[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
IMPROVING TECHNOLOGY TRANSFER AT
UNIVERSITIES, RESEARCH INSTITUTES,
AND NATIONAL LABORATORIES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
WEDNESDAY, JULY 24, 2013
__________
Serial No. 113-43
__________
Printed for the use of the Committee on Science, Space, and Technology
Available via the World Wide Web: http://science.house.gov
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR., DANIEL LIPINSKI, Illinois
Wisconsin DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas ERIC SWALWELL, California
PAUL C. BROUN, Georgia DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi ALAN GRAYSON, Florida
MO BROOKS, Alabama JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois SCOTT PETERS, California
LARRY BUCSHON, Indiana DEREK KILMER, Washington
STEVE STOCKMAN, Texas AMI BERA, California
BILL POSEY, Florida ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky MARK TAKANO, California
KEVIN CRAMER, North Dakota ROBIN KELLY, Illinois
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS STEWART, Utah
VACANCY
------
Subcommittee on Research and Technology
HON. LARRY BUCSHON, Indiana, Chair
STEVEN M. PALAZZO, Mississippi DANIEL LIPINSKI, Illinois
MO BROOKS, Alabama FEDERICA WILSON, Florida
RANDY HULTGREN, Illinois ZOE LOFGREN, California
STEVE STOCKMAN, Texas SCOTT PETERS, California
CYNTHIA LUMMIS, Wyoming AMI BERA, California
DAVID SCHWEIKERT, Arizona DEREK KILMER, Washington
THOMAS MASSIE, Kentucky ELIZABETH ESTY, Connecticut
JIM BRIDENSTINE, Oklahoma ROBIN KELLY, Illinois
LAMAR S. SMITH, Texas EDDIE BERNICE JOHNSON, Texas
C O N T E N T S
Wednesday, July 24, 2013
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Larry Bucshon, Chairman, Subcommittee
on Research and Technology, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 7
Written Statement............................................ 8
Statement by Representative Daniel Lipinski, Ranking Minority
Member, Subcommittee on Research and Technology, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 8
Written Statement............................................ 10
Statement by Representative Eddie Bernice Johnson, Ranking
Member, Committee on Science, Space, and Technology, U.S. House
of Representatives............................................. 11
Written Statement............................................ 12
Witnesses:
Dr. Brian R. Wamhoff, Vice President of Research & Development,
Co-founder, HemoShear, LLC
Oral Statement............................................... 14
Written Statement............................................ 17
Dr. Elizabeth Hart-Wells, Assistant Vice President for Research,
Associate Director of the Burton D. Morgan Center for
Entrepreneurship, Purdue University
Oral Statement............................................... 21
Written Statement............................................ 23
Dr. Erik Lium, Assistant Vice Chancellor, Office of Innovation,
Technology & Alliances, University of California, San Francisco
Oral Statement............................................... 36
Written Statement............................................ 38
Discussion....................................................... 47
Appendix I: Additional Material for the Record
Submitted statement by Representative Lamar Smith, Chairman,
Committee on Science, Space, and Technology, U.S. House of
Representatives................................................ 58
IMPROVING TECHNOLOGY TRANSFER AT
UNIVERSITIES, RESEARCH INSTITUTES,
AND NATIONAL LABORATORIES
----------
WEDNESDAY, JULY 24, 2013
House of Representatives,
Subcommittee on Research and Technology
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 3:08 p.m., in
Room 2318 of the Rayburn House Office Building, Hon. Larry
Bucshon [Chairman of the Subcommittee] presiding.
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Chairman Bucshon. The Subcommittee on Research and
Technology will come to order.
Good afternoon. Welcome to today's hearing entitled,
``Improving Technology Transfer at Universities, Research
Institutes, and National Laboratories.'' In front of you are
packets containing the written testimony, biographies, and
truth in testimony disclosures for today's witnesses.
I now recognize myself for five minutes for an opening
statement.
Today's hearing is being held to review innovative
approaches to technology transfer at universities, research
institutes, and national laboratories, and to examine a
discussion draft of legislation titled, ``The Innovative
Approaches to Technology Transfer Act of 2013.''
In 2012, the Federal Government funded more than $131
billion in research and development activities. More than half
of all basic research conducted at our Nation's colleges and
universities is funded by the Federal Government.
According to the Association of University Technology
Managers, technology transfer is the process by which
universities and research institutes transfer scientific
findings from one organization to another for the purpose of
further development or commercialization.
The Bayh-Dole Act, passed in 1980, changed the incentive
structure for universities and research institutes to work with
commercial entities, including small businesses, to license and
patent technologies. The Small Business Technology Transfer or
STTR Program was created to provide Federal R&D funding for
proposals that are developed and executed jointly between small
business and a researcher in a nonprofit research organization.
My own State of Indiana has seen 99 STTR awards totaling more
than $26 million. Both Bayh-Dole and the STTR Program have
helped to create jobs and translate new technologies into the
marketplace.
However, while the rate of technology transfer at our
Nation's universities, research institutes, and national
laboratories has increased since the passage of the Bayh-Dole
Act and the creation of the STTR Program, I believe we can do
even better.
The draft legislation, which is being developed under the
leadership of my colleague from New York, Mr. Collins, will
create a program to incentivize research institutions to
implement innovative approaches to technology transfer to
achieve better outcomes. The legislation would dedicate a
portion of STTR Program funding to provide grants to research
institutions to help facilitate and accelerate the transfer of
federally funded research and technology into the marketplace.
We will be hearing today from the co-founder of a growing
biotechnology business based in Charlottesville, Virginia, that
was developed out of federally funded R&D, with the assistance
of private foundation technology transfer grant funding. We
will also hear from the Assistant Vice President for Research
and Associate Director of the Burton D. Morgan Center for
Entrepreneurship at Purdue University in my home State of
Indiana and from the Assistant Vice Chancellor for the Office
of Innovation, Technology, and Alliances at the University of
California, San Francisco. Our witnesses have first-hand
experience in technology transfer and can provide insight into
how the proposed grant program could help facilitate better
technology transfer outcomes.
I am looking forward to hearing from our witnesses on their
thoughts about the proposed legislation, including any
recommendations they have for improvements.
I would like to thank all of our witnesses for being here
today, and we look forward to your testimony.
[The prepared statement of Mr. Bucshon follows:]
Prepared Statement of Subcommittee on Research and Technology Chairman
Larry Bucshon
Good afternoon, I'd like to welcome everyone to today's hearing,
which is being held to review innovative approaches to technology
transfer at universities, research institutes and National
Laboratories, and to examine a discussion draft of legislation, titled
the ``Innovative Approaches to Technology Transfer Act of 2013.''
In 2012, the Federal Government funded more than $131 billion in
research and development activities. More than half of all basic
research conducted at our nation's colleges and universities is funded
by the Federal Government.
According to the Association of University Technology Managers,
technology transfer is the process by which universities and research
institutes transfer scientific findings from one organization to
another for the purpose of further development or commercialization.
The Bayh-Dole Act, passed in 1980, changed the incentive structure
for universities and research institutes to work with commercial
entities, including small businesses, to license and patent
technologies. The Small Business Technology Transfer or STTR program
was created to provide federal R&D funding for proposals that are
developed and executed jointly between a small business and a
researcher in a nonprofit research organization. My own state of
Indiana has seen 99 STTR awards totaling more than $26 million. Both
Bayh-Dole and the STTR program have helped to create jobs and translate
new technologies into the marketplace.
However, while the rate of technology transfer at our nation's
universities, research institutes and national laboratories has
increased since the passage of the Bayh-Dole Act and the creation of
the STTR program, I believe we can do even better.
