Louisiana cultivates its life sciences sector with seed funding

A new treatment for brain cancer. A painkiller free of opioids and their baggage. Organ-on-a-chip technologies that accelerate pharmaceutical development.

Louisiana life science companies pioneered each of these and dozens of other life-altering discoveries. But these breakthroughs would have never taken place without support from Louisiana Economic Development and the federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

“The beginning of Obatala (Sciences) starts with the awarding of a Phase I SBIR grant through the National Science Foundation,” CEO Trivia Frazier said.

Frazier’s bioscience start-up used the SBIR money to commercialize its fat-on-a-chip technology. Obatala, starting with stem cells, can now tailor fat tissue that mimics patients from whatever demographic a pharmaceutical research company requires.

Another SBIR award helped Obatala commercialize the use of stem cells to repair pressure ulcers. The award allowed Obatala to perform the customer discovery work that showed the pressure ulcer treatment should be spun out as a separate product.

The customer discovery would never have happened without the SBIR grant.

“We’ve grown to over 15 people and we’ve received millions in federal funding to continue commercializing new products. We have expanded to the University of New Orleans campus, and we are at our second stage of growth. That definitely is a success story, I would say, from an SBIR standpoint,” Frazier said.

The SBIR/STTR programs cover three phases:

  • Phase I: Awards of up to $295,924, to establish the feasibility and commercial potential of the proposed products or services.
  • Phase II: Awards of up to $1.97 million to continue the R&D work from Phase I.
  • Phase III: Does not include a cash award but typically involves a federal contract for the startup’s product or service.

The SBIR and STTR programs award $4 billion in grants to tech companies each year. The U.S. Small Business Administration has rebranded the programs and now refers to them collectively as “America’s Seed Fund.” Startups don’t have to repay the grant money. Instead, the grants offer firms revenue before they get their businesses off the ground. The federal government describes the grants as investing in startups and giving them to run their businesses as they see fit.

Louisiana is taking extra steps to ensure more homegrown tech startups secure this seed funding. Louisiana Economic Development launched the Louisiana Phase Zero program for SBIR and STTR and created a special office to oversee it. Now housed at LSU Innovation & Ecosystem Development, the Louisiana Tech Transfer Office Phase Zero grants provide $3,000 to support preparing a Phase I application and $5,000 to support preparing a Phase II application. The Tech Transfer office also offers advice on applying for grants and connects entrepreneurs to research labs and personnel.

The program has been an unqualified success: Louisiana firms landed 145 SBIR awards in the five years ending in 2022, compared to 54 in the five years ending in 2017.

BioInfoExperts CEO Susanna Lamers credits state support for the increase. Her firm got its first SBIR grant in 2007 to develop a web-based tool to analyze viral sequences. Before that, her company survived on subcontracts from research institutions. Her revenue depended on those research institutions’ success at landing funding.

“We really didn’t have a lot of avenues to commercialize and make any profit. And so that’s what the SBIR program can do for you is allow you to develop your own technologies, go out and make your own money,” Lamers said. “On top of that, it’s just super exciting because of all the different connections you make through the program. Once you receive SBIR funding, you also receive a variety of training opportunities to learn how to commercialize.”

BioInfoExperts received its fourth SBIR grant in 2020, to develop a software platform using advanced biotech and data analytics to monitor the COVID-19 pandemic.

A number of other Louisiana firms, like Obatala and BioInfoExperts, have won multiple SBIR awards. They include:

  • AxoSim. The New Orleans-based firm accelerates the drug development process through its drug discovery platforms Nervesim and Brainsim. AxoSim has won half a dozen SBIR grants, including a 2022 Phase II award to commercialize the company’s peripheral nerve-on-a-chip for predictive, preclinical pharmaceutical testing.
  • Dekk-Tec. The biotech pharmaceutical firm has won close to 20 SBIR awards. The company’s most recent award is for a Phase II clinical trial to test its 4-demethyl-4- cholesteryloxycarbonylpenclomedine (DM-CHOC-PEN) as anticancer therapy for adolescents and young adults with brain tumors.
  • South Rampart Pharma. The clinical-stage life sciences company focuses on advancing innovative small molecules designed to overcome the risk of current pain medicines. Acute and chronic pain management is one of the costliest public health issues worldwide. In 2021, South Rampart received a Phase II award to commercialize its non-narcotic drug for acute and chronic pain.

To learn more about the Small Business Innovation Research and Small Business Technology Transfer programs, visit SBIR.gov.

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