RELEASE DATE:  September 27, 2002

PA NUMBER:  PA-02-173 (This PA has been reissued, see PA-06-079)

EXPIRATION DATE:  October 2005

National Institute of Mental Health (NIMH)


o  Purpose of the PA
o  Research Objectives
o  Mechanism(s) of Support 
o  Eligible Institutions
o  Individuals Eligible to Become Principal Investigators
o  Where to Send Inquiries
o  Submitting an Application
o  Peer Review Process
o  Review Criteria
o  Award Criteria
o  Required Federal Citations


This Program Announcement (PA) solicits Small Business Innovation Research 
(SBIR) grant applications that propose to continue the process of developing 
pharmacologic agents for brain research related to mental disorders, including 
research aimed at discovering new drugs for these disorders.  This PA 
specifically invites applications for the competing continuation of previously 
funded Phase II SBIR grants, to take existing, promising compounds through the 
next step of drug discovery and development.  Only SBIR Phase II awardees are 
eligible to submit a competing continuation application.  The previously funded 
Phase II SBIR grant need not have been submitted in response to a particular 
solicitation, as long as the research is appropriate to the purpose of this 

This PA does not support early stage drug development such as the identification 
of new targets or lead compounds.  Rather, the expectation is that as a result 
of support from previous SBIR Phase I (R43) and Phase II (R44) grants, promising 
pharmacologic agents have already been identified and some preclinical 
pharmacology has been conducted.  The competing continuation would represent a 
continuation of support for research/research and development of such previous 
work funded by the original Phase II R44 grant.  Activities supported by a 
competing continuation of a Phase II SBIR grant may include an extension and 
expansion of preclinical research and development, clinical testing, and other 
scientific research and development activities that would ultimately be useful 
in meeting the requirements and expectations of Federal regulatory processes.

A Phase II competing continuation award should not, however, be used to conduct 
very early stage research (e.g., identifying targets for drugs, initial 
identification of lead compounds, etc.).  In addition, like Phase I and initial 
Phase II grants, the Phase II competing continuation award will not support 
costs for legal consultation, marketing efforts, etc.

This PA must be read in conjunction with the current Phase II Grant Application 
( and in conjunction with 
Chapter VI of the PHS 398



Pharmacologic therapeutics represent the single most important commercial 
product of biomedical research, and they have an unsurpassed track record of 
improving human health.  Nevertheless, drug discovery and development is a 
costly, time consuming, and high risk activity.  The process starts with the 
discovery of an agent or class of agents with particular activity.  Lead 
compounds must then be identified, optimized, and only then tested in 
preclinical conditions for safety, toxicity, etc.  Those agents still considered 
viable after such rigorous scrutiny are then brought to human subjects for 
clinical evaluation of a variety of aspects of the agent, including safety, 
effectiveness, and dosage determination.

In recent years, with the advent of biotechnology, small businesses have 
played an increasingly important role in drug discovery and development, 
typically, but not entirely, focusing their efforts on the earlier stages of 
this process rather than clinical trial evaluation.  SBIR support has heretofore 
only allowed for a Phase I and single Phase II grant for such research.  A 
recipient of an NIH SBIR Phase I and Phase II award normally receives no more 
than $1 million.  If the intended commercialization product is a drug or 
biologic, the $1 million is probably less than 1% of the funds necessary to 
complete the studies required for licensing by the Food and Drug Administration 
(FDA.).  Moreover, a recipient of an NIH SBIR Phase I and Phase II award 
normally receives less than three years of support.  Yet, the process of moving 
promising new products from bench to bedside typically takes more than a decade.

This program announcement aims to add up to another 3 years of support to small 
businesses for drug research and development by providing a second epoch of 
Phase II SBIR funding through the award of an SBIR Phase II competing 
continuation grant.  It is recognized that even with a competing continuation 
grant, this entire timeline will not be supported by the SBIR Program for any 
given drug.  The competing continuation grant will, however, allow small 
businesses to carry further the fruits of their research to advance science and 
to attract interest and investment in their research programs by third parties.  
This Phase II competing continuation support will also allow small businesses to 
address clinical issues, and other important issues relevant to regulatory 
approval by agencies such as the federal Food and Drug Administration.  Thus, 
competitive continuation awards of Phase II grants will contribute to the 
strength of this nation"s economy and to the health of her people.

