>> WELL, GOOD MORNING, EVERYONE. LET ME CALL A MEETING TO ORDER AND WELCOME EVERYBODY. I'M NORM AUGUSTINE AND IT'S MY PRIVILEGE TO CHAIR THE S MR B, ALSO KNOWN AS THE SCIENTIFIC MEASURE AND REVIEW BOARD. AND BELIEVE IT OR NOT, THIS IS THE 13th MEETING, THE LUCKY 13th MEETING, I THINK, OF OUR LITTLE GROUP. AND I ALSO WANT TO PARTICULARLY WELCOME OUR GUESTS AND MEMBERS OF THE PUBLIC THAT ARE HERE TODAY, INCLUDING A SPECIAL WELCOME TO THOSE WHO HAVE BEEN KIND ENOUGH TO SHARE THEIR TIME AND THOUGHTS WITH US WHO WILL BE PARTICIPATING IN THE DISCUSSION THAT'S WE'LL BE HAVING. I THINK WE HAVE A TERRIFIC AGENDA PUT TOGETHER THAT I THINK YOU'VE ALL SEEN. AND IT'S A FAIRLY PACKED DAY SO WE'LL MOVE RIGHT ALONG. AS WE DISCUSSED AT OUR LAST MEETING IN JULY, WE WILL BE DEVOTING MUCH OF THIS MEETING TO HEARING FROM THE STAKEHOLDERS RELATING TO THE SMRB WORKING GROUP ON THE SMALL BUSINESS INNOVATION RESEARCH AND THE SMALL BUSINESS TECHNOLOGY TRANSFER PROGRAMS. THAT'S THE -- THOSE ARE THE TOPICS, OF COURSE, OF OUR WORKING GROUP RELATING TO THAT. AND YOU MIGHT HAVE NOTICED THAT THERE ARE TWO NEW FACES AROUND THE TABLE TODAY THAT WE PARTICULARLY WANT TO WELCOME. AND LET ME GO THROUGH AND DO THAT. AND FIRST OF ALL, I WANT TO ANNOUNCE THE APPOINTMENT OF OUR NEWEST BOARD MEMBERS, DR. MARTHU SOMMERMAN, WHO IS THE DIRECTOR OF RAIDIO CRANIAL FACIAL RESEARCH. THANK YOU FOR JOINING US. DR. ALAN GUTMACHER, WHO IS THE DIRECTOR OF THE NATIONAL INSTITUTE OF CHILD HEALTH AND HUMAN DEVELOPMENT AND UNFORTUNATELY HE HAD SOME OTHER EARLIER COMMITMENTS THAT KEEP HIM FROM BEING WITH US TODAY. ALSO WANT TO WELCOME BACK OUR INCOMING MEMBERS, DR. GARY KNEEL, DR. GILL OHLMAN AND DR. CLYDE YANCEY AND WE'RE PARTICULARLY PLEASED TO HAVE YOU HERE TODAY. ALL THREE OF THEM WERE ABLE TO PARTICIPATE IN PART OF THE JULY MEETING. THIS IS THE FIRST TIME THAT GILL CLYDE HAVE BEEN ABLE TO ATTEND THE BOARD MEETING IN PERSON. SO IT'S NICE TO RENEW THAT FRIENDSHIP. THEY'LL BE SERVING IN AN AD HOC CAPACITY WHILE FILLING OUT ALL 3,000 PAGES OF FORMS AND SHOULD THEY COMPLETELY THAT, WE WILL LOOK FORWARD TO WELCOMING THEM AND PUTTING THEM ON THE PAYROLL. [LAUGHTER] I THINK THIS IS HIGHER THAN THAT, THOUGH. BUT THANK YOU FOR PARTICIPATING IN TODAY'S MEETING. AND ONE OF OUR OTHER MEMBERS, INCOMING MEMBERS, WASN'T ABLE TO JOIN US. WE LOOK FORWARD TO WELCOMING HIM SOON AND THE C.E.O. OF THE COMPANY BY HIS NAME. AND WITH THE APPOINTMENT OF NEW MEMBERS, OF COURSE, SADLY COMES THE DEPARTURE OF SOME OF OUR COLLEAGUES ALONG THE WAY HERE. AND I DO WANT TO THANK THEM FOR THEIR DEDICATION, THEIR HARD WORK AND THE INSIGHT THAT THEY'VE SHARED WITH US ON SOME FAIRLY DIFFICULT ISSUES IN WHICH I HOPE WE'VE MADE A CONTRIBUTION. TODAY SUCH MARKS THE LAST MEETING OF DR. GREEN AND DR. SUSAN SHARON AND FORTUNATELY WE WERE ABLE TO CALL ON FORMER MEMBERS TO HELP US FROM TIME TO TIME IN AN AD HOC CAPACITY. BUT NOT WITH ANY DEVELOPMENT OFFICE OR ANYTHING. [LAUGHTER] AND WE DO WANT TO THANK THEM FOR THEIR WILLINGNESS TO SERVE. AND SUSAN'S ALREADY AGREED TO REMAIN ON THE CTR WORKING GROUP AND SHE'LL DO THAT AS AN AD HOC MEMBER AND I'M SURE WE'LL CONTINUE TO PROVIDE GOOD HELP AND GUIDANCE TO THAT GROUP. AND BEFORE I REALLY BEGIN THE MEETING HERE, IT WOULD PROBABLY BE A GOOD IDEA TO GO AROUND THE ROOM AND LET EVERYBODY INTRODUCE THEMSELVES SINCE THERE ARE A LOT OF NEW PEOPLE IN THE ROOM AND ALSO FOR THE PRIVATE OF THE PUBLIC. I SHOULD REMIND EVERYBODY THAT THE MEETING IS BEING BROADCAST TO THE PUBLIC, AND SO WOULD ASK THAT YOU TRY TO SPEAK CLEARLY AND MOO THE MICROPHONES AND THESE ARE PUSH-TO-TALK MICROPHONES SO IF YOU WOULD MAKE THE LITTLE PINK BUTTON LIGHT UP WHEN YOU SPEAK AND TURN IT OFF WHEN YOU'RE DONE. SO IF I COULD, WE'LL GO AROUND THE ROOM AND LET EVERYBODY JUST BRIEFLY INTRODUCE YOURSELF AND CLYDE, WOULD YOU MIND STARTING OUT? >> GOOD MORNING. MY NAME IS CLYDE YANCEY. PROFESSOR OF MEDICINE AT NORTHWEST UNIVERSITY FARM BROOK SCHOOL OF MEDICINE IN CHICAGO AND CHIEF OF CARDIOLOGY THERE. BY WAY OF ENTERPRISE, I SERVE ON DR. COLLINS' ADVISORY COMMITTEE AND SERVE ON ANOTHER -- A NUMBER OF OTHER VOLUNTEER APPOINTMENTS THROUGH THE FEDERAL ORGANIZATION F.D.A. ESPECIALLY. >> I'M STEVE KATZ, DIRECTOR OF THE NATIONAL INSTITUTE OF ARTHRITIS AND MUSKOSKELETON SKIN DISEASES AND THE DORMANTOLOGY BRANCH IN THE NATIONAL CANCER INSTITUTE AND I SERVE ON ONE OR TWO OTHER COMMITTEES. >> I'M GILL OHLMAN FROM THE UNIVERSITY OF MICHIGAN. I WORKED IN THE LAB OF CHRIS AN FENSEN HERE AT NIH IN 1967-69. IBBEEN DOING CANCER BIOLOGY, MORE RECENTLY BIOINFORMATICS AND PROT YOMIC. FOR THE LAST 15 YEARS I'VE BEEN AT THE UNIVERSITY OF MICHIGAN AFTER 28 YEARS AT THE UNIVERSITY OF WASHINGTON. AND I CURRENTLY LEAD AT THE UNIVERSITY-WIDE CENTER ON COMP PUTEATIONAL MEDICINE AND BIOINFORMATICS AND THE GLOBAL HUMAN PROD YOM -- PROTIUM PROJECT BUILDING IN THE GENERAL AREA OF PLATFORM AND INTEROMICS ANALYSIS. >> ERIC GRAY, THE NATIONAL GENOME RESEARCH INSTITUTE. >> CURRENTLY A VISITING PROFESSOR IN THE DEPARTMENT OF GLOBAL HEALTH AND SOCIAL MEDICINE AT HARVARD AND RECENTLY RETIRED VICE PRESIDENT FOR SCIENTIFIC AFFAIRS AT ELY LILY AND COMPANY AND I SHOULD SAY I AM A MEMBER OF THE ADVISORY COUNCIL WITH POVERTY INTERNATIONAL CENTER RIGHT NOW. >> GOOD MORNING. I'M MARTHA SUMMERMAN, THE DIRECTOR OF THE NATIONAL INSTITUTE OF DENTAL AND CRANIAL RESEARCH. I'VE BEEN THERE ABOUT A YEAR. I'M ALSO IN DR. STEVE KATZ' DIVISION AS A CHIEF OF A LAB OVER THERE IN ORAL BIOLOGY. MY RESEARCH FOCUS IS IN MINERAL LIFE ISSUES AND I'M DELIGHTED TO BE JOINING ALL OF YOU. >> I'M DAN GOLDEN. I USED TO BE A GOVERNMENT BREWER CRAT. I RAN NASA FOR TEN YEARS BUT NOW I'M DOING SOMETHING THAT'S QUITE EXCITING. I HAVE A STARTUP COMPANY CALLED THE INTELSIS CORPORATION. I'M THE FOUNDER, CHAIRMAN AND C.E.O. OF THAT COMPANY. AND THE LAST TEN YEARS I SPENT QUITE A BIT OF TIME IN THE ENTREPRENEURIAL COMMUNITY. >> SOMEONE THAT'S JOINED THE CONFERENCE. >> AND I WILL TALK A LITTLE BIT MORE ABOUT THAT. AND I HAVE BEEN AFFILIATED WITH THE NIH FOR TWO DECADES. I WORKED WITH FRANCES WHEN I WAS AT NASA AND ONE LITTLE STORY. WHEN I GET TO MY AGE YOU TELL STORIES. JOHN GLEN CAME TO ME AND SAID I WANTED TO FLY AND I SAID YOU ARE NEVER GOING TO FLY UNLESS YOU HAVE THE DIRECTOR OF NATIONAL INSTITUTES OF HEALTH CALL ME AND TELL ME THAT IT'S VALID SCIENCE. I GOT THE CALL. [LAUGHTER] >> I'M FRANCIS COLLINS, THE DIRECTOR OF THE NIH BUT I WAS NOT THE PERSON WHO MADE THE CALL. THAT WAS A LITTLE WHILE BACK. BUT IF I HAD THE CHANCE, I WOULD HAVE DONE IT. WELCOME, EVERYBODY. >> I'M BILL BRODY, PRESIDENT OF THE SALING INSTITUTE FOR BIOLOGICAL STUDIES IN LA JOLLAA. IN MY FORMER LIFE I WAS A UNIVERSITY PRESIDENT. I USED TO LIVE IN A BIG HOUSE AND BEG FOR A LIVING. CURRENTLY I LIVE IN A SMALL HOUSE AND BEG FOR A LIVING. LE REAL ESTATE PRICES IN CALIFORNIA ARE THREE TIMES WHAT THEY ARE ON THE EAST COAST. [LAUGHTER] >> RODERICK PETTY GURU, THE DIRECTOR OF THE BIOENGINEERING INSTITUTE, AND ALTHOUGH I HAVE ACTUALLY BEEN ON THIS COMMITTEE FOR A WHILE, THIS IS MY FIRST OPPORTUNITY TO HAVE A FACE FACE-TO-FACE MEETING. AT A PREVIOUS MEETING I HAD AN INJURY, WHICH I WAS LISTENING TO THE MEETING OVER THE WEBCAST, AND I HEARD FRANCIS OUT ME, SO TO SPEAK, IN TERMS OF THE INJURY THAT I WAS DEALING WITH AT THAT TIME. I'M ALSO LIKE STEVE, AN INVESTIGATOR IN THE DIABETES INSTITUTE, WHERE MY RESEARCH FOCUSES ON PREDICTIVE MODELING OF CORONARY ARTERY ZWRAESHGSS FOCUSING ON PLAQUE RUPTURE. >> I'M GARY KNEEL, RECENTLY RETIRED AS HEAD OF CORPORATE SCIENCE OF TECHNOLOGY AT JOHNSON & JOHNSON. I'M NOW A PARTNER IN A PRIVATE EQUITY FIRM IN NEW YORK. ALSO C.E.O. OF A NEW NONPROFIT CROSS PHARMACEUTICAL INDUSTRY CORPORATION CALLED TRANSCELLERAT BIOFARMA. >> SUSAN SHARON. DEPUTY DIRECTOR OF THE NHLBI. FOR THE LAST THREE YEARS I'VE BEEN THE ACTING DIRECTOR AND TOO MANY ROLES TO COUNT ATTACHED TO THAT ONE. THANKS. >> AMY PATTERSON, NIH. >> THAT WAS A VERY MODEST INTRODUCTION. I SAW JOHN GLEN. I WENT THERE FOR THAT LAUNCH BECAUSE WE BUILT A LOT OF THE EQUIPMENT. AND THIS WAS HIS SECOND FLIGHT, OF COURSE. HE WAS UP IN YEARS AND I REMEMBER HEARING SOME OF HIS FELLOW ASTRONAUTS SAY TO HIM JUST BEFORE THE FLIGHT THAT THEY WERE GOING TO LET HIM PREBOARD. [LAUGHTER] THAT WAS KIND OF A DOWNER. ANYWAY, -- >> NORM, HE WAS 78 WHEN HE WENT UP. >> WAS HE REALLY? YEAH, HE DID WELL, TOO. WELL, THANK YOU ALL AGAIN WELCOME. I'VE BEEN TOLD THAT JOSEPH BRIGGS AND RICHARD HONES WILL BE JOINING US LATER IN THE MORNING, THAT THEY HAD A COMMITMENT EARLY ON SO WE'LL LOOK FORWARD TO THAT. AND WE WILL TODAY BE GOING THROUGH THE SPRS CTR ACTIVITIES AND GET AN UPDATE FROM THE WORKING GROUP. GAIL IS GOING TO DO THAT FOR US, BECAUSE SAUL WAS UNABLE TO BE WITH US TODAY. AND WE'LL FOLLOW THAT UPDATE BY PRESENTATIONS AND DISCUSSIONS WITH THREE DIFFERENT PANELS. WE'LL IS A LUNCHTIME PRESENTATION AND EACH OF THESE PANELS WILL FOCUS ON A DIFFERENT ASPECT OF THE ISSUE THAT IS AT HAND. GAIL WILL TALK A BIT MORE ABOUT THE PURPOSE OF EACH OF THE PANELS. AND AT THE END OF THE DAY WE'LL DEVOTE SOMETIME TO DISCUSSING THE NEXT STEP FOR THE SMRB AS A WHOLE. AS YOU KNOW, WE'RE CURRENTLY BRINGING UP OUR NEWEST ENDEAVOR, HAVING TO DO WITH THE BENEFITS OF INVESTMENT IN HEALTHCARE RESEARCH. AND THAT KIND OF SUMMARIZES THE ADMINISTRATIVE TASKS FOR TODAY, WITH I GUESS MAYBE ONE EXCEPTION WILL COME UP. BUT BEFORE WE GO, GIVE YOU A CHANCE TO SAY WHAT YOU'D LIKE TO SAY. >> WELL, THAT'S MOST GRACIOUS AND APPRECIATED. REALLY APPRECIATE EVERYBODY'S TAKING THE TIME TO BE WITH US TODAY AND LOOKING FORWARD TO A VERY INTERESTING DISCUSSION ABOUT OUR SBR PROGRAM. IT'S REALLY A WONDERFUL PROGRAM. IT'S BEEN LINED UP. I WANT TO APOLOGIZE TO EVERYBODY FOR OUR AUSTERITY. I HOPE YOU ENJOY THE WATER ON THE TABLE. THAT'S PROBABLY ALL GURG TO BE OFFERED FROM OUR GREAT HOS PITALITY SITUATION HERE. WE'LL ALLOW PEOPLE TO RUN DOWNSTAIRS AND BUY COFFEE IF YOU BECOME DESPERATE. THIS IS THE CURRENT CLIMATE THAT WE ARE LIVING IN, WANTING TO BE SURE THAT WE ARE NOT SPENDING A SINGLE TIME ON YOUR TAXPAYERS' MONEY OTHER THAN HARD WORK AND A LOT OF HARD WORK IS GETTING DONE. THE SCIENCE THAT WAS THROUGH MANY DIFFERENT PROGRAMS THAT NIH SUPPORTS ACROSS THIS LAND AND ACROSS THE WORLD IS REALLY EXHILL RATING. GAIL AND I WAS JUST MENTIONING THE END CODE PROJECT AND THE REMARKABLE OUTPOURING OF SOME 36 PAPERS ALL GETTING PUBLISHED PRETTY MUCH IN THE SAME WEEK BETWEEN NATURE AND GENOME RESEARCH AND A