The draft legislation, which is being developed under the
leadership of my colleague from New York, Mr. Collins, will create a
program to incentivize research institutions to implement innovative
approaches to technology transfer to achieve better outcomes. The
legislation would dedicate a portion of STTR program funding to provide
grants to research institutions to help facilitate and accelerate the
transfer of federally funded research and technology into the
marketplace.
We will be hearing today from the co-founder of a growing
biotechnology business based in Charlottesville, Virginia that was
developed out of federally funded R&D, with the assistance of private
foundation technology transfer grant funding. We will also hear from
the Assistant Vice President for Research and Associate Director of the
Burton D. Morgan Center for Entrepreneurship at Purdue University in my
home state of Indiana. And from the Assistant Vice Chancellor for the
Office of Innovation, Technology, and Alliances at the University of
California, San Francisco. Our witnesses have first-hand experience in
technology transfer and can provide insight into how the proposed grant
program could help facilitate better technology transfer outcomes.
I'm looking forward to hearing from our witnesses on their thoughts
about the proposed legislation, including any recommendations they have
for improvements.We thank our witnesses for being here today and we
look forward to your testimony.
Chairman Bucshon. I will now recognize the Ranking Member,
the gentleman from Illinois, Mr. Lipinski, for an opening
statement.
Mr. Lipinski. Thank you, Mr. Chairman. Thank you for
holding this hearing, and thank each of our witnesses for being
here to share your thoughts on this topic and the draft
legislation we are considering today.
Today concerned Americans continue to ask the question,
``What is the future of American jobs?'' A big part of our
future competitiveness depends on our ability to move new and
emerging technologies out of the lab and into the mainstream of
commerce.
Accelerating technology transfer from our universities and
national labs is one of my highest priorities since I have come
to Congress. I believe the potential for job creation emanating
from research being performed at these institutions is immense.
We must capitalize on these opportunities and get the best
possible return in our investments in research through the
creation of new projects, new companies, and new American jobs.
Let me make one point clear. Our competitors have noticed
how well our innovation system works and many are trying to
imitate it. Countries like China and members of the European
Union are now investing heavily in their own R&D programs.
Combined business and government spending in R&D in China, for
instance, has been increasing by almost 20 percent a year over
the past decade, and China has already overtaken Japan as the
number two publishers of scientific articles. They are
determined to move up the value chain into higher-tech, higher-
paying jobs. We need sustained investments and smart policies
if we want to remain the world leader in science and
technology.
However, the path from the lab to a successful business is
anything but straightforward. It depends on an integrated
network of private companies, scientists and engineers,
universities, venture capitalists, startups, and entrepreneurs.
It also depends on the entrepreneurial environment, timing, and
luck.
Some universities have had more success in technology
transfer than others. Some scientists are better prepared or
more inclined to be entrepreneurial, and some parts of the
country have cultivated networks of entrepreneurials and
venture capitalists who have vast experience turning ideas into
products that can transform our everyday lives.
This draft legislation attempts to increase the successful
transition to thriving startup by supporting innovative
approaches to technology transfer. The draft bill language is
similar to an amendment I sponsored two years ago to the
Creating Jobs Through Small Business Innovation Act of 2011. My
amendment was incorporated into SBIR/STTR Reauthorization with
bipartisan support and allowed for a Proof of Concept Pilot
Program at the National Institutes of Health. That amendment,
similar to the legislation being discussed today, did not spend
any new money.
Instead, it allowed NIH to use money from their STTR fund
to set up a grant program to support translational research and
entrepreneurial education activities at universities across the
Nation.
At a time when we struggle with job creation in a fast-
changing global economy, we need to be looking more closely at
how best we can help our universities and national labs, filled
with the world's best researchers, be even better economic
engines that power America's future. When technologies have
been developed with Federal taxpayer resources, we should
explore whether there is a role for the government to play in
aiding potential commercialization. Most venture capitalists
are unwilling to take on the risk in the early-stages of the
innovation ecosystem, and in fact, their investments are moving
farther and farther downstream.
I believe this legislation has the potential to improve our
return on investment and research, and I am interested in our
witnesses' recommendations on a draft bill.
In particular, I am interested in hearing their comments on
using funds from the STTR Program to support technology
transfer activities, as well as their thoughts on the reporting
obligations of the draft bill and whether this information is
readily available or would be overly burdensome to collect. I
know that alleviating bureaucratic burdens on universities has
rightfully been the focus of this Subcommittee.
I also hope the witnesses will provide us with some
information on best practices, model programs, or policies that
can improve the technology transfer process, and appropriate
role of the Federal Government in supporting such efforts.
The draft legislation as written gives agencies discretion
on what types of programs to fund with these grants. I would
like to understand the most useful places for the Federal
Government to be involved and the major gaps or barriers that
our resources can help overcome.
I look forward to working to advance legislation on this
important topic. We need to do all we can to help turn American
discoveries into American jobs, and as I said, I very much like
this--the draft legislation we have out there, maybe because I
believe Mr. Collins is a mechanical engineer, the most
brilliant people that there are, but I think that we have--
there is a lot that we can learn from the witnesses today about
how best to take the draft legislation and put it into a final
bill.
But I appreciate the opportunity to hear from our witnesses
today.
Thank you.
[The prepared statement of Mr. Lipinski follows:]
Prepared Statement of Subcommittee on Research and Technology
Ranking Minority Member Daniel Lipinski
Mr. Chairman, thank you for holding this hearing and thank you to
our witnesses for being here to share your thoughts on the topic and
the draft legislation we are considering today.
Today, concerned Americans continue to ask, ``What is the future of
American jobs?'' A big part of our future competitiveness depends on
our ability to move new and emerging technologies out of the lab and
into the mainstream of commerce. Accelerating technology transfer from
our universities and national labs has been one of my highest
priorities since coming to Congress. I believe the potential for job
creation emanating from research being performed at these institutions
is immense. We must capitalize on these opportunities and get the best
possible return on our investments in research through the creation of
new products, new companies, and new American jobs.
Let me make one point clear: Our competitors have noticed how well
our innovation system works, and many are trying to imitate it.
Countries like China and members of the European Union are now
investing heavily in their own R&D programs. Combined business and
government spending on R&D in China, for instance, has been increasing
by almost 20% a year over the past decade, and China has already
overtaken Japan as the number two publisher of scientific articles.
They are determined to move up the value chain into higher tech, higher
paying jobs. We need sustained investments and smart policies if we
want to remain the world leader in science and technology.
However, the path from the lab to a successful business is anything
but straightforward. It depends on an integrated network of private
companies, scientists and engineers, universities, venture capitalists,
startups, and entrepreneurs. It also depends on the entrepreneurial
environment, timing, and luck.
Some universities have had more success in technology transfer than
others. Some scientists are better prepared or more inclined to be
entrepreneurial. And some parts of the country have cultivated networks
of entrepreneurs and venture capitalists who have vast experience
turning ideas into products that can transform our everyday lives.
The draft legislation attempts to increase the successful
transition to thriving startup by supporting ``innovative approaches to
technology transfer.'' In fact, the draft bill language is similar to
an amendment I sponsored two years ago to the Creating Jobs Through
Small Business Innovation Act of 2011. My amendment was incorporated
into the SBIR/STTR reauthorization with bipartisan support and allowed
for a Proof of Concept Pilot Program at the National Institutes of
Health. That amendment, similar to the legislation being discussed
today, did not spend any new money. Instead, it allowed NIH to use
money from their STTR fund to set up a grant program to support
translational research and entrepreneurial education activities at
universities across the nation.
