As research funding dries up for US science, few alternatives appear

At UMass Chan Medical School, gene therapy researchers Terence R. Flotte and Robert H. Brown are trying to figure out how to treat amyotrophic lateral sclerosis, the fatal neurodegenerative condition better known as ALS or Lou Gehrig's disease. They've made some progress: antisense oligonucleotides were able to slow down disease progression in at least one patient, and other studies from their labs have helped pin down some genetic causes of the disease, which is still poorly understood.

But that work, along with other biomedical research at UMass Chan, is threatened. Federal funding cuts and grant freezes at the hands of the National Institutes of Health (NIH) and other grant-making agencies have put a tourniquet on the flow of funding for science at the institution. 

UMass Chan is part of the University of Massachusetts system, which houses six schools. UMass Chan has received only about $2 million in grants since President Donald J. Trump took office. In a typical year, the school could expect $25 million–$30 million in that same time frame, according to a university leader who insisted on anonymity in order to speak freely.

The shortfall may mean that UMass Chan researchers won't be able to complete clinical trials that are already in progress, the leader says. He and his colleagues crunched the numbers, and they're expecting that around $150 million in research funds won't come through.

Budget cuts, delays to grant reviews, and layoffs of federal workers at agencies like the NIH and the National Science Foundation have affected nearly every research organization in the US. If researchers can't rely on federal dollars, they will have to look elsewhere to fund their projects—or risk leaving the work to die on laboratory benches.

Flotte and Brown say they're eyeing biotechnology and pharmaceutical companies as potential avenues to continue their research. UMass Chan's technology transfer office, which is responsible for negotiating intellectual property (IP) sales, is particularly active; the school is among the top US universities for generating licensing revenue, according to the leader. Brown has already cofounded multiple start-ups, including Nucyrna Therapeutics and Apic Bio.

“We have a history of engaging with industry in various ways, but this might be an opportunity to deepen that,” Flotte says.

But deepening that engagement may be a tall order. Private investors in the life sciences tell C&EN that their coffers don't compare to a juggernaut like the NIH, with its nearly $48 billion budget. Even if they did, industry players say their role is to fund science with immediate applications. Their focus is on things that are just a few years away from making money, such as drug candidates that show promise in animal studies or early-stage human trials, not basic science. 

“The reality is, the venture community and pharma and biotech cannot step in to fill this gap,” says Nessan Bermingham, an operating partner at the life sciences venture capital firm Khosla Ventures. “Forget capital standpoint. When you look at the requirements around any of these [venture] groups, it is to effectively commercialize something, generate revenue from that, and provide returns.”

An endangered ecosystem

This is the way biomedical research has long worked in the US: The government is responsible for funding extremely early-stage, basic science. So is academia, to an extent, but university researchers might also aim their efforts at translational research—science that has a strong potential for real-world applications and could be licensed out through a tech transfer office.

Biotechnology companies and the venture capital firms that power them are on the other side of that coin, buying the rights to academic research for, say, a specific disease. Larger pharmaceutical firms pay for internal research and development that falls into the near-term-applications bucket, and when they go searching for IP outside their labs, they aim their checkbooks at drug candidates that are far along, like those in midstage human trials. 

These distinctions have only become more pronounced in the last couple of years. The biotech industry has yet to emerge from a 3-year slump after a COVID-19-driven investment bubble, so venture capitalists and pharmaceutical companies are loath to fund or license much early-stage drug development. They want proven research.

“Not only is biopharma and venture capital not going to pick up the slack—they had shied away from funding this even before the NIH cuts were put into place,” says Isaac Stoner, CEO of Octagon Therapeutics and an entrepreneur in residence at the nonprofit seed-stage investor Slater Technology Fund. 

Christiana Bardon is the managing partner of MPM BioImpact, a biotech investment firm that focuses on early-stage start-ups and forms its own companies. That means she vets technology that is 2–3 years away from spawning a drug candidate; it may be several more years before such a compound is tested in humans, let alone commercialized. But she still needs to see applications on the horizon, she says. 

Bardon points to Orna Therapeutics, a start-up her firm created and launched in 2021, as an example of that paradigm. Orna’s main sell is that it can engineer RNA into circles, a theoretical improvement over its natural form—straight lines, which tend to fray at their exposed ends. “You find a professor who says, ‘I can make circles of RNA,’ ” Bardon says. “You have to say, ‘OK, why is that important? What can I do with that?’ ”

For RNA—a molecule that was having a moment, fueled in large part by the success of messenger RNA COVID-19 vaccines, when MPM BioImpact launched Orna—the applications were apparent. But for other discoveries, they may not be. Bardon says that if a scientist had approached her about studying bacterial immune systems, “that impact may not be directly obvious.” Never mind that the project would eventually yield the Nobel Prize–winning tool CRISPR-Cas9 and a gene-editing drug for sickle cell disease and β-thalassemia.

“In general, that first stage, where you’re working on very basic science research, you’re never going to find people in venture interested in that, because it's too early,” Bardon says.

