WILMINGTON — Although a federal judge has blocked the Trump administration’s cap on critical funding for medical and scientific research, health care and higher education officials in Delaware are still concerned it could have serious ramifications on innovation in the First State.
Delaware institutions — like ChristianaCare, the University of Delaware and Delaware State University — have seen about $100 million in federal funding through the National Institutes of Health (NIH) over the last year with millions more through the National Science Foundation (NSF). In the past, that research has gone into discoveries in Alzheimer’s and Parkinson’s diseases as well as cancer treatments and genetic diseases, even creating spin-off companies here in the First State.
Now the Trump administration’s proposed cap of “indirect costs” to 15% of grants issued by the NIH could cost time for research and clinical trials. For some, like startups that are born from that federally funded research, that money is even more valuable.
“You live and die by your cash flows in this work, especially start-ups. If the government says that we’re going to pull back on already negotiated contracts and there’s a legal battle that ensues, fragile organizations can’t survive that,” Delaware Innovation Space President and Chief Executive Officer Bill Provine told the Delaware Business Times. “If that’s the challenge we’re going to have, then how many start-ups will fail? It’s a battle amongst giants.”
Indirect costs are the expenses associated with providing support for facilities and administrative expenses, including space, equipment and back-office support, among others. These costs can be difficult to track compared to salaries and benefits for researchers. The NIH reported that it was $9 billion of the $35 billion spent on nearly 50,000 grants in fiscal year 2023.
While large institutions may have the means to absorb the costs that now go beyond already budgeted costs, it’s raising the alarm for smaller ones that may have to scale back or cut the research altogether.
The Innovation Space, a nonprofit innovation ecosystem and home to leading science-based startups and entrepreneurs, traditionally does not work with companies with NIH or NSF funding. But it has seen many of the next generation of “good ideas” that could become viable companies from universities.
Provine said that the abrupt policy shift has caused worry and confusion, leaving many in the life sciences sector wondering about what comes tomorrow. That anxiety has not faded, even as Judge Angel Kelley of the U.S. District Court for the District of Massachusetts blocked the cap earlier this week.
“People are frustrated by the lack of partnership and cohesiveness in our innovation system. Regulations can kill companies too, but it’s all a matter of being able to predict them,” he said. “Investors want to put money in companies with the least amount of risk, and typically, this hasn’t been one of them. “
“The companies that we work with, they can’t wait for court cases to resolve,” Provine added. “They either have the money to survive or they don’t, and the awkwardness of timing could be enough to kill a great concept.”
Discovery fueled by American entrepreneurialism
Biotech and other life sciences companies are notorious for having a high burn rate of cash before bringing a viable product to market. In 2022, McKinsey & Company estimated that research and development costs were at $237 billion for 4,000 clinical trials that started that year.
That presents a challenge for fledgling life science companies, as many require that early investment to keep going. For example, Prelude Therapeutics started in The Innovation Space in its early days and it went public to help generate the revenue to supercharge their work in treatments for brain cancer and other cancers involving solid tumors. That was four years after the company started.
The Delaware Bioscience Association, which includes major companies like AstraZeneca and Incyte as well as smaller companies and academic institutions, reported much of the alarm is coming from the higher education institutions and small businesses.
Michael Fleming, the Delaware Bioscience Association, said that federal funding was a critical asset for the nation’s ability to outcompete global rivals to be the world’s leader in science innovation. Over the past two decades, the United States has made itself known as the undisputed leader in biotechnology, and Fleming said that status was earned through American entrepreneurial spirit as well as policies that incentivize the investment.
“We need to ensure that federal policies continue to support the strategic investment in and support for cutting-edge research in the most critical areas for national security and health, and that this funding leverages our outstanding university and academic biomedical research capabilities,” Fleming told DBT.
An example of a Delaware company that was sparked by this culture of innovation and funding from NIH is CorriXR Therapeutics, which spun out of the ChristianaCare’s Gene Editing Institute. Delaware’s largest hospital system received $10 million from the NIH between 2019 and 2024, and some of the funding supported the gene editing institute.
CorriXR is developing innovative technologies using proprietary gene editing platforms to overcome drug resistance in solid tumors. At the end of last year, the company raised $6 million and is developing drug candidates to target cancer of the head and neck.
In addition, the NIH funding has been critical to funding clinical trials at ChristianaCare’s Cancer Research Program, one of 46 that participate in the NCI Community Oncology Research Program. The ChristianaCare Graham Cancer Center saw more than seven times the national average of patient enrollment in clinical trials.
“This focus on providing access to groundbreaking and lifesaving clinical trials has also helped improve Delaware’s cancer incidence and mortality rates, which have steadily declined over the past 20 years from some of the highest rates in the nation,” ChristianaCare Enterprise Chief Scientific Officer Omar Khan wrote in a statement to DBT.
The research hubs
Looking at Delaware’s education institutions, the potential impact of the cap would be massive. UD receives more than $40 million from the NIH, according to U.S. Sen. Lisa Blunt Rochester (D-Del.). Cuts would disrupt the Center for Cardiovascular Health that is researching heart disease, cancer, diabetes and stroke recovery.
Cuts would also stop the Delaware IDeA Network of Biomedical Research Excellence, a program shared between Delaware’s publicly funded universities and ChristianaCare and Nemours that provides grants to undergraduates and skill training.
“It is incomprehensible that this administration would rather slash medical research funding and undermine the progress we’ve made in protecting public health, rather than address the real issues affecting Americans across the country like lowering costs at the grocery store,” Blunt Rochester said in a press statement on Feb. 14.
UD officials have created a guidance center for researchers and advises those applying for NIH grants to use the federally negotiated rates until further notice.
UD representatives told DBT that the proposed federal funding cut would severely harm the ability to maintain buildings, laboratories and support infrastructure in institutions like UD. Funding reductions would cause job loss and talent gaps and “potentially lead to the elimination of programs” that train the next generation of clinicians, practitioners and researchers.
ChristianaCare has federal funding backing programs that focus on obstetric and gynecological care, research on better care of the stroke patients, cardiovascular research and more, according to representatives. In addition to the IDeA Network, ChristianaCare also uses NIH funding for the Delaware Clinical and Translational Research ACCEL, another workforce training program.
Meanwhile in Dover, the potential cap would target DSU’s rising portfolio in research and
development. Over the past five years, Delaware’s only Historical Black University has secured millions in research grants from the NIH and other sources in biomedical research.
Today, DSU’s research portfolio is valued at $33.5 million and includes work in Alzheimer’s and Parkinson’s diseases, new AI tools to analyze medical imaging, personalized immunotherapies to treat triple-negative breast cancer and other innovations.
The 15% cap on indirect costs could cause DSU to cut $1.4 million per year, according to DSU representatives. That would include laying off three research support personnel and reducing or eliminating stipends for doctoral students in its post-doctoral program in neuroscience.
Fleming did not directly comment on what an immediate cap on indirect costs would do to the life sciences community in Delaware, but he did say that federal funding seen at universities and research institutions does serve as a seed for many of these ideas that may change the world.
“This support is crucial for translating foundational research into products and technologies that change lives, drive our economy and global competitiveness, and has resulted in an incredibly positive return for taxpayers,” he said. “[It also could] lead to breakthrough therapies that save and extend lives and a thriving industrial and advanced manufacturing base employing people in every state of our country.”
Editor’s note: a previous version of this story incorrectly stated U.S. Sen. Lisa Blunt Rochester’s comments came from a letter to U.S. Department of Health & Human Services. The comment came from a press release.