FEW OTHER JOURNALS AND JUST LAYING OUT IN REMARKABLE GLORIOUS DETAIL THE FUNCTIONAL ASPECTS OF THE HUMAN GENOME AT A LEVEL I THINK MOST PEOPLE WERE PRETTY BLOWN AWAY BY, WHICH HAS CLEARLY TRANSFORMED OUR ABILITY TO UNDERSTAND HOW THE SEQUENCE, WHICH WE'VE HAD FOR A WHILE, DOES ITS FUNCTIONAL THINGS IN DIFFERENT TISSUES AND IN THE PRESENCE OF HEALTH AND DISEASE. MANY OTHER THINGS HAPPENING IN NEUROSCIENCE AND CANCER RESEARCH. DIABETES -- WHEREVER YOU LOOK, THERE ARE EXCITING ADVANCES THAT ARE HAPPENING WITH THE 27 INSTITUTES AND CENTERS HERE SUPPORTING. THAT'S THE GOOD NEWS. THE ROUGH PART OF IT IS OUR UNCERTAINTY ABOUT THE BUDGETARY SUPPORT FOR ALL OF THIS, ESPECIALLY WITH THIS CONCERN ABOUT WHAT MAY HAPPEN BETWEEN NOW AND JANUARY 2ND, IF NOTHING HAPPENS. THE SEQUESTERS, WHICH ARE LINED UP TO HAPPEN, WOULD KICK IN AND NIH WOULD LOSE $2.5 BILLION ON THAT PARTICULAR DAY, ABOUT 8.2% OF OUR BUDGET. WE REMAIN HOPEFUL THAT THAT PARTICULAR CLIFF WILL NOT BE TRAVERSEED. AND CERTAINLY MANY OF US HAVE BEEN WORKING HARD IN WAYS THAT WE HAVE AVAILABLE TO US TO TRY TO SHARE THE EXCITEMENT OF SCIENCE AND THE WAY IN WHICH THIS BENEFITS ECONOMIC GROWTH. I JUST ASKED AMY ABOUT THIS. MAYBE IF WE HAD TEN MINUTES AT LUNCH, RIGHT BEFORE THE WORKING LUNCH THAT'S ALREADY SETTLED HERE, I WOULD WANT TO SHOW YOU A TEN-MINUTE CLIP ABOUT OF A CELEBRATION OF SCIENCE THAT WE HELD AT NIH ABOUT THREE WEEKS AGO, WHERE FOR FIVE HOURS WE HAD ABOUT 700 PEOPLE HERE ON THE NIH CAMPUS IN A SERIES OF TED-LIKE PRESENTATIONS FEATURING SCIENTISTS AND PATIENTS THAT PEOPLE WHEN WHO WERE THERE FELT WAS PROBABLY THE MOST COMPELLING AND IMPRESSIVE DEMONSTRATION OF WHAT MEDICAL RESEARCH IS CURRENTLY DOING THAT THEY'D SEEN FAY LONG TIME. YOU CAN'T REALLY CAPTURE IT ALL IN TEN MINUTES, BUT WE COULD SHOW YOU A CLIP OF THAT JUST TO GET A SENSE OF THE KINDS OF THINGS THAT WERE PRESENTED IN THE AWESOME EFFECT IT SEEMS TO HAVE IN TERMS OF PEOPLE WHO LISTENED. SO I'LL SEE IF I CAN LINE THAT UP MAYBE AT ABOUT 1:15 OR SOMETHING LIKE THAT AS A LITTLE ENTERTAINMENT IN THE MIDDLE OF YOUR HARD-WORKING DAY. SO AGAIN, I WANT TO SAY THANK YOU AND NORM, A SPECIAL THANK YOU TO YOU FOR YOUR ABLE AND CAPABLE LEADERSHIP OF SMRB. IT'S A JOY TO WORK WITH ALL OF YOU ON THESE IMPORTANT PROJECTS. >> THANK YOU, FRANCIS. AND WE HAVE JUST A COUPLE OF OTHER THINGS TO HANDLE BEFORE WE GET INTO THE SUBSTANCE HERE. FIRST OF ALL, WE AS USUAL, HAVE A PUBLIC COMMENT PERIOD. WE'RE GOING TO OPERATE IT SLIGHTLY DIFFERENTLY THAN WE HAVE IN THE PAST. AS USUAL, THE MEMBERS OF THE PUBLIC WHO WOULD LIKE TO PROVIDE REMARKS IN PERSON DURING THE PUBLIC COMMENT PERIOD SHOULD SIGN UP AT THE ADMINISTRATION TABLE OUT IN THE -- REGISTRATION TABLE OUT IN THE HALL AND AT THE DESIGNATED TIME WE'LL TAKE COMMENTS. TO BE FAIR TO ALL THE MEMBERS WHO HAVE THINGS THAT MEMBERS OF THE PUBLIC HAVE THINGS THEY WOULD LIKE TO SAY, WE WOULD ASK THAT AS A COURTESY TO YOUR COLLEAGUES, YOU HOLD YOUR COMMENTS TO THREE MINUTES. WE REALIZE THAT'S A VERY SHORT PERIOD AND WE VERY MUCH WELCOME WRITTEN INPUT THAT COULD BE SENT TO US HERE TO OUR COMMITTEE AT THE NIH. AND BY EMAIL OR REGULAR MAIL OR HOWEVER YOU WOULD LIKE. AND I WANT TO EMPHASIZE I HOW WELCOMED THOSE INPUTS ARE. THE ONE THING THAT'S NEW IS THAT MEMBERS OF THE PUBLIC WHO ARE VIEWING THIS MEETING BY WEBCAST WILL NOW BE ABLE TO SUBMIT COMMENTS FOR THE PUBLIC COMMENT PERIOD AND THEY CAN DO THAT BY USING OUR EMAIL, WHICH IS SMRB@MAIL SMRB@MAIL.NIH.GOV. AND I'LL SAY THAT AGAIN. IT'S SMRB@MAIL.NIH.GOV. AND THE COMMENTS THAT WE SEIVE, WE'LL READ THEM IN THE ORDER THAT WE RECEIVE THEM. WE'LL COVER AS MANY AS WE CAN, AND WE WILL INCLUDE THE COMMENTOR'S NAME AND AFFILIATION SO WE WOULD ASK THAT YOU DO INCLUDE THAT IN YOUR REMARKS. AND WE WILL FOLLOW UP THOSE COMMENTS WITH YOU. MEANWHILE IN, ANY GENERAL COMMENTS THAT YOU FEEL ARE IMPORTANT WILL BE WELCOMED AT THE COMMENT PERIOD AT THE VERY END OF THE PUBLIC -- AT THE END OF THE MEETING. SECONDLY, ANY PUBLIC COMMENT, LETTERS THAT HAVE BEEN RECEIVED WILL BE POSTED ON THE BOARD'S WEBSITE. AND THEY ARE INCLUDED IN THE MEMBERS' BRIEFING MATERIALS AND WE DO APPRECIATE, AGAIN, THOSE COMMENTS THAT WE'VE RECEIVED. AND FINALLY, THE MINUTES FOR THE MEETING THAT WE HELD ON JULY 11th OF THIS YEAR HAVE BEEN COMPLETED. PARTICULAR THANKS TO GAIL FOR REVIEWING THOSE WITH SUCH CARE AND ALSO TO THE STAFF FOR THEIR THOROUGHNESS AND THEIR PREPARATION AND I WOULD WELCOME A MOTION TO APPROVE THOSE MINUTES. THANK YOU. MOVE TO SECOND. ALL OF THE FAVORS AYE. THANK YOU. AND NOW WE TURN TO THE HIGHLIGHT OF THE MEETING. THE BRIEFING THAT AMY ALWAYS GIVES US ON NIH CONFLICTS OF INTEREST RULES. BUT I DON'T MEAN TO MAKE FUN OF THAT. THIS IS VERY, VERY IMPORTANT IF WE'RE TO HAVE ANY CREDIBILITY. AND SO I HOPE EVERYBODY IS LISTENING CAREFULLY SO DR. PATTERSON, THE FLOOR IS YOURS. >> THANK YOU, NORM. I'LL MAKE THIS BRIEF, BUT IT IS VERY IMPORTANT. JUST TAKE A MOMENT TO REMIND EVERYONE OF THE RESPONSIBILITIES THAT YOU AGREED TO UNDERTAKE WHEN YOU BECAME A SPECIAL GOVERNMENT EMPLOYEE, A MEMBER OF THIS BOARD. AND WHILE WE DO EVERYTHING WE CAN TO SCREEN ALL THE INFORMATION YOU PROVIDE NUS ADVANCE OF THE MEETING, FOR MY REAL OR PERCEIVED CONFLICTS OF INTEREST, WE DO ASK YOU TO REMAIN VERY MINDFUL OF SPECIFIC ISSUES THAT MIGHT COME UP DURING THE COURSE OF THE MEETING THAT MIGHT PRESENT EITHER A REAL OR APPARENT CONFLICT OF INTEREST. AND SHOULD THAT HAPPEN, WE'D ASK TO YOU LET US KNOW AND WE'LL NEED TO RECUSE YOU FROM THE MEETING. TODAY, HOWEVER, WHILE THAT NORMALLY IS NOT THE HIGHLIGHT OF THE MEETING, I HAVE ANOTHER ANNOUNCEMENT TO MAKE. AND I THINK THIS REALLY IS A TRUE HIGHLIGHT. NORMAN OR AUGUSTINE HAS BEEN CHOSEN TO RECEIVE THE 2012 AMERICAN PATRIOT OF CHARACTER AWARD FROM THE CHARACTER EDUCATION PARTNERSHIP, WHICH IS A NATIONAL NONPROFIT ORGANIZATION LED BY BUSINESS AND EDUCATIONAL LEADERS AND IT WILL BE PRESENTED TO NORM IN WASHINGTON, D.C. IN NOVEMBER. THE CHARACTER EDUCATION PARTNERSHIP DEFINES CHARACTER COMPREHENSIVELYT MEANS THINKING, FEELING, AND DOING. AND I THINK THOSE OF YOU WHO HAVE WORKED ON THIS COMMITTEE WITH NORM AND PERHAPS KNOWN HIM IN OTHER AVENUES OF LIFE KNOW THAT THERE IS NO FINER PERSON THAT EPITOMIZES THAT. NORM'S INCREDIBLE BRILLIANCE, ANALYZES, PUTS IN PLACE A PARADIGM FOR THINKING ABOUT THINGS. HE CAN COMMUNICATE THAT AND SHARE THAT WITH PEOPLE. HIS PASSION LEADS HIM TO BE AN INCREDIBLE ADVOCATE FOR THOSE ISSUES AND TO DRIVE HOME THE VERY SOUNDEST ANALYSIS AND HE'S A DOER. HE'S NOT JUST AN IVORY TOWER THINKING. HE GETS OUT THERE AND HE DOES. AND I JUST WANTED TO READ A QUOTE FROM THE PRESIDENT OF THE RESEARCH CORPORATION FOR SCIENCE ADVANCEMENT. "NO ONE DESERVES THIS AWARD MORE, AS NORM AUGUSTINE HAS DEMONSTRATED TRUE CHARACTER, INTEGRITY AND PUBLIC COMMITMENT. AND THEIR VALUE IN ACHIEVING GREATNESS TO HIS NUMEROUS AND VARIED ROLES IN NATIONAL LEADERSHIP. IT'S TRULY A RARE PERSON -- AND I WOULD PAUSE THAT HE'S A UNIQUE PERSON -- WHO COMBINES THE VALUES AND ACCOMPLISHMENTS THAT HE REPRESENTS. IT'S REFLECTED IN HIS BUSINESS, GOVERNMENT AND NONPROFIT LEADERSHIP AND HIS UNPARALLELED CHAMPION OF A CAUSE IS AN IMPORTANT COMPETITIVE IVEINESS. NORM AUGUSTINE DESERVES ALL THE RECOGNITION THAT HE RECEIVES AND HE WILL NO DOUBT CONTINUE TO USE THAT RECOGNITION TO TALK FURTHER WITH THE AMERICAN PEOPLE ABOUT THE CHALLENGE IN MAINTAINING OUR GLOBAL ECONOMIC COMPETITIVEIVENESS AND THE IMPORTANCE OF SCIENCE IN THAT QUEST ." [APPLAUSE] >> AMY, THANK YOU VERY MUCH AND THANK ALL OF YOU. YOU READ THAT INSERT AND I PUT IN THE MINUTES -- [LAUGHTER] THANK YOU AND I AM VERY HONORED. OKAY, NOW WE GET TO THE HEART OF THE DAY. AND GAIL, OF COURSE, HAS BEEN SERVING ON THE SMRB, WHATEVER ALL THAT MEANS -- COMMITTEE. AND IS GOING TO PITCH IN FOR SAUL TODAY AND I KNOW GAIL, YOU WILL DO A GREAT JOB. SO THE FLOOR IS YOURS AND YOU CAN CHAIR THIS PART OF THE MEETING. >> THANK YOU. AS ONE WHO HAS BEEN PRIVILEGED TO HAVE WORKED WITH NORM ON ANOTHER BIG ENDEAVOR, WHICH WAS THE COMMITTEE WITHIN THE NATIONAL ACADEMY OF SCIENCES THAT ISSUED THE REPORT, THE GATHERING STORM, I CAN TELL YOU THAT THAT REPORT WAS RELEASED FIVE YEARS AGO. NORM CHAIRED THE COMMITTEE, AND HE IS STILL GIVING TESTIMONY AND MAKING PRESENTATIONS AROUND THAT REPORT. NORM, I DON'T KNOW IF YOU SAW RECENTLY THAT THE COUNCIL ON FOREIGN RELATIONS ACTUALLY CALLED THE GATHERING STORM REPORT PERHAPS THE MOST IMPACTFUL THAT THE NATIONAL ACADEMIES HAS EVER RELEASED AND THAT'S MUCH TO YOUR CREDIT. SO AT ANY RATE, WE HOPE THAT THE LEGACY THAT FROM THIS COMMITTEE THAT YOU ALSO CHAIR WILL LIVE LONG AFTER ALL OF US IN TERMS OF HAVING AN IMPACT. WHAT I'D LIKE TO DO IN THE FEW MINUTES THAT I'VE BEEN GIVEN IS TO FIRST TALK ABOUT OUR CHARGE, THE PROCESS THAT WE ARE UTILIZING TO TRY TO FULFILL THE CHARGE, THE PRELIMINARY FINDINGS, AND I'D LIKE TO EMPHASIZE THAT THESE ARE INDEED PRELIMINARY. THERE WILL BE A LOT MORE WORK DONE BEFORE THEY BECOME FINAL FINDINGS. AND THEN LASTLY, TO TALK A LITTLE BIT MORE IN-DEPTH ABOUT THE GOALS OF TODAY'S MEETING. SO IF I CAN HAVE THE FIRST SLIDE TO HELP WALK US THROUGH THESE TOPICS, THAT WOULD BE VERY GOOD. OKAY THANK YOU. SO WE ARE UTILIZING -- IN FACT, THE PROCESS THAT WE HAVE PUT IN PLACE FOR OTHER OBJECTIVES AND I'LL TALK A LITTLE BIT MORE ABOUT THE OVERALL PROCESS THAT WE ARE USING THAT HAS GUIDED US IN OUR PREVIOUS CHARGES AND ALSO THE CURRENT ONE REVIEWING THE SBR PROGRAM. WHAT I WOULD LIKE TO DO IS TO TALK ABOUT THE CHARGE AND THE IMPETUS FOR THE CHARGE. WITH A TOTAL BUDGET OF NEARLY $32 BILLION, AS YOU ALL KNOW, ALL TOO WELL, NIH FUNDS ONE OF THE LARGEST SBR PROGRAMS FIRE TOTAL OF $717 MILLION. FOR A TOTAL. THE MENTION OF NIH IS TO SEEK FUNDAMENTAL KNOWLEDGE ABOUT THE NATURE OF LIVING SYSTEMS TO ENHANCE HEALTH AND LIFE. THIS MAKES IT A BIT CHALLENGING IN THAT THE MISSION, OR GOAL, OF THE SBR PROGRAM IS TO TRANSLATE THAT KNOWLEDGE TO COMMERCIALIZE THAT KNOWLEDGE, BUT TO IN ESSENCE, GET NEW MEDICINES, DIAGNOSTICS, VACCINES TO PATIENTS. SO IT'S A COMPLEX PROCESS, AS WE ALL KNOW. THIS PROCESS OF COMMERCIALIZATION AND TRANSLATION AND ALSO IN SOME WAYS CHALLENGING, GIVEN THE MISSION OF NIH. NOW, JUST A LITTLE BIT MORE OF THE IMPETUS OF THE CHARGE AND MAYBE WITHOUT GOING THROUGH THIS IN TOO GREAT A DETAIL. I THINK YOU SEE IMMEDIATELY, IF YOU GLANCE AT THIS TABLE, WHY FRANCIS HAS ASKED THIS COMMITTEE TO ACTUALLY REVIEW THE SBR PROGRAM OF NIH TO MAKE CERTAIN THAT IT IS BEING FULFILLED