At a time when we struggle with job creation and a fast-changing
global economy, we need to be looking more closely at how we can best
help our universities and national labs--filled with the world's best
researchers--be even better economic engines that power America's
future.
When technologies have been developed with Federal taxpayer
resources, we should explore whether there is a role for the government
to play in aiding potential commercialization. Most venture capitalists
are unwilling to take on the risk in the early-stages of the innovation
ecosystem, and in fact their investments are moving farther and farther
downstream.
I believe this legislation has the potential to improve our return
on investment in research, and I am interested in our witnesses'
recommendations on the draft bill. In particular, I am interested in
hearing their comments on using funds from the STTR program to support
technology transfer activities, as well as their thoughts on the
reporting obligations in the draft bill and whether this information is
readily available or would be overly burdensome to collect. I know that
alleviating bureaucratic burdens on universities has rightfully been a
focus of this Subcommittee.
I also hope the witnesses will provide us with some information on
best practices, model programs, or policies that can improve the
technology transfer process, and the appropriate role of the federal
government in supporting such efforts.
The draft legislation, as written, gives agencies discretion on
what types of programs to fund with these grants. I'd like to
understand the most useful places for the federal government to be
involved and the major gaps or barriers federal resources can help
overcome. I look forward to working with you to advance legislation on
this important topic. We need to do all we can to help turn American
discoveries into American jobs.
Thank you Mr. Chairman. I yield back the balance of my time.
Chairman Bucshon. Thank you very much.
I am now going to recognize the Ranking Member of the full
Committee, Ms. Johnson, for an opening statement.
Ms. Johnson. Thank you very much, Mr. Chairman, and thank
you for calling the hearing today on this draft legislation,
Innovative Approaches to Technology Transfer Act of 2013. I am
glad that this Subcommittee is taking a serious look at the
issue of facilitating the creation of successful, profitable,
and sustainable small businesses from the discoveries of our
research and development enterprise.
The topic today is so critical to our Nation's economic and
national security. As we continue our efforts to keep our
economy on the path of recovery, it is more important than ever
that we recommit ourselves to innovation in the United States.
As the President remarked two years ago in his State of the
Union Address, we need to out-innovate, out-educate, and out-
build the rest of the world. Our universities and Federal labs
are the foundation that America's future will be built upon.
We have world-class scientists and engineers engaged in
cutting-edge research that can change the world. We must
examine how to translate and transition this research out of
the lab into the marketplace. Our innovation model has been the
gold standard for many years, and nations around the world have
been adopting it.
However, we are all very aware that our competitors are
multiplying their investments in not only R&D and STEM
education but also in commercialization activities. The United
States cannot afford to be left behind. The ideas from our
researchers and entrepreneurs with the most commercial
potential deserve our best efforts.
In contemplating the next steps for advancing technology
transfer, our ultimate goal is to promote the creation of
innovation ecosystems that sustain long-term and mutually-
beneficial collaborations. Many of today's most beneficial
technologies do not emerge out of the straight-line process but
rather they involve the interactions of a network of various
public and private-sector elements. While we understand that
university culture and business culture are separate and unique
entities, we need to learn more about innovative approaches and
collaborations that can accelerate technology transfer of
federally funded research.
I believe there is not a clear and distinct line in the
innovation process at which the public role ends and the
private role begins. The next development or discovery is built
on a shifting platform where the line between research,
development, and a final product in the marketplace are
blurred. The feedback is critical and cannot continue without
consistent support of the people and the institutions that make
up the innovation ecosystems.
The Federal Government has a great stake in the Nation
getting a return on the investments we make, and we need to
know what we can do that would be helpful to the academic
community and startups in improving technology transfer.
The draft legislation we are considering this afternoon has
the potential to improve technology transfer, and I hope that
the final version can reflect good ideas from both sides of the
aisle.
I would like to add my thanks to the witnesses for being
here today and for providing us with their recommendations on
how to make this bill better. I am looking forward to working
with my colleagues to move legislation that addresses this
important issue.
Thank you, Mr. Chairman. I yield back the balance of my
time.
[The prepared statement of Ms. Johnson follows:]
Prepared Statement of Committee on Science, Space and Technology
Ranking Member Eddie Bernice Johnson
Thank you Mr. Chairman for calling this hearing today on the draft
legislation, Innovative Approaches to Technology Transfer Act of 2013.
I am glad that this Subcommittee is taking a serious look at the issue
of facilitating the creation of successful, profitable, and sustainable
small businesses from the discoveries of our research and development
enterprise.
The topic today is so critical to our nation's economic and
national security. As we continue our efforts to keep our economy on
the path to recovery, it is more important than ever that we recommit
ourselves to innovation in the United States.
As the President remarked two years ago in his State of the Union
address, ``we need to out-innovate, out-educate, and out-build the rest
of the world.''
Our universities and federal labs are the foundation that America's
future will be built on. We have world class scientists and engineers
engaged in cutting-edge research that can change the world. We must
examine how to translate and transition this research out of the lab
and into the marketplace.
Our innovation model has been the gold standard for many years, and
nations around the world have been adopting it.
However, we are all very aware that our competitors are multiplying
their investments in not only R&D and STEM education, but also in
commercialization activities. The United States cannot afford to be
left behind. The ideas from our researchers and entrepreneurs with the
most commercial potential deserve our best efforts.
In contemplating the next steps for advancing technology transfer,
our ultimate goal is to promote the creation of innovation ecosystems
that sustain long-term and mutually beneficial collaborations.
Many of today's most beneficial technologies did not emerge out of
a straight-line process, but rather they involved the interactions of a
network of various public and private sector elements.
While we understand that university culture and business culture
are separate and unique entities, we need to learn more about
innovative approaches and collaborations that can accelerate technology
transfer of federally funded research.
I believe there is not a clear and distinct line in the innovation
process at which the public role ends and the private role begins.
The next development or discovery is built on a shifting platform
where the lines between research, development, and a final product in
the marketplace are blurred.
This feedback is critical and cannot continue without consistent
support for the people and the institutions that make up the innovation
ecosystem.
The federal government has a great stake in the nation getting a
return on the investments we make, and we need to know what we can do
that would be helpful to the academic community and start-ups in
improving technology transfer. The draft legislation we are considering
this afternoon has the potential to improve technology transfer, and I
hope that the final version can reflect good ideas from both sides of
the aisle.
I'd like to add my thanks to the witnesses for being here today and
for providing us with their recommendations on how to make the bill
better.
I am looking forward working with my colleagues to move legislation
that addresses this important issue.
Thank you Mr. Chairman, I yield back the balance of my time.
Chairman Bucshon. Thank you very much.
If there are Members who wish to submit additional opening
statements, your statements will be added to the record at this
point.
At this time I am going to introduce our witnesses. Our
first witness is Dr. Brian Wamhoff, Vice President of Research
and Development and Co-Founder of HemoShear, LLC. Dr. Wamhoff
has expertise in small and large animal models of vascular
disease, molecular biology, cell-based systems, toxicology, and
interventional vascular device development. Dr. Wamhoff
obtained a B.S. in biology with a minor in business
administration from Rhodes College and received his Ph.D. in
medical physiology from the University of Missouri in 2001.
