Despite fears caused by the nullification of the Iowa Values Fund, three Ames companies should still receive state money to help them create new jobs for Iowans.

The Iowa Supreme Court declared Gov. Tom Vilsack’s line-item vetoes of HF692, a bill drafted to create the Values Fund, unconstitutional last June. Monetary promises to businesses in Iowa hung in the balance as legislators scrambled to find a compromise. Last September, a special one-day legislative session resulted in a $100 million appropriation to fulfill the commitments of the Values Fund for one year.

Three of those commitments were made to Ames companies in February 2004. NewLink Genetics Corp., 2901 S. Loop Drive; Phytodyne Inc., 2711 S. Loop Drive; and NovaScan Technologies, 131 Main St., were awarded a total of $9.7 million to help their businesses grow.

Tina Hoffman, spokeswoman for the Iowa Department of Economic Development, said contract negotiations are still underway.

Sen. Bob Brunkhorst, R-Waverly, said although there is enough money to fulfill current contract agreements, there will be no money to grant contracts to new applicants until an economic stimulus bill is passed.

“There is still about a hundred or so contracts in the hopper to be evaluated,” Brunkhorst said. “Once we get a funding stream, we’ll start awarding contracts again.”

Brunkhorst, who is the co-chairman of the Senate Economic Growth Committee, said there will likely be a shift in focus from large-scale grants to contract awards for small business and value-added agriculture.

“We don’t want companies to come down here to Des Moines to beg and plead for money,” Brunkhorst said.

“We believe that should be with their stockholders and local banks.”

Nick Vahanian, chief medical and operations officer for NewLink, said the initial promise of state funds was beneficial for his company.

“People view state support as a very positive thing,” Vahanian said. “It takes a lot of state support, not just good science, to grow a company like this.”

Representatives from Phytodyne Inc. and NovaScan Technologies could not be reached for comment.

Vahanian is developing vaccines for several types of cancer. These vaccines consist of genetically modified cancer cells that are designed to teach a person’s immune system to attack cancer cells already in the body.

“Obviously, it takes a lot of money to build a company that is working to become a formidable force in the cancer world,” Vahanian said.

“Bringing new cancer drugs to patients is expensive and competitive.” He said his company, which is expected to receive $6 million from the Values Fund, found a gene in lower mammals to which the human body has a “very potent reaction.” The gene is added to harvested cancer cells and introduced to the patient’s body, which rejects them. With the gene’s help, people’s bodies may learn to reject resident cancer cells.

Results from a clinical trial of NewLink’s HyperAcuteTM lung cancer vaccine at the National Cancer Institute in Washington are “encouraging,” Vahanian said.

Clinical trials for NewLink’s breast cancer vaccine began Wednesday in Iowa, the first such trials ever in the state.

With the funding, Vahanian said he expects to add about 10 employees to the company — roughly a 30 percent increase — after receiving $2 million from the state early last year.

He said a “significant portion” of the new hires would be recent graduates from Iowa State.