TO ITS FULLEST POTENTIAL BUT ALSO THAT IT'S OPTIMIZED TO DELIVER IN THE VERY BEST WAY POSSIBLE. AND PART OF THAT STIMULUS FOR THE CHARGE FOR THE COMMITTEE IS THE FACT THAT OVER THESE NEXT FIVE YEARS, THE AMOUNT OF THE NIH BUDGET THAT WILL BE SATISFIED FOR THE SBR AND SPR PROGRAM IS INCREASING AND IS SIGNIFICANT. SO WE WANT TO BE CERTAIN THAT IT IS, IN FACT, OPTIMIZED AND OPERATING TO ITS FULLEST POTENTIAL. SO AT ANY RATE, CONSIDERATIONS WITH REGARDS TO THE CHARGE THAT FRANCIS HAS ASKED US SPECIFICALLY WHAT GAT IS, HOW DO WE BEST FOSTER INNOVATION AND THAT ALIGNS WITH OUR NIH DIFFERENT INSTITUTES' PRIORITIES THAT THE PROGRAM FUND, OF COURSE, QUALITY PROPOSAL AND THOSE THAT HAVE THE GREATEST POTENTIAL FOR SUCCESSFUL COMMERCIALIZATION AND TO LEVERAGE EXISTING RESOURCES. BUT I WOULD ALSO ADD RESOURCES THAT EXIST NOT ONLY INTERNALLY BUT EXTERNALLY TO NIH TO ENHANCE THE CHANCES FOR SUCCESS OF THE GRANTEES. HERE IS THE WORKING GROUP ROSTER. I WON'T TAKE TIME TO READ THEM. YOU HAVE THOSE. SO WHAT ABOUT THE PROCESS THAT'S BEING USED? AND I WON'T SAY A LOT ABOUT THAT, EXCEPT THAT WE HAVE I GUESS IN THE FIRST COUPLE OF MEETINGS THAT WE'VE HAD OF THIS NEWLY ESTABLISHED OVERALL SMRB, WE DID TALK ABOUT WHAT PRINCIPLES WOULD GUIDE US IN TERMS OF OUR ACTIVITIES. AND FIRST OF ALL WOULD BE TO GUIDE THE PROCESS BY PROVIDING THE ENVIRONMENT FOR COLLABORATION, COORDINATION AND INTERACTION, TO BRING TOGETHER SYNERGIES, ENHANCE PUBLIC UNDERSTANDING, COMMENTS AND SUPPORT, AND TO INCREASE THE OPERATIONAL EFFICIENCY. SO THE PROCESS, THE ACTUAL PROCESS OR STEPS FOR OUR CONSIDERATION WOULD BE, FIRST OF ALL, BE CERTAIN THAT THERE REALLY IS A NEED FOR A CHANGE, AND THEN TO OPTIMIZE THE CHANGES AND WHAT ARE THE OPTIONS AND THEN TO IMPLEMENT AND EVALUATE THE CHANGE AND WHAT PROCESS SHOULD BE USED. I THINK THESE STEPS FOR CONSIDERATIONS STEM FROM THE FACT THAT, AS WE ALL KNOW IN THE PAST, THERE HAVE BEEN DEMANDS PLACED UPON NIH CONGRESS BY THE PUBLIC, BOTH FROM THE SCIENTIFIC COMMUNITY, THE PATIENT COMMUNITY, AND OTHER GROUPS. AND SO TO MAKE CHANGE SO THE PART OF THE MAJOR PURPOSE OF THIS COMMITTEE IS TO ENSURE, FIRST OF ALL, THAT CHANGE IS NEEDED, AND THAT IT REALLY WILL IMPROVE THE MISSION OF NIH, NOT IMPROVE THE MISSION BUT ACTUALLY THE OUTCOMES OF NIH RESEARCH. AND AT THE SAME TIME TO BE SURE THAT THE PROCESS IS TRANSPARENT, THAT IT'S ACTUALLY COMMUNICATED IN GREAT DETAIL WITH ALL OF THE POTENTIAL PEOPLE THAT WILL BE IMPACTED AND THEN THE ABILITY. SO WE HAVE SPENT A LOT OF TIME IN TERMS OF COLLECTING DATA, AND THE NIH STAFF HAS BEEN VERY GOOD ABOUT PROVIDING US WITH CERTAINLY THE NEW REAUTHORIZATION AND WHAT THE NEW AUTHORIZATION ENTAILS FOR ALL OF THE FEDERAL AGENCIES BUT SPECIFICALLY NIH. AND I WON'T GO BACK OVER ALL THOSE SINCE WE'VE SPENT CONSIDERABLE TIME IN THE PAST. BUT BASICALLYdtmv, WHAT WE DECIDED TO DO WAS LOOK AT OUR WORK OVER A PERIOD OF THIS YEAR. ACCORDING TO THE LIFE CYCLE AN SBR, STARTING FIRST WITH RESPECT TO APPLICANTS AND THEN WORKING OUR WAY THROUGH EACH OF THE DIFFERENT STEPS. NOW, I MENTIONED THAT I WOULD SHARE WITH YOU SOME OF OUR PRELIMINARY FINDINGS, BUT I EMPHASIZE AGAIN THEY ARE INDEED PRELIMINARY. FIRST OF ALL, AND MOST IMPORTANTLY, THE COMMITTEE FEELS -- THE WORKING COMMITTEE FEELS THAT THE NIH IS FULFILLING MORE THAN FULFILLING THE STATUTORY OBJECTIVES AS THE SBR PROGRAM BUT THE ONE THING THAT REALLY CHARACTERIZES THIS PROGRAM ACROSS THE INSTITUTES IS THE FLEXIBILITY THAT THE INSTITUTES ARE GIVEN IN TERMS OF WHAT THEIR SBR AND STTR PROGRAM LOOKS LIKE. THERE ARE STRENGTHS AND WEAKNESSS RELATED TO THIS FLEXIBILITY. WE HEARD A LOT ABOUT THAT, AS WE INTERVIEWED THE DIFFERENT INSTITUTES IN TERMS OF EXACTLY WHAT THEIR SBR/STTR PROGRAMS LOOK LIKE. AND THEY DO VARY BOTH IN TERMS OF THE PROGRAM MANAGEMENT BUT ALSO THE SIZE OF THE BUDGET, THE IMPLEMENTATION. TO SOME DEGREE THE SUCCESS OF THE PROGRAMS AND THEN TAKING ADVANTAGE OF OPPORTUNITIES LEARNED TO IMPROVE THEIR PROGRAM. SOME HAVE BEEN BETTER THAN OTHERS AT THIS. AND SO THE RECOMMENDATIONS TO DATE, AGAIN, I WOULD EMPHASIZE ARE PRELIMINARY, BUT TO ESTABLISH RELIABLE METRICS AND OUTCOMES USING THE METHODS, BOTH THAT ALREADY EXIST BUT ALSO PERHAPS IMPROVING THOSE TO STRENGTHEN THE APPLICATION PROCESS TO SAVE SMALL BUSINESS BOTH TIME AND EFFORT. I THINK WE WOULD ALL AGREE THAT, WHILE THE SCIENTIFIC PEER REVIEW IS GOOD, WE CAN MAKE IT EVEN BETTER. WE CAN MAKE IT EVEN GREATER. AND THEN TO DEFINE AND TRACK THE SUCCESS SO THAT IN FACT, WE CAN GUARANTEE THE PUBLIC A GOOD RETURN ON THEIR INVESTMENT. NOW, TODAY IS VERY IMPORTANT, OBVIOUSLY, BECAUSE WE HAVE BROUGHT TOGETHER TWO VERY IMPORTANT GROUPS -- THE INNOVATORS, FIRST AND FOREMOST, WHICH MAKE UP OUR FIRST PANEL -- THEN WE WILL HEAR FROM THE INVESTORS AND THEN LASTLY, WE'LL TALK ABOUT STRATEGIESN/L TO IMPROVE THE CHANCES OF COMMERCIALIZATION. AND I'D LIKE TO EMPHASIZE THAT ONE OF THE INDIVIDUALS THATTHA WE'LL HEAR FROM IS THE COCHAIR OF THE PRESIDENT'S ADVISORY COUNCIL ON INNOVATION AND ENTREPRENEURISM. SO WITH THAT, I THINK WE CAN START ON THE FIRST PANEL, OR WITH THE FIRST PANEL. SO I'LL TURN IT OVER TO YOU, DAN. OH, YOU'RE THE SECOND PANEL. I'M SORRY. I BELIEVE THAT'S DR. BRODY. AND I'LL USE A STRONG ARM IF HE GETS OUT OF LINE BUT OTHERWISE IT'S YOURS, BILL. >> WELL, GOOD MORNING. I AM PLEASED TO MODERATE -- ALL ENTREPRENEURS BY DEFINITION CANNOT BE MODERATED -- SUCCESSFUL ENTREPRENEURS. THE FIRST PANEL, AS GAIL MENTIONED, IS REALLY THE ENTREPRENEURS WHO SOME OF THEM ARE SERIAL ENTREPRENEURS. AND BASICALLY WHAT WE WANT TO HEAR FROM YOU ALL -- AND WE HAVE THREE WHO ARE ON THE PHONE AND SO WE WILL GO IN ORDER. IF I WERE TO INTRODUCE THEM BY BIO, IT WOULD TAKE MUCH OF THE TIME TO GET THROUGH THE SESSION AND WE WOULDN'T HEAR FROM THEM. SO I THINK EVERYBODY HAS THEIR BIOS, IS THAT RIGHT? AVAILABLE? AND THE RULES ARE FIVE MINUTES -- LOOK, IF YOU TAKE TEN MINUTES, WE'LL USE ALL THE TIME WITH NO TIME FOR DISCUSSIONF YOU TAKE FIVE MINUTES, YOU PROBABLY WON'T FINISH YOUR PRESENTATION, BUT TRY TO MAKE IT AS CL9œ’bE TO FIVE MINUTES AS YOU CAN SO WE'LL HAVE TIME TOR DISCUSSION. AND WITH THAT, I'LL INTRODUCE DEBRA HE WILL YIS FROM OSTEOJENICS. DEBRA? >> HELLO. THANK YOU FOR INVITING ME TO TALK TO THE BOARD. ARE WE SUPPOSED TO JUST GIVE A LITTLE BIT ABOUT OURSELVES AT THIS POINT? >> I THINK WHAT WE WANT TO HEAR IS REALLY SET THIS IN THE FRAMEWORK OF WHAT IS YOUR COMPANY DOING OR IF THERE ARE SOME OF YOU WHO HAVE MULTIPLE COMPANIES AND THAT HAS WHAT HAS BEEN THE ROLE OF THE S BIR IN THAT AND WHAT ARE THE THINGS THAT YOU SEE THAT ARE EITHER IMPEDIMENTS OR THINGS THAT MIGHT BE CHANGED TO IMPROVE THE PROGRAM. >> OKAY, FIVE MINUTES. WOW. ALL RIGHT. SO I AM GOING TO RUN HERE. MY NAME IS DEBRA ELLIES. I'M FOUNDER OF OSTEOJENICS, ORIGINALLY A SCIENTIST AND AN INVENTOR AND I SPUN OUT MY COMPANY WITH AN SBIR THAT I WAS AWARDED MANY YEARS AGO AND SINCE THEN I WAS AWARDED A PHASE TWO S BIR AND ALSO RECEIVED LOTS OF OTHER GRANTS AS WELL. SO OUR COMPANY HAS RAIDSED A LITTLE OVER $5 MILLION FROM GRANTS, NOT JUST SBIRS BUT OTHER GRANTS AS WELL AND A LITTLE BIT OF ANGEL MONEY. SO 70% OF THAT ARE GRANTS. ARE REALLY NON-DILUTED FUNDING IS IMPORTANT TO ENTREPRENEURS AND SHAREHOLDERS AND FOR TAKING THE RISK OUT OF OF THE -- OUT OF THE INVESTMENT IS VERY IMPORTANT. BEING A REVIEWER AS WELL, I COULD CHIME IN A LITTLE BIT TO TALK ABOUT WHAT WE SEE COMING ACROSS THE TABLE. AND APPLICANTS REALLY NEED, I THINK THE BIGGEST THING IS APPLICANTS REALLY NEED TO DO SOME VALUE PROPOSITION VALID VALIDATION. SO -- IT'S NOT ON? ALL RIGHT. IS THAT BETTER? OKAY, EXCELLENT. SO TO REALLY VALIDATE THE MARKET THAT THEY'RE GOING AFTER AND THEIR WIDGET IS WORTH GOING AFTER AND IS GOING TO MAKE A SIGNIFICANT CONTRIBUTION TO THE MARKET. I THINK THOSE ARE THINGS MOST SCIENTISTS DON'T UNDERSTAND. SO TO REALLY HAVE THAT PART OF THE PROPOSAL EVEN IN A PHASE ONE WOULD HELP. OTHER THINGS THAT WOULD HELP TO BRING IN OTHER REVIEWERS THAT ARE NOT NECESSARILY REVIEWERS THAT HAVE HAD SBIRS. I THINK OTHER INDUSTRY EXPERTS COULD REALLY HELP REVIEW PROPOSALS AND WOULD ALSO GIVE DIVERSITY TO THE REVIEW PANEL. MORE INDUSTRY-FOCUSED. AND I THINK OVERALL IT'S A GREAT PROGRAM AND I'D LIKE TO SEE IT GROW TREMENDOUSLY TO HELP OTHERS AS WELL. >> [INAUDIBLE] >> WHAT STAGE IS YOUR COMPANY AND HOW MUCH MONEY ARE YOUS HAVE A RAISED? DO YOU HAVE OTHER INVESTORS AND SO FORTH? ARE WE'RE ACTUALLY RAISING -- WE'VE BOOT STRAPPED FOR THE LAST FIVE YEARS, REALLY PUSHING -- WE'VE GROWN ALL THE DISCOVERIES IN THE COMPANY SO WE SCREEN FOR SMALL MOLECULES. WE'RE WORKING ON -- I'M SORRY. I FORGOT TO INTRODUCE MY COMPANY. WE'RE BUILDING BONES FOR PREVENTING AND TREATING OSTEOPOROSIS AND ALSO FOR HEALING, ACCELERATING FRACTURES. WE'RE WORKING ON A TARGET CALLED SCHOLAR OSTIN AND THERE ARE ANTIBODIES GOING THROUGH CLINICAL TRIALS RIGHT NOW. WE'RE ACTUALLY FOLLOWING ONE A SMALL MOLECULE AND ARE IN LEAD OPTIMIZEATION AT THIS POINT AND ALL THAT WORK HAS BEEN DONE MOSTLY ON GRANTS. AND WE'VE GOT ABOUT JUST UNDER $2 MILLION FROM ANGELS AT THIS POINT. >> [INAUDIBLE] >> GAIL HAS A QUESTION. >> DEBRA, YOU MAY NOT WANT TO ANSWER THIS AND YOU DON'T HAVE TO. BUT I'M JUST CURIOUS, HAVING HAD EXPERIENCE AT LILY AND FIRST HAVING BEEN IN ACADEMIA FOR 30 YEARS. BUT WHEN YOU SAY YOU ARE IN THE LEAD OPTIMIZEATION PHASE AND REALIZING THAT YOU ARE A SMALL COMPANY, I WONDER HOW MUCH INPUT YOU GET FROM, SAY, A SCIENTIFIC ADVISORY BOARD, ESPECIALLY ONE THAT WOULD BE VERY HEAVILY WEIGHTD IN MEDICINEAL CHEMISTRY AND PARTICULARLY IN THE LEAD OPTIMIZEATION PHASE. AND DO YOU FIND THAT READILY ACCESSIBLE TO GET THAT KIND OF INPUT AND ADVICE OR HOW DO YOU SEEK THAT ADVICE? >> EXCELLENT QUESTION. I'VE BEEN VERY FORTUNATE. WE DO HAVE A MEDICINEAL CHEMIST ON STAFF WHO WENT TO THE SCRIPTS AND DID A POST DOC AND DIDN'T WANT TO COME BACK TO KANSAS CITY SO WE'VE HIRED HIM. MORE SO WE WORK WITH EX FOLKS FROM INDUSTRY. ONE GUY THAT I WORKED WITH JAMES MCDONALD WAS A TOX COLOGIST AT MERCK AND WENT TO CHERRING AND WAS RUNNING -- HE BECAME V.P. OF PRECLINICAL DEVELOPMENT. SEW REALLY KNOWS TO TAKE A DRUG TO THE MARKET. HE'S TAKEN MULTIPLE DRUGS TO THE MARKET SUCCESSFULLY, INCLUDING FOSSOMAX, NASEONEX, A LIST. THE OTHER PERSON THAT WE WORK WITH THAT WAS ALSO VERY FORTUNATE IS BOB YOUNG, ROBERT YOUNG. HE'S AN EXPERT WORLD-RENOWNED MEDICINEAL CHEMIST WHO ACTUALLY WORKED AT MERCK THROUGHOUT HIS CAREER, WAS RESPONSIBLE FOR DRUGS LIKE SINGULAYER