The same goes for Khosla Ventures, which also funds early-stage start-ups. Bermingham uses the example of adenosine deaminase acting on RNA (ADAR), an RNA-editing enzyme that’s naturally deployed by cephalopods. Khosla invested in a start-up called Deep Genomics that’s developing ADARs and other RNA-based medicines against targets in the central nervous system and the liver. The firm was well beyond marine animal systems by the time Khosla committed funding. “If somebody came up and said, ‘I'm going to look at RNA in cephalopods,’ most people would turn around and say, ‘That's great, but where's the company in that?’ ” Bermingham says.

Brian Stanley, a policy analyst at the Boston University School of Public Health, doesn’t totally buy that argument, though. “In some ways, I think industry is the first to abdicate responsibility with a lot of this stuff,” he says, especially as the life sciences industry reaps the rewards of government funding.

NIH dollars played a role in all 313 drugs the US Food and Drug Administration approved between 2010 and 2019, according to a 2023 analysis by Bentley University researchers (PLOS One, DOI: 10.1371/journal.pone.0288447). And it’s not just NIH grants that matter. Academic researchers that form start-ups rely on government programs, too, like Small Business Innovation Research (SBIR) and Small Business Technology Transfer grants, which the Small Business Administration awards.

Bridging the gap

In early February, Altitude Lab executive director Chandana Haque’s phone started blowing up. Professors were texting her, panicking about losing funding. So were start-up founders, who’d been promised funding through the SBIR program, only to have reviewers suddenly become unreachable.

“That was a chaotic moment,” Haque recalls. But the timing was also fortuitous. She had a meeting with her board just a few days later. When she told the board members about the texts she’d been getting, they wanted to figure out how Altitude might be able to help. By the end of the month, Altitude, which normally operates a pre-seed-stage accelerator for biotech start-ups, had launched a new fund dedicated entirely to funding companies that would have otherwise likely received SBIR grants.

The Altitude Lab Fund is small, but it plugs an important gap. SBIR grants are typically only up to $250,000 each—not much money for a biotech firm, but enough to get an idea off the ground. Recursion Pharmaceuticals, the artificial intelligence–driven biotech whose cofounder, Chris Gibson, chairs the Altitude board, was funded by SBIR money in its early days, Haque says. 

The Altitude Lab Fund is designed as a 1-year microfund with about $2.5 million, enough to fund 10–15 start-ups on the order of $100,000–$250,000. Each start-up will also be accepted into Altitude’s accelerator, which comes with Recursion's professional network plus lab and office space in Salt Lake City. Around 100 start-ups have already applied. Next year, Haque hopes to put together a similar program, but larger—more in the realm of $10 million–$20 million, she says.

“We discovered that it doesn't take a ton of money to pave over the bumps right now,” Haque says. Still, she acknowledges that the fund is a Band-aid solution to one part of a much larger shortfall. “It would take a ton of money, it would take millions, to actually get this fixed long term.”

That’s the issue everyone seems to be grappling with as they try to find solutions. Stoner recently met with other Boston-area biotech leaders at a life sciences incubator in Cambridge, Massachusetts, to brainstorm ideas on what industry can do to step in where the government is stepping back.

Academic leaders are having the same discussions. The UMass Chan leader says he and leaders from other medical schools meet at least weekly to discuss how to support their researchers. But “we can't become the NIH, nor can the state,” he says. “It’s too much money.”

UMass’s total endowment was $1.5 billion as of last June; it's not clear how much of that is allocated to the medical school. Endowments are a flash point in discussions around university spending. Institution leaders like the one at UMass Chan make the case that endowments are less touchable than many people think they are: some portions are tied up in illiquid funds, while others were earmarked by donors for specific projects and causes. 

But Stanley thinks universities may have to use part of their endowments eventually to keep things running. “There is a portion of the endowment—that's actually right—that is totally bound up in donor restrictions, but there's also a lot of discretion,” he says. “At what point do we deem the university, or the social value the university creates, is under enough threat that we dig into these financial reserves?”

Stanley also believes there's a place for philanthropy funds to step in where universities or venture capitalists can’t or won’t. There are already foundations that fund life sciences research, including the Gates Foundation, the Chan Zuckerberg Foundation, and the Schmidt Family Foundation.

But there are reasons why existing philanthropic models aren’t a good alternative to public funding. For example, donors to such funds often like to see what kinds of social returns their gifts have generated—a number of sick children back in school, a number of clinical studies initiated. “Philanthropy doesn’t really have a great infrastructure to make these really long-term commitments without telling their donors, ‘Oh, look what we’re doing,’ ” Stanley says.

PitchBook senior research analyst Kazi Helal also points out that philanthropic foundations already have relationships with certain universities and researchers. That means they may be unlikely to fund the junior scientists who will be most hurt by federal funding cuts.

“The little guys, they suffer,” Helal says.

Many biotech leaders are worried that by striking at the heart of their ecosystem’s cash flow, the US is willfully giving up its standing as the global leader in biomedical research. Helal expects European investors might swoop in, for one: “mRNA, if we get rid of it in the US, what happens is Germany's going to be the crown king,” he says. 

Bermingham agrees. “If we want to maintain that leading position and have that economic return from that leading position, we’re going to have to address this,” he says. “Otherwise, we’ll see it shift to China. We’ll see it shift to Europe. We’ll see it shift away from the US. And that will have its own longer-term implications as we think about the economic position of the US.”