The Winners of the IRS Biotech Grant Program Are…

11/3/10

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around $410,000. A number of companies won multiple awards for different projects, and the credits and grants cover expenditures in both 2009 and 2010. The government, to its credit, met the very ambitious timeline that it had set for the collection and review of the applications and the announcement of the awards.

So what impact will these awards have? The amount available to any one company was capped at $5 million, and the majority of companies clearly received much less than this. Overall, the effects will be rather modest on a per company basis. It’s likely that the very smallest companies, those that are just holding on while trying to obtain a critical piece of data or lock down some VC or angel funding, will get the most benefit. This was, in fact, the intention of the program: to stimulate the growth and survival of the smallest companies. That’s why the larger, more mature biotech companies (with greater than 250 employees) were not eligible to compete. The money will not only pay for expensive lab supplies, it should also serve as well as create a number of good, high paying jobs across the industry. Here’s hoping that the winning companies will use the funds to leverage their research and clinical programs into successful businesses.

The other likely big winners? The accounting and grant writing firms that assisted the baby biotechs with putting together their applications. Some of these firms were taking as much as 25 percent of the grant proceeds if their efforts were successful (and zero percent if they were not). When the awards program was first announced and details were non-existent, rumors flew about early application deadlines, submissions that would be judged and funded in the order in which they were received, and the possibility that grant applications might run hundreds of pages (including supporting materials). None of these rumors turned out to be true, nor was it known at the time that the dollar amount of the individual awards was going to be limited. I would guess that many biotechs signed on with these firms early in the rumor phase, only to realize later that they have could have easily completed the brief applications on their own. Given overstretched internal resources, I don’t fault the biotech companies for going down this path. As Henry Ford once put it, “The best we can do is size up the chances, calculate the risks involved, estimate our ability to deal with them, and then make our plans with confidence.”

Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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