Our second witness is Dr. Elizabeth Hart-Wells, Assistant
Vice President for Research and Associate Director of the
Burton D. Morgan Center for Entrepreneurship at Purdue
University. Dr. Hart-Wells is responsible for managing the
commercialization of Purdue's intellectual property assets,
which includes responsibility of evaluating innovations,
developing commercialization strategies, memorializing
commercialization agreements, promoting discovery with
delivery, forming startup companies, and overseeing compliance
with Federal technology regulations. I don't know how she has
time to do all that, but she does. She earned a doctorate in
chemistry from Rice University where she was a Turner
outstanding graduate student in organic chemistry and a Harry
B. Weiser Research Scholar, and Robert A. Welch Foundation
Fellow. She earned a Bachelor's Degree in chemistry from
Indiana University. She is a member of the American Chemical
Society, the American Association for the Advancement of
Science, and the U.S. Patent Bar.
Our third witness is Dr. Erik Lium, Assistant Vice
Chancellor, Office of Innovation, Technology, and Alliances at
the University of California at San Francisco. He has held
prior positions at UCSF of Vice Chancellor of Research,
Director of the Industry Contracts Division, and Interim
Director of the Contracts and Grants Division of the Office of
Sponsored Research, and Director of Business Development for
the Diabetes Center and Immune Tolerance Network. He served as
a post-doctoral research scientist at UCSF, earned a Ph.D. from
the Integrated Program in Cellular, Molecular, and Biophysical
Studies at Columbia University and a B.S. in biology from
Gonzaga.
Thanks again to our witnesses for being here this
afternoon. As the witnesses should know, spoken testimony is
limited to five minutes after which the Members of the
Committee will have five minutes each to ask questions.
I now recognize Dr. Wamhoff for five minutes to present his
testimony.
TESTIMONY OF DR. BRIAN R. WAMHOFF,
VICE PRESIDENT OF RESEARCH & DEVELOPMENT,
CO-FOUNDER, HEMOSHEAR, LLC
Dr. Wamhoff. Thank you. Dear Mr. Chairman and distinguished
Members of this very important Committee, as an entrepreneur
and scientific executive of a startup company, I can state
categorically that the American economy and its 300 plus
million consumers of healthcare products and services have
benefited profoundly from Federal programs that fund early-
stage research in the medical sciences, particularly the SBIR
mechanism. Thank you.
I have been invited to address three questions. I want to
tell you a story first.
By way of background, I was an Associate Professor at the
University of Virginia's Department of Medicine in the
Cardiovascular Division from 2006, until 2012. Through
collaboration with Dr. Brett Blackman, who, Mr. Collins is also
a mechanical engineer, in the Department of Biomedical
Engineering, we developed a technology at the university that
became the foundation of a very successful biotechnology
research company, HemoShear. We co-founded the company in 2008.
I now serve as Vice President of Research and Development,
and Brett serves as Chief Scientific Officer. We are literally
changing the decades-old global drug discovery and development
paradigm. The old methods are inefficient, time-consuming, and
more than 92 percent of drugs that go into humans today fail.
They either fail because they don't work, or they fail because
they are not safe. We see it every week in the news.
The adverse financial impact of these failures, in
combination with patent expirations, has driven consolidation
of the industry in recent years. Our technology, which is
developed out of the University of Virginia, through mechanisms
that we are talking about today, has enabled the industry to
transform its drug discovery paradigm while significantly
improving its return on investment capital. This is because
HemoShear can measure and predict the response of a drug before
it ever enters the human body.
HemoShear is a successful American company. We are creating
high-value, STEM-related jobs right here in Central Virginia,
while positioning itself to become a world leader in drug
development. The SBIR mechanism has been critical in this
process.
So how has proof-of-concept funding been used to launch
HemoShear? The development of the technology at the University
of Virginia was funded by two seed grants, rather than the
traditional NIH funding mechanism that my lab and Brett's lab
was being driven by. The two funding mechanisms were the
University of Virginia Heart Board Partners' Fund and the
University of Virginia Wallace H. Coulter Foundation RoPE Fund.
Without these seed funding mechanisms, it is doubtful that
HemoShear would exist as it does today and very doubtful that I
would be sitting here right now. Equally important to funding
the critical R&D to launch this technology was the exposure
that we were getting to very successful board members from both
organizations, the endless advice, hands-on help towards
translating an academic technology to a business model for
commercialization, going from academia to a commercial
endeavor. It is a huge gap.
It is important to note that at the time this was not
common at the University of Virginia, and by example of that
success this mechanism has become a core of the university's
technology transfer ecosystem and philosophy.
Now, at HemoShear we have also been privileged to secure
funding through the NIH Small Business Innovation Research
Program, the SBIR mechanism. It has been instrumental in the
technological growth of HemoShear, allowing us to further
advance our technologies for drug development in cardiovascular
disease, diabetes, liver toxicity, and cancer. We have proven
that the SBIR mechanism provides a great return on investment
for the U.S. taxpayer.
Thank you for continuing to support that program.
What are my thoughts on today's issue? I feel that it would
be beneficial to dedicate a portion of the STTR Program to
proof-of-concept and other technology transfer programs at
universities, research institutions, and national laboratories.
Having run a large NIH-funded academic laboratory and co-
founded a rapidly-growing biotechnology company, I have lived
in both worlds. It is very challenging, and the investigator
often finds himself, herself in conflict. The old adage that it
is hard to have two bosses couldn't be any more real in that
scenario, and often your bosses are diametrically opposed;
bosses from the commercial side and bosses from the academic
side.
As I stated in question one, if it were not for the
exposure to the board members of the Heart Board and the
Coulter Foundation it is highly unlikely that we would have had
the foresight or wherewithal to commercialize a very important
technology for human health. The failure to commercialize
academic research is not for the lack of entrepreneurial
faculty wanting to do so. There are many. Rather, it is due in
part to the lack of institutional support to assist faculty in
these endeavors and sometimes creating barriers. Filling this
gap is going to be the greatest need for technology transfers
in universities.
My last thoughts or recommendations regarding the draft of
this proposal, I have read the draft and fully support the
award criteria. As it relates to the proposed funding
mechanism, I think it is really important to establish hands-on
oversight committees or boards to monitor the accountability of
the funded institutions. An excellent model for this is the
Wallace H. Coulter Foundation and how they monitor initial
investments in translational research at U.S. academic
institutions. These investments ultimately led to larger
endowments for the research institution but also spun out many
companies at the University of Virginia, including HemoShear.
With that I thank you for your time on this very important
matter.
[The prepared statement of Dr. Wamhoff follows:]
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Chairman Bucshon. Thank you. Now I will recognize Dr. Hart-
Wells for five minutes to present her testimony.
TESTIMONY OF DR. ELIZABETH HART-WELLS,
ASSISTANT VICE PRESIDENT FOR RESEARCH,
ASSOCIATE DIRECTOR OF THE BURTON D. MORGAN
CENTER FOR ENTREPRENEURSHIP,
PURDUE UNIVERSITY
Dr. Hart-Wells. Thank you. I wish to thank the Committee,
Chairman Bucshon, Ranking Member Lipinski, and the entire
Subcommittee for the opportunity to participate in today's
hearing. It is an honor to be provided this opportunity to
discuss the draft legislation.
As mentioned, I am Elizabeth Hart-Wells, and I am the
Assistant Vice President for Research at Purdue University and
Associate Director of the Burton D. Morgan Center for
Entrepreneurship. Further, in my spare time, I lead a team of
dedicated Housiers to manage the Office of Technology
Commercialization that is housed within the Purdue Research
Foundation. To quantify the scope of our operation is submitted
in the written testimony, so I won't comment on that in my
oral.
