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Budget Battles Keep Agencies Guessing

September 3, 2013 by

“I don’t want to throw darts or rocks at anybody,” said Gov. Neil Abercrombie, Democrat of Hawaii, at the National Governors Association convention last month in Milwaukee, venting his frustration over the budget uncertainty. “I just want to know what the hell the numbers are.”

The budget woes are afflicting, among others, state governments, American Indian tribes, military contractors and cancer research laboratories. Budget experts said that the short-term concerns over next year’s dollar figures were already hampering long-term planning and making government officials hesitant to commit to big projects or to hire needed employees.

“You’re eating away little by little at the infrastructure and effectiveness of government,” said Philip Joyce, a professor at the University of Maryland.

In an interview, Dr. Francis Collins, the director of the National Institutes of Health, called 2013 the “darkest ever” year for the agency, whose budget is at its lowest inflation-adjusted appropriations level in more than a decade. The agency has been awarding grants to an increasingly smaller sliver of applicants as well.

The stopgap measures that have kept the government running have further hobbled the agency, he added. “Continuing resolutions discourage you from trying something new and bold,” he said. “You’re supposed to tread water. And science is very badly served by that tread-water message.”

One researcher who said he had felt the impact of the budget wars is Steven Salzberg, the director of the Center for Computational Biology at Johns Hopkins University in Baltimore and a lauded biomedical researcher. Mr. Salzberg said that he had received about 20 percent less in federal funding than his peers had recommended for his work on the biological underpinnings of cancer and other diseases.

“Less science is getting done,” he said. “That means cures won’t emerge. Five years from now, when your aunt gets cancer and you can’t do anything for her, people won’t stop and think, ‘Jesus, if we only hadn’t had the sequester!’ ”

Shorter grant cycles have forced scientists to rush to get results, he said. Increasing competition for funding has left him and his peers spending more and more time on paperwork, and less and less time on laboratory work. Worst of all, he said, promising young scientists are becoming discouraged and leaving the field.

“The current budget wars are a more extreme or egregious version of what has been going on for a number of years,” Mr. Salzberg said. “They’re wreaking havoc on people’s research plans.”

A broad range of budget officials described similar headaches emanating from Washington. Sequestration has forced programs that normally expect flat or increasing financing to make sudden cuts. Many programs delayed those cuts, and are scrambling to make them now — in some cases with reduced staffs because of furloughs or hiring freezes.

A number of budget issues lingered unresolved during Congress’s long summer recess. Earlier this year, the House and the Senate passed spending bills for the 2014 fiscal year, which begins on Oct. 1, that were about $90 billion apart, but never settled on a final figure.

With lawmakers returning to Washington next week, Congress is expected to pass another stopgap bill, known as a continuing resolution, financing the government for a few more months, but it is unclear whether such funding will stay at current levels or shrink. And if the Republicans who control the House and the Democrats who hold sway in the Senate fail to come to a deal before October, many parts of the federal government could shut down.

The breakdown of the Congressional budgeting process this summer has compounded the problems. Officials said that they had received no word about budget figures from Congressional appropriators — because such numbers do not yet exist.

Article source: http://www.nytimes.com/2013/09/04/business/budget-breakdown-keeps-federal-agencies-guessing.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

The Agenda: S.B.A. Signs Its First Venture Capital Fund to New Investment Program

January 23, 2013 by Leave a Comment
The Agenda

How small-business issues are shaping politics and policy.

While many small businesses are waiting for the federal government to write rules for so-called equity crowdfunding, the Obama administration is moving forward with another effort to funnel investment capital to start-ups. Last week, the Small Business Administration announced that it had granted a venture capital fund from North Carolina the first license to participate in a new program to encourage investment. The program essentially makes government-guaranteed loans to venture capital funds, which in turn use the debt to make equity investments.

The new initiative, called the Early Stage Innovation Fund, is part of the Obama administration’s Startup America effort. The Innovation Fund makes $200 million in debt financing available in each of the next five years for early-stage venture funding. The hope is to direct investment to the sorts of companies that often fly below the radar of venture capitalists, which mostly buy into more mature companies that tend to be tech-related enterprises in California, New York, and Massachusetts.