AND BRINGING THOSE TO THE MARKET. I THINK BRINGING TALENT LIKE THAT TO THE TABLE IS EXTREMELY IMPORTANT, AND I AGREE. >> THANK YOU. >> BILL? >> YES. SCHOLARO0ASIN IS A SUBJECT THAT HAS BEEN VERY POPULAR FOR THE LAST FIVE YEARS. AND I IMAGINE -- I KNOW ACTUALLY THERE ARE MANY GROUPS THAT ARE FOCUSING ON SCHOLARASINTIN. WHAT SORT OF INTERACTION DO YOU HAVE WITH ANY OF THOSE OTHERS? >> I ACTUALLY WAS AN INVENTOR IN THE FIELD. I DISCOVERED THE MECHANISM OF ACTION. I WENT OUT AS A POST DOC AND I ACTUALLY DEVELOPED THOSE -- SOME OF THOSE FIRST BLOCKING ANTIBODIES THAT HAVE MOVED ON NOW. I'VE BEEN LICENSED. I KNOW MOST OF THE PLAYERS IN THE FIELD. THEY ALSO ARE AWARE OF ME. YES, I AM A SMALL FISH IN A BIG SEA. AND YES, HAVING THOSE INTERACTIONS IS IMPORTANT AND REALLY IT'S GOOD TO HAVE PEOPLE AHEAD OF YOU SO YOU CAN SORT OF FOLLOW THE PROGRAM WITH THE SAME SORT OF PROGRAMS THAT WE'RE DOING. WE DON'T HAVE TO REINVENT THE WHEEL. >> ONE OF THE REQUESTS FOR US IS TO OPINE ABOUT METRICS. ONE IS CONVERTING FROM PHASE ONE TO GUYS, MULTIPLE S BIR PATHWAYS FOR YOUR SAME COMPANY. YOUR TIMELINE FROM SBIR FUNDING TO ACTUALLY HAVING A LEAD COMPOUND TO HAVING A POTENTIAL PRODUCT, TO ACTUALLY TAKING IT TO A PARTNER OR TO A MARKETPLACE. WHAT DO YOU THINK REASONABLE METRICS ARE AND WHAT TIMELINE MIGHT APPLY IN YOUR SITUATION? >> OH, THAT'S A DIFFICULT QUESTION. MOST COMPANIES, I THINK, IN LICENSE MORE THAN THEY DEVELOP IN-HOUSE. I THINK WE'RE A LITTLE DIFFERENT IN THAT WAY. METRICS WOULD BE BASED ON PAR ADVERTISE ADVERTISINGED UPON THOSE TWO DIFFERENT PATHS. IF YOU IN-LICENSE, I THINK THE PRODUCT WOULD BE FURTHER ALONG THAN OUR PRODUCT IS CURRENTLY. YOU'D BE LICENSING SOMETHING THAT'S CLOSER TO GOING INTO PRECLINICAL OR EVEN INTO THE CLINIC. SO I THINK MILESTONES -- YOU COULD REALLY, I THINK, USE PARTNERING MILESTONES AS POTENTIAL METRICS, WY THINK BECAUSE IF YOU GET TWO, FOR EXAMPLE, AN IND OR IF YOU GET TO DIFFERENT CLINICAL STAGES. AS FAR AS EARLIER THAN THAT, I THINK THERE IS DIFFICULTY IN GETTING FROM A HIT TO A LEAD TO SOMETHING IN THE CLINIC. I THINK THAT THOSE ARE THE -- AS YOU CALL THE VALLEY OF DEATH AREA. SO THE SBIR STTR PROGRAM IS VERY SIGNIFICANT IN HELPING COMPANIES GET OVER THAT. AND ALSO MATCHING EQUITY COMING IF FROM INVESTORS IS EXTREMELY HELPFUL. >> OKAY, I THINK WE'D BETTER MOVE ON. WE'RE VIOLATING MY TIME CONSTRAINTS HERE, AND THAT'S NOT YOUR FAULT, DEBRA. IT'S OUR FAULT. JOHN GARDENER IS FOUNDER AND PRESIDENT OF UPUS TECHNOLOGY. >> SO I'M ON THE AIR? >> YEAH. >> OKAY. HI. I AM A PHYSICIST, DID WORK IN MATERIALS PHYSICS, AND THEN WAS PROFESSOR AT OREGON STATE UNIVERSITY. I GUESS I STILL PROM OF COURSE EMERITUS. IN SEPTEMBER 1988 ONE MORNING I WOKE UP BLIND AND THAT SORT OF CHANGED MY LIFE A BIT. THERE IS MORE TO BE SAID ABOUT THAT BUT I WON'T SAY IT HERE. I WAS FORTUNATELY WAY TOO BUSY TO FEEL SORRY FOR MYSELF BECAUSE I HAD A FAIRLY LARGE GROUP OF STUDENTS, A DOZEN OR SO STUDENTS, POSTDOCS, ET CETERA, GRANTS, DOING RECOGNIZED WORK. AND I WAS ABLE TO ADAPT TO CONTINUE TO DO THINGS, MORE OR LESS, AS I HAD DONE BEFORE WITH TECHNOLOGIES AND HELP FROM READERS, ET CETERA, BUT ONE OF THE THINGS I COULDN'T DO WAS I COULDN'T READ THE DATA THAT WAS COMING OUT OF MY OWN LAB. MY STUDENTS WERE TAKING DATA THAT WERE BASICALLY TIME TIME-STATISTIC COUNTS OF THE FUNCTION OF TIME AND FITTING THAT DATA WAS THE DIFFERENCE BETWEEN GETTING GARBAGE OUT AND GETTING GOOD PHYSICS OUT AND THERE WERE DOZENS OF PARAMETERS TO FIT AND IT'S REALLY TO GET GARBAGE OUT WHEN YOU HAVE SO MANY PARAMETERS. THAT WAS VIRTUALLY IMPOSSIBLE FOR ME TO DO. I CONTINUED TO DO WORK IN THIS FIELD FOR ANOTHER TEN YEARS RELYING ON FRIENDS AROUND THE WORLD WHO WERE EXPERTS WHO COULD SEE WHAT I COULDN'T SEE AND TELL ME WHAT WAS RIGHT AND WRONG. BUT IT WAS WAY TOO CLUMSY. SO I STARTED DOING WORK ON IMPROVING ACCESSIBILITY AND HOPEFULLY TO MAINSTREAM COMPLEX INFORMATION AND GRAPHICS. WE DEVELOPED SOME TECHNOLOGIES, WON SOME ACADEMIC PRIZES, SPUN OFF IN 1996 AND THEN IN YEAR 2000 WE SHIPPED OUR FIRST PRODUCT. OUR ROUTE TO MARKET WAS VERY DIFFERENT FROM I THINK ANOTHER COMPANIES HERE. NOBODY IS GOING TO INVEST -- NO ANGEL OR VENTURE CAPITALIST IS GOING TO INVEST IN A BARREL AND BUSTER COMPANY AND THEY DIDN'T. BUT I WAS OLD, AND THAT'S GOOD BECAUSE I HAD FRIENDS WHO WERE OLD AND BY THAT TIME HAD MATURE AND HAD SOME MONEY AND SO A NUMBER OF FRIENDS PUT TEN, $50,000 A NIECE THIS COMPANY AND IT WAS ENOUGH TO GET IT STARTED. SO WE'RE A MULTIMILLIONAIRE DOLLAR COMPANY AND WE HAVE A SMALL OFFICE IN EUROPE. WE BROKE EVEN IN 2003. WE WERE QUITE SUCCESSFUL IN GETTING SBIR GRANTS, WHICH ALLOWED US TO FIRST OF ALL, BREAK EVEN. BUT ALSO TO HAVE A VERY, VERY LARGE R AND D OPERATION. R AND D HAS ALWAYS BEEN 250% OF THE COMPANY. IT'S NOT THAT MUCH TODAY. BUT FOR MANY YEARS IT WAS. AND SO WE WERE ABLE TO DEVELOP A LOT OF REALLY INNOVATIVE PRODUCTS. WE'RE KNOWN AS THE INNOVATORS. NOW, I'VE ACTUALLY GOTTEN GRANTS FROM THREE AGENCIES, AND IF I WAS ON A REVIEW PANEL FOR THE OTHER TWO AGENCIES, MY ADVICE WOULD BE STOP DOING WHAT YOU ARE DOING AND GO DO IT'S WAY NIH DOES IT. NIH HAS THE BEST-RUN SBIR PROGRAM BY FAR OF THE ONES THAT I'VE EXPERIENCED. NONETHELESS, THERE ARE THINGS THAT NIH COULD DO BETTER. FRANKLY, I'M JUST NOT REALLY CAPABLE OF COMMENTING USEFULLY ON THE BROAD POLICY ISSUES, AND THAT I KNOW ARE VERY IMPORTANT TO YOU. BUT CERTAINLY ON ISSUES OF PRACTICE, HOW THINGS ARE DONE IN PRACTICE, THERE ARE THINGS THAT CAN BE DONE BETTER. SOME OF THEM SHOULD BE DONE BETTER. SOME OF THEM SHOULD BE DONE BETTER BUT I WOULDN'T KNOW HOW TO START ABOUT DOING IT. SOME OF THE FINANCIAL ISSUES. ESTABLISHING INDIRECT COST RATES IS A TRAIN WRECK, AND IT REALLY HAS HAD AN INFLUENCE ON MY COMPANY. IT'S COST US A LOT OF MONEY THAT WAS UNNECESSARY. THERE IS A REQUIREMENT FOR AN AUDIT. EVERYTHING THAT LIMITS ON EVERYTHING DURING MY TEN YEARS OF RUNNING THIS COMPANY OR SO, EVERYTHING HAS GONE UP WITH INFLATION. THE AUDIT THRESHOLD HAS NOT GONE UP, AND IT REALLY SHUTTING UP. AUDITS ARE GETTING TO BE A LOT MORE EXPENSIVE BUT THE THRESHOLD FOR THE AUDITS NEEDS TO BE INCREASED. SO THOSE ARE MY TWO STRONG RECOMMENDATIONS FOR FINANCIAL IMPROVEMENTS AND I THINK THOSE SHOULD BE PRETTY EASY TO IMPLEMENT. I'VE SERVED BOTH, OF COURSE, AS RECIPIENT OF SBIR GRANTS. WE'VE DONE, I THINK, A VERY GOOD JOB. EVERY GRANT THAT WE'VE GOTTEN WE'VE BROUGHT OUT A PRODUCT. EVEN ONE OR TWO WHERE WE DIDN'T GET AN SBIR, WE ACTUALLY HAD SOME SMALL PRODUCT THAT HAS COME OUT OF IT. MOST OF THEM REACHED MARKET TOWARDS THE END OF THE PHASE TWO GRANT? THAT'S A PRETTY REMARKABLE SUCCESS RATE AND WHICH HELPS US, IN FACT, IN OTHER GRANTS. WE'RE REACHING THE POINT NOW WHERE WE DON'T RUN THE COMPANY ON GRANTS. OUR COMPANY IS AT LEAST -- OH, MY LORD -- [PHONE RINGING] I'M SORRY, I FORGOT TO PUT MY PHONE ON BUZZER. AN IPHONE CAN BE REALLY ANNOYING. WHEN YUB GOT THE VOICE ON BUT ON THE OTHER HAND IF I DON'T HAVE THE VOICE ON, WELL, IT'S NOT ANNOYING. SO WHERE WAS I? THE SCIENTIFIC REVIEW PROCESS IS -- I MUST SAY, SIGNIFICANTLY BETTER. THE NIH REVIEW PANELS REALLY ARE AWARE OF THE CRITERIA BY WHICH SBIR PROPOSALS ARE TO BE JUDGED AND THEY'RE VERY DIFFERENT FROM ACADEMIC RESEARCH PROPOSALS. I KNOW HOW TO WRITE ACADEMIC RESEARCH PROPOSALS AND SBIR PROPOSALS, DIFFERENT PURPOSE. THE NATIONAL SCIENCE FOUNDATION REVIEW PANELS BY AND LARGE DO NOT KNOW THE DIFFERENCE, AND IT'S VERY DIFFICULT TO HAVE THINGS -- THE NIH DOES, BUT NOT EVERYBODY DOES, AND THERE ARE A LOT OF REALLY SILLY THINGS THAT COME UP. I'VE BEEN ON REVIEW PACKAGES AND I'VE SEEN INSTANCES IN WHICH ONE PERSON IN THE GROUP WHO REALLY THOROUGHLY UNDERSTOOD SOMETHING COULD CHANGE A HIGHLY POSITIVE DECISION INTO A HIGHLY NEGATIVE DECISION DECISION OR VICE VERSA JUST BECAUSE THAT ONE PERSON THOROUGHLY UNDERSTOOD THE PROPOSAL, THE PROCESS AND EVERYTHING IN IT. ONCE OR TWICE IT'S BEEN ME -- I, SORRY. SPEAKING PROPER GRAMMAR, WHO HAS BEEN THAT PERSON. SO THERE ARE THINGS THAT NEED TO BE IMPROVED IN THE SCIENTIFIC REVIEW PROCESS. I LIKE DEBBIE'S IDEA OF ADDING SOME PEOPLE WITH OTHER KINDS OF EXPERTISE OTHER THAN NIH PEOPLE. I NOTICE THERE ARE VERY FEW PEOPLE, MAYBE NOBODY THIS ROOM WHO HAS AN MD OR DOESN'T ALSO HAVE A PH.D. BUT MOST OF THE REVIEW PANELS ARE PRETTY MD-HEAVY. AND MANY OF THEM DO NOT HAVE REALLY ANY EXPERIENCE WITH SBIR'S. THEY'RE GOOD PEOPLE, BUT THEY HAVE A LOT MORE TROUBLE UNDERSTANDING SBIR REVIEW PROCESS. SO THOSE WOULD BE MY -- >> JUST ONE QUICK CLARIFYING QUESTION. HOW MANY SBIR GRANTS HAVE YOU RECEIVED ROUGHLY? >> WE'VE PROBABLY RECEIVED EIGHT. >> EIGHT. AND ARE THEY FROM THE SAME INSTITUTE? >> YES. THE NEI MISSION IS -- INCLUDES HEALTH AND WELL-BEING OF BLIND PEOPLE AND THAT'S OUR BUSINESS. >> OKAY. I'M GOING TO HOLD QUESTIONS TILL WE GET ALL THE WAY THROUGH, OTHERWISE WE MIGHT CUT SOMEBODY SHORT AT THE END. OUR NEXT PANELIST, MR. GROSS, ARE YOU ON THE PHONE? >> I AM HERE, AND I AM ON SKYPE AND HOPEFULLY IT'S A GOOD CONNECTION TODAY. >> MR. GROSS, I AM THE TECH HERE, I'LL BE ADVANCING YOUR SLIDES UPON COMMAND. >> Caller: OKAY, GREAT, THANKS. AND THE FEED IS SOMEWHAT DELAYED SO I'LL HOPEFULLY BE ABLE TO WORK THROUGH THAT. SO THANK YOU FOR INVITING ME. I THINK I REPRESENT SOMEONE WAY ON THE FRONT OF THIS PROCESS. TO GIVE YOU A BIT OF BACKGROUND. I HAVE A NLC THAT I USED TO APPLY ONE ROUND TO AN SBIR AND I AM GOING TO TALK A BIT ABOUT THAT PROCESS. AND I'M ALSO VERY INVOLVED WITH A CONDITION CALLED HYDROCEPHALUS AND I'LL GIVE UT BACKGROUND. I'VE DONE A LOT OF WORK IN BOTH PATIENT ADVOCACY GROUPS AND IN FINDING A CLINICAL RESEARCH NETWORK. SO IF YOU CAN ADVANCE TO THE NEXT SLIDE. SO JUST QUICK BACKGROUND. I'M THE FATHER OF A KID WITH HYDROCEPHALUS, EXCESSIVE ACCUMULATION OF FLUID ON THE BRAIN. MY BACKGROUND, THOUGH, IS I'M BOTH AN ENTREPRENEUR AND HAVE BEEN DONE A COUPLE OF STARTUPS AND SPENT ABOUT 28 YEARS IN THE SOFTWARE INDUSTRY BROADLY. THE LAST BIG COMMERCIAL JOB WAS A SENIOR VICE PRESIDENT IN MICROSOFT CORPORATION. AND AS A FATHER OF A KID WITH THIS CONDITION, WHERE HE'S TREATED WITH A MEDICAL DEVICE CALLED A SHUNT, WHICH I BELIEVE HAS THE HIGHEST FAILURE RATE OF ANY MEDICALICALLY IMPLANTED DEVICE. ABOUT 50% FAIL WITHIN TWO YEARS, I WAS PRETTY DISTRAUGHT SO I THOUGHT ABOUT THE PROBLEM AND I'M A SOFTWARE ENGINEER BUT THOUGHT ABOUT ABOUT A WAY TO SOLVE THE PROBLEM AT THE BIGGEST POINT OF FAILURE, WHICH IS THE CATHETER THAT'S IN MY SON'S BRAIN AND CLOGS VERY