Yale Labs Seeded by Stimulus Act Threatened by Program's Demise

Yale University had originally planned to purchase two DNA sequencing machines from San Diego- based Illumina Inc., spending $800,000 to help genetic researchers at the school do their work. Then, in February 2009, the Obama stimulus act kicked in.

Instead, the New Haven, Connecticut, school bought eight sequencers for $3.2 million. It now has 12 machines that spit out data 24 hours a day for stimulus-funded experiments. These projects are among 18,568 receiving about $8.2 billion set aside over two years for biomedical research.

While the money helped create jobs and seed innovative ideas, university officials and researchers say worthwhile initiatives will be threatened when the program ends on Sept. 30. Research projects will shrink within the year, jobs will be cut and, in 2011, scientists with funding proposals based on out-of-the-box theories may lose out to more established researchers who set goals they’re likely to reach, they say.

“Without the money from the recovery act, it’s very possible we’ll see a falloff in research,” said Robert Alpern, dean of the Yale School of Medicine, which so far has received 326 grants for $137 million, leading to 335 new jobs. “Common sense will tell you that there will have to be layoffs.”

Illumina fell 66 cents, or 1.5 percent, to $43.37 in Nasdaq Stock Market composite trading yesterday. The stock had climbed 23 percent in the 12 months before today.

Funding for biomedical research is being handed out under the American Recovery and Reinvestment Act, the official name of the stimulus, by the National Institutes of Health, based in Bethesda, Maryland.

Statutory Life

Once the act’s statutory life ends on Sept. 30, the NIH’s yearly grant and contract budget may drop by about 15 percent, based on this year’s $26.2 billion appropriation. That may be the margin between a business-as-usual science agenda and one flexible enough to seek out young researchers with unique ideas, said Steve Fluharty, senior vice provost for research of the University of Pennsylvania in Philadelphia.

The stimulus arrived at a time when universities struggled to keep labs operating and salaries of science educators and researchers funded, Fluharty said in a telephone interview. Not only were schools hampered by endowments shrunk by the collapse of equity markets, they also faced a decline in research dollars and a rising backlog of scientists seeking them.

“There was a clogged pipeline,” Fluharty said. “The stimulus money couldn’t have come at a better time to jumpstart research.”

Grand Opportunities Grants

Before the stimulus, senior scientists generally won out over younger ones, pushing ideas with the highest guarantee of success, he said. That changed as the program aimed so-called Challenge and Grand Opportunities grants at researchers with novel and “high impact” ideas who could make progress in the two-year life of stimulus funding.

The money rolling into the universities also had a spillover effect for companies, particularly those supplying them with technology products and services.

Jay Flatley, Illumina’s president and chief executive officer, estimated during an investor conference call Feb. 4 that the company would see sales of as much as $100 million from the stimulus by 2011. From October 2009 through the end of June, Illumina had orders of about $63 million resulting from the recovery money, according to earnings conference calls in February, April and July.

According to a 2008 report by Families USA, a Washington- based health advocacy group, every $1 of NIH funding generates more than $2 in business activity and economic output. NIH officials, in interviews, have said the money they were spending would result in 50,000 jobs nationwide.

Centers of Life Sciences

Additionally, universities that receive the most funding from the NIH become centers of life sciences, hubs around which communities of startups in pharmaceuticals and devices spring up, said Ross DeVol, the executive director of Economic Research at the Milken Institute in Santa Monica, California.

“Research is the first step in the process, and most startups occur close to the universities where that’s happening, where that basic research is performed,” DeVol said in a telephone interview. “But it’s far from instantaneous. It takes years. While the short-term impact is keeping researchers employed, it’s clearly the longer term benefits from the research that really accrue to the economy.”

At Yale, the university more than doubled the size of the Yale Center for Genomic Analysis it was building in 2009, adding the extra sequencing machines specifically because of the added stimulus grants the school’s scientists had received and the frequent genetic component in most of the projects, Alpern said.

Seeking Corporate Business

While the recovery act funds have kept the new genomic center working seven days a week in 2010, Alpern said the schools is seeking corporate business to keep up that schedule once the stimulus money runs out.

