Episode 98: How to Navigate Biotech Innovation Amidst Government Funding Uncertainty

If your organization relies on federal or defense funding, or would like to, this episode is a can't miss.

You're listening to Bio from the Bayou, empowering biotech leaders with the tools, assets, and expertise to improve healthcare outcomes.

Each episode provides insights and information to expand your network, advance your product line, and help your company thrive.

Serving the entire Gulf South, but recorded in the heart of New Orleans.

Welcome back to BIO From the Bayou. I'm James Zanewicz from Tulane Medicine, your host for today. And today's guest is Adi Pierce, one of my favorite people in the world who has come down to BIO On the Bayou as well. And I want to remind everyone to save the date of October 28th and 29th before we even get going. But Adi is the Director of Biodefense and Government Contracting at BDO USA, and she's here today to provide some much-needed insights and advice on how biodefense and life science contractors can navigate current federal funding uncertainties that we see. So I want to welcome you to the show, Adi, because we're at a really critical time, I think, for this information, and I'm really excited for you to share with our listeners.

Well, James, thanks so much for having me, and I am very excited to be here.

Excellent. Well, let's dive straight into this. I'm sure it's concerning, of interest to a lot of our listeners this year more than ever before, as we've seen that increased uncertainty around federal spending in science and health, especially with agencies like the NIH, BARDA, and the FDA. How are you seeing this affect life science organizations that rely on government contracts or grants?

Well, where do we start?

Yeah, right? Like everywhere. Yeah.

So with regards to academic research institutions, universities are facing both funding cuts and reduced indirect cost reimbursements. And so the impact of that we're seeing in terms of paused research projects or clinical trials, labs are closing, and not to mention just job loss, as well as the brain drain. You know, we see that labs are terminating staffing positions or they can't promise postdoc positions in the manner that they traditionally have.

I know you've talked a lot about how we need to diversify funding sources to be able to combat some of this. So what additional funding sources should organizations be looking at, and how can they position themselves to be more attractive for these different types of funding?

So that's a great question. And really, organizations, whether they're academic institutions or industry, they have to really start to reconsider whether their products align with federal priorities. Sometimes this means reconsidering the scope of a product or a project. Or considering whether or not they're going to invest in or pursue strategic partnerships at earlier stages than they might have considered otherwise. And of course, there's the really important piece of diversifying funding and looking at alternative funding sources.

And what are some of those alternative sources that you see out there? Do any come straight to mind?

So we're seeing a lot of initiatives with state and local agencies. They are matching SBIR and STTR grants from states like Kentucky, North Carolina, Pennsylvania, Indiana. And then you also have states that have established innovative research and development funds as well. Texas has the Cancer Prevention and Research Institute. Maryland has TEDCO, which is their Technology Development Corporation. California has the Institute for Regenerative Medicine. And so all of these are just examples where companies or institutions can find funding resources and connection in agencies that are specifically looking to support early-stage tech and life science companies.

Yeah, and I love that you mentioned Kentucky because, you know, I started my management tech transfer career there at the University of Louisville, and Deborah Clayton was the innovator behind kind of those matching SBIR funds in Kentucky, which was a first in the nation. And it was really nice to come from a state that was an EBSCO state and be doing something really creative like that. And Deborah has long since left her office there, but you have Kristen Godale in Kentucky now who is doing really innovative and amazing things. I want to give a shout out to them as well as all the other states out there, but always like talking about people who have had an influence on me, who I see who are doing great stuff.

There are a few other alternative funding sources that are worth considering. Strategic partnerships and joint ventures. There's Flagship Pioneering is an example that support product and platform level products. Anderson Horowitz, their bio fund, Novartis, Johnson& Johnson, and Roche all have venture funds that provide opportunities to support novel therapeutics, platform technologies, diagnostics, medtech, you name it. So there are lots of options out there in that space. And then there is a really important piece that shouldn't be overlooked, and that's the international funding. So HERA, which is the EU's equivalent to BARDA, and HERA is the Health Emergency Response Authority, they use the platform Horizon Europe to support their research innovation funding projects. And there's lots of opportunities there. They are looking in some ways to kind of capture medical countermeasure development in the same way that BARDA does. So certainly worth looking at considering those, as well as Japan has the AMED organization, very similar, which is the Agency for Medical Research and Development. And even Singapore has the A*STAR, which is the Agency for Science and Technology Research. And all of these agencies are also looking to expand their medical countermeasure space. And worth looking at, particularly if there's an opportunity to leverage international relationships to position to respond to any of their solicitations.

