In Our Opinion, Biotech Grants Program Falls Short Print E-mail
By M.E.Garza   
Thursday, 04 November 2010 07:25

Following upon our story "Look for up-and-comers to start announcing government grants" from earlier in the week, Reuters is reporting that the U.S. government announced $1 billion worth of small grants to small biotechnology companies to boost research and support jobs.
The grants, some of them just a few thousand dollars, will go to 2,923 companies with fewer than 250 employees in 47 states and Washington, D.C.

"With this funding, they'll be able to hire more staff, improve facilities and move forward with research projects that might otherwise have been put on hold," Health and Human Services Secretary Kathleen Sebelius said in a statement. "We can't afford to see promising discoveries discarded or innovative businesses move overseas."

Look for up-and-comers to start announcing government grants

The money comes from the healthcare reform bill passed into law in March, the same bill targeted by many of the Republicans who won new seats in the U.S. Congress on Tuesday. Most experts agree that Congress will be unable to substantially change the law, but many of the new lawmakers promised to fight funding of many of its provisions.

It's easy to sit on the sidelined and criticize these effort, but we're going to do it anyway.

In our opinion, the governement really dropped the ball here. They should have awarded more these grant monies more carefully and only to the biotech companies with the most promising technologies. The problem is that they probably didn't have either the expertise or selsction process in place to do that. As a result, many of the companies who dillegently applied for the grants hoping to get more funding got what ammounts to "an equal disbursement."

A list of the companies receiving grants is available here:

"These grants made possible by the Affordable Care Act will not only help to create jobs and bolster the economy, but also bring us closer to the next generation of life-saving cures," National Institutes of Health Director Dr. Francis Collins said in a statement.

I'm just another guy with an opinion, but in my book that statement reads more false than true. The sums of most of the awards are simply not big enough to create jobs or bolster the economy. Dr. Collins' staff should follow up and see how many new job postings will be up in the coming weeks, especially at some of the biotech companies many investors consider long-shots at best.

Many of the companies with great science, but little funding could have truly benefited from the reform bill grants. Instead, they'll have to wait their turn for capital raises (dillution) or other funding mechanisms in a time when many of the check writers simply aren't writing checks. How is that spurring advancing medical science, really? The truth is much of that money will either be carelessly spent, end up in someone's pockets or both. There will be exceptions, of course, but most of them insignificant enough to go unnoticed.

What a shame. We were expecting much more significant impact from our tax dollars.

Then again, when was the last time we heard otherwise?

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