Matthew State is one of the researchers keeping the genomics center busy.

In 2009, the Yale geneticist won a $4 million stimulus grant for a project to study rare genetic variations associated with autism, more than 10 times what he planned to ask for if he had gone to private foundations. The additional funds will let the 49-year-old State and his 20-person team finish the research in 18 months instead of 7 years as he initially anticipated.

“Instead of taking baby steps, we are able to take a shot at pushing things forward in a dramatic way,” said State, a Stanford University medical school graduate with a Ph.D. from Yale, in an interview.

Autism Spur

State’s team is probing whether variations in genes associated with the brain are responsible for disrupting the activity of neurons, spurring autism, according to Abha Gupta, an associate research scientist and pediatrician in State’s lab.

The researchers collect DNA from affected individuals, and then use sequencing machines to determine which variations are associated with the disease, Gupta said in a telephone interview. The final piece of the stimulus-funded research, which involves three separate Yale laboratories including State’s, will be to test the variants in genetically engineered zebrafish to see if neural functions are disrupted, she said.

State isn’t the only scientist at Yale benefiting from stimulus money and the Yale Center for Genomic Analysis. In a neighboring laboratory, Murat Gunel is doing research into gene- related causes of aneurysms and brain abnormalities. A Turkish- born graduate of the Istanbul School of Medicine, he is using his grant to pay for the DNA sequencing of samples from the 250 participants in his study at a cost of $3,500 apiece.

‘Like a Revolution’

“The stimulus grants have been like a revolution, allowing us to use cutting-edge technologies to look at very complex problems,” he said in an interview.

Without the stimulus and Yale’s investment in the center, State and Gunel would have spent years completing studies with small samples, then doing the research over again on a scale necessary to prove their hypotheses, State said.

Stimulus grants from the NIH have covered a wide range of topics. The University of California at San Francisco, for instance, received $24.8 million in an effort with Kaiser Permanente to analyze the DNA of 100,000 the health-plan’s members. The University of Michigan received $6.8 million for stem cell studies, and Harvard University, in Cambridge, Massachusetts, got $5 million for a project on antibiotic- resistant disease.

By the end of July, the University of Michigan at Ann Arbor was awarded $272 million, the highest discovered by a Bloomberg survey of top research universities. The figures were determined by contacting schools because the NIH lists grants by researcher’s names, not by academic institution.

University Breakdowns

Other school totals to date include the University of Washington at Seattle, $263 million; Duke University in Durham, North Carolina, $195 million; Penn, $195 million; Johns Hopkins University in Baltimore, $213 million; and Harvard University $191 million.

Francis Collins, 60, the gene-mapping pioneer who now heads the NIH, told a House appropriations committee in late April that one in five scientists seeking grants from the agency received them under the stimulus act. In 2011, that will drop to less than one in seven, he said.

When the number of grants drops too much compared with the number of applicants, “one worries about the ability of early- stage investigators to get funded, and about what happens to innovation,” Collins said in an interview in Washington. He said he fears the process could once again become risk averse, leaning toward projects by established scientists who set goals they’re likely to reach

‘Serious Belt Tightening’

“There will be some very serious belt tightening for universities” after the stimulus runs out, George Church, a Harvard University genetics professor and pioneer in synthetic biology, said in a telephone interview.

“One can hope that projects with the most utility and scientific value will continue to get funded,” said the 56- year-old Church, who is director of the Human Genomics and Bioenergy Technology Centers, which are funded by NIH and the Department of Energy. “But inevitably some of the most innovative and creative stuff will get shelved.”

To contact the reporter on this story: Pat Wechsler in New York at pwechsler@bloomberg.net

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Gene-Mapping Pioneer and NIH Head Francis Collins

Andrew Harrer/Bloomberg

NIH head Francis Collins, seen here, told a House appropriations committee in late April that one in five scientists seeking grants from the agency received them under the stimulus act.

NIH head Francis Collins, seen here, told a House appropriations committee in late April that one in five scientists seeking grants from the agency received them under the stimulus act. Photographer: Andrew Harrer/Bloomberg