Since the pandemic began, the independent San Antonio nonprofit has expanded its reputation with government and within the private sector, namely the pharmaceutical industry. And that has widened Texas Biomed’s potential customer and revenue base at a time that it’s undergoing an expansion and modernization plan estimated at more than $300 million.
Texas Biomed, which seeks to increase its staff from 430 to 700 employees in the next decade, is looking to strengthen partnerships with pharmaceutical companies like Pzifer and Regeneron Pharmaceuticals. After being contracted by those two companies to study and develop COVID-19 vaccines and therapeutics, more calls have come from the industry seeking Texas Biomed’s help to streamline the path from research to market.
On ExpressNews.com: Texas Biomed elevated to state’s only prime contractor in U.S. response to pandemic, bioterrorism
With a new financial strategy, the institute is ready to engage with Big Pharma and high-dollar contracts. Its researchers boast access to high-level containment labs and a primate center, confident that they can help pharmaceutical companies move scientific discoveries to preclinical studies and commercial adoption.
Texas Biomed CEO Dr. Larry Schlesinger said Big Pharma has “reduced its investment” in developing new drugs to treat infectious diseases in recent years, to a large extent out of concern that their shelf lives are too short. And the resulting void is where the research institute can play a key role.
“They need a nonprofit to do the hard development work they could then take over and commercialize,” Schlesinger said.
At the same time, Schlesinger believes the nonprofit can grow its basic science research like medical schools or universities that have long histories of working with industry partners.
“Based on the need to really handle infection, we need to have more products,” he said. “We don’t convert our scientists to businessmen. We just help them understand how there’s a very fine line between cutting-edge, basic science discovery and a possible application.”
Diversifying revenue
Texas Biomed reported revenue of $70 million this year, up 38.6 percent from $50.5 million in 2017. It secured $108 million in grants and contracts in 2022, up significantly from $27 million in 2017.
As part of the institute’s expansion plan, it broke ground on a $15 million-plus animal care complex and is ramping up efforts for its new Global Center for Bioscience, which is known as “the future home for multidisciplinary team science,” director of public relations Nicole Foy has said.
Federally funded work won’t be enough to help bring Texas Biomed’s vision to fruition.
“Funding (from the National Institutes of Health) for biomedical research is tight,” Schlesinger said. “When we ask for $1 for an experiment, the NIH pays us $1.98. The 98 cents is the indirect revenue on every dollar to fund the lights and the mortar and the bricks to help the research. That alone is not enough money actually to sustain the expense of science.”
He said the nonprofit aims to diversify its revenue.
His rough idea is to generate 50 percent of Texas Biomed’s revenue from NIH funding, with the rest coming from current government grants and increased private sector contracts from Big Pharma, which would provide indirect funding for research, the expansion of the campus and hiring scientists.
“For institute’s that don’t diversify, they either close or they are in slow decline, because you can’t support the cost of the science,” he said. “I would say diversification is critical.”
Big Pharma is also interested in engaging scientists to work on lucrative biological data projects. Besides studying infectious diseases, scientists might be involved in collecting biological data — a lucrative market. For Texas Biomed, it’s a new practice with the potential to yield tension among scientists.
Schlesinger hopes to find an “aligned strategy” to complete such data projects while keeping scientists on task to research infectious diseases. He doesn’t want to “get into the business of ripping off the scientists to do contract work.”
“We need to resource both properly to avoid that tension,” he said. “We’re growing, and there’s tension that comes with growth. But tension needs to be in right-sizing both sides of the house at the same time, trying to keep a handle on administrative costs so we have the money available to do that science.”
The nonprofit expects to receive more federal funding after being named a prime contractor with the Biomedical Advanced Research and Development Authority.
Since 2015, the nonprofit has received about $46 million through subprime contracts with the authority. The new status puts it in the top ranks of the authority’s limited network and enables it to receive up to $100 million in federal funding over five years. It’s now the only researcher in Texas with the designation.
It will also continue to seek funding from the city of San Antonio, philanthropists and private sector contracts. In 2022, the San Antonio City Council voted to give $10 million in federal COVID-19 relief money to the nonprofit.