EASILY WITH BRAIN TISSUE. SO I SET ABOUT FINDING PEOPLE THAT COULD HELP ME TEST THE THEORY OF THIS AND FOUND A UNIVERSITY OF UTAH LAB AND PH.D THAT HAD A SIMILAR IDEA AND I ALSO FOUND A PERSON WHO HELD 23 PATENT ON SHUNT DESIGN AND HAD SOME INTELLECTUAL PROPERTY AND ALONG THE SIMILAR IDEA. AND WE GOT TOGETHER TO TEST THE FEASIBILITY OF OUR SHARED CONCEPT. ADVANCE TO THE NEXT SLIDE. IF YOU COULD ADVANCE THE NEXT SLIDE. HELLO, CAN WE GET TO THE NEXT SLIDE? >> WHAT'S THE TITLE OF THE SLIDE THAT YOU WANT? >> THERE WE GO. THANK YOU. >> INITIAL WORK? >> GO AHEAD. >> NO. I'M SORRY. GOOD. I THOUGHT SOMEONE WAS ASKING A QUESTION. >> WHAT'S THE TITLE OF THE SLIDE THAT YOU WANT UP? >> INITIAL WORK. >> OKAY, WE GOT IT. >> THANK YOU. AND I AGAIN, I'M LOOKING AT THE DISPLAY AND IT'S DELAYED SO IT'S MESSING ME UP. I'LL STOP LOOKING AT IT. SO WE INITIALLY SECURED FUNDING THAT WE COULD RUN TO THE UNIVERSITY AS A WAY TO GET GOING. WE GOT $250,000, BUT IT WAS INTENDED TO CREATE PRELIMINARY DATA THAT WE FELT WOULD HELP TO OUR SBIR SUBMISSION SO WE BEGAN WORK AS A COLLABORATION WITH THE DIRECTOR OF ENGINEERING OVERSEEING CHARACTERIZATION STEPS AND THE LAB DIRECTOR MANAGING THE LAB TECH, A PRE-DOC AND BUILDING A TEST BENCH. AND I, AS THE NON-SCIENTIST, REALLY EXECUTED ON GETTING THE APPLICATION INFRASTRUCTURE IN PLACE ON GRANT.GOV AND JUST WAS THE DRIVER OF THE PROCESS. NEXT SLIDE AND I WILL JUST ASSUME WE ARE THERE AND NOT PAY ATTENTION TO THE SCREEN. SO WE RAN INTO SEVERAL CHALLENGES. I THINK ONE OF THE BIGGEST THINGS WAS TRYING TO FIGURE OUT A VALID SPLIT OF EXPENSES BECAUSE WE WERE SO RELIANT ON THE UNIVERSITY EXPENSES, WE HAD TO KIND OF CRAFT WAYS TO FIGURE OUT HOW $100,000 A BUSINESS WOULD BE ABLE TO CONSUME 50% THAT HAVE. AND WE FELT LIKE WE WERE JUMPING THROUGH HOOPS AND WERE TALKING TO PROGRAM STAFF AS TO WHETHER OR NOT THIS CONFIGURATION WAS SORT OF LEGAL AND APPROPRIATE. WE ALSO HAD OUR DIRECTOR OF ENGINEERING QUIT HER DAY JOB BECAUSE -- HAD A DAY JOB BECAUSE WE WERE RUNNING OUT OF FUNDS AND HE WAS NOT PART OF THE UNIVERSITY SO THAT CREATED SOME ADDITIONAL CHALLENGE AND FIGURING OUT HOW YOU CAN INFLATE THE COMPANY WITH HIRING THE PEOPLE THAT YOU NEED JUST AT THE POINT THAT YOU GET MORE THAN THAT PHILANTHROPIC OR SEED FUNDING WAS A BIG CHALLENGE. AND WE REALLY FELT LIKE WE HAD TO GO FOR AN SBIR JUST BECAUSE THE PAY LINES WERE BETTER AND SPLIT WITH AN STTR, WHICH WOULD ALLOW TO US SPEND MORE MONEY WITH THE GOVERNMENT -- I MEAN WITH A LAB. IT WAS CHALLENGING. WE FOUND THE APPLICATION PROCESS VERY BIZANTINE AND AT THE FACT WHERE WE SUBMIT WE HAD GOT FEEDBACK THAT WE NEEDED TO MAKE A CHANGE AND WE HAD TO QUICKLY MAKE THAT CHANGE AND WE WERE DENIED ACCESS AND TOLD IT WAS NOT ONE OF THOSE APPLICATION TYPES WHERE IF YOU WERE TO INTERACT YOU WOULD GET AN EXTENSION. WE HAD KMGD MANAGED TO GET INTO THE PROCESS BUT IT WAS VERY, VERY DIFFICULT. AND THEN IN DOING THIS IN THIS VERY EARLY STAGE, WE FOUND IT HARD TO BALANCE BETWEEN THE COMPETING OBJECTIVES OF A UNIVERSITY'S DESIRE TO PUBLISH IN A COMMERCIAL ORGANIZATION'S DESIRE FOR SECRECYIS AND TO DEVELOP IT AND ALSO TO REALLY MOVE FAST. THE COMMERCIALIZE PACE WAS A CHALLENGE WITH OUR COM PATRIOTS. AND FOR MY LAST SLIDE, AFTER -- WE DID NOT GET THE GRANT. WE GOT FEEDBACK AND CONSIDERED SUBMITTING ANOTHER ONE, BUT PROBLEMS WITH THAT BECAUSE WE WENT DOWN AN AURA FUNDED PIPELINE AND THERE WAS NO RESUBMITTING. BUT WE WENT OFF AND WE EVALUATED EVERY SBIR THAT I COULD FIND TO SEE IF WE COULD HELP ONE OF THESE LITTLE COMPANIES BE SUCCESSFUL. AND WE JUST FOUND A VERY BROAD RANGE OF CAPABILITY IN SMALL BUSINESS THAT I THINK SPEAKS TO SOME OF THE CHANGES THAT NEED TO HAPPEN IN THE REVIEW PROCESS. THERE WERE MANY THAT WERE FAR TOO ACADEMIC AND WE FELT LIKE WE COULDN'T BELIEVE THEY ACTUALLY GOT MONEY. THERE WAS TWO -PTOO RESEARCHING AND PRACTICAL. WE FELT THERE WERE MANY THAT HAD LITTLE MARKET AWARENESS FOR WHAT THEY WERE BUILDING. SO THEY WERE BUILDING SOMETHING BUT DISCONNECTED FROM WHAT IT WAS GOING TO TAKE TO ACTUALLY HAVE DEMAND AND MAKE A SUCCESSFUL PRODUCT. AND THE COMPANIES THAT HAD GREAT ENGINEERING AND EXPERTISE BUT WERE TRYING TO BREAK INTO THIS NEW MARKET HAD VERY LIMITED CLINICAL EXPERTISE OR ACCESS TO PATIENTS. AND I WILL STOP THERE SO WE HAVE MORE TIME. LEAVE IT FOR DISCUSSION. >> I THINK WE'LL CONTINUE TO MOVE ON. THANK YOU VERY MUCH, PAUL AND WE'LL COME BACK WITH QUESTIONS, I'M SURE THERE WILL BE A NUMBER OF DETAILED QUESTIONS. DR. JACOBOVITS. ARE YOU ON THE PHONE? >> Caller: YES, I AM. >> OKAY, WELCOME. HE'S THE PRESIDENT OF EXPERIAD AND MAYBE YOU CAN TELL US A LITTLE BIT ABOUT YOUR BACKGROUND AND EXPERIENCES AT EXPERIODIAD AND THE SBIR PROGRAM. >> Caller: EXCELLENT. THANK YOU SO MUCH. I WILL MAKE SURE TO STAY WITHIN MY FIVE-MINUTE ALOT. HERE AND I REALLY -- ALLOTMENT AND I REALLY APPRECIATE BEING INVITED TO PROVIDE INPUT. I WAS A COMPUTER SCIENCE PH.D STUDENT IN THE LATE 90S WHEN I DISCOVERED SBIR AND THE WAY I FOUND OUT ABOUT IT WAS THE PROGRAM OFFICIAL OF THE NIMH SBIR PROGRAM DR. MIKE HDA SAW ME AT A CONFERENCE AND SAID YOU LOOK LIKE THE KIND OF PERSON WHO SHOULD BE APPLYINGIFER AN SBIR AND IF IT WASN'T FOR HIM SORT OF GOING OUT OF HIS WAY TO LET ME KNOW ABOUT IT, I PROBABLY WOULD HAVE GONE ON INTO INDUSTRY OR GONE ON AS A POST DOC SOMEWHERE. BUT INSTEAD I DECIDED WHILE I WAS STILL A GRAD STUDENT TO WRITE THIS PHASE ONE PROPOSAL AND IT GOT FUND SOD THAT KIND OF DEFINED MY CAREER. OVER A FEW YEARS I GOT THAT PHASE ONE PHASE TWO AND THEN A FAST TRACK $2 MILLION IN TOTAL. AND THAT ALLOWED ME TO BUILD MY BUSINESS. IT WAS A SOFTWARE COMPANY BUILDING MEDICAL-SHARING SOFTWARE FOR HOSPITALS. AND AT THE END OF MY FAST TRACK, I WAS MY THIRD GRANT, I HAD A PRODUCT THAT WAS STARTING TO BRING IN REVENUE. AND ABOUT A YEAR LATER, WE WERE BRINGING IN CLOSE TO A MILLION DOLLARS AND WE WERE ACQUIRED BY MECH KETS INCORPORATION. AND SBIR WAS MY ONLY FUNDING FOR THAT PROCESS AND IT ALLOWED ME TO FILL THIS NICHE WHERE IF IT WASN'T FOR THE SBIR FUNDS, THERE IS NO WAY THAT PARTICULAR NICHE WOULD HAVE BEEN CREATED. IN ADDITION TO THE PROFITABILITY -- PROVE SOFTWARE D PROFITABLE BUSINESS THAT BECAME REALLY SUCCESSFUL AND STILL NOW HAS 60 OR 70,000 REGISTERED USERS. I'D LIKE TO THINK OF MYSELF AS AN SBIR SUCCESS STORY AND I WANT TO MAKE A CONTRAST BETWEEN THIS TYPE OF JOURNEY AND I THINK THE VAST MAJORITY OF SBIR GOES TO COMPANIES WHICH RECEIVE MANY, MANY SBIR'S AND KIND OF LIVE OFF OF THE SBIR FUNDS. SO I THINK IF THERE WAS ONE CHANGE THAT WOULD HAVE A BIG IMPACT IN THE ULTIMATE MISSION OF CREATING COMMERCIAL SUCCESS, IT WOULD BE TO TRY TO EMPHASIZE GIVING SBIR'S TO NEW INVESTIGATORS OR TO NEW COMPANIES THAT HAVEN'T EARNED THROUGH MORE THAN SAY $2 MILLION OF SBIR FUNDS. AND IF THERE WAS EITHER A CAP ON THE AMOUNT OF FUNDING A COMPANY COULD RECEIVE OVER THE YEARS OR AN EMPHASIS FOR THE PROGRAM OFFICIALS TO BE GIVEN MORE LEEWAY TO PICK COMPANIES THAT MAY NOT GET A GOOD SCORE BUT ARE NEW PLAYERS, I THINK THAT MIGHT HAVE A BIG IMPACT ON WHAT YOU ARE SEEING IN TERMS OF COMMERCIALIZATION OUTCOMES. I THINK THAT A LOT OF COMPANIES HAVE FIGURED OUT THE FORMULA FOR HOW TO GET A GOOD SCORE. THROUGH TRIAL AND ERROR AND THROUGH HAVING REALLY GOOD GRANT WRITERS ON THEIR STAFF, THEY REALIZE THAT THEY CAN KIND OF RISK ON A FORMULA OVER AND OVER AGAIN. SKAS A REVIEWER OF SBIR'S, I'M REALLY TUNED IN TO CATCHING THOSE FORMULAS. LIKE I CAN SEE WHERE A COMPANY CUTS AND PASTES A TOPIC INTO A LARGER FRAMEWORK THAT THEY'VE USED BEFORE. AND I PERSONALLY GIVE NEGATIVE SCORES TO THOSE TYPES OF PROPOSALS. BUT I SEE THEM GETTING GOOD SCORES. AND SO I THINK THAT THAT'S THE BIGGEST THING. I ALSO FEEL THAT IF THERE WAS ANY WAY TO SHORTEN THE AMOUNT OF TIME THAT IT TAKES FROM WHEN YOU SUBMIT A PROPOSAL TO WHEN YOU RECEIVE THE AWARD, RIGHT NOW I THINK IT'S ABOUT FIVE MONTHS. IF YOU COULD BRING THAT DOWN TO FOUR MONTHS OR EVEN THREE AND A HALF MONTHS THAT, WOULD MAKE A BIG DIFFERENCE BECAUSE IT'S A HARD FIRE SMALL BUSINESS TO GO THROUGH THAT CYCLE AND WAIT FOR THE MONIES, ESPECIALLY WHEN THERE IS A GOOD CHANCE YOU ARE NOT GOING TO GET IT ON YOUR FIRST TRIUMPHANT SO THEN WHEN YOU RESUBMIT, ALL OF A SUDDEN IT'S A YEAR LATER FROM THE TIME YOU FIRST STARTED AND SO IT MAKES IT REALLY HARD TO RELY ON THAT MONEY. I ALSO THINK THAT, AS FAR AS THE COMMERCIALIZATION POTENTIAL AS A FACTOR FOR THE REVIEWERS, IT'S NOT CONSISTENTLY WEIGHTED HIGHLY. SO IN SOME REVIEW GROUPS, YOU HAVE A LOT OF FOCUS ON COMMERCIALIZATION POTENTIAL. IN OTHERS IT'S SORT OF AN AFTERTHOUGHT. I THINK THERE NEEDS TO BE A WAY TO STANDARDIZE THAT AND HAVE IT BE SOMETHING WHICH IS REALLY A CRITICAL COMPONENT OF THE SCORE. THE QUESTION SHOULD BE "CAN THIS RESULT IN A PRODUCT OR A SERVICE THAT IS GOING TO GENERATE MORE REVENUE OR CREATE JOBS BEYOND SOME MULTIPLE OF THE MONEY THAT'S BEING SPENT"? IN A RECENT REVIEW SESSION THAT I WAS ON FOR BEHAVIORAL TECHNOLOGIES, OVER HALF OF THE PROPOSALS THAT WERE SUBMITTED SEEMED TO BE ABOUT BUILDING A MULTIMEDIA TRADING MATERIALS FOR ONE DISEASE OR ANOTHER. AND NONE OF THOSE HAD ANY COMMERCIAL POTENTIAL BEYOND MAYBE $100,000 TOTAL IN REVENUE FOR THAT PRODUCT. AND YET THE REVIEW GROUP WAS GIVING GOOD SCORES TO THOSE BECAUSE THEY WERE EXCITED ABOUT THE TOPIC ITSELF AND THE NEED FOR TRAINING. BUT I THINK THERE NEEDS TO BE A HIGHER LEVEL OF SCRUTINY ON THE ACTUAL COMMERCIALIZATION POTENTIAL. >> OKAY. >> THAT'S IT. >> THANK YOU. I'M SURE WE'VE GOT A NUMBER OF QUESTIONS BUT I THINK WE'LL MOVE ON TO DR. ANTHONY RAD CLIFF, PRESIDENT AND C.E.O. OF SIN SHESOME? >> YEAH, I'M HERE. FIRST OF ALL, MY BACKGROUND -- >> TURN YOUR MIC ON THERE. >> THIS IS AS MUCH AS I CAN DO. OKAY, DOES THAT ONE WORK? ALL RIGHT. BACKGROUND IS ACADEMIC, FOLLOWED BY BEING IN INDUSTRY, AND I NOW RUN A BIOTECH COMPANY IN SAN DIEGO. SO LOTS OF EXPERIENCE IN TERMS OF GETTING GRANTS, BOTH RO1-LEVEL AS WELL AS SBIR. SIT ON REVIEW COMMITTEES, ET CETERA, ET CETERA. THE SBIR PROGRAM, OF COURSE, IS AN OUTSTANDING ONE, PARTICULARLY THE ONE AT NIH, AND IT PROVIDES AN UNVALUABLE SERVICE. SO ANY CHANGES THAT WE MAKE OR ARE MADE, PERHAPS SHOULD BE DONE CAREFULLY BECAUSE IT'S A MOTTO IF IT ISN'T BROKE DON'T FIX IT. BUT THERE ARE OPPORTUNITIES HERE BUT REALLY WANT TO EMPHASIZE THAT IT IS AN INCREDIBLY VALUABLE PROGRAM. OKAY IS THAT'S THE BREVITY OF COMPLIMENT. I'LL GET BACK TO HOW WE CAN CONTRIBUTE. I'LL GIVE YOU A PERSPECTIVE. THE SBIR PROGRAM IS DESIGNED TO ENHANCE TECHNOLOGY