The last 12 months have not been an easy time for biotech startups to raise capital, and the situation may not improve much in the coming year. Initial public offerings (IPO) are less common, venture capital and private equity firms are more selective, and the mergers & acquisition (M&A) option isn’t always available for pre-clinical and early-stage companies.
Fortunately, venture capital, M&A, and IPOs are not the only options for advancing a biologic through the clinic. Non-dilutive funding, particularly from government grants and loans, can be an excellent way for biotechs to support clinical manufacturing—without giving up any equity or ownership stake. Non-dilutive funding is often under-utilized by biotechs, even though this type of funding is more accessible in the life sciences than in other sectors, given government interest in improving public health.
Below, we outline excellent sources of non-dilutive funding. These funding mechanisms can be coordinated with the selection of a biologics contract development and manufacturing organization (CDMO) to advance your mammalian, microbial, or cell therapy program to clinical trials.
The Cancer Prevention & Research Institute of Texas
The Cancer Prevention & Research Institute (CPRIT) of Texas funds projects for companies developing novel products for cancer patients. The “Therapeutics Company” program funds ongoing research and development, normally for a company that is already in Phase I or less than a year away from an investigational new drug (IND) filing. The “New Technologies” category supports ongoing R&D of new technologies for cancer diagnosis or treatment, including the manufacture of cell-based therapies and biomanufacturing of new therapeutics.
Applicants may ask for any amount of funding, though larger requests will naturally involve a more stringent evaluation process. CPRIT grants include requirements for matching funds and revenue sharing. Companies do not have to be based in Texas to apply, but to receive a grant, must commit to certain factors such as locating in Texas, maintaining business in the state, and working with service providers located in Texas.
Small-Business Funding from the US Federal Government
Through the Small Business Innovation Research (SBIR) program, the US federal government provides funding for small US-based companies for R&D projects with potential for commercialization. For the first phase, typical funding amounts range from $50,000 to $250,000 for six months; for the second phase, these average $750,000 over two years but can reach $1.5 million. The SBIR program spends at least $3.2 billion a year.
SBIR funding is provided through participating agencies, such as the Small Business Administration (SBA), the National Science Foundation (NSF), Health and Human Services (HHS), and the National Institutes of Health (NIH). Participating agencies post SBIR and Small Business Technology Transfer (STTR) funding opportunities throughout the year, following a schedule posted in an online planner.
The National Institutes of Health
The National Institutes of Health (NIH) funds more biomedical research than any other public entity worldwide. In 2022, NIH invested $45 billion in such research. The NIH website offers extensive information about grants, including how to request assistance with the process—something they strongly encourage.
NIH funding is issued through its 27 institutes and centers. Using the “matchmaker” tool on the RePorter page, you can submit a description of your research to see what similar work has already been funded, and by which center. That information will help you determine which center is the right fit for your project. Funding Opportunity Announcements (FOAs) are posted on the NIH Guide to Grants and Contracts page.
Biomedical Advanced Research and Development Authority
The Biomedical Advanced Research and Development Authority (BARDA) funds the development of vaccines, drugs, therapies, and diagnostics for public health emergencies.
Under the BARDA Broad Agency Announcement (BAA), the authority partners with companies offering solutions to a broad range of health security threats, including therapies and vaccines for influenza and emerging infectious diseases.
Through its Division of Research, Innovation, and Ventures (DRIVe), BARDA’s Easy Broad Agency Announcement (EZ-BAA) funds early-stage companies developing “life saving innovation” with two levels of awards; the first offers up to $750,000, while Plus (+) Phase awards can reach $20 million. Current funding opportunities are listed on the DRIVe website, where past programs are also shown for reference.
Advanced Research Projects Agency for Health
The new Advanced Research Projects Agency for Health (ARPA-H)—which announced its first solicitation in March 2023—advances biomedical research for challenging health problems. This funding agency focuses on research considered to be high-potential and high-impact but that is not readily developed through traditional research or commercial activity. Early awardees of ARPA-H funding include a $19.9 million award for a cancer immunotherapy program and up to a $37 million award for a stem cell-derived treatment targeted at improving immune and endocrine function.
Check for Updates
Even if current programs offered by these funding agencies are not an exact match for your company’s projects, it’s worth checking regularly for announcements of new programs. You can also sign up for email notifications about new opportunities through the U.S. federal grants website. The Grant Engine blog also provides helpful information and updates about many aspects of non-dilutive funding.
Timing Matters—Partner with a CDMO Before Funding Arrives
Biotech executives should begin the work of selecting a biologics contract development and manufacturing organization (CDMO) long before funding arrives. Many non-dilutive funding options come with strict timelines for spending the funding, so you must be ready on day one.
The process of partnering with a CDMO, from developing a request for proposals (RFP) to signing a contract, can take several months. By allowing time to get to know a CDMO, you can ensure the CDMO will meet your needs, understand your timelines, and help you budget for clinical trial manufacturing. The ideal biologics CDMO partner will act as your consultant, leveraging its process development, manufacturing, and regulatory expertise for your benefit.
Another important reason to start working with a CDMO early is that capacity is not guaranteed. Just because a CDMO has the capabilities to manufacture your biologic doesn’t mean it has the current capacity to start your program. If you wait until funding arrives to sign a contract, you could discover that your top-choice CDMO won’t be able to produce your clinical batches until after your funding expires.
Taking your research from the lab to clinical trials demands a great deal of time, effort, and money. Starting down that path with non-dilutive funding can set you up for success in the long run. Scorpius BioManufacturing is happy to discuss timelines and provide budgetary estimates for biotechs seeking to enter clinical development. Contact us today to schedule an introduction.
Contact us to learn more
Scorpius BioManufacturing is a biologics CDMO that provides manufacturing, analytical and process development services. The company's first facility in San Antonio, TX, prioritizes American-made equipment, reagents, and materials. By integrating analytical methods development, process development, cGMP manufacturing product characterization, and QC release testing, Scorpius can efficiently develop a client-specific clinical manufacturing solution that enables a faster path to product commercialization.
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