Founded in 1869, West Lafayette, Indiana, Purdue University
serves the people of the State of Indiana, the Nation, and the
world through education, research, and engagement. Purdue
educates over 75,000 students statewide each year and is home
to a very robust research enterprise of over $650 million in
research expenditures, primarily originating from the U.S.
taxpayers through such programs as the SBIR and STTR.
The Committee is both aware and respectful of the critical
role the American research enterprise plays in our Nation's
competitiveness. Universities engage in fundamental research to
grow our knowledge base, to advance understanding, and to
encourage thinking without constraint or restraint in our next
generations. Inherent to exploration in uncharted areas of
inquiry, however, is discovery. Discovery can and should lead
to delivery, however, gaps in the path that connects discovery
to delivery do exist.
In my reading of its current draft of legislation, it is
the filling of this gap that is the subject of the proposed
draft.
Specifically, the Committee requested comment on innovative
practices employed by Purdue University to develop federally
funded research projects. The Purdue Trask Innovation Fund and
the Emerging Innovations Fund are two of such programs. While
there are details in the written testimony and I look forward
to discussing those relevant aspects of the programs as the
Committee wishes, I will highlight one output data of those
proof-of-concept fund that we call the Trask Innovation Fund.
First I will say at the outset this fund is entirely funded
with private dollars and not taxpayer dollars. Purdue, in 1973,
identified this need of a gap between research results and
commercial exploitation of those results and set out to fill
that gap themselves. And as a result in the last five years 48
Purdue technologies have been competitively awarded development
funding, and of those, 35 percent of those technologies were
sponsored by the U.S. taxpayers.
Over the roughly 35 year history of the Trask Venture Fund
support of filling the gap, federally funded Purdue
technologies that were supplemented with these awards
experienced about a 40 percent increased licensing rate than
those federally funded Purdue technologies that were not
supplemented with those awards.
In addition and with brevity I would like to highlight a
few other innovative practices that Purdue University has
undertaken in the last several months.
The Office of Technology Commercialization has unveiled new
procedures and policy implementations to accelerate technology
transfer out of the university, whether Purdue University owns
the technology or not. Students who create inventions in the
performance of their coursework, such as a design project in an
engineering course, own their inventions. Purdue inventors who
have contributed Purdue-owned intellectual property may elect
an, ``as is,'' license contract to establish a new venture
based on those inventions to which she or he contributed.
Of particular pertinence to this authorizing body, Purdue
now offers recipients of SBIR and STTR grants aimed at
developing a Purdue technology, a cash-free first option to
license the Purdue technology. This express first option allows
these recipients to competitively leverage Purdue technology,
provides a mechanism to support the commercialization of
taxpayer-funded technologies, and supports speed and
transparency of the licensing of the same.
Accordingly, it should be of no surprise that Purdue
University strongly supports and encourages the Committee's
sincere consideration of the draft legislation. It would
strengthen and promote partnerships between universities and
small businesses to achieve the STTR's stated goals. Proposed
legislation superimposes on its predecessor and emphasizes the
benefits to the Nation of technology innovation and the
proficiency of small businesses to translate federally funded
research results into new products and services.
The proposed legislation offers synergy to these
relationships between the university and small businesses
towards translation and commercialization. So maybe one plus
one can indeed equal three.
I am going to defer the rest of my comments until the Q&A,
and in close I just wish to express my grateful thanks to the
Committee for the opportunity to participate today and for your
leadership, commitment, and partnership on this important topic
of technology transfer.
Thank you.
[The prepared statement of Dr. Hart-Wells follows:]
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Chairman Bucshon. Thank you very much.
I now recognize Dr. Lium for five minutes to present his
testimony.
TESTIMONY OF DR. ERIK LIUM,
ASSISTANT VICE CHANCELLOR,
OFFICE OF INNOVATION, TECHNOLOGY & ALLIANCES,
UNIVERSITY OF CALIFORNIA, SAN FRANCISCO
Dr. Lium. Mr. Chairman, Ranking Member Lipinski, and
Members of this Subcommittee, the University of California, San
Francisco is widely recognized as a leader in the health
sciences and as the birthplace of biotechnology. I am here
today to testify on my own behalf and would like to thank you
for the opportunity to appear before you to discuss the
important issue of commercializing federally funded research. I
am a molecular biologist by training and as a prior co-founder
of a venture-backed software company, an entrepreneur.
At UCSF I lead a team responsible for streamlining the
creation of public-private research partnerships, licensing
technologies for commercialization, and education of budding
life science entrepreneurs.
Federal funding, the lifeblood of basic research, is
essential for the development of groundbreaking discoveries.
The challenge is commercializing these discoveries for public
benefit, especially in capital-intensive fields such as the
life sciences.
My testimony today on expanding the use of STTR funds to
support innovative approaches to increase the commercialization
of federally funded research is focused on three points
specifically related to life science discoveries.
First, venture capital, one of the historical mainstays for
advancing life science discoveries through proof-of-concept has
fallen sharply as investors have shifted capital to lower-risk
opportunities. Early-stage life science ventures are struggling
to fund proof-of-concept, which is a critical value inflection
point required to attract investment today.
Some estimates suggest that the number of venture firms
investing in life sciences has fallen as much as 2/3 in the
last five years. In essence, a shortage of early-stage pre-
proof-of-concept funding is impeding the commercialization of
federally funded research.
My second point. It is reasonable and appropriate for the
Federal Government to play a role in funding proof-of-concept
research at universities, research institutes, and national
labs given the requirement today for proof-of-concept to
attract investment. The gap between development of an
intriguing, yet unproven discovery and the investment to
commercialize that discovery is characterized as the Valley of
Death. The virtual disappearance of pre-proof-of-concept
venture financing and the lack of sufficient programs to fund
proof-of-concept research make crossing the Valley virtually
impossible for countless technologies.
Take, for example, a team of investigators from UCSF, the
Cleveland Clinic, Vanderbilt University, and the University of
Michigan, who invented an implantable artificial kidney device
with the potential to improve the health and wellbeing of
individuals suffering from kidney failure and to reduce the
estimated $41 billion spent annually in the U.S. on this
disease. Despite receiving numerous awards based on promising
results, having substantial interest from potential corporate
partners, and being selected by the FDA as one of three
projects for a pilot program to fast track the development of
breakthrough medical devices, investors have been reluctant to
provide funding without proof-of-concept in large animals.
Simply stated, a new model to attract private investments
to once again fuel the commercialization of early-stage
discoveries is required. The Federal Government could play a
role in this model. It could help bridge the gap.
Finally, I would like to enthusiastically express support
for the draft legislation to expand the use of STTR funds to
support innovative approaches that increase the
commercialization of federally funded research. Grant programs
created under the Act could address the crucial need for proof-
of-concept funding as well as the need for experiential
training in commercialization.
For example, I would welcome expansion of the NSF
Innovation Corps Program to additional agencies and the
inclusion of phased proof-of-concept funding programs
administered by universities, research institutes, and national
labs to validate and advance a broader array of federally
funded discoveries.
I support including requirements for the collection and
analysis of programmatic data to identify best practices.
Though steps should be taken to ensure that such requirements
are not an impediment to participation.
Thank you, Mr. Chairman, Ranking Member Lipinski, and
Members of this Subcommittee for the opportunity to discuss
this important issue. I look forward to answering your
questions.
[The prepared statement of Dr. Lium follows:]
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Chairman Bucshon. Thank you very much for your testimony.
Because of the delayed start Chairman Smith will not be
able to attend but he asks now that, with unanimous consent to
submit his statement for the record. Without objection.
[The prepared statement appears in Appendix I]
Chairman Bucshon. I would like to thank the witnesses for
their testimony and remind Members of the Committee that
questioning is limited to five minutes.