Well, that list alone makes listening to this podcast worthwhile. How should biotech and healthtech leaders be thinking about risk today? Are there shifts in how they should plan for regulatory timelines that could be changing, capital needs, or differences in hiring in the face of uncertain public sector support? I know that's a whole lot in one. So basically all the problems out there, how do they solve them?

Well, I think they have to take a multi-pronged approach to that process. And one of those is to build commercial viability, show how the projects that they're passionate about or are supporting translate into market opportunities. And whether that's identifying specific diseases, patient populations, or market needs that product or project might address. Another piece of that is looking at their IP portfolios. Strong patent positions make organizations more attractive to investors or strategic partners. And the idea of just establishing those strategic partnerships themselves, industry collaborations are a key component in advancing product development. And a lot of the funding agencies, both on the DOD and HHS side, they have these consortia that are associated with these funding agencies, and they really emphasize and promote networking, collaboration, and partnership within those consortia. So those are just easy ways to sort of get involved, to sort of expand that access and opportunity for collaboration and partnership. And then, you know, I think it's imperative that any company at this point sort of do an assessment or a reassessment of their risk framework around dependency on federal funding and making sure that they're really looking at diversification of their funding sources. Along with that, focusing on relationships with private foundations. And one of the places too that's really important are the international funding bodies. So they create funding opportunities as well, and forming partnerships with alliances outside the US can also strengthen those opportunities to be considered for some of those international funding sources.

And when these funding sources, regardless of whether they're coming from inside the US or outside the US, are looking at organizations that they're potentially going to fund, how important is that organization's internal readiness? Things like compliance system, reporting processes, processes or their financial planning capabilities? How does that factor into the decision?

So that's another really good question. And I think—

Ian wrote them all. I get no credit.

Well, sometimes I think that that piece isn't valued enough because if you're an organization and you're looking at a funding opportunity, it's important to understand the type of opportunity it is. There is a big difference between a contract and a grant. And then even within grants, there are several different types, whether it's a cooperative agreement or an other transaction agreement. All of those different funding vehicles have different compliance requirements. So understanding what those are and making sure that all of your ducks are in a row, so to speak, is a really important component. And then I think oftentimes Companies assume that if they see a solicitation and they're ready to go and they're just ready to roll up their sleeves and dive in, but they underestimate the time involved for any of their strategic partners. So anytime that you can get or establish teaming agreements or subcontractor agreements with any partners that you may need in responding to a solicitation on a particular project, that's always going to put you one step ahead. So whether that's your CDMOs or your CROs, any external sources that you may be planning to use to fill roles within your team, your management team, if you can identify and work to get those pieces in place preemptively, it allows you to be better positioned to really respond because depending upon the time of year, the response window may be much shorter than traditionally one would expect with some of those solicitations.

Yeah, and if you're prepared, then you're almost 4 steps ahead of everyone else, which is fantastic.

Absolutely.

And speaking of that, you sometimes will have expedited funding opportunities due to public health emergencies or biosecurity threats, and we want to avoid those situations as much as possible, but they happen. And if the need for them arises, what else can organizations do to be ready for funding opportunities that come arise really quickly like that and have those really short expedited pathways? Obviously, the topic we just talked about is super important, but what are some other pieces they should have in place?