In evaluating venture capital funds that apply for licenses, the S.B.A. will look favorably on those with investment strategies that eschew some of those prevailing trends, said Sean Greene, the official in charge of the program, and instead propose to invest in younger companies in a broader array of industries located around the country.

The Innovation Fund’s first participant, Hatteras Venture Partners, of Durham, N.C., will address at least one of those diversity goals. Hatteras Partners will invest in young life-sciences businesses in the Southeast, “where National Institutes of Health funding is very high, but venture capital flows are quite low,” said Clay Thorp, a partner in the fund. Mr. Thorp said the fund had raised $88 million from private investors and would borrow $37 million in government-backed debentures.

The arrangement is based on the S.B.A.’s long-running Small Business Investment Company program, which effectively guarantees loans to venture funds (or investment companies) that in turn make loans to small businesses. Because the government-sponsored money is a loan and not an investment, whatever profits might accrue from it go to the investment company’s investors, increasing their returns. If, for example, an investment company raises $50 million from investors and borrows $50 million, and then doubles its money, the investors get back $4 for every dollar they put in.

When The Agenda first reported on the Innovation Fund a year ago, Mr. Thorp expressed some concern about placing a predictable debt arrangement, with regular payments of a fixed amount, over the most speculative of speculative investments. But in a recent interview, he said that a rigorous analysis showed it would be difficult for his investors not to benefit from the leverage. “It will make a very bad fund awful, but even a mediocre fund will do O.K., and it will make a good fund great,” Mr. Thorp said.

Still, the question hanging over the program is whether it will attract enough interest from other venture capitalists and their investors to be fully subscribed. According to Mr. Greene of the Small Business Administration, 33 venture funds applied for the program in 2012, and the agency gave preliminary approval to just six. “In our view, we’re right down the middle of the fairway in where we expected to be,” he said. “We thought 33 applications was solid, we were very impressed with the quality of funds that applied.” Ultimately, he said, “our expectation would be to license four to six funds.”

Mark Heesen, president of the National Venture Capital Association, said that the new program addresses yet another, more recent market failure in the venture industry: funds are finding it harder to raise money from their limited partners. (For funds in the Small Business Investment Company program, the amount of time it has taken to raise private capital has increased from about a year to 18 months, Mr. Greene said.) “If you can have the government basically help in that process by standing side by side with those limited partners, you’re going to be able to have at the end of the day a larger fund, which is a net positive,” Mr. Heesen said. “You’ll not only be able to seed these companies but keep them on the growth pattern.”

Brett Palmer, president of the Small Business Investor Alliance, a trade group whose members are largely S.B.A.-licensed small business investment companies, said the big institutions that provide much of the venture financing are interested in the program. But, he added, “the jury’s still out on what the take-up on this program is going to be, from a limited partner or institutional investor perspective. We’ll really know in the next year.”

Mr. Palmer said that program rules limiting the amount of debt available to any one venture fund to $50 million would discourage the largest and best-known funds from taking part. Bob Clarkson, a lawyer in Palo Alto, Calif., who represents companies that win venture investment, as well as some venture funds, agreed. “At least for the top-tier venture funds, the time commitments to serve on the board [of a portfolio company] are pretty much the same if you put $1 million to work or $10 million to work,” he said.

“Out here, there wasn’t a whole lot of interest” in the program, he added. “None of the folks that I work with are that eager to go be the people to fill that gap” — the gap, that is, between an angel investment and a first round of full-fledged venture funding — “if it requires complying with government regulations, even if they don’t know what those government regulations might be.”

Of course, the Innovation Fund was not designed with those Silicon Valley funds in mind, at least if they plan to continue investing in the same sorts of companies in the same sorts of places. And Mr. Heesen, of the venture capital association, said that attitude might in any case change now that Hatteras has received its license. “Hatteras has gone through the process, and it’s a pretty arduous process,” he said. “Because Hatteras has done it, others will now put their toe in the water.”

Article source: http://boss.blogs.nytimes.com/2013/01/22/s-b-a-signs-its-first-v-c-to-new-start-up-investment-program/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

Its Gene Patents Upheld, Myriad Genetics Moves to Protect Its Secrets

August 24, 2011 by Leave a Comment

But it is only a matter of time before the company’s business faces severe challenges, some experts say, because that $3,340 test is already technologically outmoded, incomplete and too costly.

