Citigroup Comments On NIH Budget And F2011 Appropriations (LIFE, ILMN)

Late Friday (2/11), the House Appropriations Committee released details of its budget cuts proposal for the remainder of F2011 (ending 9/30) which will be voted on this week as HR 1, Citigroup reports. “According to the bill, the proposed NIH budget will be cut by $1.6B to $29.3B (-5%) vs. F2010 levels under a new spending bill that targeted $100B (-9% from the President's F2011 budget request) in total discretionary spending cuts from the federal budget,” Citigroup writes. “A previous list of proposed cuts released Feb. 9 had left NIH funding flat. While this is a negative headline, this proposal will still face much debate in the House before moving to the Senate for a vote. Ultimately, we believe this proposal represents the “bear” case for NIH cuts and the final cut could be less. “While a 5% cut to the NIH budget will likely be viewed as a negative for companies with greater exposure to academic/gov't end mkts. (e.g., Life Technologies Corporation LIFE and Illumina, Inc. ILMN), the $1.6B in NIH cuts are not final and there will be continued debate/negotiation before any budget proposal moves to the Senate.” Life Technologies Corporation closed Friday at $54.38; Illumina closed at $73.66.