The Chair will now recognize himself for five minutes for
the first round of questioning.
Dr. Hart-Wells, thanks for coming from Purdue. We
appreciate that.
Dr. Hart-Wells. My pleasure.
Chairman Bucshon. In your testimony you state that
federally funded Purdue technologies that were supplemented by
proof-of-concept awards had about a 40 percent increase in
licensing rate compared with other federally funded programs
not supplemented by proof-of-concept awards.
Can you explain what the reasons are for that, and how
might the proposed grant program we are considering improve
that?
Dr. Hart-Wells. Certainly. Thank you for the question.
Yes. That data is 35 to 40 years of data that, granted this
Trask Venture Fund has evolved over time. Very recently in the
last three to four years the program is run very similar to an
early pre-proof-of-concept and proof-of-concept type with
business executives and local business community
representatives, as well as university leadership or an
advisory council. The funding is targeted through their
advisement towards answering questions that de-risk a
technology for transfer to a private sector partner.
So the goal of the fund has been focused on experiments
that fill the gap. That was part of the fund when it was
established in '73, many moons ago, before even the Bayh-Dole
legislation that created technology transfer offices in
universities. And I believe based on our experience and having
done the analytics of the program over the years that the
targeted deployment with a goal to transfer research results
for commercial products and services made the focus of the
decision making in such a way that it produced the kinds of
outputs that it did, which is the university to transfer out
the technology. Get it into the hands of a partner like Dr.
Wamhoff, HemoShear, whether you are creating a new company or
you are partnering through licensing. But to get it out of the
university so that it has an opportunity to be developed
further into products and services that can benefit those folks
that paid for it.
And that is the number that we can use and put our finger
on in a reliable way to say that we were able to get going in
that right direction. So I believe it is the targeted, the
metrics and what you are measuring will determine how these
programs perform, and I believe that was part of this program
from the beginning and helped inform its outcomes.
Chairman Bucshon. Thank you. Dr. Wamhoff, I have to ask
you, what do you see as the strengths and weaknesses of the
STTR Program?
Dr. Wamhoff. I think one of the strengths is that it gives
investigators critical seed money to do proof-of-concept
studies, check off a go, no-go box for a technology you are
trying to commercialize. I think one of the challenges is
putting a mechanism in place to let them know what is the go,
no-go box on that technology. Scientists--no one loves their
science more than the scientist that is developing it, and
there is a lot of emotional attachment to it, and there comes a
point for every technology when it is going to move out of
academia, does it really have legs, and getting exposure to
non-scientists, people from the industry, advisors that can
help you make that decision to fail fast and move on is really
important and a critical gap that needs to be filled.
Chairman Bucshon. Thank you very much. That is all I have.
I will yield now to the Ranking Member, Mr. Lipinski, for five
minutes.
Mr. Lipinski. Thank you, Mr. Chairman. I thank everyone for
their testimony.
As I noted in my opening statement the draft legislation
doesn't specify the types of activity that should be supported,
so I wanted to get a little bit more into that. Certainly we
heard from I think all of you about proof-of-concept, the
importance there, and as I said, something I support for NIH.
It is just NIH because that was the opportunity we had. I
certainly think that is critical. Entrepreneurial education is
something I also am very supportive of. Dr. Lium mentioned I-
Corps, which I have mentioned countless times in this
Committee, my support for I-Corps, I think that is an
entrepreneurial education program that has worked very well and
should be expanded to other agencies.
What other areas, are there other areas, you know, maybe
this is what we should be limiting this bill to, but are there
other areas that you think may fit into this bill to help us
accelerate commercialization of federally funded research?
Start with Dr. Lium. If there is nothing else, you don't
have to make up something else just to answer the question. I
just want to see if there were other things that you wanted to
add.
Dr. Lium. My impression is that the bill provides
significant flexibility on what programs can be developed by
agencies. We have already touched on a number of issues that
are relevant from experiential entrepreneurial education,
mentorship, and resources within the university to provide a
strong infrastructure for technology transfer. I think all of
those issues are very important.
Again, based on the draft legislation it appears to me that
those types of programs could be developed.
Mr. Lipinski. Dr. Hart-Wells.
Dr. Hart-Wells. Yes. I would like to add the critical
component in coincident with technology development is
cultivation of business experiential learning, kind of on-the-
job. There is student entrepreneurialship programs I think at
all of the--a lot of universities including Purdue, but perhaps
these are opportunities that the faculty researcher or staff or
students who are participating in the development of the
technology would also perhaps benefit from business support
services.
I would agree that my reading of the draft allows that
degree of freedom. I refer to a creative license, the way that
I read the draft so that it can be customized to the
appropriate geographic regions and what those needs are.
But I would add that one of the support mechanisms that
could accelerate the translation and transfer of federally
funded research results is business support services or
mentoring and counseling, along those lines, just generally of
how to write a business plan. These are things that are not
taught to you in graduate school as you well know when you get
an advanced degree.
Thank you.
Dr. Wamhoff. I remember when I wrote my first business plan
actually. I had no idea what I was doing, and I was six years
into tenure. But I agree with you, Dr. Hart-Wells, that
bringing the private sector into this in any way possible I
think is a great idea. At the end of the day they are the
consumer of this technology before it goes into the general
public. They are the ones licensing it out of the university,
they are the ones that are further developing it, putting more
capital into it to make it available to the taxpayer, and I
don't think there is enough of that. I know at Purdue you have
recently changed your boards around where you have a lot of
influence, advisors from the private sector. It is not just an
academic setting, and having that leeway to do that I think
would be really important.
Mr. Lipinski. Thank you. I want to quickly ask Dr. Lium,
you talked about UCSF's entrepreneurial education activities.
You are certainly strong in the focus on life sciences.
Are there any steps that you are taking to adapt
entrepreneurial education courses like I-Corps to life
sciences? Are there any other special hurdles that you face in
tech transfer from the life sciences that other disciplines do
not face?
Dr. Lium. Sure. I think I will start with the hurdles of
transferring life science technologies into the commercial
sector first. Life science technologies have a particularly
long timeframe for development. They are very high risk in
general. There are technical risks, regulatory risks--will the
product be approved by the FDA?--reimbursement risks. So the--
and then the comments that I have made regarding proof-of-
concept funding. So there are significant risks related to the
investment in the life sciences that are not present in all
other fields.
In regards to the Innovation Corps, the UCSF is fortunate
to participate in the program. The University of California
Berkeley, UCSF, and Stanford are--formed the Bay Area
Innovation Corps Node. UCSF in particular is developing life-
science-specific curriculum for the Innovation Corps Program in
the fields of drugs, devices, diagnostics, and digital health.
And I would be happy to answer any questions about that.
Mr. Lipinski. Thank you. I yield back.
Chairman Bucshon. Thank you. I now recognize Mr. Collins
for five minutes.
Mr. Collins. Thank you, Mr. Chairman. I want to thank both
you and Chairman Smith for assisting me and us in putting this
forth. My background, yes, I am a mechanical engineer from
North Carolina State. Even though I know you have a background
from Duke, we won't talk about Duke. But I also have a
biotechnology company with two level three plus space labs
involved in virus production and the like and also a phase 2B
multiple sclerosis secondary progressive MS drug trial ongoing
right now in Australia and New Zealand. So I live the life
sciences world a lot, at least before I came here.
But I agree with you on the Valley of Death and you know,
the scientists who do really love their science, but when you
talk to them and say, all right, now how are we going to get it
to market, what is the market, how are we going to price it,
and, again, what is the fail safe point, they usually give you
the deer in the headlights look.
