Xconomist of the Week: Bob Langer’s Advice for Turning Foundation and Government Money into Startup Success

9/1/11Follow @arleneweintraub

Yesterday, Selecta Biosciences—one of many companies founded by MIT professor and entrepreneur Bob Langer—announced that it had received a subcontract from the Science Applications International Corporation (SAIC) to develop a vaccine against malaria. The financial details weren’t released, but the initiative is part of a $76.5 million contract SAIC has with the National Institutes of Health.

Like many of Langer’s creations, Selecta has made the most of federal funding and grants from disease foundations. In June, the Watertown, MA-based company received a grant from the Juvenile Diabetes Research Foundation to apply its vaccine technology to Type 1 diabetes. Selecta has raised $30 million in venture capital, but the grant money has been equally vital to advancing the technology, Langer says. “What I want when we create a technology in our laboratory is to see it help as many people as possible,” Langer says. That matches the mission of the grant-givers, he says, which is “to solve problems any way they can.” Another advantage, of course, is that grant money is non-dilutive to shareholders.

Langer knows a thing or two about applying for grants. In his 30 years as a scientist and entrepreneur he estimates he has founded about 24 companies. He has 800 patents issued or pending. He can’t estimate how much grant money he’s won over his career, except to say “It’s a lot.” And he believes every entrepreneur should lean heavily on grants. “Grant money is critical in the early stages,” he says. “It basically enables companies to get off the ground.”

Selecta is developing “antigen-specific vaccines,” which are designed to elicit different types of immune responses. The vaccines are made of synthetic nanoparticles. Some activate the immune system, while others induce immune tolerance to disease, without damaging cells that keep people’s immune systems intact. The NAIC contract is geared towards developing a vaccine particle that can fight malaria.

Selecta isn’t the only Langer company that has scored grants. Cambridge, MA-based Seventh Sense Biosystems received a grant from the Bill & Melinda Gates Foundation in 2009 to develop low-cost diagnostic systems for malaria. The company has developed a technology that can collect blood samples from the skin’s surface—no painful injections or finger pricks needed.

Last November, Lexington, MA-based T2 Biosystems—which Langer co-founded in 2006—said it had received $730,000 in grants from the IRS Qualifying Therapeutic Discovery Project, to support the development of next-generation diagnostic tests for a variety of diseases. And early this year, Langer’s Arsenal Medical, based in Watertown, MA, was awarded $2.3 million from the National Institute of Standards and Technology to develop new materials for drug delivery, tissue engineering, and other medical products.

Winning grants is far from easy, especially at a time when government funding for basic research is stagnant, at best. In fiscal 2009, research funding by government agencies increased about 9 percent, according to the National Science Foundation. But that followed two years in which such funding dropped nearly 3 percent. And with concerns about the national debt at an all-time high, fears of cutbacks in government coffers for R&D are on the rise.

Langer has two pieces of advice for entrepreneurs looking for grants. Number one: Learn everything you can about potential funding sources, especially the ones that are off the radar. “When I was a graduate student at MIT, I helped start a school for poor kids in Cambridge,” Langer recalls. “One of the things I did was try to raise money for different educational programs. I found that I could apply for grants from the National Institute of Drug Abuse saying, ‘If you can educate kids better, you’ll reduce drug abuse.’ We got grants for doing things like that.”

Number two: Write a really good grant. Sounds basic, Langer says, but some grant applicants overlook the obvious. “What you want to do, in general, is have good science. But you also want to meet the needs of whatever place is doing the judging,” Langer says. If your company is not an expert in the problem the grant maker is trying to solve, he adds, you need to prove you have access to people who are. “With Selecta, we’re in vaccines and nanotechnology. We’re not experts in malaria. But we can hook up with people who are. You want to have all the pieces in place when you apply for the grant.”

Langer believes trends in grant funding from private foundations will benefit entrepreneurs. Several niche foundations have popped up looking for cures for rare diseases, he points out. And overall, foundations are starting to go out and search for promising projects to fund, even before the scientists come asking for money. For example, Langer’s lab at MIT received a grant from the Juvenile Diabetes Research Foundation in 2008 that was renewed in January of this year. The project centers around developing synthetic polymers that can encapsulate insulin-producing cells, so they can be transplanted into people with diabetes. “They sought us out,” Langer says. “Some of these foundations are very proactive today. Their goal is to see the disease treated.”

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