DOWN THAT COMMERCIALIZATION PATHWAY. THE EARLY PHASE, WHETHER IT'S HIGH-RISK, BUT POTENTIAL FOR HIGH PAYOFF. ADVANCING MEDICAL TECHNOLOGIES, BRING THEM TO MARKET AND HELPING THE U.S. POPULATION'S HEALTH. ABSOLUTELY INVALUABLE. THAT STRATEGY IS ONE WAY THE FEDERAL GOVERNMENT PUTS IN THE EARLY MONEY, DEVELOPS THE TECHNOLOGY AND THEN THERE IS A HANDOVER FROM THE FEDERAL FUNDING INTO THE PRIVATE SECTOR. AND THAT'S THE STRATEGY. AND WE ALL UNDERSTAND THAT. AND WHEN THE PROGRAM WAS DEVELOPED AND INTRODUCED, THAT ONE WORKED VERY WELL. SO THERE IS A HAND HEADACHE AND IT MOVES DOWN THAT PATHWAY ALL THE WAY THROUGH TO COMMERCIALIZATION. IT MEANS THAT THOSE WORTHWHILE PROJECTS ARE TAKEN ON BY THE PRIVATE SECTOR, WHETHER THEY BE A COMPANY OR WHETHER THEY BE THE B.C.S -- IT DOESN'T MATTER. THERE IS NOW A DISCONNECT WHERE THAT JUNCTION SHOULD BE A NICE ABUTTMENT AND AN INTERACTION. I'M NOT TALKING BAY VALLEY OF DEATH. EVERYBODY TALKS ABOUT THE VALLEY OF DEATH. IT'S A COMMON FEATURE. I THINK ABOUT VALLEY OF DEATH. VALLEY OF DEATH IS ALWAYS WHERE YOU ARE IN YOUR PROJECT, ALL RIGHT? ALWAYS WHERE YOU ARE. IN GEOGRAPHY WE LEARN THAT YOU'RE OUT ON A TRIP AND YOU SEE A MOUNTAINF YOU GO BACK THE NEXT DAY, THE MOUNTAIN IS STILL THERE. THE VALLEY OF DEATH MOVES. WE'RE NOT TALKING ABOUT A VALLEY OF DEATH HERE. WE'RE TALKING ABOUT A CHASM. A GIANT, GIANT GAP. NOW, HAS FORMED BETWEEN THE END OF YOUR SBIR PROGRAM AND THE LIKELIHOOD OF BEGINNING INVESTMENT BY THE PRIVATE SECTOR. SO WE HAVE A DISCONNECT. AND IN THE HEART YOU MIGHT SAY WELL WHAT'S THE POINT IN HAVING THE SBIR PROGRAM? BECAUSE IF YOU JUST PAY PEOPLE TO TAKE THE TECHNOLOGY A BIT FURTHER BUT THEY STILL CAN'T MAKE THAT LEAP, THAT'S A BIG PROBLEM. SO LET'S ADDRESS THAT PROBLEM. AND WHAT WE NEED TO DO ACE GROUP, AS A WHOLE, IS TO BRING SBIR CLOSER TO WHERE THE PRIVATE SECTOR WOULD LIKE US TO BE AND AT THE SAME TIME WE NEED TO BRING THE PRIVATE SECTOR CLOSER TO THE SBIR PROGRAM. SO HOW DO WE MANAGE THAT? YOU KNOW, THE PRIVATE SECTOR F THEY FELT THAT THE INVESTMENT WAS WORTHWHILE AT THE END OF A PHASE TWO SBIR, THEY WOULD BE THERE. SO THERE WOULD BE A GOOD REASON FOR THEM NOT TO JOIN THAT PARTICIPATION. SO WE NEED TO REALLY UNDERSTAND WHAT THAT PROCESS CAN BE. SO GOING OFF THE LIST THAT WE WERE PROVIDEED, I WOULD SAY -- I WAS ASKED TO PROVIDE INFORMATION IN TERMS OF FOSTER INNOVATION. BUT I SUGGEST THAT A PART OF THE SBIR COULD CONSIDER SOMETHING EQUIVALENT TO THE R 21 PROGRAM THAT PEOPLE AROUND THE TABLE ARE FAMILIAR WITH. SO HIGH-RISK, HIGH PAYOFF. LOW AMOUNT OF PRELIMINARY STUDIES. SO I WANT TO PUT THAT OUT IN TERMS OF FOSTERING INNOVATION AND I THINK IT'S WORTHWHILE CONSIDERING AS A COMPONENT. I LIKE THE R 21 PROGRAM IN THE RO1 FIELD. I THINK IT'S VERY GOOD AND IT'S REALLY COMING INTO ITS OWN I BELIEVE NOW. OKAY, NOW THINK ABOUT HOW WE MIGHT IMPROVE COMMERCIALIZATION AND I'VE GOT A COUPLE OF POINTS HERE. ONE, I THINK HAS BEEN MENTIONED, IS TO IMPROVE THE COMMERCIAL FEASIBILITY ASSESSMENT. AND WHILE THE SCIENTIFIC ASSESSMENT IS ALWAYS VERY STRONG ON NIH REVIEW PANELS, I THINK THERE IS ROOM FOR IMPROVEMENT ON THE COMMERCIALIZATION ASSESSMENT. AND I SAY THAT AS EXPERIENCE AS A REVIEWER AND AS AN APPLICANT. OF COURSE, THERE HAS TO BE CARE HERE, BECAUSE YOU MIGHT THROW OUT THE BABY WITH THE BATH WATER. SO BE CAREFUL WITH THAT COMMERCIALIZATION ASSESSMENT. BUT I THINK IT SHOULD BE AT THE SAME TIME QUALITY AS WE HAVE FROM A SCIENTIFIC POINT OF VIEW. THE NEXT PHASE IN THIS IS THAT I THINK WE NEED TO CONTINUE TO REDUCE RISK. THE PRIVATE SECTOR WANTS TO REDUCE RISK BEFORE THEY VEST SKPREF I UNDERSTAND THAT INVEST AND THIS IS WHERE I SUGGEST WE SERIOUSLY CONSIDER A MUCH MORE FORMAL PHASE THREE FOR THOSE SUCCESSFUL PHASE TWO PROJECTS. AND THE PHASE THREE, WE'D HAVE TO CONSIDER THAT. BUT IT WOULD INCLUDE MOVING THE PRODUCT THROUGH TO LET'S SAY THE PHASE ONE OF A CLINICAL TRIAL. AND I'M NOT SUGGESTING SUCCESSFUL PHASE TWO'S DO THAT BUT ALLOW THE OPPORTUNITY FOR THE SUCCESSFUL PHASE TWO TO GO ON INTO THE PHASE THREE AND GET SOME CLINICAL DATA AND MOVE THE PROJECT CLOSER TO WHERE THE PRIVATE SECTOR FIND THE INVESTMENT INTERESTING. I THINK -- WHAT WE'RE DOING THERE IS MOVING IT FORWARD, CONTINUING TO REDUCE RISK. REMEMBER, THE PRIVATE SECTOR IS RISK-AVERSE. I THINK WE SHOULD ALSO INFORM THE PRIVATE SECTOR. WHAT THE PRIVATE SECTOR DOES IS THAT THEY HAVE THESE MEETINGS AROUND THE COUNTRY, ACROSS THE AREA, WHERE THEY HAVE ENTREPRENEURS OF NEW COMPANIES COME AND GIVE PRESENTATIONS AND INVESTORS ARE INVITED TO THOSE MEETINGS. SO THERE IS AN EXCHANGE OF INFORMATION. I DON'T SEE THAT HAPPENING WITH THE SBIR PROGRAM, HOWEVER, THE PROGRAM IS IMMENSE IN TERMS OF OPPORTUNITY. SO WHAT WE'RE NOT DOING WITH THE SBIR IS SELLING THE TECHNOLOGIES THAT WE'RE INVESTING IN. BUT THAT'S THE GENERAL IDEA IS WE'RE SUPPOSED TO BE SELLING IT ON TO THE NEXT LEVEL OF INVESTORS. BUT WHAT I HAVEN'T DISCUSSED IS HOW WE BRING THE VC'S BACK IN. WELL, THAT DISCUSSION WHERE WE INTRODUCE THE TECHNOLOGIES IS ONE WAY OF BRINGING IT IN BUT I SUGGEST THAT WE HAVE TO WORK HARDER OF BRINGING IN THE VC'S CLOSER TO WHERE WE ARE AND I SUGGEST THAT WE CONSIDER SOME KIND OF PUBLIC-PRIVATE PARTNERSHIP. NOW, THAT'S A COMPLICATED TOPIC, AND IT'S EASY TO SAY AND PROBABLY VERY DIFFICULT TO IMPLEMENT. AND I AM NOT GOING TO BE ABLE TO PROVIDE YOU TODAY OVER THE NEXT 30 SECONDS HOW THAT MIGHT BE DONE. BUT IT MAY WELL BE A WAY, A MECHANISM WHEREBY WE CAN BRING THE PRIVATE SECTOR MUCH CLOSER TO THE SBIR PARTICIPANTS. SO THAT'S HOW I THINK WE COULD LEVERAGE OUR EXISTING RESOURCES. QUICKLY, WHAT ARE SOME CHALLENGES WITH THE SBIR PROGRAM? THERE IS UNCERTAINTY IN TERMS OF FUNDING. WE'D REALLY LIKE TO KNOW EARLIER IF WE'RE GOING TO GET FUNDINGS. WE UNDERSTAND THERE ARE LIMITATION THERE'S ET CETERA, ET CETERA. BUT SOME DEFINITION OF WHETHER THE FUNDING'S GOING TO COME IN BECAUSE WE'VE GOT SOME CHALLENGES. IF YOU RUN A COMPANY, YOU HAVE TO MAKE PAYROLL AND YOU HAVE TO PAY RENT AND ET CETERA, ET CETERA AND NOBODY'S UNDERWRITING. THE FEDERAL GOVERNMENT CAN UNDERWRITE THE FEDERAL GOVERNMENT. LARGE COMPANIES CAN DO THAT AND ACADEMIC INSTITUTIONS CAN DO THAT. SMALL COMPANIES HAVE TO PAY BILLS AT THE TIME AND SO IT'S REALLY USEFUL IF WE KNOW WHAT THE PROCESS IS. I SUGGEST CONSIDERING MAKING A SMALL ALLOCATION IN THE SBIR FUNDING FOR PATENTS. WE'RE EXCLUDED AT THE MOMENT. YET IF YOU SUBMIT A GRANT, AN SBIR APPLICATION, YOU ARE EXPECTED TO EITHER HAVE OR DEVELOP THAT TECHNOLOGY. THE INVESTMENT COMMUNITY EXPECTS YOU TO HAVE PATENTS SO IT WOULD BE USEFUL TO HAVE A SMALL AMOUNT OF FUNDING ALLOWED IN THERE. AND IT HAS BEEN DISCUSSED WHAT KIND OF METRICS TO CONSIDER AND I SUGGEST A VALUABLE METRIC WOULD BE THE TECHNOLOGY BEING INTRODUCED TO THE PATIENT. PHASE ONE CLINICAL TRIAL OR SOMETHING ALONG THOSE LINES WOULD BE A VERY IMPORTANT METRIC TO CONSIDER IN TERMS OF SUCCESS OF AN SBIR PROGRAM. AND I THINK THAT COVERS MY COMMENTS. >> MAYBE IT WOULD BE HELPFUL. COULD YOU TELL US THE STAGE OF SIN SHESOME AND WHAT YOU ARE DEVELOPING? >> WE FOCUS ON SOFT TISSUE REPAIR PRIMARILY IN ORTHOPEDICS AND CAN INVOLVE CELLS. WE HAVE SEVERAL PROJECTS IN DEVELOPMENT, AND WE HAVE A PRODUCT ON THE MARKET THAT WAS DEVELOPED THROUGH AN SBIR PROGRAM. SO WE'VE HAD -- >> DID YOUM CAPITAL FUNDING? >> NO. >> WE'RE 100% OWNED OURSELVES AND WE'VE USED THE SBIR PROGRAM AS WELL AS OTHER RESOURCES. >> AND HOW MANY SBIR GRANTS WOULD YOU SAY? >> FOUR OR FIVE, SIX? I DON'T REALLY REMEMBER. >> ALL RIGHT. THANK YOU VERY MUCH. THE NEXT SPEAKER IS STEVE MEGINNIS, CHIEF TECHNICAL OFFICER OF MAGIC WHEELS. IT TURNS OUT THAT I THINK OF STEVE AT LEAST TWICE A DAY WHEN I BRUSH MY TEETH. HE'S A SERIAL ENTREPRENEUR INSKPRERNT WE'D LOVE TO HEAR YOUR THOUGHTS ABOUT THE SBIR PROGRAM AND ALSO WHAT MAGIC WHEELS IS DOING. >> ARE YOU THERE, STEVE? LOST HIM. WAS HE ON THE PHONE? DOES ANYBODY KNOW? WE DON'T KNOW. OKAY, ALL RIGHT, SO WE'LL MOVE TO ROBERT SCHMIDT, WHO IS THE FOUNDER AND CHAIRMAN OF ORBITAL RESEARCH. DRFRT SCHMIDT HANDED ME THREE OR FOUR BUSINESS CARDS OF DIFFERENT COMPANIES, AGAIN, A SERIAL ENTREPRENEUR, BOGE IN THE MEDICAL DEVICE FIELD AS WELL AS IN THE AIR SPACE INDUSTRY. >> THANK YOU VERY MUCH FOR ASKING ME HERE. I'M BOB SCHMIDT. MY BACKGROUND IS I'M A PROFESSIONAL ENGINEER AND -- >> SOMEONE HAS JOINED THE CONFERENCE. >> AND A PATENT ATTORNEY. I HAVE FIVE DIFFERENT COMPANIES THAT I'VE STARTED. WE HAVE ABOUT 70 EMPLOYEES TOTAL. WE'VE GOTTEN DOZENS OF SBIR'S PROBABLY 60 PERCENT OF THOSE ARE FROM THE NIH WITH A LOT BEING FROM DODD AND OTHER AGENCYS SO THANK YOU VERY MUCH. WE REALLY APPRECIATE THE ABILITY TO BE HERE AND I WANT TO TELL YOU WHAT YOU GOT FOR YOUR MONEY TODAY. SO WE WON A WHOLE BUNCH OF AWARDS. THE BIG ONE ONE OF THE FEW PEOPLE IN THE COUNTRY THAT'S TAKEN TWO COMPANIES OUT OF THE, INC. 500. ONE OF THE MAJOR AWARDS WE GOT WAS JUST THIS YEAR WITH THE EDISON AWARD, WHICH IS ALONG WITH THE APPLE IPHONE 4S AND THE FORD HYBRID VEHICLE, THAT'S FROM NHLBI. THAT'S OUR SLEEP VIEW PRODUCT AND WE WON A STEVIE AWARD, AMERICAN BUSINESS AWARD ON BEST PRODUCT IN AMERICA. THE SLEEP YOU PRODUCT TAKES A SLEEP APNEA TEST OUTSIDE OF THE SLEEP LAB, WHICH CROSSED ABOUT $2500 AND TAKES IT INTO THE HOME WHERE YOU SLEEP IN YOUR OWN BED TO DROP THE PRICE TO ABOUT $250. SO IT SAVES ABOUT $80 TO 90% OF THE COST OF A $2 BILLION FEE EVERY YEAR IN AMERICA. SO IT CAN SAVE OVER $1.5 BILLION. SO THAT ONE LITTLE PRODUCT HAS THE CAPABILITY OF SAVING TWO YEARS OF NIH-SBIR FUNDING FOR THE ENTIRE PROGRAM FROM ONE LITTLE THING. SO THERE IS A RETURN ON INVESTMENT IN SBIR AND TECHNOLOGIES SO WHEN YOU GET THESE CONGRESSMEN TILLING PEOPLE FROM CMS AND OTHER PLACES SAYING WE DON'T LIKE TECHNOLOGYT ADDS TOO MUCH COST. THERE IS ONE EXAMPLE OF GUYS, NOT ONLY DOES IT GIVE YOU BETTER HEALTH AND LONGER LIFE. IT ALSO SAVES MONEY. RESEARCH MAKES A LITTLE DRY ELECTRODE. FOR ANY OF YOU WHO HAVE EVER WATCHED "THE BIGGEST LOSER" THIS IS ON A DEVICE FROM A COMPANY CALLED BODY MEDIA. WE'RE GETTING ECG ON ONE ARM SO YOU DON'T HAVE TO BE ACROSS THE BODY. A SPIN-OFF COMPANY CALLED NEUROWAVE SYSTEMS DEVELOPS AN ANS THESEIA MONITORS TO BE ABLE TO DEVELOP AND LOOK AT THE DEPTH OF ANS THESEIA. WE CAN ALSO SEE ESCHEMIA. SO THE VERY FIRST TIME WE USED IT IN A HUMAN TRIAL, A GUY WAS STROKING OUT. THEY DIDN'T KNOW IT AND THEY SAW THIS DEVICE AND OVER THE COURSE OF SEVERAL MINUTES, THEY WENT FROM WHO GAVE US THIS PIECE OF CRAP BECAUSE IT'S GOING DOWN DOWN