A Bridge over the Valley of Death

The National Cancer Institute has funded cutting-edge research for years, but now it’s engaged in some innovation on the financial side of things, and the initiative might just help the venerable institution improve the ROI on its own investments.

The NCI’s idea is to set aside funds that help emerging companies forge the “valley of death,” a term describing the period after their SBIR funding is exhausted and before they are ready to raise funds from an increasingly penurious VC community. 

According to BurrillReport, then acting NIH Director Elias Zerhouni hatched the idea upon realizing that $650 million invested by NIH in the Small Business Innovative Research program was not yielding adequate returns in the form of newly commercialized drugs and devices.

Zerhouni charged the NCI’s Michael Weingarten and Andy Kurtz to remedy matters, and they came up with the concept of the Bridge Awards.

“A lot of projects die on the vine when they exhaust the usual funding through the SBIR program. The idea with the Bridge Awards was to provide additional funding for the most promising projects,” Kurtz explained to Burrill.

The NCI recently issued its first round of Bridge Award grants and is now reviewing a second round. The 3-year grants top-out at $3 million.

Bridge Award applicants must match NCI funds on a dollar-for-dollar basis via external funding mechanisms. The Award provides non-dilutive capital and a measure of independence for the  companies while helping the NCI to validate the commercial potential of the company’s product.

“It’s money that buys you some runway or buys you time to a next milestone where you can get traditional venture capital,” Ernst & Young’s Glen Giovannetti explained.

“With NIH, there’s a process by which you have to qualify, so there is a scientific review and validation that comes from that.”

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