“Science has moved beyond what these folks do,” said Mary-Claire King, a professor of genome sciences and medicine at the University of Washington. “It’s not good for the science and it’s not good for the patients and their clinicians if they cannot have the most complete, up-to-date information.”

Myriad sequences the two patented genes, known as BRCA1 and BRCA2, for mutations that raise the risk of a woman getting breast and ovarian cancer.

But newer DNA-sequencing techniques are far faster and only a fraction of the cost of the 1990s technology that Myriad uses. Indeed, it will soon be possible to sequence a person’s entire genome, all 22,000 or so genes, for less than Myriad charges for just two genes.

Executives at Myriad say they are preparing for changes. Although its major patents start expiring in 2014, the executives say the company’s patent protection should last until at least 2018.

They say that will give the company time to adopt new technology and to diversify beyond the breast cancer test, which accounted for $353 million, or 88 percent, of Myriad’s $402 million in revenue in the fiscal year that ended in June.

The company also plans to rely less on patents and more on trade secrets. Because it has done so much more testing than anyone else, Myriad has more information on which of the thousands of possible mutations in the two genes actually raise the risk of getting cancer.

Myriad used to share such information with a public database maintained by the National Institutes of Health, and it cooperated with academic scientists trying to analyze the mutations. But a few years ago, the company quietly stopped contributing and cooperating, in favor of building its own database.

An academic consortium, relying on data from European labs or from individual patients, is trying to catch up, but “it’s kind of slow going,” said Sean Tavtigian, a former Myriad scientist who is now an associate professor of oncological sciences at the University of Utah and is involved in the consortium.

Myriad, which is based in Salt Lake City, is hoping to use that advantage first in Europe, where it will open a testing laboratory next year.

“If I had my druthers, I would not want to go into a new market in a heavy-handed fashion, trying to enforce patents,” Peter D. Meldrum, Myriad’s chief executive, told analysts in January. Instead, he said the company would exploit its quicker turnaround time for testing and its “vastly superior information.”

Myriad executives have said that when a European laboratory finds a mutation in either of the two genes, 20 to 40 percent of the time it does not know if the mutation raises the risk of cancer. They say that Myriad’s rate of uncertain findings is just 3 percent.

Daniel B. Vorhaus, a New York lawyer and editor of the Genomics Law Report, a Web site, said there were ethical questions about whether Myriad should be withholding the mutation information, important for public health, that it has gathered by dint of its patents to essentially extend its monopoly beyond the life of the patents.

Mark C. Capone, the president of Myriad’s laboratory division, said in an interview that the company had invested heavily in characterizing the various mutations. He said that the company became uncomfortable sharing its information with a public database when it realized the information might be used to compete against it.

Ever since Myriad and its partner, the University of Utah, beat other researchers, including Professor King of the University of Washington, in identifying the BRCA1 gene in 1994, Myriad has been the target of those opposed to the patenting of genes.

In 2009, the American Civil Liberties Union and the Public Patent Foundation filed a lawsuit challenging Myriad’s patents on behalf of various medical researchers, medical societies and patients.

A federal district judge last year said genes could not be patented. But his decision was reversed in late July by a 2-1 decision from the Court of Appeals for the Federal Circuit. The plaintiffs are considering appealing to the Supreme Court.

The lawsuit contends that the patents, by giving Myriad a monopoly, have limited testing options for patients and led to lower-quality tests.

The latest controversy concerns a supplemental test that Myriad is offering.

In 2006, Professor King and colleagues published a paper showing that Myriad’s test, known as the Comprehensive BRACAnalysis, actually failed to detect a significant number of genetic alterations in the two genes.

Article source: http://feeds.nytimes.com/click.phdo?i=18b51be625d96a12a6e1b70ab08964c8

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Prescriptions: Test of Eye Drug Is Said to Show Success in Elderly

April 27, 2011 by Leave a Comment

A far less expensive alternative proved roughly as effective as Genentech’s costly drug Lucentis in preserving or improving vision in elderly people with a common eye disease, according to two people familiar with the results of a closely watched clinical trial.

A clear showing of equivalence between the two drugs could lead to greater use of the less expensive drug, Avastin, which is also made by Genentech, saving Medicare hundreds of millions of dollars a year or more. However, some researchers said, there are some complicating factors, both in the trial data and in other studies, that would favor Lucentis.

