A Few Companies Are Reaping The Benefits Of NIH Investigator-Initiated Basic Grants

Investigator-Initiated Basic Grants Author: Lee Katterman At a time when biotechnology and some pharmaceutical companies are working hard to finance research and product development, a small number of firms are tapping a pot of federal money generally thought to support only projects led by academic scientists. Some industry officials value this source of support for studies a company might not otherwise be able to afford, while others avoid it because of the strings that come with it. SEPARATE REALMS: James Paulson of Cytel Corp. takes pains to differentiate his grant-related and company projects. The money in question comes from the nearly $4 billion awarded annually by the National Institutes of Health to support the thousands of individual, curiosity-driven research projects proposed by scientists and physicians. These funds are disbursed via "traditional" research grants-known as "R01s," after the prefix attached to each grant identification number- that pay for the basic biomedical science studies carried on primarily at United States universities, hospitals, and nonprofit research institutes. A small fraction-less than one-half of 1 percent-of the 18,000 research grants awarded annually to individual scientists as R01-type grants go to researchers at for-profit companies. In FY 1994, the latest year for which complete data are available, NIH awarded just 85 research grants of the R01 variety, worth about $18 million, for projects directed by scientists in the private, for-profit sector. A GOOD MOVE: Biotech consultant Robert Gottlieb says R01s can add "credibility" to a firm. "It's not the kind of grant you hear about companies getting," observes Robert Gottlieb of Feinstein Partners Inc., a biotechnology consulting firm in Cambridge, Mass. He speculates that small companies may not want to broadcast their efforts in very basic research, since investors may not understand where such work will lead. Still, says Gottlieb: "It lends some credibility to a company's direction if NIH deems it worthy of funding." NO SURPRISE: Rae Burke of Chiron Corp. thinks getting R01 grants is logical for a company. "You shouldn't be at all surprised that people in industry have R01s," states Rae Burke, director of virology at Chiron Corp. in Emeryville, Calif. She says that while a company may not want to fund a particular line of research, it may be willing to let one of its scientists pursue the work under a grant with the assumption that the knowledge added to the discipline would benefit any company efforts in that area. Burke has received R01 funds to characterize T-cell responses to human herpes virus. Her grant, which expires in February, has already spawned several journal articles and supported research collaborations with academic scientists at the University of Washington; Seattle Biomedical Research Institute; and McMaster University in Hamilton, Ontario. NO FLOOD: Jerome Green, formerly of NIH, notes that there are few industry R01 applications. To some researchers in both the private and nonprofit sectors, however, it may be news that private companies can even apply for a basic research grant. Yet private firms have been eligible for R01 grants since Congress authorized the change some 20 years ago, explains Jerome Green, recently retired director of the NIH Division of Research Grants (DRG), the unit responsible for reviewing grant applications. Green notes: "Nobody expected a flood of applications [from for- profit companies]. And they were right. It didn't happen." Officials at NIH stress that, in evaluating research proposals, the type of organization requesting the funds has no effect on the funding decision. Nor does it matter that the applicant may be able to obtain other funds, such as from a profitable company's R&D budget. "Our mission [at NIH] is to support biomedical and biobehavioral research to improve the health of the nation," maintains Anthony Demsey, acting deputy director of DRG. "Whatever comes in the door [as a proposal] has to respond to that mission. We don't care if an applicant is from a nonprofit or for-profit institution." More than 100 study sections organized by subject area and composed of practicing scientists, including a few from industry, evaluate the scientific merit of research proposals. Calbert Laing, scientific review administrator for the experimental immunology study section of DRG, says that the appearance of an R01 proposal from industry makes no difference to the review conducted. "There are no changes in the discussion [of the proposal's merits]," he states emphatically. However, in evaluating a proposal, NIH must be convinced that if a grant is awarded, the results-good or bad-will be published in the open literature, Green points out. This does prevent some companies from applying for NIH grants, since they would be required to reveal to competitors their scientific interests through journal articles. "It won't be acceptable if a company's response is, 'We don't publish. We'll put the results in our files as background,'" according