Making it to market

Like many modern wars, the war against terrorism was expected to infuse new cash into the life sciences, spawning new products and spurring refinements of existing technology to meet demand for efficient bio-detection devices and reliable vaccines.But the year since 9-11 has seen a series of disappointments and no significant shortening of the risky path to market for new life sciences technologies. "There's always a time lag between the point when Congress says they're throwing money at a problem and the time we see a stimulating effect," says Brent Ericksen, vice president of the industrial and environmental unit of the Biotechnology Industry Organization (BIO) in Washington. "It's a mini-surge, so far."As early as November 2001, BIO began lobbying against barriers that keep new ideas from getting off the laboratory bench and onto the market. The industry group is pushing for long-term contracts, price supports and indemnification — government protection from liability for products that prove problematic.A 1995 presidential order allows the government to clear a legal path for technology essential to the national security interest. The cost of insurance against a vaccine gone wrong or a biosensor that fails is an intimidating hurdle to a small company, says BIO general counsel, Stephen Lawton. "One incident, despite all precautions, could wipe out an emerging biotech," he explains.There's no question the government is spending more. The "Public Health Security and Bioterrorism Response Act" of 2001 authorized $4.6 billion in fiscal year 2003 for research and production of vaccines, training, security and improved food and agricultural inspections.The National Institute of Allergy and Infectious Diseases (NIAID), the chief conduit for counter-bioterrorism spending at the National Institutes of Health (NIH), is preparing for a $275 million budget increase to $1.5 billion for fiscal year 2003. Outside the NIH, military spending systems that once merely dabbled in life sciences research are ramping up, too. The US military's central agency for cutting-edge research, the Defense Advanced Research Projects Agency (DARPA), spent $77.6 million on biological warfare defense in 1999. For 2003, DARPA has requested $116.5 million for biological warfare defense, plus $90 million for bioinformatics projects including a brain–machine interface, $78.2 million for new biology-based devices and materials, $7.6 million for nanoscale biomolecular and meta materials and $10 million for engineered biomolecular nanodevices and microsystems.But government assessment of new technologies is getting mixed reviews from scientists, says Ericksen. Scientists trying to land money from the military report being dragged from meeting to meeting to present their data to officials who are unskilled in the technology they are being asked to judge. Until 9-11, chemical and biological warfare projects were seen as a dead-end career track at the Department of Defense, according to Ericksen. Now a glut of new proposals threatens to overwhelm the experienced reviewers, to the point that legislation is in the works to create a central government clearinghouse for reviewing technology-based funding requests, Ericksen told The Scientist.Transforming research money into a marketed product is no easier now than it was before the events of 11 September. As in past wars, critics say government spending is too out-of-touch with marketplace reality to feed a sustainable industry sector. And while the sums being dispensed may seem enormous to academic researchers, the federal dollars are only a slice of the capital available to life sciences companies, even in these distressed times. "The pharmaceutical industry supports the biotech industry at a rate of about $10 billion a year. Then there's the capital market cash flow from VCs and the public market. I don't know, that's probably another $10 billion. My sense is that the Department of Defense allocation is a couple of billion spread across the universities and industry," says Nicholas Galakatos, a general partner in Boston and San Francisco-based MPM Capital, which manages over $1 billion in life sciences investments, including the $450 million MPM BioEquities Fund.Government funding can move a young technology along, and it can provide a welcome revenue stream for smaller and mid-sized companies. But it's not enough to get the venture capitalists excited about finding new opportunities in bio-terrorism technologies they had not seen before. "Despite the difference in awareness of the risk of bioterrorism from before 11 September 2001 to after, there's really no change in the capability of companies in that space to commercialize products," says Ilan Zipkin, a San Francisco-based associate in MPM Capital. "The end consumer is really the government, who might purchase to stockpile, but there's no growth in that. It's a one-time contract and it's hard to see how to build a sustainable business around that model."In fact, the government's one-and-only anthrax vaccine maker, BioPort Corp., was battling lawsuits prior to 9-11 questioning the circumstances surrounding its contract award, the safety of its product and the misuse of millions in federal dollars allegedly spent on travel and furniture for the chief executive's office. BioPort continues to defend its vaccine as well as its management and claims that doing business with the government has hurt it financially.US Genomics, however, a Boston-area biotechnology firm, is celebrating a $500,000 DARPA grant, announced 4 September, to fashion the company's GeneEngine DNA analyzer into a detector for deadly pathogens.The military agency sought out US Genomics, having learned of its work in high-speed DNA reading technology. Chief executive Eugene Chan says the company likes the terms for the government money. Venture capitalists want equity in exchange for their investment. The military just wants to be first in line to buy, he points out. "We are trying to make an ultra-fast bug sniffer. The government is paying for the development of the technology, but at the end of the day when we start selling it, the government will be paying for that, too," Chan says.

Making it to market

Have federal funds been a boon to the science of fighting terror?

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