Our biotech clients with immunology and infectious diseases assets ponder repurposing their portfolio for COVID-19. How to best do so?
As COVID-19 rages on, smaller biotech firms are seeing their funding dry up and new trials delayed. In addition to professional challenges, many of us are starting to feel the personal sting of this pandemic, as well as the general call to help. Being in biotech it is tempting to consider pivoting business plans and repurposing portfolios, particularly in immunology, virology and immuno-oncology, to fight COVID-19.
Big Pharma has the scale to quickly repurpose capital and resources to fight the global pandemic. Smaller firms may have some valuable assets to lend to the cause, but it is far riskier for them to make such a commitment.
Despite the risks our smaller clients are itching to help out. And with many COVID-19 grants available, there appears to be a good opportunity to develop one’s assets, raise additional funds, and help with the good fight against this global pandemic, all at the same time.
So we spent some time looking into how our smaller clients can do so via COVID-19 Grants while mitigating any longer term risks. Here’s what we found out.
While such emergency funding streams as COVID-19 grants are a viable option, such a pivot using current funding is also a financial and fiduciary challenge for most firms, as they can put companies on paths they were not intending, and create operational and financial obligations that are not easily reversed. As a result, firms MUST weigh important strategic, operational, and funding-stream questions before accepting COVID-19 money.
Strategic Considerations:
1. Strings Attached: will accepting funding come with long-term financial, clinical participation, or IP obligations that can cause problems later on? Are there IP impairment risks?
2. Clinical Risk: will generating COVID-19 data compromise or alter existing clinical programs (for example, dose differences, differences in population health, and the structure of trial that may increase the chance of severe AEs)?
3. Quantify COVID Alignment: how much overlap is there between a COVID-19 program and the development of the core strategy of the firm? Will the board approve?
4. Altruism: given the pros and cons, how much of an impact can the firm truly make on society by repurposing efforts to COVID-19, considering the potential for distraction? Will proceeding on original course provide better and larger benefits to society overall?
5. Red Tape: Does receiving government or non-profit money open up a risk of federal audit or other additional distraction? Does this risk spread to the rest of the organization or can it be contained?
Operational Considerations:
After confirming COVID-19 Grants make sense strategically, small firms MUST also mitigate subtle but very real operational risks:
1. A side project in COVID-19 can push staff and senior executives away from focusing on corporate goals.
2. There are significant resources required to track spend and additional administrative costs particularly with government funding.
3. There is potential for considerable compliance burden
Choosing the right funding stream:
And finally, there is the daunting task of selecting a funding program to pursue that best fits your company’s abilities and needs. First Principles has investigated over 20 different grant and funding opportunities for our clients and determined the best opportunities:
1. BARDA - General - >$3.5B
With its budget tripled to over 3.5 billion dollars in response to the pandemic, Biomedical Advanced Research and Development Authority (BARDA), within the US Department of Health and Human Services, is the most well-known of the grant providers. BARDA reformulated an existing BAA to try to streamline the process: innovators can first set up a video meeting (referred to as TechWatch), then submit a short white paper, which upon acceptance, triggers submission of a full proposal. The typical three month review process has been abbreviated dramatically. Already, within weeks, Roche received 25 million dollars to accelerate its tocilizumab study. This is a general “Broad Agency Announcement” (BAA), but there are a fair number of conditions in the fine print. For example, some areas of interest, but not all require a completed Phase 1 clinical study.
2. Gates Foundation - Therapeutics - $125M
Within the therapeutics realm, the Bill & Melinda Gates Foundation, in collaboration with Wellcome Trust and Mastercard, launched a $125 million COVID-19 Therapeutics Accelerator fund aimed at evaluating how existing drugs can help treat COVID-19. Recently, the Chan Zuckerberg Initiative, UK Government, and singer Madonna announced their additional financial contributions to the fund. The accelerator will support candidates from pipeline development through manufacturing and distribution; while it has not yet launched a traditional funding call or application process, inquiries to identify potential therapeutic candidates has been encouraged.The lack of structure for applying to this fund presents a barrier, but it is likely to entail less bureaucratic overhead compared to the US government as a funding source.
3. Amazon - Diagnostics - $20M
A leader in diagnostic innovation funding is the Amazon Web Services (AWS) Diagnostic Development Initiative. Their $20 million fund aims to accelerate the development of tools to detect SARS-CoV-2 infection and the creation of innovative solutions to mitigating infectious disease outbreaks in the future, using the AWS platform. Researchers must submit an abstract and plan outlining how AWS can support their diagnostic research. AWS will award selected projects credit towards utilizing AWS services.
4. NIAID - Vaccines and Therapeutics - $11.5M
The National Institutes of Health (NIH) has created a multitude of award opportunities in response to the growing pandemic, but the total funding available is limited. Several NIH grants are solely supplemental opportunities for current awardees to expand their research, but there are also new solicitations open to the public. NIH grants can be operationally challenging.
The National Institute of Allergy and Infectious Disease (NIAID) created a $10.5 million fund to award grants for select projects focused on pre-clinical development of therapeutics and vaccines.
The NIAID is also supporting research on a smaller scale through a $1 million fund utilizing collaborative cross mouse models to explore immunoregulatory mechanisms. Research proposals studying immunity to SARS-CoV are encouraged to apply to this opportunity.
For projects planned to involve a long-term clinical trial over several years, but are not repurposing existing therapeutics, sponsors should consider applying to a separate NIAID grant that funds investigator-initiated, milestone driven research. The criteria for this grant are broad, indicating that a wide range of clinical studies will be considered. Though not specific to COVID-19 funding, researchers could utilize this funding mechanism to conduct clinical research on a potential novel COVID-19 therapeutic.
5. NCATS – ongoing trials - Up to $5M per applicant
Another opportunity of interest, presented by the National Center for Advancing Translational Sciences (NCATS), is a call for research projects that repurpose existing drugs or biologics that have already begun or completed Phase I clinical trials for COVID-19. This opportunity supports three stages of development: pre-clinical studies, clinical trial planning, or clinical study execution. All project applications should aim to evaluate a therapeutic/indication pairing for drug repurposing. For each applicant, funding can be as high as $200k for bench testing, $3M/year for clinical testing, and $1.5M for clinical planning.
Take Away:
It is out view small biotech firms should seriously consider COVID-19 grants so long as the strategic and operational risks make sense, and there’s a grant available that clearly works with the firm’s goals and abilities.
Towards this goal, First Principles is working with its biotech clients to determine the best portfolio strategy and assist in the grant application process. If your firm is interested in our support, please reach out to us here or at info@fpadvisory.net.