to Green. Still, David Blake, vice dean for research at Johns Hopkins University School of Medicine, adds that he can imagine scenarios in which reviewers cannot help being influenced by the "affluence" of a grant applicant, whether from industry or a university: "The problem is that there's not enough money to go around, so it can be an issue [in a reviewer's mind], 'Do they really need the money?'" Blake, who has served on NIH study sections, is convinced that for grant consideration. "But when somebody comes to a [study section] meeting ready to give a good score to a proposal from a small biotech company, and then learn that the company just raised $25 million in a stock offering, it can't help but affect the attitude of the reviewer." R01 grants are different from other types of NIH funding that reach the private sector more frequently. The Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) grant programs, which promote the development of new technology into commercially viable products, are open only to for-profit companies. In recent years, NIH has awarded more than $100 million in SBIR and STTR grants to support private-sector biomedical R&D. Then there are the R01 projects awarded to university scientists who enlist industry researchers as collaborators. In these situations, however, an academic researcher directs the project and sets the agenda. This is distinctly different from R01 grants awarded to for-profits, in which a company scientist is at the intellectual helm. A third route by which NIH funds often pass to business is the research and development contract. In these cases, NIH issues a request for proposals (RFP) that stipulates specific goals and parameters for the R&D work. For example, an RFP may describe exact protocols an applicant must follow in accepting a contract to conduct clinical trials of a drug or medical procedure that NIH wants tested. NIH spent $1 billion on research contracts in FY 1994. More than half of these R01s support projects by scientists at biotech and pharmaceutical firms. Among these, Syntex (USA) Inc. Research Division (now Roche Bioscience) of Palo Alto, Calif., topped the list in FY 1994 with six such grants, worth a total of $890,000. Other R01s awarded to for-profits fund public health, health delivery, or biobehavioral research. The top grant recipient of all for-profits in FY 1994 was New England Research Institutes Inc. of Watertown, Mass., with eight awards worth $1.67 million. This private organization with a staff of 200 conducts public health research on subjects such as breast cancer care and socioeconomic factors affecting health-care access, with funding from NIH, the Atlanta-based Centers for Disease Control and Prevention, and several state agencies. For-profit companies have a range of views on the value of the R01 grant to their activities. Some believe NIH funds make possible interesting research that the firm simply can't afford on its own. Other companies have one or two R01 grants, but are unenthusiastic about applying for them because of the limitations put on the company's ability to exploit the findings. Still other firms specifically forbid staff scientists from applying because they believe it distracts attention and drains resources from company goals. Besides the requirement that grant recipients publish their results, some companies are uncomfortable with the condition that the government retain a nonexclusive license to any patents that result from the NIH-supported work. Although firms (as do universities) retain the patent rights, if the grant led to a vaccine, for instance, the government could use it in the military without paying a license fee. Also, if a company generates revenues through grant-related activities, such as by selling a new cell line developed with NIH funds, then these revenues must be used to offset a comparable portion of the original grant allocation, according to Diana Jaeger, assistant grants policy officer in the NIH Office on Policy for Extramural Research Administration. Nonprofits can keep these revenues and use them to expand their research. R01 grants arrive at for-profits by a number of routes. At Panlabs Inc. in Bothell, Wash., senior scientist David Kirk splits his time between company projects and his NIH-funded research project, a search for nonsurgical treatments of benign prostatic tumors. Kirk received his grant in 1992 while a scientist at the nonprofit Huntington Medical Research Institutes of Pasadena, Calif. By the time he started the three-year project in 1993, Kirk had moved to Panlabs. Kirk conducts his NIH work at the Panlabs facility using company labs and equipment. He stresses that the company has been very supportive of the research funded by the grant. "We've gone through a friendly merger and a downsize since I've been here, yet they [management] continue to support my doing the grant work," even though the project is not closely related to company interests, he says. William Braun, vice president of Integrated Genetics Inc. in Framingham, Mass., says that from his company's perspective, the traditional