Infectious disease a ‘growth area’
Texas Biomed’s revenue from contract research — much of it involving projects that are confidential — jumped 187 percent from 2017 to 2022, the nonprofit reported.
And it expects contract revenue to grow based on the threat of infectious diseases, a threat it considers to be massive, so much so that its executives believe infectious diseases may become the leading cause of death by 2050.
Such projections are based on a groundbreaking report — by the United Nation’s ad hoc Interagency Coordination Group on Antimicrobial Resistance — that estimated drug-resistant diseases could cause 10 million deaths per year by that time, up from about 700,000 today. The U.N. said the economic damage from such a level of deaths could be as “catastrophic” as the global financial crisis of 2008-09 and push millions of people into poverty.
“From a business perspective, this is a growth area,” Schlesinger said.
As COVID-19 has killed millions across the U.S. and the world, the bioscience industry has been rushing to study infectious diseases and bring therapeutics and vaccines to market.
To that end, Schlesinger said Texas Biomed has found created a business model “at the cutting edge of infectious disease research and development model that you’re going to see more of,” Schlesinger said. “The world is demanding more options to treat infection.”
Texas Biomed has existing partnerships with MAPP Biopharmaceuticals in California and the nonprofit Sabin Vaccine Institute in Washington, D.C., involving recent Sudan Ebolavirus vaccines and therapies. It has also re-established existing models for mpox, formerly called monkeypox, to support therapy studies for Regeneron.
“Our business is science,” Cory Hallam, vice president of business development and strategic alliance, said. “Our currency is quality science regardless of who the audience is, whether it’s your collaborators and fellow researchers that are pushing the boundaries and discovery or partners or clients you’re working with to actually do science for them.”
‘Primed’ for the pandemic
Yale-educated oil man Tom Slick founded Texas Biomed in 1941, and he started the nonprofit Southwest Research Institute seven years later.
Ever since, Texas Biomed scientists have primarily worked on independent projects funded by the NIH, part of the U.S. Department of Health and Human Services, Foy said.
They studied diabetes, obesity, cancer and aging. But under the leadership of Schlesinger, who became CEO in 2017, the institute pivoted to focus on researching infectious diseases.
That year, an internal audit found that 70 percent of the institute’s research involved infectious disease, a category that drove about 80 percent of its revenue. Another 10 percent of revenue came from contracts, almost exclusively in high-containment work in Texas Biomed’s biosafety level 4 lab, known as BSL-4.
Texas Biomed is home to the nation’s only privately owned BSL-4 containment lab used to study infectious agents or toxins and life-threatening disease. It also operates 7,500 square feet of BSL-3 labs.
On ExpressNews.com: National group says San Antonio shouldn’t give COVID-19 relief funds to Texas Biomed
Then, in early 2020, amid the coronavirus pandemic’s initial stages, Schlesinger issued funding calls to local donors — including H-E-B, USAA and the McCombs Foundation — to collect nearly $3.5 million for five COVID-19 research projects.
The nonprofit also received a $60,000 grant from the NIH to help it determine which animal — baboon, macaque or marmoset — could produce best test subjects.
The institute’s Southwest National Primate Research Center has more than 2,500 primates, including chimpanzees and about 1,000 baboons — making it the world’s largest colony of baboons for biomedical research. It hasn’t conducted “invasive research” on chimpanzees since 2016, after the NIH announced it would no longer support biomedical research on the endangered species.
Scientists conduct research on primates in the BSL-3 and BSL-4 labs — the same facilities they used to study Ebola, hepatitis C, Zika and SARS, a coronavirus genetically related to the strain that caused COVID-19.
Texas Biomed established partnerships with pharmaceutical giant Pfizer and biotechnology company Regeneron Pharmaceuticals, both based in New York. It also worked with Novavax, a biotechnology firm in Maryland, as well as Gilead, a pharmaceutical company in California.
The institute’s staff gained national recognition for its contributions to researching COVID-19 and for helping the government and Big Pharma get therapeutics and vaccines onto market.
“Being primed helped us when the pandemic hit,” Schlesinger said.
eric.killelea@express-news.net
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