Texas Cancer Agency Withdraws Pending Startup Funding Applications

7/2/13Follow @angelashah

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CPRIT was created by a 2007 amendment to the Texas state constitution with the mission of funding cancer research and prevention efforts in the state. With $3 billion to dole out over 10 years, CPRIT is the nation’s second-largest supporter of cancer research, behind the National Cancer Institute. A Texas State Auditor’s report in January detailed significant issues, including questionable or inappropriate activity in three grants totaling $56.2 million.

CPRIT says that companies that resubmit would not have to pay the commercialization application fee and that the withdrawal will not be held against them in the new evaluation.

While CPRIT may not hold the withdrawal against them, Michael Redman, CEO of Oncolix in Houston, is worried that the funding community looks unfavorably on startups caught up in the institute’s turmoil. CPRIT is an 800-pound gorilla and even a soft “no,” such as a withdrawal of applications can adversely affect future fundraising prospects, he says.

“We’re extremely disappointed,” he says. “We had to lay off some people, we postponed our clinical trial. It’s soured other potential investors, because if CPRIT doesn’t like you …  That really hurt us.”

Redman, whose company is developing a drug to fight ovarian cancer, also received the letter from the institute that his pending application for a $12 million grant was withdrawn. This was Oncolix’s second attempt to secure funding.

The company’s first try for funding was rejected. “We didn’t have any means to give any rebuttal to some of the erroneous statements that were made,” he added. Oncolix, he points out, has other investors, including the Texas Emerging Technology Fund, which gave the company a $2.4 million grant, and has orphan status from the FDA and clearance to hold a phase 1 trial.

Jon Northrup, CEO of BetaCat Pharmaceuticals in Gaithersburg, Maryland, didn’t get a letter from CPRIT withdrawing his application, but says he doesn’t have any better idea of the status of his application.

“We still think CPRIT is a fantastic idea and has potential to do wonderful things for Texas and oncology companies,” he says. “We’re still interested in making the move to Texas.”

Part of CPRIT’s mission is to fund out-of-state startups that would then move their operations to Texas. BetaCat initially applied for a $15 million grant to develop a drug that targets cancer stem cells, in the same cycle as Moleculin (the deadline in March 2012).

Northrup says they were turned down in September but then received an invitation from CPRIT to re-apply for a new cycle of applications that had a deadline of November 15 last year. He has not heard from authorities about where that grant application stands, he says.

“I think we would re-apply even if we were told we had to start over from scratch,” Northrup says. “We would go back one more time—that would be our last time.”

Angela Shah is the editor of Xconomy Texas. She can be reached at ashah@xconomy.com or (214) 793-5763. Follow @angelashah

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