Research topics

The following examples would make appropriate topics for proposed SBIR Phase II 
competing continuation projects.  These are meant for illustrative purposes only 
and are not exclusive of other appropriate activities:

o  Preclinical studies, including pharmacology and toxicology, beyond those 
conducted under the Phase I (R43) and initial Phase II (R44) grants.  Some in 
vivo or in vitro studies would be expected to have been carried out in Phase I 
or the initial Phase II grant.

o  Completion of studies as required by the Food and Drug Administration (FDA) 
for Investigational New Drug (IND) or Radioactive Drug Research Committee (RDRC) 

o  Studies in normal healthy volunteers to determine a drug"s safety profile, 
metabolism, etc.

o  Clinical studies in patient/disease population to assess the drug"s 


SBIR Phase II competing continuation applications in response to this PA will 
only be accepted as competing continuations of previously funded NIH Phase II 
SBIR awards (R44 mechanisms).  The expectation is that as a result of support 
from previous SBIR Phase I (R43) and Phase II (R44) grants, promising findings 
had been produced that indicate not only the merit of further research and 
development, but also that clinical investigations and Federal regulatory 
approvals will ultimately be required to realize the potential of the product 
being researched and developed.

The previously funded NIH Phase II grant need not have been submitted in 
response to any particular solicitation, but the application for the competing 
continuation must propose research and development of pharmacologic agents and 
drugs for the treatment of mental disorders, and must be a logical extension of 
the previously supported Phase II research.  Applicants will be solely 
responsible for planning, directing, and executing the proposed project.

Project Period and Amount of Award

Because the length of time and cost of drug discovery and development represents 
a long term research and development commitment, a project period of up to three 
years and a budget not to exceed total costs of $800,000 per year (including 
direct costs, indirect costs and fee/profit) will be considered under this PA if 
the time period and amount are well justified.

Consultant and Contractual Costs

The total amount of all consultant costs and contractual costs normally 
may not exceed 50% of the total costs requested for R44 Phase II SBIR 
applications.  Competing continuation grant applications submitted under this PA 
may exceed this guideline, however, when well justified.  Examples of well 
founded reasons for exceeding this guideline include, but are not limited to, 
subcontracts to clinical research organizations to carry out aspects of clinical 
evaluation or subcontracts to assure compliance with Good Manufacturing 
Practices (GMPs) expectations of the FDA.

This PA uses just-in-time concepts.  Also, applicants must follow the 
instructions for non-modular research grant applications.


The competing continuation application must be a continuation and logical 
extension of a previously completed Phase II (R44) SBIR grant focusing on drug 
development of pharmacologic agents.  To maintain eligibility to seek a Phase II 
competing continuation grant, a Phase II grantee organization should submit an 
application for the Phase II competing continuation grant within the first six 
receipt dates following the expiration of the initial Phase II budget.  Other 
eligibility requirements for a Phase II competing continuation grant are 
identical to those for the initial Phase II (R44) applications and can be found 
and in the PHS 398


Any individual with the skills, knowledge, and resources necessary to carry out 
the proposed research is invited to work with their institution to develop an 
application for support.  Individuals from underrepresented racial and ethnic 
groups as well as individuals with disabilities are always encouraged to apply 
for NIH programs.


We encourage your inquiries concerning this PA and welcome the opportunity to 
answer questions from potential applicants.

o Direct your questions about scientific/research issues to:

Margaret Grabb, Ph.D.
Division of Basic and Clinical Neuroscience Research
National Institute of Mental Health
6001 Executive Boulevard, Room 7201, MSC 9645
Bethesda, MD  20892-9645
Rockville, MD  20852 (for express/courier service)
Telephone:  (301) 443-3563  
FAX:  (301) 443-1731

o Direct your questions about financial or grants management matters to:

Ms. Kathy Hancock
Grants Management Branch
National Institute of Child Health and Human Development
6001 Executive Boulevard, Room 8A17M
Bethesda, MD  20892-7510
Telephone:  (301) 496-5482
FAX:  (301) 402-0915