DOWN AND SO THEY FINALLY FIGURED OUT THIS GUY IS STROKING. THEY WERE DOING A SHOULDER THING AND MOVED HIS HEAD A LITTLE BIT AND CAME RIGHT BACK UP. INSTEAD OF HAVING A HALF OF VEGETABLE FOR THE REST OF THEIR LIFE, THIS GUY NOW LIVES FINE. AND SO THAT MADE' BIG DIFFERENCE IN THAT PERSON'S LIFE. ANOTHER COMPANY+ LAKES NEUROTECHNOLOGIES. WE SELL A DEVICE CALLED THE BIORAIDIO THAT SPUN OUT OF CLEVELAND MEDICAL DEVICES AND THAT'S USED FOR TEACHING ELECTROPHYSIOLOGY SO IT'S USED FROM SCHOOLS FROM HARVARD AND U.S.C. TO LITTLE PLACES IN MALAYSIA AND AROUND THE WORL. ANOTHER THING THAT WE HAVE IS A DEVICE FOR PARKINSON'S DISEASE. SO THIS MONITORS SOMEBODY FOR PARKISON'S. YOU CAN BETTER TITRAIT THE DRUG AT HOME AND BE ABLE TO MONITOR THEM AND WE'RE ALSO USING IT TO PROVIDE FEEDBACK FOR DEEP BRAIN STIMLATION FOR THE TUNING THE DEEP BRAIN STIMULATOR. THE FINAL PRODUCT FLOW CELL IS A LITTLE DEVICE THAT WE GROW HUMAN BRAIN CELLS IN LITTLE TUBES TO BE ABLE TO GIVE AN INVITRO TEST OF THE DRUG BRAIN BARRIER TO SEE WHERE-T THE DRUGS GO ACROSS. PEOPLE WITH EPLEP TOUR SURGERY WE FOUND THAT THE EPILEPSY DRUG WAS GOING THROUGH THE EPITHELIAL CELLS AT ABOUT ONE TENTH OF THE RATE THAT NORMAL PEOPLE GET SO THAT'S THE REASON WHY THEY HAVE TO GO IN FOR SURGERY BECAUSE THE DRUG WASN'T GETTING THROUGH THEIR ENDOTHELIUM. SOME OF THE THINGS THAT I THINK THAT THIS PANEL SHOULD BE CONSIDERING IS WHAT ARE THE PRIORITIES THAT THE NIH SHOULD BE HAVING FOR ALL OF THIS? WELL FIRST IS DELIVER BETTER HEALTH, WHICH OBVIOUSLY EVERYONE AGREES WITH BUT IT'S FASTER AND THAT HAS SOME FINANCIAL IMPLICATIONS THAT I WANT TO TALK ABOUT. BUT GETTING THE TECHNOLOGIES TO THE MARKETPLACE AS FAST AS POSSIBLE DEALS WITH DR. RAD CLIFF'S COMMENTS ABOUT THE FACT THAT IF YOU CAN FUND PHASE ONE CLINICAL TRIALS OR OTHER THINGS, THAT HELPS MOVE THAT ALONG. JOB CREATION, PROBABLY ISN'T THOUGHT ABOUT MUCH ON THE PANEL BUT WHEN YOU OPEN THE PAPER, THAT'S ONE OF THE FIRST THINGS YOU SEE AND HEAR ABOUT. THIS HAS A HUGE IMPACT ON HOW MANY JOBS YOU CAN CREATE, WHICH LEADS TO WEALTH CREATION. AND SO THE SBIR COMPANIES, IN MY CASE I'VE GOT 70 JOBS AND NONE OF THOSE WILL BE THERE WITHOUT THE SBIR PROGRAM. SO I AND MY EMPLOYEES AND THEIR 200 FAMILY MEMBERS, THANK YOU ALL. SO AND COORDINATING WITH OTHER GOVERNMENT AGENCIES, WHICH WE'LL TALK ABOUT SOME MORE, BUT WEALTH CREATION. AND OBVIOUSLY WE NEED THAT TO PAY OFF THE NATIONAL DEBT OTHERWISE WE ALL GO DOWN TOGETHER. SO THIS IS ONE OF THE THINGS WHERE INVESTING IN THIS MAKES A BIG DIFFERENCE. SO INVEST IN WHERE YOU GET THE MOST BANG FOR THE BUCK. AND PATENTS, ACCORDING TO THE FEDERAL RESERVE BANK, ARE THE MOST IMPORTANT WEALTH CREATOR, MORE IMPORTANT THAN EDUCATION, ACCORDING TO THE FEDERAL RESERVE BANK. AND IT IS THE NUMBER ONE INDICATOR OF REGIONAL WEALTH. AND SO TO ALSO DR. RAD CHRIF'S COMMENTS OF PAYING FOR PATENTS. WE'LL TALK ABOUT MORE THAT LATER. SO ENCOURAGING PATENTS. THIS IS THE BANG FOR THE BUCK SLIDE. ACE GO AROUND THE COUNTRY AND TALK TO TECH TRANSFER PEOPLE FROM UNIVERSITIES, THEY ALL COMPLAIN I CAN'T GET THIS TECHNOLOGY. I'VE GOT ALL OF THIS STUFF THAT'S GETTING ZPALE OLD AND WE CAN'T AFFORD THE PATENTS AND PROTECT IT AND WE CAN'T DO THIS STUFF. SO WE'RE BUILDING UP THIS GIANT WEALTH OF BASIC RESEARCH THAT'S GOING TO WASTE. SO WHAT WE'VE GOT IS A HUGE PUMP FROM THE NIH OVER HERE THAT'S PUMPING INTO THIS TANK AND THE TANK IN, IN FACT,, WEEPING AND LEAKING AND OVERFLOWING WITH BASIC RESEARCH THAT ISN'T GETTING OUT INTO THE MARKETPLACE. AND MY ANALYSIS THAT HAVE PROBLEM IS A SYSTEMS KIND OF GUY IS YOU GOT A VALVE HERE BETWEEN BASIC RESEARCH AND TECHNOLOGYTRANS TRANSITION THAT'S HOW MUCH MONEY YOU FUND FOR THIS TECHNOLOGY TRANSITION PART. IF YOU OPEN UP THAT SELF-A LITTLE BIT MORE, PERHAPS YOU WON'T HAVE SO MUCH BASIC RESEARCH OVERFLOWING THE TANK AND SPILLING ONTO THE GROUND. AND THAT WOULD BE MY MAJOR SUGGESTION TO YOU AS A BOARD OF HOW DO YOU SPEND MORE MONEY ON TECHNOLOGY TRANSITION TO KEEP THIS TECHNOLOGY GOING OUT, CREATING JOBS, CREATING WEALTH INSTEAD OF WASTING ALL THIS BASIC RESEARCH? SMALL BUSINESS, OBVIOUSLY, THAT'S MY PITCH. THAT'S THE REASON WHY WE'RE HERE. IN 2005, WE EMPLOYED 38% OF THE ENGINEERS AS OPPOSED TO THE 1975 MODEL OF ABOUT 8%. AND NOW WE THINK AFTER THE LATEST RECESSION, WE'RE PROBABLY AROUND 50% BUT I DON'T HAVE THE DATA TO PROVE THAT SO ALL I CAN CLAIM IS 30% OF THE SCIENTISTS AND ENGINEERS IN THE U.S. WORK FOR SMALL BUSINESS BUT THEY GET 4.3% OF THE FUNDING ON A NATIONAL BASIS. SO WE UNDERFUND SMALL BUSINESS BUT AN ORDER OF MAGNITUDE. THE PROBLEM IS THESE SAME GUYS PRODUCE AT LEAST TEN TIMES AS MUCH WEALTH CREATION, JOB CREATION, TECHNOLOGY, IMPORTANT TECHNOLOGY, PATENTS AS LARGE BUSINESS AND UNIVERSITIES. SO HERE IS THE DATA FOR THAT. I HAVE IT ON A HANDOUT THERE AND I'LL BE HAPPY TO GIVE YOU THE SLIDES. BUT SMALL BUSINESSES ARE BY FAR THE MOST EFFECTIVE INSTRUMENTS FOR HELPING THE NATION GROW NEW JOBS. THE SBA TYPICALLY USES THE TWO THIRDS, WHICH WE THINK IS PRETTY CONSERVATIVE. BUT THEIR DATA SAYS FROM 1989 TO 2005, SMALL BUSINESSES CREATED THE 3% OF THE JOBS. 93. >> STEVE, WE'RE GETTING TIGHT ON TIME. I DON'T THINK YOU NEED TO CONVINCE THE COMMITTEE ABOUT THE INVESTMENT BUSINESS. >> HERE THE PATENTS. >> WE NEED MORE FOCUS ON THE SPECIFIC ISSUES OF THE SBIR PROGRAM. >> SURE. INCREASED FUNDING FOR TECH TRANSFER. MORE GAP FUNDING. INCREASE BY FIVE OR TEN PERCENT OR TWO, FIVE, OR TEN PERCENT IS GAP FUNDING BUT IN STEPS TOTALING FIVE TO TEN MILLION DOLLARS. AND OUR STANDARD RULES OF THUMB ARE WHEN THE PROFESSOR PUTS A THING ON THE TABLE AND SAYS THIS IS DONE. ALL YOU NEED TO DO IS TAKE IT OUT, AT BEST IT'S FIVE PERCENT OF THE WAY TOWARDS COMMERCIALIZATION. THE FORM, FIT AND FUNCTION, ENGINEERING PROTOTYPE, FIVE PERCENT. THE PROTOTYPE OF TRULY MANUFACTUREABLE PROTOTYPE IS ABOUT 10 PERCENT. THROUGH F.D.A. IT'S 25%. THROUGH CMS IS 50% AND THE LAST HALF OF THE MONEY SPENT ON COMMERCIAL INTRODUCTION. SO HAVING THIS IN A STEP-WISE FASHION TO BE ABLE TO SAY YOU'VE GOT TO GO THROUGH I WHOLE BUNCH OF GATES AND MAKE SURE YOU ARE DOING THAT AND INCREASING THAT FUNDING TO GET THROUGH THE PHASE ONE CLINICAL TRIALS, I WOULD HIGHLY SUPPORT. THE PAYING FOR PATENTS, WHETHER YOU SAY IT'S ONLY INTERNATIONAL OR ONLY NIH OR WHETHER YOU HAVE A LIMITED AMOUNT. BUT TO MY KNOWLEDGE THE NAOMI IS THE ONLY AGENCY THAT WON'T PAY FOR PATENTS. YOU ARE INCONSISTENT. >> UNDER THE SBIR PROGRAM, YOU ARE SAYING? >> EVERY OTHER AGENCY PAYS FOR PATENTS. JUST THE NIH WON'T. SO YOU'RE INCONSISTENT WITH THE FAR, WITH FEDERAL REGULATIONS SO I WOULD SUGGEST THAT SOMEBODY LOOK AT THAT AND REEVALUATE IT AND CONFIRM THAT IN FACT THAT THAT'S CORRECT. ESTABLISH INTERAGENCY COMMITTEES. PARTICULARLY WORKING WITH THE F.D.A. BECAUSE ALL THE VC'S WHAT IS HAPPENING IN THE VENTURE CAPITAL COMMUNITY IS THEY'RE SAYING THEY CAN'T RAISE THE MONEY BECAUSE THEY HAVEN'T BEEN WORKING THE RETURNS SO WE SEE THE VENTURE CAPITAL CERTAINLY TAPERING OFF. BUT THE OTHER MAJOR SHIFT IS HUGE AMOUNTS THAT USED TO GO IN BIOMED ARE NOW GOING INTO IT BECAUSE THEY CAN'T GET STUFF THROUGH THE F.D.A.. SO THIS MYTH OF THE VENTURE CAPITALISTS WILL SAVE US FOR GETTING STUFF INTO COMMERCIALIZATION -- IT'S NOT GOING TO HAPPEN. SO YOU GOT TO START THINKING ABOUT WHAT YOU ARE GOING TO DO TO BOOT STRAP ALL OF YOUR OWN TECHNOLOGY WITH THIS AND WORKING WITH THE F.D.A. IS THE FIRST AND FOREMOST THING THAT COULD HAPPEN THERE. AND ALSO WITH DODD FOR OTHER FUNDING, CMS AND THE V.A. FURTHER DOWNSTREAM STUFF. VC'S. SO OKAY, VC'S ARE GOING TO HELP US. WELL, THE MORE MONEY WE PUT AND LINK TOWARDS VC MEANS YOU ARE BASICALLY GOING TO BE PUTTING ALL OF THE MONEY INTO FOUR OR FIVE METROPOLITAN AREAS. MORE THAN HALF OF THE VC MONEY GOES TO CALIFORNIA. 10.5% GOES TO MASSACHUSETTS. 8% GOES TO NEW YORK, VIRTUALLY ALL OF THAT IN NEW YORK AND 5% TO TEXAS. SO THAT MEANS 46 OTHER STATES SPLIT THE LAST QUARTER OR THEY GET ABOUT .5% PER STATE. SO WHAT YOU WILL BE DOING IS ENDING GENEVA CONVENTION -- GEOGRAPHIC DIVERSITY AND CONCENTRATING THE NIH FUNDING TOWARDS THOSE FOUR AREAS. YOU ARE GOING TO AFFECT WOMEN AND MINORITIES. SO YOU WILL BE CUTTING BY 80% OF YOUR DIVERSITY FUNDING FOR WOMEN AND MINORITIES BY LINKING IT TO VC'S. >> OKAY, I'M GOING TO ASK IF YOU CAN CLOSE. >> OTHER ISSUES FOR THE PANEL BEYOND THIS AMERICAN ACT IS A DISASTER FOR SMALL BUSINESS. THERE IS NOT GOING TO BE ANY MORE LITTLE GUYS LIKE ME BECAUSE THEY WON'T BE ABLE TO GET PATENTS. SO THAT'S THAT. THANK YOU VERY MUCH. >> ROBERT, THANK YOU. WE'VE GOT LOTS OF QUESTIONS, BUT I UNDERSTAND STEVE MEGINNIS, ARE YOU ON THE LINE? >> Caller: I AM. CAN YOU HEAR ME? >> I DON'T YES. WERE YOU TUNED IN WHEN ANY OF THE PREVIOUS PEOPLE WERE SPEAKING? >> I WAS. >> OKAY. >> Caller: I WATCHED IT ON THE WEBSITE. IT WAS A BIG DELAY BUT I'VE BEEN WATCHING. >> OKAY, GREAT. I JUST INTRODUCED YOU BUT APPARENTLY YOU WEREN'T THERE. I MENTIONED EVERY DAY WHEN I BRUSH MY TEETH, I THANK YOU FOR YOUR INVENTION OF THE ELECTRIC TOOTHBRUSH AND WE'RE EXCITED TO HEAR FROM YOU AND WHAT YOU HAVE TO SAY ABOUT THE SBIR PROGRAM AND YOUR EXPERIENCES AND RECOMMENDATIONS. WELCOME. >> WELL, THANKS. IT'S A PLEASURE TO BE HERE. >> Caller: I'M JOHNNY COME LATELY BECAUSE I WAS OUT OF THE COUNTRY UNTIL LAST WEEK AND I WASN'T AWARE THAT I WAS SUPPOSED TO HAVE A PRESENTATION. SO I'LL GO AHEAD AND TELL OUR STORY BRIEFLY. AS YOU MAY KNOW, THE TOOTHBRUSH WAS STARTED WITH AN SBIR GRANT IN 1990. AND I'VE BEEN LED TO BELIEVE THAT IT MAYBE IT WAS THE FIRST SBIR GRANT THAT NIH EVER DID. AND IT'S ALSO MAYBE THE MOST SUCCESSFUL ONE THEY'VE EVER DONE. SONICH AIR GREW TO WELL OVER 500 PEOPLE AND A COUPLE HUNDRED MILLION DOLLARS IN SALES. AND AFTER WE GOT TO MAKING MILLIONS, MY EYES WERE GLAZING SKPIFR STARTED LOOKING FOR SOMETHING ELSE TO DO AND SO I FOLLOWED THE SAME MODEL, WHICH WAS GO TO THE UNIVERSITY OF WASHINGTON AND LOOK FOR TECHNOLOGY TO TRANSFER. I'M A MECHANICAL DESIGN ENGINEER OF MECHANISMS AND INVENTOR TO LOOKING FOR SOMETHING NEW TO DEVELOP AND I WANTED TO DO IT ON MY OWN. AND IT'S WHERE I FOUND THE CONCEPT FOR THE WHEEL. IT WAS UP FOR TECHNOLOGIES THEY WERE OFFERING AND I FUNDED A MARKET STUDY TO FIND OUT WHICH F ANY OF THEM, HAD SUFFICIENT POTENTIAL FOR A STARTUP COMPANY. THE TWO-YEAR WHEEL CAME OUT OF BEING SOMETHING THAT COULD HAVE A 50 $TO 100 MAIL YEAR POTENTIAL. AND FURTHER MORE, IN 1990, THE NATIONAL INSTITUTE OF DISABILITY REHAB RESEARCH IN THE JUSTICE