The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Category Archives: Bailout

Anyone Else Short on Cash?

Yesterday, the WSJ Health Blog picked up on Burrill & Co.’s report, noting that one-third (120 out of 360) of publicly-traded U.S. biotech companies have under 6 months’ cash left, a figure that sounds depressingly familiar…

In the UK, the BioIndustry Association put out a press release January 27 that said:

The current situation is grave – approximately a third of publicly quoted UK bioscience companies have less than six months cash remaining. 

And here in Canada, BIOTECanada’s latest Parliamentary Quarterly (pdf) includes this nugget:

As of December 2008, over 25% of Canadian biotechs have less than 6 months cash remaining and … for smaller public companies, more than 40% have less than 12 months cash remaining. 

So please, give now.  And if you can’t spare the cash, pick up a pipette and go volunteer.  Every microlitre counts. 

Seriously, this is ugly.  Check out the Biotech Bailout page and toss an idea into the ring.

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Bailout Update: UK and Canada

Two bailout developments to report yesterday:

In the UK, the science minister Lord Drayson is championing a call by Imperial College London and the universities of Cambridge, Edinburgh and Oxford to create a £1bn fund to finance the early stages of university spin-outs:

Medical research was given as an example, but Drayson is said to be pushing for the £1bn fund to finance ideas from all areas of science and engineering.

Here in Canada, the MaRS Blog posted yesterday about BIOTECanada’s Parliamentary Quarterly (pdf), which reiterates BIOTECanada’s previous bailout asks and includes some new data on the Canadian biotech industry, as well as some information on bailouts in other jurisdictions.

I would guess that some of the support apparently being generated by the UK proposal is due to the breadth of the project, with the potential to stimulate a wide range of innovative industries.  With so many common needs and challenges among biotech, cleantech and high tech, I would like to see further collaborative efforts in Canada as well.  Hopefully the Ontario Venture Capital Fund, which appears to be set up along the lines being proposed in the UK, will invest in all three areas and create a foundation for future collaboration.

Update: for some sense of common ground, see this NY Times blog post.

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Stimulus Funding from NIH!

On Wednesday the National Institutes of Health published its Request for Applications (RFA), allocating $200 million provided in the American Recovery and Reinvestment Act.  The deadline for submissions is April 27, and requests for funding cannot exceed $1 million over two years. Applications must come from U.S. institutions and organizations, but  there are no apparent restrictions on sourcing technology from non-U.S. partners.

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Allocating Spending to Support R&D: UK, U.S. and Canadian Approaches

The U.S., Canada and the UK have all acknowledged the central importance of R&D even in these recessionary times.  However, the three national governments have decided to focus their spending on different steps of the R&D equation:

  1. Education: UK Takes the Long View
    British PM Gordon Brown, in a speech this week, identified three priorities: research, education and training, and public discourse.  However, only one of the three, education, was the subject of specific increased targets and spending:  retraining to increase the number of science teachers, a goal to double the number of pupils in state schools taking ‘triple science’, and a new Diploma program.  The U.S. and Canada have increased funding for graduate studies, but the UK effort is focused at an earlier stage, to rebuild the interest and capabilities of domestic graduates. 
  2. Publicly-Funded Research: U.S. Takes the Lead
    The focus of the U.S. R&D spending increases has absolutely been on research.  The increases for the NIH and NSF in the stimulus and the budget will go largely to increasing the volume of publicly-funded research.  PM Brown’s speech also vowed to protect funding for science from competing demands for Government support during the downturn, but did not propose increases over the existing 10-year plan.  Canada’s budget actually cut research funding across the three main granting agencies.
  3. Commercialization: Canada Takes Off 
    Canada’s focus was on commercialization.  The 2009 budget included $200 million allocated to the National Research Council’s IRAP program — $170 million to double the program’s contributions to companies, and $30 million to help companies hire over 1,000 new post-secondary graduates.  It also provided significant additional funding to BDC.  The only comparable spending in the U.S. was the $400 million for ARPA-E, which is allocated to energy programs, and supports research as well as commercialization.  PM Brown’s speech recognized the importance of maintaining the country’s struggling start-ups, and he has reached out to big pharma, but promised no specific action.

What’s still missing:  Stimulating Output

  • Despite calls in the UK, the U.S. and Canada, there have been no major tax policy changes enacted in this round of budgets and bailouts that ease the burden on, or return money to, early-stage technology companies.  Ontario has actually taken some steps in this direction with the Ontario Venture Capital Fund and the Ontario Tax Exemption for Commercialization.
  • Nor have there been many changes that increase the value of outputs: in the bio/pharma area, the UK has probably moved farthest in this direction, with upcoming reforms of the National Institute on Comparative Effectiveness (NICE), while the U.S. has seen decreasing FDA approvals and is allocating new comparative effectiveness funds.  On the other hand, approvals of GE animals, support for personalized medicine and big spending on electronic medical records will provide support to specific industry initiatives.