But one question I know we are going to get is we are going
to take money that is already in the STTR Program, and so we
want to designate a small piece of it for this new Valley of
Death, proof-of-concept.
Would you speak to what you would say the return on
investment to the taxpayers and taking this small piece and
addressing the Valley of Death versus not doing that and having
that money instead go to the traditional programs, in other
words, speak to the importance of creating this and what I
would hope would be a very high return on investment or your
opinion on that for the taxpayers.
Start with Dr. Wamhoff.
Dr. Wamhoff. Sure. I don't know the metrics on the success
of the STTR mechanism, but I can tell you that any time you can
decrease the gap in the Valley of Death, it is a good return on
any investment, whether it is advice or seed funding on a go,
no-go decision, you can end a $2 million venture with $100,000
of seed funding very quickly and say, you know what? This is
great science, but it is not going to translate out. Take it
back into the lab and do what you need to do, publish in your
academic career.
So I am fully for it. I think that it is a real event that
happens to a lot of academic investigators. They just get lost.
Mr. Collins. Thank you. Dr. Hart-Wells.
Dr. Hart-Wells. Yes. Thank you. I think the--it is--metrics
in this space are always tough. This is difficult. There is a
lot of good momentum in discussing and deliberating what are
appropriate metrics. I would note in my written testimony at
Purdue we also have a pre-seed evergreen fund for new ventures.
Most of the applicants to these programs, as well as the proof-
of-concept, are in the life sciences. There is some data
following funds in the universities, and the biggest consumer
of these funds are in the life sciences, and that is not
surprising given the high risk associated with those
technologies.
My belief is--and live this every day is that if
universities can incubate a little longer some of these
technologies and de-risk them, there are opportunities that
are--that will be delivered to the private sector, in
particular small businesses, which is our preference. They are
statistically proven to generate more jobs. We are responsible
to helping those technologies along as much as we can, and a
lot of universities are doing that at their own expense, and it
is only the Federal Government that can step in and have broad
impact across the board. And I see that embraced in the spirit
of this legislation.
So I actually see synergy and improvements in the starting
point from which a small business would pick a technology,
perhaps what Dr. Wamhoff articulated wouldn't have to be the
norm anymore.
Mr. Collins. Thank you. We are running a little out of
time, so not to skip Dr. Lium, but I would like to ask each of
you, right now there is a $150,000 limit on the phase 1 STTR
funding. We haven't addressed a particular number here, and I
wonder if you could offer a quick opinion on what you might
think would be an appropriate dollar limit for this Valley of
Death funding.
Dr. Wamhoff. Oh, for the Valley of Death funding? So you
are talking about pre-STTR money essentially.
Mr. Collins. Yes. You have got the 150,000 phase 1, the
million dollar phase----
Dr. Wamhoff. I can tell you that with the Coulter
Foundation at the University of Virginia you could do a lot
with 25,000, $50,000. I believe you have a specific number.
Dr. Hart-Wells. Our data suggests an average of $48,000.
Mr. Collins. So $50,000 would be a good number for both of
you.
Dr. Lium?
Dr. Lium. We have a small program at the University of
California San Francisco that averages between 50 and $75,000.
One comment that I would also make is that I believe that the
award size should reflect the technology and the market and the
next milestone that--or inflection point of value that one
wants to achieve.
Mr. Collins. Good. Thank you all for your testimony. I
yield back.
Chairman Bucshon. Thank you. I now recognize Ms. Esty for
five minutes.
Ms. Esty. Thank you, and I want to thank Mr. Collins for
asking several of my questions, but to follow up on that and
really to sort of point out the question you asked about
diversion of funds from existing programs, I believe, Dr. Lium,
you mentioned how the current structure, because presumably
because it does not fund the Valley of Death, ends up then with
premature formation of startups, which then fail.
So could you discuss a little bit whether you think this
focus on permitting grants to be used in relative, we are
talking small amounts of grants, $50,000, $75,000, can you
explain if you think that really would help better deployment
and leverage of those resources?
Dr. Lium. The simple answer to the question is yes. I
believe that conducting proof-of-concept research within the
university where the discovery was made can be done much, much
less expensively than in the context of a company. Creating a
company and the cost of a company and the complications of a
company and the distraction that the company represents for a
faculty member relative to being able to raise a small amount
of proof-of-concept funding, do the research within the
university, using the same individuals that likely made the
invention is actually--would be a very, a significant
advantage. And ultimately in the long run would be a better
utilization of capital.
Ms. Esty. I represent northwest Connecticut, so we have
Farmington U-Conn Medical Center with the Jackson Labs coming
in and synergies with Yale as well and attempting to do this
licensing better.
Can any of you discuss, this is a great concern in my
state, things that we might be able to do as we look at this
issue about aiding universities that are already very focused
on this? What can we do to aid that process on the tech
transfer? We have got big centers, both of them working a lot
of life sciences. Are there other things we haven't flagged in
this bill or related issues that we should put on their radar?
Dr. Lium. I think many of the comments that have been made
today related to having external boards and mentorship are very
important in the context of licensing as well. We recently were
negotiating a license with a small company and reached out to
neutral parties in the field--neutral venture capitalists--to
determine what the cost or what the value of the technology was
to provide us some comfort in the level of--in the financial
terms that we were negotiating. We were actually, by doing that
kind of homework able to complete the financial negotiations
within one hour.
So I think that engaging the commercial community to help
in the technology transfer process is essential.
Ms. Esty. And a final quick question. There has been some
discussion, certainly looked at--at Commerce looking at
regional clustering for say excellence in manufacturing. Is
this something we could also be looking, at say in the life
sciences? Again, that is an area where they are looking at
public-private partnerships to address in part these
entrepreneurial outside advice to help make that transition. We
have been attempting to do this with the investing at the state
level in Connecticut, but obviously the resources get quite
limited, and there is criticism that we are picking winners and
losers.
So can you help us, you know, how do we avoid that picking
winners and losers problem but nevertheless provide the
resources for these startups? The outside advice. Do you have
thoughts on how we could structure that, what the Federal
Government's role should be or whether that is just advisory to
suggest that they do this?
Dr. Lium. I think advice has to be tailored very
specifically to the technology that one is examining at any
particular time. We have a program within the Clinical
Translational Science Institute at the University of California
San Francisco that utilizes mentors with very specific
expertise to advise faculty with early-stage technologies.
So, again, I am very supportive of these structures. That
program is structured in such a way where there is a call for
proposals twice a year from faculty. They are evaluated by
boards of mentors, individuals are selected and mentored for a
period of months, and then there is a report out at the
culmination, and a number of the projects then receive a small
amount of funding. I think there is an opportunity to use those
types of external boards to help make these types of decisions.
Ms. Esty. Thank you very much, and thank you, Mr. Chairman.
Chairman Bucshon. You are welcome. I now recognize Dr. Bera
for five minutes.
Mr. Bera. Thank you, Mr. Chairman, and I am not a
mechanical engineer, but a physician, and I will give a shout
out to the University of California system where I did my
training and was on faculty.
I think this is fascinating, and, again, I am glad that we
are addressing the issue of technology transfer. When you talk
about this Valley of Death, you know, going through the three
stages from basic research to proof-of-concept to
commercialization, I know when we are in the lab, you know, in
the academic center we just like to think of ideas, and we like
to, you know, and the academic center is very well situated for
this exchange of ideas where--which is what we are trained to
do, but we are not thinking about how to take product to
market.
