Bioe News

Published online: 03 November 2005, doi:10.1038/bioent890

Nanobiotech booster shots

*Emily Waltz is an intern at Nature Biotechnology and Nature Medicine

The US National Cancer Institute has completed its funding for nanobiotech projects, but the debate about its value to startups lingers.

Nanobiotech booster: Gregory Lanza, Washington University Medical School Earl S. Cryer

A few weeks ago the US National Cancer Institute (NCI) doled out the last chunk of its controversial $144.3 million Alliance for Nanotechnology in Cancer initiative to fund nanobiotech R&D. Over five years, 12 teams will receive a total of $35 million in grants, and seven multi-institutional centers will receive a total of $90.8 million (Nat. Biotechnol.  22, 1335–1336, 2004). The grants cover R&D projects focused on biomarkers, diagnostics, drug delivery, devices and therapeutics. The big question: will any of this money benefit entrepreneurs and lead to new products?

Ever since the NCI first formally announced the grant initiative in September 2004, critics of all sorts have argued that the NCI is not up to the task of stimulating nanobiotech R&D. Some critics carp that $144.3 million is too much money to spend on nanotech whereas others complain that it's hardly enough funding to provide much more than proof of concept. There are some, however, who see the NCI initiative as a smart move for the US given nations such as China, Japan and Korea are said to be investing more in nanobiotech.

One small fact often gets lost in these controversies about new technology grants: to entrepreneurs and researchers, who in this case are still struggling to prove the value of their platforms in biomedical R&D, proof of concept is plenty.

What's more, the NCI nanobiotech grants might be meaningful in other, sometimes less obvious ways. It will be years before we see tangible results, but for those keen to develop, then commercialize or license their nanobiotech innovations, these NCI grants not only help fill the funding gap leading up to a seed or first round financing, but also often provide the validation needed to capture the interest of investors in the first place. Lead investigators of the grants say the money allows them to develop nascent technologies most other federal government grants and private investors would not touch. Researchers say the funding gives them an opportunity to test their ideas in the laboratory, taking the edge off the risk to investors.

		"What's more, the NCI nanobiotech grants might be meaningful in other, sometimes less obvious ways."

"Without preclinical data, it's very hard to get funding," said Marianne Manchester, an associate professor at Scripps Research Institute in La Jolla and a past recipient of two NCI nanotech grants. Her group is harvesting virus-based nanoparticles to target cells and deliver chemotherapeutic drugs. "When we started, it was really new still and if we would have submitted it to a different [US National Institutes of Health] grant, they would have triaged it immediately."

Jim Matheson, a partner at the venture capital firm Flagship Ventures in Cambridge, Massachusetts, says investors look to researchers receiving federal funding as a source for ideas. "We're all about reducing risk at early stages of development," Matheson says, "so if grant money can move research to preclinical stages, it reduces risk and makes it more appealing to VCs [venture capitalists]." (See Table 1)

Flagship recently invested in dendrimer technology at biotech startup Avidimer Therapeutics in Ann Arbor, Michigan, Matheson says. The technology at Avidimer arose from an NCI grant to Jim Baker, chairman of Avidimer and a researcher at the University of Michigan in Ann Arbor.

Although the NCI is providing funding opportunities that wouldn't otherwise exist, VCs know some of the proposals could be a bit farfetched as products. "A lot of it is very fundamental research, and very far afield," says Baker. For some projects, "it's not rational to think they will result in any near-term technology," he said. Knowing this, investors may shy away from diving in too soon, he says.

"Fewer and fewer VCs will take research directly from a university," adds Larry Bock, chairman of Nanosys, a nanotech company in Palo Alto, California. Although looking for future partnerships among the lists of awardees of federal grants can be rewarding, Bock says "there aren't a lot of VCs who will do that."

In the past, the grants have functioned more like contracts. Investigators had to meet milestones and submit quarterly reports on their progress. "They very aggressively reviewed us," said Baker, referring to prior awards. "Other grants got curtailed if they didn't meet milestones."

		"'But the NCI doesn't have a good understanding of how to get cancer drugs into clinical development,' says Carl Grove, president of iMEDD."