Applications must be prepared using Chapter VI of the PHS 398 research grant 
application instructions and forms (rev. 5/2001).  The PHS 398 is available at in an interactive format.  
For further assistance contact GrantsInfo, Telephone (301) 710-0267, Email:

All Phase II grant applications, including this competing continuation application, 
require a "Product Development Plan," as described at
p1_specific_instructions.htm#8_Appendix.  The 
Product Development Plan is meant in part to demonstrate the commercial 
viability of the product researched and developed with SBIR support.  Since this 
Phase II competing continuation application mechanism supports a more advanced 
stage of research and development than the R44 Phase II mechanism, the Product 
Development Plan should reflect more advanced plans and arrangements for 
commercialization than what might be submitted for an R44 application.  For 
example, part of a Product Development Plan that would be appropriate to drug 
development supported by a Competing Continuation application would be a clear 
indication of an arrangement (e.g., strategic alliance, letters of support)) 
with another party through which the final stages of the work might be supported 
or carried out, including additional clinical trials, FDA submissions, drug 
manufacturing and drug commercialization.  This example is meant for 
illustrative purposes, the details of any Product Development Plan will depend 
upon the particular circumstances represented in a given application.

For purposes of identification and processing, enter the following title and 
number of this PA in item 2 on the face page of the application:  COMPETING 

APPLICATION RECEIPT DATES:  Applications submitted in response to this program 
announcement will be accepted at the standard application deadlines, which are 
available at  Application deadlines are 
also indicated in the PHS 398 application kit.

SENDING AN APPLICATION TO THE NIH:  Submit a signed, typewritten original of the 
application, including the checklist, and five signed photocopies in one package 

Center for Scientific Review
National Institutes of Health
6701 Rockledge Drive, Room 1040, MSC 7710
Bethesda, MD  20892-7710
Bethesda, MD  20817 (for express/courier service)

APPLICATION PROCESSING:  Applications must be received by or mailed on or before 
the receipt dates described at  The CSR will not 
accept any application in response to this PA that is essentially the same as 
one currently pending initial review unless the applicant withdraws the pending 
application.  The CSR will not accept any application that is essentially the 
same as one already reviewed.  This does not preclude the submission of a 
substantial revision of an application already reviewed, but such application 
must include an Introduction addressing the previous critique.


Applications submitted for this PA will be assigned on the basis of established 
PHS referral guidelines.  An appropriate scientific review group convened in 
accordance with the standard NIH peer review procedures 
( will evaluate applications for 
scientific and technical merit.

As part of the initial merit review, all applications will:

o  Receive a written critique
o  Undergo a selection process in which only those applications deemed to have 
the highest scientific merit, generally the top half of applications under 
review, will be discussed and assigned a priority score
o  Receive a second level review by the appropriate national advisory council or 


In addition to the five subcomponents of the Significance review criterion 
described in Chapter VI of the PHS 398 
p1_peer_review.htm#Research_Project), a sixth 
subcomponent will be assessed by reviewers:  Does the activity as proposed 
address issues related to Federal regulatory approval processes?


Applications submitted in response to a PA will compete for available funds with 
all other recommended applications.  The following will be considered in making 
funding decisions:

o  Scientific merit of the proposed project as determined by peer review
o  Availability of funds 
o  Relevance to program priorities


NIH that women and members of minority groups and their sub-populations must be 
included in all NIH-supported clinical research projects unless a clear and 
compelling justification is provided indicating that inclusion is inappropriate 
with respect to the health of the subjects or the purpose of the research.  This 
policy results from the NIH Revitalization Act of 1993 (Section 492B of Public 
Law 103-43).

All investigators proposing clinical research should read the AMENDMENT "NIH 
Guidelines for Inclusion of Women and Minorities as Subjects in Clinical 
Research - Amended, October, 2001," published in the NIH Guide for Grants and 
Contracts on October 9, 2001 
(, a complete 
copy of the updated Guidelines are available at  The 
amended policy incorporates:  the use of an NIH definition of clinical research, 
updated racial and ethnic categories in compliance with the new OMB standards, 
clarification of language governing NIH-defined Phase III clinical trials 
consistent with the new PHS Form 398, and updated roles and responsibilities of 
NIH staff and the extramural community.  The policy continues to require for all 
NIH-defined Phase III clinical trials that:  a) all applications or proposals 
and/or protocols must provide a description of plans to conduct analyses, as 
appropriate, to address differences by sex/gender and/or racial/ethnic groups, 
including subgroups if applicable, and b) investigators must report annual 
accrual and progress in conducting analyses, as appropriate, by sex/gender 
and/or racial/ethnic group differences.