research grant provides the benefits of collaborative science and can cover some of the company's expenses. "Usually the particular grants we're involved in are multisite, so they bring with them the opportunity to collaborate with university scientists. And if it's research you're going to do anyway and it's in the public interest, then the grant helps offset the costs of the research," he says. Integrated Genetics scientist Katherine Klinger currently has NIH funding to study a form of polycystic kidney disease that accounts for about 10 percent of end-stage renal disease. CONTINUITY: Gerard Congelosi moved his R01 with him from a firm to a nonprofit. In 1993, Gerard Cangelosi received an R01 grant from NIH to conduct physiological studies of the tuberculosis bacterium. The basic-science studies were necessary underpinnings of a new assay Cangelosi was working on as a scientist at Microprobe Corp. of Seattle. The assay is intended to rapidly identify the susceptibility of tuberculosis to a range of antibiotics. "The project has elements of basic research with a very applied goal," he explains. The idea to pursue a grant was Cangelosi's, not the company's. "[Microprobe] paid my salary while I did the feasibility studies and wrote the grant. The company thought it [the project] was a good idea. It just didn't have the resources to fund it." Then in March, Cangelosi left to become a staff scientist at the nonprofit Seattle Biomedical Research Institute and an assistant professor of pathobiology at the University of Washington. He is continuing the NIH-funded project at the institute. At Cytel Corp., an eight-year-old biotech company in San Diego, an R01 grant supports the investigation of an enzyme system important for the biosynthesis of carbohydrates. James Paulson, Cytel's vice president of research and development in the cell adhesion program, has directed the grant for 17 years, first as a faculty member in the biological chemistry department at the University of California, Los Angeles, and since 1990 at Cytel. Cytel is developing drugs to stimulate or suppress the immune system, explains Paulson, and has a strong interest in carbohydrates and carbohydrate-based drugs. In addition, Paulson's research at UCLA resulted in some patented technology that Cytel has licensed. Even so, the current NIH grant focuses on more basic science than studies the company is pursuing, so Paulson takes pains to keep separate grant- related and Cytel work. "The postdocs working on the grant have no oversight of their work by anyone at the company other than me," states Paulson. "We make sure the grant funding covers the support of those individuals so that they have no obligations to focus on any company goals." But the postdocs work in company labs and interact with company scientists, a stimulating situation for all involved, Paulson notes. At Genetics Institute Inc. in Cambridge, Mass., the company has a general policy against seeking R01 grants. The only such grant at the company arrived there with a scientist it hired away from Dana Farber Cancer Institute. Genetics Institute, according to a company spokesperson, believes these grants don't bring in enough money relative to the effort needed to apply for one. Also, the firm doesn't think that the "strings" that come with a grant, such as the administrative and reporting requirements, are something a for-profit company in a competitive environment can afford. Panlabs' Kirk agrees that the traditional research grant may not necessarily be a good "fit" in industry. He says it's difficult to find enough time to give his company projects and the grant work the attention they need. "The demands on an industrial scientist and on an R01 scientist are very different," he says. Management and customers want answers and results quickly, he observes, while exploratory research requires time and flexibility to pursue interesting leads as they appear. Kirk and others note that in addition to funding, an NIH grant can bring prestige to a company. With some publicity, suggests Kirk, a firm can communicate the message that "here is the caliber of people we have." Paulson says there is "no question" that the presence of NIH- funded research at Cytel Corp. offers intangible benefits in addition to the knowledge gained. "The publications that result from the grants and the talks that our scientists are invited to give at scientific meetings are very valuable to the company," he asserts. "It brings us into relationships with thought leaders in the field of drug development." He also believes that a young biotech company can engender feelings on the part of investors and analysts that the company is doing high-quality science if its projects can earn scientific grants. "So it [an NIH grant] counts for a lot. Incrementally, that perception influences your ability to raise capital." Lee Katterman, a writer based in Ann Arbor, Mich., is editor of Research News, a publication of the University of Michigan.

A Few Companies Are Reaping The Benefits Of NIH Investigator-Initiated Basic Grants

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