Stay tuned to our Bailout Page for updates.

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Bright Spot for Canada in NIH Gains?

You may not know this, but Canadian researchers can compete for NIH extramural funds, and they do so quite successfully.  I reviewed the 2008 data from the NIH budget site, which shows that Canadian researchers were awarded $47.4 million in 2008 (out of a total of $212.4 million total awarded outside the U.S.).  Hopefully this amount will increase in 2009-2010 as the stimulus and budget money for the NIH is allocated.  Considering the research funding cut in the Harper budget was $113 million, the NIH funds are a significant contribution to the Canadian landscape.

Some geographic breakdown: Toronto (69 awards, $18.4 million) and Vancouver (37 awards, $8.7 million) are the largest recipients.

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More Money: House of Representatives Release 2009 Spending Bill

The U.S. House of Representatives Appropriations Committee unveiled its Omnibus spending bill for Fiscal Year 2009 yesterday (pdf). The House is expected to vote on the package this week. For Health and Human Services, the Ombnibus contains $30 billion for the National Institutes of Health (NIH). This funding is in addition to the $10 billion added to NIH in the American Recovery and Reinvestment Act. The Omnibus also includes a new initiative to reduce hospital and clinic infections that cause nearly 100,000 deaths each year, and requires national and state plans to combat infections with $22 million.

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NIH Stimulus Spending

Some good info from ScienceInsider about how NIH is planning to allocate the stimulus money.  It looks like the vast majority will go to existing grants and already-submitted applications.

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Biotech Bailout: Texas Edition

Texas Governor Rick Perry keynoted a conference yesterday on “the challenges and the future of biotechnology in Texas” and “told the group that the biosciences are ‘the next big thing in the global economy.’”

According to the article in today’s Star-Telegram, the Texas Healthcare and Bioscience Institute is encouraging a number of measures this legislative session for bioscience, including:

  • A bill that would reauthorize the Texas Emerging Technology Fund, which was established with $200 million by the Legislature in 2005 to promote and finance innovations in technology.
  • A bill that would make it easier for patients to enroll in clinical trials for life-threatening diseases, which, officials say, is a necessary step in developing new medicines and medical devices.

Also, some jobs data:

There are about 33,000 Texans employed in biotechnology, with an average salary of more than $84,000, according to the Governor’s Office of Economic Development and Tourism.

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U.S. Stimulus Compromise (Updated)

Initial reporting (NYT, WSJ) on the bill coming out of the House-Senate conference committee this evening indicates that the $789 billion package will include most of the Bio-related provisions:

Update 10am: More details from ScienceInsider based on Pelosi’s fact sheet:

  • The Department of Energy’s Office of Science, which supports US physical science, will receive $1.6 billion.
  • $400 million will be provided to fund a new mini agency within DOE called the Advanced Research Project Agency-Energy. Obama’s energy secretary, Steve Chu, is a fan. Now congress has bestowed their blessing — and big money –on his dream energy program.
  • NASA will get $1 billion including $400 million for climate change research.
  • The National Institute of Standards and Technology will receive $580 million.
  • The National Science Foundation would receive the full $3 billion increase that the House had passed last month. That’s a 50% boost to its $6 billion budget. The breakdown of that number is not clear, but the House version contained $2 billion more for research grants; $900 million for three infrastructure programs, including a revived $200 million extramural facilities competition; and $100 million for two education programs.

Update 5pm:

  • The $3 billion in NSF funding breaks down as follows: $2.5 billion for research (peer-reviewed proposals); $100 million for the university research instrumentation program; and $400 million for national labs.
  • The NIST money is for infrastructure: $220 million for lab equipment and $360 million for facilities.
  • USDA gets $850 million for infrastructure.
  • NOAA gets $600 million for facilities and equipment.

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Biotech Bailout: France Edition

Unlike their research couterparts, who threw shoes in protest, France Biotech is taking a more traditional approach to their asks, starting with some grim statistics on private investment in French biotech in 2008:
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Senate Stimulus: Good and Bad Outcomes for Funding Biotech

The latest Senate deal provides an extra $6.5 billion to NIH, amounting to $10 billion for biomedical research but also to improve research infrastructure in NIH facilities. According to Senator Arlen Specter, Ranking Republican on the Senate Health and Human Services Appropriations Subcommittee, the monies would be divvied up among NIH agencies in amounts proportional to their fiscal year 2008 funding. He said that economists estimate that the additional funds could lead to 70,000 new jobs in the health industry over two years.