NIH maintains a policy that children (i.e., individuals under the age of 21) 
must be included in all human subjects research, conducted or supported by the 
NIH, unless there are scientific and ethical reasons not to include them.  This 
policy applies to all initial (Type 1) applications submitted for receipt dates 
after October 1, 1998.

All investigators proposing research involving human subjects should read the 
"NIH Policy and Guidelines" on the inclusion of children as participants in 
research involving human subjects that is available at

requires education on the protection of human subject participants for all 
investigators submitting NIH proposals for research involving human subjects.  
You will find this policy announcement in the NIH Guide for Grants and Contracts 
Announcement, dated June 5, 2000, at

HUMAN EMBRYONIC STEM CELLS (hESC):  Criteria for federal funding of research on 
hESCs can be found at and at  Only research 
using hESC lines that are registered in the NIH Human Embryonic Stem 
Cell Registry will be eligible for Federal funding (see  It 
is the responsibility of the applicant to provide the official NIH identifier(s)
for the hESC line(s)to be used in the proposed research.  Applications that do 
not provide this information will be returned without review.

Office of Management and Budget (OMB) Circular A-110 has been revised to provide 
public access to research data through the Freedom of Information Act (FOIA) 
under some circumstances.  Data that are (1) first produced in a project that is 
supported in whole or in part with Federal funds and (2) cited publicly and 
officially by a Federal agency in support of an action that has the force and 
effect of law (i.e., a regulation) may be accessed through FOIA.  It is 
important for applicants to understand the basic scope of this amendment.  NIH 
has provided guidance at

Applicants may wish to place data collected under this PA in a public archive, 
which can provide protections for the data and manage the distribution for an 
indefinite period of time.  If so, the application should include a description 
of the archiving plan in the study design and include information about this in 
the budget justification section of the application.  In addition, applicants 
should think about how to structure informed consent statements and other human 
subjects procedures given the potential for wider use of data collected under 
this award.

URLs IN NIH GRANT APPLICATIONS OR APPENDICES:  All applications and proposals 
for NIH funding must be self-contained within specified page limitations.  
Unless otherwise specified in an NIH solicitation, Internet addresses (URLs) 
should not be used to provide information necessary to the review because 
reviewers are under no obligation to view the Internet sites.  Furthermore, we 
caution reviewers that their anonymity may be compromised when they directly 
access an Internet site.

HEALTHY PEOPLE 2010:  The Public Health Service (PHS) is committed to achieving 
the health promotion and disease prevention objectives of "Healthy People 2010," 
a PHS-led national activity for setting priority areas.  This PA is related to 
one or more of the priority areas.  Potential applicants may obtain a copy of
People 2010" at

AUTHORITY AND REGULATIONS:  This program is described in the Catalog of Federal 
Domestic Assistance No. 93.242, and is not subject to the intergovernmental 
review requirements of Executive Order 12372 or Health Systems Agency review.  
Awards are made under authorization of Sections 301 and 405 of the Public Health 
Service Act as amended (42 USC 241 and 284) and administered under NIH grants 
policies described at and under Federal 
Regulations 42 CFR 52 and 45 CFR Parts 74 and 92.

The PHS strongly encourages all grant recipients to provide a smoke-free 
workplace and discourage the use of all tobacco products.  In addition, Public 
Law 103-227, the Pro-Children Act of 1994, prohibits smoking in certain 
facilities (or in some cases, any portion of a facility) in which regular or 
routine education, library, day care, health care, or early childhood 
development services are provided to children.  This is consistent with the PHS 
mission to protect and advance the physical and mental health of the American 

Weekly TOC for this Announcement
NIH Funding Opportunities and Notices

Office of Extramural Research (OER) - Home Page Office of Extramural
Research (OER)
  National Institutes of Health (NIH) - Home Page National Institutes of Health (NIH)
9000 Rockville Pike
Bethesda, Maryland 20892
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and Human Services (HHS) - Government Made Easy

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