. Some DHS funds pass to individual states, which may be additional sources of grants (see below).

The first step in identifying and applying for any federal grant is generally a conversation with the company's local member of the US Senate or US House of Representatives. This representative is likely to have a paid aide responsible for helping companies cope with governmental complexities. Companies outside the US can gain access by partnering with a US company.

State

Grants made by an individual US state typically go to companies in that state and provide jobs for the state's residents. Many states have established their own programs to promote the research and development of biodefense products. They also may be distributing federal money, such DHS grants. The best starting point for a company seeking a state grant is usually a congressional representative or senator.

Some state programs offer tax abatements instead of cash grants. Although abatements are not as desirable as direct funding, they may make it easier to attract investors. Many states use job creation as a major selection criterion for grants, and they may be more open to projects located in economically depressed areas.

International

The availability of international government grants seems to change rapidly, and their requirements can range widely. The World Health Organization (WHO) is the focus for the United Nations' programs. The International Red Cross can also be a funding source for applied and delivery projects.

Many countries have established programs similar to Project BioShield. For example, Great Britain, the Netherlands, Sweden, Germany, Switzerland, and Israel have actively funded biodefense companies in recent years. These national programs generally require that outside companies partner with in-country organizations.

FOUNDATION GRANTS

Foundations can be prime sources of research and development grants for biodefense and other medical applications. The first step for a spin-off seeking such a grant would be a letter to a foundation officer. The spin-off company that applies for multiple government and foundation grants, in cooperation with related universities or international partners, has a high probability of success and generally will carry no debt or loss of equity.

Research foundations have been established for most major diseases. Biodefense projects with the potential to prevent or treat a specific condition, such as cancer or birth defects, may attract funding from these targeted organizations.

Other foundations, both large and small, are oriented toward the general public health. Most of these can be easily identified through a web search.

Corporate foundations have been established to fund promising medical and public health research. These are most commonly biomedical: Johnson and Johnson's Robert Wood Johnson Pharmaceutical Research Institute is an example. Although these foundations are functionally independent of their corporate parents, a spin-off company seeking a corporate foundation grant can enhance its potential for success by matching a project with an area of corporate focus.

INVESTORS

Although abatements are not as desirable as direct funding, they may make it easier to attract investors. To compensate for the high risks of early funding, investors typically seek equity or bond arrangements with high rates of return—often as much as an eight- to 10-fold return in five years.

Angels

Angels are private individuals. They may be successful entrepreneurs themselves, professional athletes, private medical and dental professionals, or other individuals attempting to shelter large, short-term incomes over long-term periods. Angels often invest as groups (known as "angel networks"), and their investments are typically in the range of $50,000 to $1 million.


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