Drug Money: NIH Grant Funding for Therapeutics Companies in Michigan 2009-2019

During my time working at a Michigan-based therapeutics startup, I’ve gathered some sense of what the therapeutics startup ecosystem is like in Michigan. But I’ve realized that my experiences have only given me a small sliver of the whole story. So, I decided to do some digging to try to see the bigger picture and learn more about the startup environment for therapeutics in Michigan. What follows is the first of what I hope will be a periodic miniseries of articles on the topic of drug development in Michigan.

As a starting point, I wanted to look at the amount of small business grant funding from the National Institutes of Health (NIH) that Michigan companies have received over the years. The NIH, along with a variety of other federal agencies, provide grants to small business and startups to help them develop and commercialize new and innovative technologies. This is predominantly done through two grant mechanisms: the Small Business Innovation Research (SBIR) grant and the Small Business Technology Transfer (STTR) grant program. The SBIR/STTR programs are a common – and often vital – way for a startup to raise funds for R&D activities. The application process is competitive, and the awarded grant money is non-dilutive funding for the company, another reason why these grants can be so valuable. Both ONL Therapeutics and Arborsense have received NIH SBIR/STTR grant funding over the course of their histories, providing key funding for the development of the companies’ respective technologies.

To look at the amount of NIH SBIR/STTR grant funding that Michigan-based small companies and startups have received, I dug through data provided by the NIH’s Research Portfolio Online Reporting Tools Expenditures and Results Tool (RePORTER). With this tool, I was able to gather the raw data used to generate the figures in this blog post.

I chose to look across the period of 2009-2019 in order to get a sense of how things may have changed over time. Over this 11-year period, Michigan-based companies received a total of just under $189 million in NIH SBIR/STTR grant funding. Approximately 36% of this money – about $68 million – went to companies working on therapeutics. The rest went to companies working in other aspects of life sciences, such as diagnostics, devices, and health IT. The yearly distribution of the funding is shown here:

This graph shows that the amount of funding received by Michigan companies dipped around 2014 before slowly rising again, tracking somewhat with the NIH’s overall budget growth and slowdowns. Funding for therapeutics companies represents approximately a third of the total funding or more, with the exception of 2013. As a caveat to this information, the definition of a “therapeutics company” was based on my interpretation of the title and abstract of the awarded grant project. In some cases, it was a little ambiguous as to how a grant project and company should be categorized. It’s possible that another person could have categorized a few of these companies differently than I have. So, it’s possible that these graphs may look slightly different depending on who analyzed the data.

Next, I was curious to see how Michigan compared to other states. A quick look into the biotech hotspots of Massachusetts and California led to an intimidating amount of funding data, prompting me to hold off on that analysis for possibly another time. I decided instead to compare Michigan with our regional Great Lakes neighbors: Ohio, Indiana, Wisconsin, Illinois, and Minnesota. Looking at the total SBIR/STTR funding that each state received led to this graph:

In this graph, the jumble of lines shows that most of the states are relatively close together. There appears to be a slight decrease in funding over time for Wisconsin, a slight rise for Illinois, relatively flat funding for Indiana, and Michigan and Ohio’s lines seem to be fairly intertwined. The one surprise – at least to me – was Minnesota’s dramatic funding increase over time. However, Minnesota’s rise was mainly due to an increase in new funding for diagnostic and device companies, and only a small part of the increased funding was due to therapeutics companies. To compare the amount of grant funding awarded to therapeutics companies in each state, you get this graph:

As you can see in this graph, the states are even more closely clustered than seen in the previous graph. There were slight decreases in funding to therapeutics companies in Ohio and Wisconsin, while there were slight increases in funding for companies in Indiana, Minnesota, and Illinois. In more recent years, there appeared to be an uptick in funding for Michigan-based companies, helping to boost Michigan above its neighbors.

Looking at the total amount of funding for the 2009-2019 period for therapeutics companies and other life science companies per state, we get:

Taken together, these graphs support the notion that Michigan has a good therapeutics startup environment, at least in the context of its regional peers.

Digging a little deeper into my comparison between the states, I was interested in learning about the geography of these companies. Where were the centers of innovation within each state? In Michigan, Ann Arbor was the runaway leader and home to the most NIH grant funded companies, an unsurprising result likely due to the presence of the University of Michigan. Similarly, the proximity of the University of Wisconsin likely helped drive Madison’s number one ranking for grant funded companies in Wisconsin.

Being the state’s largest city also appeared to help in several cases. Chicago, Minneapolis, and Indianapolis led their respective states for NIH SBIR/STTR awarded companies.

However, these trends seemed to break down in the case of Ohio where being the largest city and having a flagship state university didn’t guarantee small business grant funding. Columbus, home of Ohio State University and Ohio’s largest city, was a distant second for SBIR/STTR grant funding. Instead, it was Cleveland, with less than half the population of Columbus, that led in the number of grant-awarded companies. This may be driven, at least in part, by the presence of the Cleveland Clinic.

Returning to Michigan, Ann Arbor also led in the number of therapeutics companies. Ann Arbor-based therapeutics companies were awarded over $33 million in total grant funding in 2009-2019, representing 49% of NIH grant money awarded to Michigan therapeutics companies. The second-place city for therapeutics funding during this time period was Kalamazoo with $9.6 million, or 14%.

To get a better sense of what kind of projects these Ann Arbor-based therapeutics companies were working on, I looked at the NIH institute that awarded the grants. For the period of 2009-2019, the largest number of the SBIR/STTR awards were granted by the National Institute of Allergy and Infectious Diseases, as shown below:

While this chart doesn’t specifically describe the underlying biology for the technology of each company, it at least provides an idea of the field that these companies are working in.

This exploration into the depths of NIH grant funding helps illustrate the level of innovation occurring in the Great Lakes region. While perhaps not yet at the level of our coastal colleagues, Michigan and its neighbors are producing and developing new technologies – in therapeutics and in other life science fields – that are attracting NIH grant awards. This key funding source will hopefully help these companies develop their technologies to attract additional investment from venture capital firms and strategic partners in Big Pharma, help build out their local biotech ecosystems, and ultimately help patients.