Something has shifted for San Diego’s life sciences and biotech leaders over the past several months. Grants that were penciled into budgets have not materialized on schedule. Programs that once looked fully backed now sit in a holding pattern, with no firm sense of when, or whether, that will change.
What is unfolding is not a routine dip in the grant cycle. Researchers have described certain elements of the disruption, including mid-project grant cancellations, as highly unusual and, in some cases, previously almost unheard of.
This situation has finance chiefs across “Biotech Beach” rethinking long-held assumptions about runway, capital strategy and which programs deserve priority.
Two forces behind the slowdown
It helps to break the situation into two separate but overlapping issues: a shift in federal policy, and a lag in how funds already committed are actually being paid out.
On the policy front, the National Institutes of Health has overhauled elements of how grants get approved, sorted and ranked for funding. Awards have been pulled mid-project, something researchers say almost never happened before 2025. Some funding announcements have been narrowed or shut down entirely.
Meanwhile, the Trump administration’s 2026 fiscal year budget request proposed a roughly 40% reduction in NIH funding, though Congress later rejected that proposal and approved a slight increase instead. The President’s budget request for the 2027 fiscal year proposes $41.5 billion for NIH, a $5.0 billion cut.
The second issue is more of a bottleneck than a cut. Money that Congress has already approved is not necessarily reaching recipients on the schedule they expected. Roughly halfway through the current fiscal year, cumulative cancer research disbursements nationally sat at about $541 million, well short of the approximately $5.3 billion that typically moves in a full year, per NBC 7 San Diego’s reporting.
What the local data shows
San Diego’s research institutions are already feeling the impact. Across six of the region’s leading centers, among them UC San Diego, Scripps Research, the Salk Institute, Sanford Burnham Prebys, the La Jolla Institute for Immunology and San Diego State University Foundation, combined cancer research grants fell from roughly $103 million to about $87 million between fiscal 2024 and fiscal 2025, a decline of 16%.
UC San Diego alone saw its cancer research funding fall from $46.8 million a year ago to just $10.8 million at the same point this fiscal year.
That drop looks even more striking set against how much federal money typically flows into the region. San Diego County placed ninth nationally for total NIH grant dollars in 2025, led by UC San Diego’s $576 million, followed by Scripps Research at $164 million, the Salk Institute at $61 million and Sanford Burnham Prebys at $45 million, according to Voice of San Diego.
Given that scale, disruptions here reverberate widely: San Diego biotech companies lean heavily on NIH-funded academic research at institutions like UCSD, Scripps and Salk to keep their pipelines moving, so this isn’t some abstract policy story playing out in Washington. It’s a real operating constraint.
Where companies are feeling it
For biotech companies, the strain is showing up in several parts of the business at once, not just one. Burn rate assumptions built around predictable NIH payment timing are being upended as disbursements arrive later than planned, tightening cash positions in the near term. Staffing plans grow more complicated too, since research roles, postdoctoral positions and lab teams often depend on a blend of federal grants and private funding that no longer arrives on a reliable clock.
Fundraising conversations are likely to shift as investors evaluate whether and how a company depends on NIH-funded research or grant timing. For eligible companies, biotech R&D tax credits may be one available tool to help preserve runway while critical programs are evaluated and prioritized.
Philanthropy steps into the gap
As federal support has grown less predictable, local philanthropy has taken on a bigger role in filling the space. Curebound, a San Diego-based nonprofit, reports having directed about $51 million toward cancer research and helping unlock roughly $166 million in additional follow-on funding. The group also hosted a Concert for Cures at Petco Park headlined by P!nk to raise further support.
Jeremy Berg, who spent eight years leading the National Institute of General Medical Sciences at NIH, described the shift bluntly to NBC 7 San Diego, noting that grants have been “canceled or terminated in the middle of their projects, which is something that was basically unheard of in the past.”
The region’s biotech strength is resilient
None of this changes the fact that San Diego remains among the most resilient biotech hubs anywhere in the world. BIOCOM’s current San Diego data describes roughly 2,000 life science establishments and 75,816 direct jobs, while Voice of San Diego separately reported BIOCOM’s broader tally as supporting 167,000 local jobs, more than 10% of the local workforce. And the density of top-tier research institutions here, UC San Diego, Scripps and Salk chief among them, gives the region a structural edge that a rough federal funding stretch isn’t going to erase.
What today’s environment is really testing isn’t the caliber of San Diego’s science. It’s how well individual companies can withstand a funding landscape that looks a lot less certain than the one many built their financial plans around.
Andre Shevchuck is a partner in BPM, a public accounting and advisory firm headquartered in San Francisco.
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