The latest Senate stimulus deal cuts $870 million for pandemic influenza preparedness efforts. This funding was largely set aside for advanced development of novel vaccines, therapeutics and diagnostics. This is quite different from the earlier stage work that would be funded through NIH. I have heard that the funding would not only fund development efforts for flu, but also allow Health and Human Services to support other advanced development programs, namely for biodefense.

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Biotech Bailout: Israel Edition

Israel’s Ministry of Finance announced a two-part stimulus for high-tech and biotech companies. 

  • The first part is an additional infusion of NIS 150 million (US$37 million) for the Office of the Chief Scientist, which runs a variety of R&D and commercialization programs. 
  • The second part is NIS 250 million (US$61 million) to set up a new fund specializing in biotechnology investments. The fund will be leveraged by the private sector and will reach a total of between NIS 750 million and 1 billion, and will be managed by an experienced management body with expertise in the biotech R&D sector.

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Dare We Compare?

Canada Budget Reax Update

Genome Canada is causing quite a stir this morning, picked up by ScienceInsider this afternoon.  That, plus more budget reaction from a Research Canada press release and a thumbs-down from the CVCA below…

The CBC story on Genome Canada funding has some reaction from Tony Clement:

Minister of Industry Tony Clement, speaking to CBC Newsworld on Thursday morning, disputed that funding had been cut, saying Genome Canada was in the third year of a five-year budget rollout.

“It would not be surprising that they would not get an extra amount in this budget because that was taken care of in the last two budgets,” Clement told CBC News.

So what is the status?

Godbout said that while money from last year’s budget was allocated over the next four years to fund ongoing projects, there no indication that they would receive nothing this year for new initiatives.

He pointed to a project to sequence the genomes of 50 different types of cancer, led by Ontario Institute of Cancer Research scientific director Tom Hudson, as one project that would be $25 million short of funding without further federal support.

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Canada Budget Reax

Canadian Budget

Flu and Stimulus

With new reported cases of avian flu in Canada and China  it’s encouraging to see that the U.S. economic stimulus plan boosts funding for development of vaccines and antiviral treatments for pandemic influenza.

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Trends, Trends Everywhere: Random Gloating II

Update on U.S. Biotech Bailout

Yesterday the U.S. House of Representatives’ Ways and Means Committee approved the “American Recovery and Reinvestment Plan,” (pdf) which did not include tax stimulus incentives proposed by the biotechnology industry (namely monetizing future Net Operating Losses and future R&D tax credits now in order to forgo those tax assets in the future).

The U.S. House of Representatives package included an enhanced R&D tax credit for up to 20% in R&D expenditures in 2009 and 2010, but limited to renewable energy technology.

The Senate Finance Committee economic stimulus tax bill (pdf) unveiled today extends for 2009 a more general provision that allows firms in a loss position to get cash from the government for research tax credits.

The Senate and House will need to resolve differences with respect to these R&D tax provisons in their respective economic stimulus packages.

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Bailout Bedfellows

A brief was released jointly last night (pdf) by 7 Canadian national organizations:

  1. Association of Canadian Academic Healthcare Organizations(ACAHO)
  2. Association of Faculties of Medicine of Canada (AFMC
  3. BIOTECanada
  4. Canada’s Research-Based Pharmaceutical Companies (Rx&D)
  5. Health Charities Coalition of Canada (HCCC)
  6. MEDEC – Canada’s Medical Technology Companies
  7. Research Canada: An Alliance for Health Discovery

Update: the Brief calls for Government action in four areas:

  • Tax policy (the BIOTECanada asks, plus measures to encourage charitable contributions);
  • Continued investment in world-class infrastructure;
  • Support for research and management talent in research and innovation; and
  • Increased investment in discovery research (granting councils and a $100 million increase for CIHR)

More info from the press release after the jump:

Trends in 2009: Random Gloating

Remember way back Monday when we identified Comparative Effectiveness as a trend to watch in 2009? Well, here it is, showing up as part of the bailout bill. More on the bailout bill’s Bio provisions to come. AAAS is running continually updated coverage of the bill and its R&D provisions here.

Money = Jobs

As various constituencies make their arguments for bailout funding, the supporting materials have a common, unsurprising, theme: Money = Jobs.  How many jobs?  A collection of the data we’ve found after the jump:

Bailout Bonanza!!

bailout-pic1With every industry under the sun seeking bailout money, Biotech is not about to be left out. And with a record number of biotech companies with less than 6 months’ cash in the bank, there is good reason to fear that promising ideas could be lost before the credit markets thaw. There are, however, an abundance of views on what form help for the industry should take.

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