A decade ago, 70% of Scripps Research’s funding came from government grants. But that share is now 30%, after Scripps reinvented its financial model to reduce its dependence on Washington.
The shift has left Scripps better positioned than many other research institutes to withstand the billions of dollars in science funding cuts from the Trump administration.
Scripps, which has nearly $1.3 billion in assets, offers a different financial model for biomedical research. It’s pushing discoveries into clinical trials, and launching a fund backed by private investors, a much more expansive role compared to research institutes that typically stick to early-stage drug discovery.
As a result, Scripps has attracted attention from peers that are searching for ways to shore up their own finances. But even with less reliance on federal funding, the intent isn’t to replace it entirely, nor bolster the administration’s view that less money should flow to biomedical institutes.
In an interview with
Endpoints News
, Scripps CEO Peter Schultz said that Scripps’ strategy is rather to extend government dollars that underpin its discoveries and translational work.
“We as nonprofits need to start thinking more broadly about how we fund and grow our impact than simply relying on federal funding and philanthropy,” Schultz said.
Scripps has helped to hatch well-known medicines like blockbuster Humira. It’s widely known for its work on cancer, heart conditions and HIV. In 2017, Nature Index ranked it first worldwide in the impact and quality of its science, beating out research centers at places like MIT and Stanford University.
When Schultz was appointed as the CEO of Scripps in 2015, he had to contend with the institute running a $16 million operating loss. Scripps had been operating in the red the four previous years as well.
Pharmaceutical companies at the time had become pickier with licensing deals, and NIH funding was fickle.
In response, Scripps remade itself to push discoveries further into drug development. It shuttles promising ideas to Calibr, its commercialization arm that leads clinical trials. By doing more of the heavy lifting, Scripps has secured more favorable milestone payments and royalties.
That came with higher risks, too — while Scripps can fetch higher payments, a more pricey clinical trial could flop.
In 2023, Scripps recorded $112 million in operating income, according to its latest financial report. It received about 42% of its $641 million in revenue from government grants. Schultz said the figure has fallen further to about 30%.
The rest of its funding comes from a mix of pharmaceutical partnerships, royalty and licensing revenues, and philanthropy. In the past two years, it has licensed a tuberculosis drug candidate to the Gates Medical Research Institute, licensed its experimental long-acting HIV drug to Gilead, and expanded a partnership with AbbVie.
Schultz said such sources can offer more flexible, unrestricted capital.
That flexibility, he said, has allowed Scripps to diversify revenue and take new approaches. It’s now working on a dedicated regenerative medicine fund that will support drug programs through early clinical testing, using money from private investors rather than pharma or philanthropy.
Even with the financial makeover, Scripps is still hurting from Trump administration cuts that wiped out $6 million in funding this year for its part in the All of Us Research Program, a nationwide consortium to build one of the largest, most diverse health datasets.
In addition, Scripps lost $3.5 million in funding to develop drugs against viruses with high pandemic potential, as part of the administration’s pullback of $11.4 billion in pandemic funding.
Scripps could face additional cuts, depending on the outcome of court battles over the Trump administration’s plan to slash billions in payments to universities for research overhead, also known as indirect costs.
Others are taking note of Scripps’ approach. Schultz said a leader from another biomedical institution recently visited Scripps to study its structure. “You guys are 10 years ahead of us,” Schultz recalled the official telling him.
Scripps feeds translational revenues back into its discovery engine. But some see danger in biomedical institutes drifting too far away from fundamental discovery.
“It really is the responsibility of academic centers to pursue basic science,” said Keith Yamamoto, the former vice chancellor for science policy and strategy at UCSF.
Yamamoto said the model might work for Scripps, but he doubts it’s widely applicable. Many institutions lack the infrastructure, financing or leadership experienced in both academia and industry.
The tension, in part, reflects a struggle in biomedical research: the so-called “valley of death,” in which promising early-stage research languishes.
Scripps’ strategy is one approach, but it’s not the only option. Yamamoto pointed to a potential alternative idea modeled on the Department of Energy’s loan guarantee fund, which helped finance companies like Tesla. In medicine, a similar vehicle could back high-risk, high-reward projects, especially for rare diseases, where private investment has lagged.