“The data is going to be interpreted many different ways,’’ said one investigator in the trial, who spoke under condition of anonymity but would not provide any trial results. Revealing trial results before they are published or presented at a conference is considered a violation of scientific protocol.

Genentech developed Lucentis to treat the wet form of age-related macular degeneration, the most common cause of severe vision loss in the elderly. While Avastin, which is a cancer drug, has not been approved for use in treating macular degeneration, it has the same mechanism of action as Lucentis. And Avastin costs only about $50 per injection into the eye, compared to roughly $2,000 for Lucentis.

Many eye doctors already are using Avastin off-label to treat macular degeneration, and many say it appears to work just as well as Lucentis. But there has never been a definitive trial to compare the two drugs.

So the National Eye Institute, part of the National Institutes of Health, sponsored a randomized trial involving 1,200 patients. Results are scheduled to be presented Sunday at the annual meeting of the Association for Research in Vision and Ophthalmology in Fort Lauderdale, Fla. The results will also be published in The New England Journal of Medicine.

Some 1.6 million Americans have advanced forms of age-related macular degeneration and the number is expected to increase as baby boomers age. In 2008, Medicare paid for 480,000 injections of Avastin to treat macular degeneration and 337,000 injections of Lucentis, according to a study led by Dr. Philip Rosenfeld of the University of Miami. Yet Medicare paid only $20 million for the Avastin compared to $537 million for the smaller number of Lucentis injections.

Investigators in the National Eye Institute trial had a day-long meeting on Tuesday in Chicago to learn the results. But they were sworn to secrecy.

But two people familiar with the data, who spoke on condition of anonymity, said that injections of Lucentis and Avastin every four weeks resulted in vision changes after one year that were essentially the same.

The result was largely expected. Under the rules of the trial, patients treated with Avastin could read on average of up to five fewer letters on an eye chart than those treated with Lucentis and Avastin would still be considered “non-inferior.” It is believed the results were closer than five letters, however.
Still, doctors will be looking closely at details of the data. One person said Avastin was less effective than Lucentis in decreasing the thickness of the retina, suggesting that Avastin might not prove as effective in preserving vision over a period beyond one year. Patients in the trial are being followed for a second year.

Safety of the two drugs will also be closely watched. However, experts say that with only 1,200 patients, the trial will be able to detect only major differences in safety.

Another part of the trial compared injecting the drugs as needed, depending on the course of the patient’s disease, rather than on a strict monthly schedule. One source said Avastin was slightly inferior to Lucentis, but the other said the results of the two drugs were the same.

The trial comparing the two drugs is of the type known as a comparative effectiveness study. Such studies are being encouraged under the new health reform law, though this one started before the law was enacted.

Genentech, which is owned by Roche, has already mounted a pre-emptive counterattack aimed at nullifying any results of the federal trial that would shift more patients to Avastin.

The company sponsored a study looking at records of nearly 78,000 Medicare recipients with age-related macular degeneration. The study found that those who received Avastin had an 11 percent higher risk of dying and a 57 percent higher risk of hemorrhagic stroke than those getting Lucentis, according to an abstract of the study posted on the Web site of the upcoming ophthalmology conference, where the results will be presented.

Genentech arranged for the lead investigator of this study, Dr. Emily W. Gower of Johns Hopkins University, to brief Congressional staffers on the results on Tuesday.

If this finding is considered valid, it could render the results of the National Eye Institute trial somewhat moot by raising safety questions about Avastin.
“Once you plant that seed of doubt in patients’ minds it’s very difficult to overcome that,’’ said one retina specialist, who spoke on condition of anonymity. “I would say it changes the landscape.’’

However, experts have not been able to scrutinize the data of this study. One obvious potential flaw is that people who get the cheaper Avastin are more likely to be poor and uninsured and might therefore have worse health to begin with than those who get Lucentis. The study tried to correct for this but whether it did so adequately is a subject of debate.

Roche sells Lucentis in the United States and Novartis in other countries. Sales of the drug for each company were about $1.5 billion last year.

Article source: http://feeds.nytimes.com/click.phdo?i=dea039546277c47db0196f23e261807f

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