One of the groups that did not get re-funded was biotech startup iMEDD of Foster City. The group received funding in 2001, and was one of a few private sector groups at the time to directly receive money from the NCI. In their proposal, iMEDD suggested a new way to mimic killer cells that target tumors. "It was a very novel idea and we had done no research," said Carl Grove, president of iMEDD. The NCI awarded $2 million to the group, but it failed to reach an animal studies stage of development on schedule, Grove said.

"It's a noble attempt to try to address getting research to the clinic," Grove says. "But the NCI doesn't have a good understanding of how to get cancer drugs into clinical development." Grove says because his company's technology was so new, the milestones should have been adjusted to be more realistic once the project was underway. iMEDD's project is now on hold as it has been unable to attract outside investment or commercial partners. The NCI seems curiously ambivalent about its role as an official bridge builder from basic research to commercial R&D.

A reviewer of the proposals to the NCI says inspiring private sector interest was a goal, but not an overt one. The reviewer, Jan Schnitzer at the Sydney Kimmel Cancer Center in San Diego, says the purpose of the grants was more to bring together groups of people from various fields to produce tangible results. He said, however, one of the requirements of the proposals was for researchers to specify his or her ties to the private sector, and highlight the possible clinical applications for discoveries. Schnitzer reviewed the platform proposals and separately, received one of the center grants this year, which were reviewed by a different group.

Threading the needle: Jan Schnitzer, Sydney Kimmel Cancer Center SKCC

Schnitzer says investigators who emphasize the private partnerships too much in their proposals may cause grant reviewers to balk. "There was some discussion of 'are we just throwing money into a biotech?'" Schnitzer said. He said the discussion came up particularly with the proposal from Sam Wickline and Greg Lanza, researchers at Washington University in St. Louis and board members of the biotech Kereos in St. Louis. "Wickline clearly had a tie to a company," Schnitzer said, "but he also clearly defined his purpose" at the university.

Lanza and Wickline received a grant in 2000 for their work at Washington University and Barnes-Jewish Hospital in St. Louis in targeting imaging and chemotherapeutic agents that detect and selectively destroy tumors. The award was one of the agency's unconventional innovations program grants, a predecessor of the platform and center grants awarded this year.

From the grant money, Lanza and Wickline were able to test animal models and push their technology forward. Kereos licensed the technology from the university and the hospital and developed it further. "The university is kind of conservative," Lanza says, "so this was a way for the university to contribute safely."

The group received another round of funding from the NCI in 2002. Soon after, VCs started showing interest. By 2005, 14 investors had contributed, including Genentech and Royal Philips Electronics.

"The momentum picked up and snowballed and at $20 million we had to tell people we couldn't take any more," Lanza said. Morale picked up around the company, he said. "Our tech transfer office was more on the ball and everybody had more energy—not because there was more money, but because we could see real results." Lanza says he expects their technology to enter phase I trials by early 2007.

Washington University is one success story, and recipients of other past NCI grants have similar sentiments, but nobody should confuse some early evidence of success with the reality of nanobiotech at this point in its evolution.

"There is a giant gap between research funded by the government and the dollars VCs will put into applied research," says Bock. "And it doesn't help that it's extremely difficult working with college tech transfer offices."

Table 1. Snapshot of previous recipients of nanotech grants from the US National Cancer Institute.

Primary investigator	Institution	Award year(s)	Private partnership(s)	Investors
James Baker	University Of Michigan (Ann Arbor)	1999 2002 2005	Avidimer Therapeutics (Ann Arbor)	Flagship Ventures (Cambridge, Massachusetts)
Greg Lanza	Washington University & Barnes-Jewish Hospital (St. Louis)	2000 2002 2003	Kereos (St. Louis)	14 investors, including Genentech, Royal Philips Electronics, and Harris & Harris Group
Marianne Manchester	Scripps Research Institute (La Jolla, California)	2002 2005	Novartis (Basel)	None
Francis Martin	iMEDD, Inc. (Foster City, California)	2001	None	None
Kirk Beach	University of Washington (Seattle)	2000	Undisclosed Japanese major manufacturer	Undisclosed
Stephen Berry	Alnis Biosciences, Inc. (Research Triangle Park, North Carolina)	2002 2004	Undisclosed	Johnson & Johnson Development Corp (New Brunswick, New Jersey)