And it has always occurred to me that if we could take the
entrepreneur and actually partner them very early on, so while
we are formulating our ideas and so forth, they are also
thinking about and providing input into how to bring that
product to market.
So, again, creating a context that allows that to happen at
an early-stage as opposed to a later stage certainly is
something that we should be working on, and I would be
interested in hearing your thoughts on how we best go about,
you know, getting that at that earlier stage.
The other question is--I was down at the University of
California San Diego this past weekend meeting with Chancellor
Khosla and some of his faculty, and I knew this hearing was
coming up, so I actually posed to them the question of what
could we do to better help technology transfer obviously at one
of our major research institutions, and the answer they gave me
surprised me. What he said was look at tax-exempt bonds, and I
tested this with my home institution at U.C. Davis, and they
talked about how the Federal Tax Reform Act really limits their
ability to provide research space. They said, you know,
industry is knocking on their door. They want to partner, they
want to come in and, you know, work side by side in these lab
spaces, but our tax code currently limits their ability, you
know, because these are tax-exempt bonds, to allow the
entrepreneur to come in, and I would ask you guys to comment on
that and, you know, provide perspective.
Dr. Hart-Wells.
Dr. Hart-Wells. I will take that first. While I am not a
tax attorney or a mechanical engineer for that matter, we run
into this, and we have this conversation, actually more
vigorous conversations more recently, what you are referring to
is what is referred to as private use and bonded facilities.
And there is a prohibition on basically for-profit activities
in those spaces.
So that is actually an input in the analysis that is often
not considered inside the university in the dialogue on the
outside but is a critical go, no-go of whether a university can
even undertake a partnership, whether it wishes to or not. It
would be a very, I think appropriate in the context of all of
the conversations about realizing the value of federally funded
research through products and services where appropriate, to
consider and take up the question of private use and its
impact, positive and negative, on this whole ecosystem.
Mr. Bera. So it would be possible actually in this body to
perhaps amend the Tax Reform Act to allow at an earlier stage
those entrepreneurs to come into the lab, work side by side.
Dr. Lium. Yes.
Dr. Lium. Yes. I think that would be true. We do have
relationships with corporations that allow for their personnel
to come onto campus and work closely with our investigators but
on a limited basis. One example of a close relationship that
the University of California San Francisco has is the Center
for Therapeutic Innovation with Pfizer. In this particular case
they have established a laboratory across the street from the
campus.
We do believe very strongly that collaborative research
between industry and academics is essential to translating
academic inventions into the commercial sector.
I can also take, if you would like, I can also comment on
your first question related to in essence, if I understood you
correctly, early intervention. I think a very good model for
this, again, is the National Science Foundation Innovation
Corps Program. This is a program that takes teams, small teams
at the very earliest stages that apply to participate. It is
highly experiential. The teams go through a process of meeting
with a very large number of customers and stakeholders from
whatever particular market is appropriate for the technology
that they have over a relatively short period of time to
establish beyond proof-of-concept around the technology itself,
but actually they understand what the market is, what the
product should be, what they would be able to charge for it. So
really getting a much, much deeper understanding. That is a
short, intensive program. The goal is to help individuals or to
help teams fail early and then also to identify those that have
a successful concept and take those forward.
Mr. Bera. Okay. Thank you.
Chairman Bucshon. Thank you. I now recognize Mr. Kilmer for
five minutes.
Mr. Kilmer. Thank you, Mr. Chair, and thank you all for
your testimony. You have shared with us, I think, some
interesting ideas around a number of themes; financing,
mentorship, partnerships. We talked about some challenges
including prohibitions on for-profit activities, and that is
something we have grappled with in my state, the State of
Washington, where we had to update our ethics laws as we dealt
with commercialization of research.
Can you touch on, you know, as you look both in the areas
where you work and other states, have you seen any other best
practices that as we noodle on these issues we ought to be
thinking about, we ought to be looking at? And that we ought to
think about scaling up at the Federal level.
Dr. Hart-Wells. I will comment that I believe there are a
number of practices undertaken across the country now as you
start to see folks inside the university change over into
individuals with industrial experience or experience in
technology transfer. For example, Dr. Wamhoff, the Coulter, I
will say the Wallace H. Coulter Foundation in my opinion is a
best practice that is scalable and is embedded in a number of
universities throughout the country, a small number. It is not
dissimilar to how we implement our proof-of-concept awards. But
the business advisement component that has been mentioned as
critical is a requirement, I believe. Business advisors who
compensated for their time and knowhow and expertise, and then
done so in a way that conflicts of interests and tax bonds, all
these types of very critical considerations are done, with the
goal in mind, which is not dissimilar to your proposed
legislation.
I would offer up that program as a best practice.
Mr. Kilmer. Thank you.
Dr. Wamhoff. Yeah. I would like to echo what Libby said.
The Coulter Foundation, that mechanism is extremely effective.
What they were able to do with a $1 million seed grant at the
University of Virginia in partialing out $25,000, $50,000,
$75,000 seed grants and the number of companies that launched
off of that simply because of the fact there was an oversight
board of university faculty but more importantly outside
members in the community as well as other industries helping
academics make very critical go, no-go decisions. It is either
going to work when you do this study, or it is not going to
work, and at the end of the day you are going to know whether
to turn left, right, or keep going forward or abandon it, and
that is a mechanism that is now, I think, being implemented not
just in the original nine universities, but they have now
branched it out probably closer to 20 universities.
So it is in place, and it is a great structure.
Dr. Lium. I think that we have touched on a number of
themes today that are repeated in many programs across the
Nation from proof-of-concept funding, fail early, experiential
learning for entrepreneurship, bringing mentors, actually true
commercial mentorship to the table. One thing that hasn't been
mentioned is incubator space. I think it is important to have
space that this type of work can be done in, particularly when
it is time to create a company, have space that a small company
can take a very small amount of space and move forward. Really
it is about creating the ecosystem, and so if we can create an
ecosystem that supports entrepreneurship and commercialization
within the academic environment without actually fundamentally
changing the academic mission of an institution, I think we
would be very successful.
The educational issues that we face are significant. I
think we have all mentioned or referred to them in terms of
individuals understanding truly what does it take to take a
basic discovery into the commercial marketplace. It is a very
complex process. The mentorship alone can be very time
consuming, but, again, these are the kind of things and
ultimately what the goal is to create that entrepreneurial
supportive environment that cultivates this.
Mr. Kilmer. Thanks, Mr. Chair.
Chairman Bucshon. Thank you very much.
At this point I would like to thank the witnesses for their
valuable and very fascinating testimony and the Members for
their questions.
The record will remain open for two weeks for additional
comments and written questions from Members.
The witnesses are excused, and the hearing is adjourned.
[Whereupon, at 4:13 p.m., the Subcommittee was adjourned.]
Appendix I
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Additional Material for the Record
Submitted statement by Chairman Lamar Smith,
Committee on Science, Space, and Technology
Thank you, Chairman Bucshon, for yielding me time. And I thank our
newest member of the Science Committee, Chris Collins, for bringing his
small business experience and leadership position on the Small Business
Committee to bear in developing the discussion draft of ``The
Innovative Approaches to Technology Transfer Act of 2013.''
The research and development conducted at our nation's
universities, research institutes and national laboratories have served
as the basis for many technology breakthroughs that have driven
American innovation and our economic growth.
It is our job as policymakers to help create a healthy, pro-
business environment that brings new inventions to the market.
Today's hearing will provide a focused discussion on how to improve
technology transfer at our nation's research universities and
laboratories in order to promote American competitiveness.
I look forward to hearing from our witnesses and I yield back the
balance of my time.