So sometimes, depending upon the federal funding agency, there are other additional requirements beyond what one traditionally expects. So for instance, many of the DOD-funded efforts require more stringent cybersecurity requirements, and they have those needs that organizations must meet. So that's understanding what those are, what that looks like, and being positioned to address those is always going to put you in a better position. The other piece is understanding what the funding requirements are and what the reporting requirements are associated with a particular funding opportunity and whether or not you have the team in place that can meet those requirements, that can prepare All of those plans and deliverables that are typically associated with that. The accounting systems, BDO is an accounting firm. So that's one of the areas where it can't be underestimated, particularly with cost reimbursable contracts. You have certain accounting system requirements that organizations must meet. So making sure that you have all of those pieces in place is also really important.

And this is quite possibly, we've gone over a lot of things that maybe are overwhelming people out there who are listening and like, oh, I could never be ready for this. But there's help. There are organizations like BDO and yourself. What kind of advice do you have for people when they're approaching, whether it's BDO or another firm, and, you know, looking to position themselves and get that advice, that contracting help? What should they be looking for in, in a service like yours?

Well, I would say that it's most important to make sure that you're engaging with people that know what they're talking about.

And we know, you know what you're talking about. That's why we have you here. So like, we vetted you for everyone so they can of course come to you, but give them the other things they should be looking for. Say you're busy and they gotta go somewhere else. What do they look for?

So, you know, anytime that you can work with someone who has preexisting relationships within those agencies, that's always going to put you a step ahead because they can provide insights and sort of intuitive Nuggets that aren't going to be easily translated just by what you're reading on a page. So being able to leverage that access is a really important piece that cannot be underestimated. And with some of these agencies, I'd like to say it's a really small community and world, and we sort of all know each other.

Mm-hmm.

Um, it makes a big difference in terms of being able to communicate with those funding agencies, getting information that is important to a client so that they can move forward and make informed decisions about whether or not they wanna pursue a solicitation, whether or not they should wait until the timing is right and that their project aligns with federal priorities, et cetera. So a lot of that strategic advice, being able to trust that is a really important piece.

Yeah, you want that real partnership, I think, because it's less of a, a short-term transaction, I think, when engaging with folks like you. And more of almost building that long-term relationship, because hopefully you'll be working together for a while to come to position yourself better for what is coming out of the government or defense agencies.

Right. Absolutely. You know, a lot of times that's part of the reading the tea leaves, so to speak, and being able to interpret based on the information that is out there. And not to mention having the informal conversations with a lot of the federal partners to kind of understand where their funding priorities are and what their timelines are for when they may be moving forward with various initiatives.

We're onto our last question, Adi, and I want to ask you to close us out. What is the last piece of advice or action that you would give to a life science organization that they should take today to be better prepared for what lies ahead in the funding environment? Because we can't predict it. We hope we know where it's going now. that you never know, but what is the one kernel of wisdom you want to leave folks with before we sign off today?

So I have 2.

Oh, I love that. 2's better than one. See, it's a bargain.

So I would say that it's really important to just stay informed of federal priorities and by tracking the executive orders, following the congressional budget discussions and legislation. And continuing to sort of monitor those landscapes will help to get a better sense of what those priorities are. And then the other piece is to really look at those options or opportunities for alternative sources of funding. There are many of them out there and really consider rather than a traditional bolus of federal funding that one may have been accustomed to or expecting, To really think about it in terms of may require getting smaller amounts of funding from various sources to sort of accomplish the same goal.

I think that is the best pieces of knowledge we can leave people with. And with that, I want to thank you so much for taking time out of your busy day to talk with us once again, share so much really good advice for our listeners. As always, I encourage them to keep an eye on BDO USA and your advice and your potential services as they're looking at examining these areas and as the year progresses forward. As always, we're going to have your contact info and informational links in our show notes so people can get in touch with you. I encourage everyone to check out the links to the things we talked about today. Check out BDO and check out Adi Pierce. I want to thank you again so much for joining us.

Thank you so much, James, for having me.

And hopefully we'll see you back here in October for Bio on the Bayou.

Absolutely.

All right. Thanks so much, Adi. Bye. Thanks for joining us for Bio from the Bayou, and we hope you'll join us again.

To never miss the latest updates in biotech, hit the subscribe button now.

We'll catch you on our next episode of Bio from the Bayou.