DEPARTMENT -- IT SORT OF MATCHES UP WITH THE SIMILAR DEPARTMENTS AT NIH AND NIC HD. DIDÖÌA DEMAND POLL PROJECT LOOKING FOR THINGS THAT NEEDED TO BE DONE IN WHEELS MOBILITY. AND ONE OF THE ITEMS THAT THEY CAME UP WITH WAS A MULTI-SPEED WHEEL FOR MANUAL WHEELCHAIRS AND SO I LOOKED ALL THAT OVER AND SAYS CAN'T GO WRONG ON THIS PROJECT. EVEN THE GOVERNMENT SAYS IT'S NEEDED IN A HUGE MANNER. SO I WENT AHEAD AND LICENSED THE TWO-YEAR WHEEL TECHNOLOGY FROM THE UNIVERSITY OF WASHINGTON. ACTUALLY, ONLY LICENSED PART OF IT BECAUSE I WAS GOING TO REDEVELOP IT ANYWAY. AND THEN THOUGHT ABOUT IT FOR A COUPLE OF YEARS AND ACTUALLY CAME UP WITH SOME CONCEPTS OF HOW WE MIGHT MAKE A PRODUCT LIKE THIS. AND HOW I MADE A TYPICAL PATTERN, YOU LICENSE THE PRODUCT, FORM THE COMPANY, AND GET AN SBIR GRANT. THAT'S HOW SONICARE WAS DONE. SO I DID THE SAME THING. APPLIED FOR AN SBIR GRANT. IT WAS REJECTED, LIKE LEVERAGE IS THE FIRST TIME. AND I DID A SECOND IMPROVED VERSION, AND BY THAT TIME WE HAD THREE SO I DID IT ALL IN THREE THREE-DIMENSION AND ANIMATION. AND IN FACT, SOME PEOPLE WITH CSR THOUGHT THAT WE HAD BUILT IT ALREADY. CAN EVERYONE STILL HEAR ME OKAY? >> YEAH, COMING THROUGH LOUD AND CLEAR. >> Caller: SO ANYWAYS, IT WAS REJECTED AGAIN. GOT A REPORT BACK FROM CSR SAYING IT WAS IMPOSSIBLE TO BUILD A DEVICE THAT I WAS PROPOSING. AND SO I PUT IT AWAY AND FORGOT IT AND WAS GOING ON WITH OTHER LIFE. AND TOWARDS THE END OF THE FISCAL YEAR, I BELIEVE IT WAS 1998, I GOT A CALL FROM NIH THAT THEY HAD SOME MONEY LEFT OVER AND SOME OF THE MANAGERS WANTED TO FUND ME EVEN THOUGH I GOT TERRIBLE SCORES. SO THE GOOD NEWS IS WE WERE GOING TO GET FUNDED. ZBROESHGS THE BAD NEWS IS NOW I HAD TO SEE IF I COULD ACTUALLY DO THIS. [LAUGHTER] SO IN FACT, THE CSR PEOPLE TBD TO SAY IT WAS IMPOSSIBLE TO BUILD A WHEEL THAT WOULD HAVE AUTOMATIC HAND HOLDING THAT COULD BE OVERRIDDEN WHEN YOU WANTED TO GO BACKWARDS. SO AT ANY RATE, THIS IS A GOOD EXAMPLE OF AN SBIR FUNDING SOMETHING THAT A LOT OF PEOPLE DIDN'T THINK IT COULD BE DONE. AND OF COURSE, THE MORE PEOPLE SAID IT COULDN'T BE DONE, THE MORE DETERMINED I WAS TO PROVE IT COULD BE DONE. SO GOT THE GRANT. I DID IT IN MY BASEMENT IN MY SPARE TIME AND EVEN HAD LOCAL REPRESENTATIVE TO CONGRESS FOUND OUT ABOUT IT AND WANTED TO KNOW HOW COME I HAD A NATIONAL INSTITUTE OF HEALTH GRANT THAT I WAS WORKING ON IN MY BASEMENT AND CAME OVER TO SEE WHAT WAS GOING ON. TO MAKE A LONG STORY SHORT, WE DID PROVE IT COULD BE DONE. WE WENT OUT AND GOT A PHASE TWO, AND WE GOT IT MORE TOWARDS PRODUCTION. WE WENT THROUGH FOUR GENERATIONS OF TRYING TO MAKE A ROBUST, EASY-TO-USE PRODUCT. IT WAS ONE OF THE MOST DIFFICULT PROJECTS I'VE EVER HAD. AND SO WE WERE RUNNING OUT OF MONEY. I SAID IT'S GOING TO TAKE MORE THAN A PHASE ONE OR PHASE TWO TO GET SOMETHING THIS COMPLEX INTO PRODUCTION. SO NIH CREATED THE PHASE TWO CONTINUATION GRANT THAT'S DONE FOR DRUGS BUT I GUESS IT HADN'T BEEN DONE FOR DEVICE ASKS WE GOAT AN EXTRA $900,000 AND WE CONTINUED ON. HE GUESS IT TOOK US UNTIL 2002-2003 TO GET THE PRODUCT READY FOR PRODUCTION. WE STARTED OPERATIONS IN 2000 BY RENTING A SPACE AND HIRING ENGINEERS TO WORK THE MILLIONS OF DETAILS OUT ON IT. SO LONG STORY SHORTENED IS WE GOT IT ON THE MARKET, AND THAT'S WHEN IT HIT THE VALLEY OF DEATH. NIH SAYS ONE OF THE THINGS CREATED BY NIH, KILLED BY MEDICARE AND THE INSURANCE COMPANIES. THE DEVICE, LIKE THE SONICARE, WAS A CLASS ONE EXEMPT, WHICH MEANS WE DIDN'T HAVE TO DEAL WITH THE F.D.A. TOO MUCH ANYWAY. SO WE WERE ABLE TO GET IT ON THE MARKET, GET IT LISTED, AND THAT'S WHEN WE FOUND OUT A LOT OF THINGS ABOUT THE MARKET WE DIDN'T UNDERSTAND, EVEN THOUGH WE HAD PEOPLE IN THE WHEELCHAIR BUSINESS AS PART OF OUR BOARD AND ACTUAL EMPLOYEES OF THE COMPANY. BASICALLY, WE FOUND OUT THAT IT HAD TO BE PRICED WAY TOO HIGH IN ORDER TO GET THE SUITABLE INSURANCE COVERAGE AND THE PRICING WAS TURNING OFF PEOPLE WHO FOUND OUT ABOUT IT. IT WOULD TRIPLE THE PRICE OF A WHEELCHAIR TO PUT THIS ON IT. AND WE FELT IT ONLY DOUBLING IT WOULD BE BETTER. BUT THE INDUSTRY, THE REHAB INDUSTRY REQUIRES 100% MARKUPS BETWEEN WHOLE SALE AND WHAT THE INSURANCE ACTUALLY PAYS AND THE INSURANCE PAID SOME SMALL PERCENT OF WHAT THE RETAIL PRICE IS. SO WE WERE TRAPPED IN THIS PRICING DEAL. AND OF COURSE, VOLUME WAS VERY LOW, SO THE COST OF MAKING ANYTHING WAS EXTREMELY HIGH, SINCE THIS IS A COMPLEX TRANSMISSION PRODUCT. SO AT ANY RATE, WENT ON TO RAISE ABOUT $5 MILLION FROM ANGELS. AND WE'VE NEVER BROKEN EVEN. AND IT'S BEEN A DIFFICULT PROCESS. I'M AMAZED THAT WE FOUND ENOUGH PEOPLE TO KEEP IT GOING ALL THESE YEARS. WE'RE ABOUT 16 YEARS OLD NOW FOR MAGIC WHEELS. AND SO I GUESS I CAN SAY THAT THE SBIR PROGRAM GAVE US OUR CHANCE TO DO IT AND IT'S UP TO US TO MAKE IT HAPPEN. WE'VE ALSO PARTICIPATED IN A NUMBER OF THE NIH COMMERCIALIZATION PROGRAMS, INCLUDING A NEW ONE THAT'S OUT NOW CALLED SIM BEX, WHICH ANALYZING YOUR TECHNOLOGY AND TRIES TO FIGURE OUT IF IT'S SALEABLE OR NOT. THIS IS IN THE REHAB MARKET, WHICH IS DIFFERENCE DIFFERENT FROM THE SOME OF THE OTHER MARKETS THAT I'VE HEARD ABOUT TODAY. SO THERE WE GO. >> OKAY. STEVE, THANK YOU VERY MUCH. WE'LL OPEN UP FOR QUESTIONS AND I'LL HAVE TO ASK OUR CHAIR WHAT OUR TIMELINE IS. OKAY. LET'S OPEN UP FOR QUESTIONS. >> I'LL START OUT, IF I MIGHT. I WAS VERY IMPRESSED WITH ALL THOSE PRESENTATIONS, AND THERE WERE MANY THINGS THAT STOOD OUT TO ME. TWO OF THEM THAT I MENTIONED. ONE WAS THE NOTION OF TAKING FIVE MONTHS TO GET A DECISION. MANY SMALL COMPANIES ARE BORN AND DIE IN FIVE MONTHS AND THE TECHNOLOGIES HAVE A LIFE THAT'S NOT MUCH LONGER THAN THAT SO THAT CERTAINLY SOUNDS LIKE SOMETHING OF CONCERN. THE SECOND IS THIS ISSUE OF THE VALLEY OF DEATH. THERE IS THAT VALLEY OF DEATH PROVING CONCEPT FEASIBILITY. I'VE ALWAYS THOUGHT THERE WAS A SECOND VALLEY OF DEATH THAT LEADS TO THE COMMERCIAL FEASIBILITY, WHICH I CALL THE CHASM OF DEATH BECAUSE IT TAKES US MORE MONEY TO GET OVER THAT HURDLE USUALLY. AND I THINK BOTH THOSE THINGS REQUIRE A LOT OF OUR ATTENTION. THE QUESTION I HAVE RELATES TO THE CONFLICTS OF THESE REFERRED TO -- THE CONFLICTS THAT EXIST BETWEEN THE VARIOUS PARTIES INVOLVED IN INNOVATION THE PARTIES BEING, OF COURSE, UNIVERSITY, BUSINESS, AND THE GOVERNMENT. AND YOU HAVE THE CONFLICT WITH UNIVERSITIES AND BUSINESS, WHERE UNIVERSITIES SAID IT'S PUBLISH OR PERISH. IN BUSINESS I'VE ALWAYS SAID IT'S PUBLISH AND PERISH AND YOU HAVE A DIFFERENCE IN RHYTHMS IN TERMS OF TIME. BUSINESSS ARE INTERESTED IN QUARTER. UNFORTUNATELY. AND UNIVERSITIES TEND TO BE FOUR OR FIVE OR SIX-YEAR TIME CYCLES. AND THEN WHEN IT COMES TO GOVERNMENT AND BUSINESS, IN MY EXPERIENCE, TEN YEARS IN THE GOVERNMENT WAS -- WE WERE VERY RISK AVERSE BECAUSE THE PENALTY FOR ANYTHING GOING WRONG WAS ENORMOUS IN TERMS YOUR TREATMENT BY THE MEDIA AND CONGRESS THAT YOU TENDED NOT TO TAKE VERY MANY BIG RISKS. AND WHERE NAS BUSINESS, IF YOU DON'T TAKE RISKS, YOU DON'T SURVIVE. AND SO MY QUESTION TO WHOEVER THE PANELS WOULD CARE TO ANSWER, IS WITH REGARD TO THESE DISCONTINUE DISCONTINUEUTITIES OR CONFLICTS, DO YOU HAVE ANY PROEMSSES -- PROPOSALS FOR WHAT THIS GROUP MIGHT OFFER IN THE WAY OF SUGGESTIONS? >> SPEAK UP ON THIS. >> WITH REGARD TO THE RISKS, FOR THE FIRST EIGHT TO TEN YEARS OF RUNNING MY BUSINESS, I NEVER WENT TEN MINUTES OF A WAKING DAY WITHOUT THINKING OF MY WIFE AND SON LIVING IN A CARDBOARD BOX. YOUR HOUSE IS ON THE LINE. YOUR ENTIRE LIFE IS ON LINE BECAUSE YOU MORTGAGED EVERYTHING TO BE ABLE TO DO THIS. SO WE KNOW HOW TO TAKE RISKS. THE THINGS THAT I SEE -- AND YOU TALKED ABOUT THE VALLEY OR THE CHASM OF DEATH -- HAVING ADDITIONAL FUNDING OF WHETHER YOU CALL IT PHASE D OR E OR PHASE 3 OR WHATEVER PHASE 2 OR YOU WANT TO CALL IT -- THERE NEEDS TO BE MORE FUNDING. AND I AM NOT JUST TALKING TAKING THE SBIR AND DOING FEWER PHASE ONES TO BE ABLE TO FUND THESE BIGGER PHASE TWO'S. I'M SAYING LET'S LOOK AT THE OTHER THE 5% AND INSTEAD OF FILLING THIS BASIC RESEARCH, WHICH IS EXTREMELY IMPORTANT AND I DON'T WANT TO UNDERSTATE THAT. IT'S REAL IMPORTANT. EVERYBODY REALLY APPRECIATES THE GENOME. THE BIG DEAL. SO BUT HOW DO WE TAKE SOME OF THIS TO BE ABLE TO SAY NO, WE NEED TO SPEND MORE MONEY TRANSITIONING? AND I THINK THAT IS GOING TO BE A BIG DEAL TO HELP LOWER THE RISK, TO BE ABLE TO PUSH MORE TECHNOLOGY OUT INTO THE USE FOR THE PATIENT BECAUSE THAT'S THE ULTIMATE END-GAME IS DOES THE PATIENT BENEFIT? DOES THE GOVERNMENT SAVE MONEY WITH THIS NEW TECHNOLOGY? THOSE ARE THINGS WE HAVE TO CONCENTRATE ON. SO THAT'S THE WAY I'D BALANCE. AND THE PATENTS ARE THE MOST IMPORTANT THING TO BE ABLE TO KEEP THAT STUFF HERE BECAUSE OTHERWISE IF YOU ARE NOT PROTECTING IT WITH PAENTS, YOU'RE LETTING ALL OF THIS STUFF JUST GO TO CHINA AND THAT'S WHAT'S GOING TO HAPPEN WITH IT. >> ON THIS SPECIFIC POINT, IS THERE ANY GUIDANCE FROM THE CONGRESS IN THE SIX-YEAR REAUTHORIZATION PERIOD UPPING THE PERCENTAGE OF IT ALL? THAT BEFORE YOU START TAPPING INTO THE PURPOSE OF THE NIH FURTHER THAT THAT RISE FROM 2 AND A HALF TO 3.2 OR WHATEVER IT IS MIGHT BE A PLACE WHERE YOU DO SOMETHING DIFFERENT INSTEAD OF JUST MORE OF THE SAME PHASE ONE, PHASE TWO? >> GILL, I HAVEN'T HEARD THAT THAT WAS PART OF THE DISCUSSION. WELL, I WAS ON THE AIS COMMITTEE THAT REVIEWED THE SBIR PROGRAM THAT RESULT IN THE REAUTHORIZATION. I'M NOT AWARE THAT THAT HAS BEEN A CONSIDERATION. BUT OTHERS HERE FROM NIH CERTAINLY WOULD KNOW MORE THAT HAVE BEEN TRACKING THE LEGISLATION. >> PERHAPS I CAN COMMENT? I'M THE NIH SBIR PROGRAM COORDINATOR IN THE OFFICE OF THE DIRECTOR. AND SO AS GAIL SAID, IT'S RIGHT. THE LEGISLATION TALKS ABOUT THE INCREASE IN THE SET WOULDN'T HAVE THE AUTHORITY TO TELL ANY AGENCY WHAT THEY'D DO WITH THE REMAINING 96% OF THEIR FUNDS. >> MATT, WHILE YOU'RE AT THE TABLE, A QUESTION ABOUT WHETHER PATENTING COSTS ARE ALLOWABLE OR NOT OR DIFFERENT ACROSS THE GOVERNMENT? >> I'VE ALREADY GOT ANSWERS ON MOST OF THAT. THEY ARE -- SO THERE IS A 7% FEE. THERE IS NO RESTRICTIONS ON WHAT A COMPANY CAN USE IN THIS FEE. IT COULD BE USED FOR PATENTS. NIH, SO FAR DEPARTMENT OF HOMELAND SECURITY, NASA, USDA TO DATE THAT I'VE GOTTEN DO NOT AWILL YOU A PATENT COST IN SBIR ON THEIR DIRECT AWARDS. DOD MAY, ACCORDING TO THE INFORMATION I LOOKED AT RIGHT NOW. >> SO THAT'S AN AGENCY. >> IT DEPENDS ON AGENCY REGULATIONS. IN SOME CASES THERE ARE FAR CLAUSES BUT THAT WOULD ONLY BE RELAT FOR CONTRACTING AGENCIES. WE HAVE GRANTS, POLICY THAT DICTATES THOSE PARTICULAR RULES AND SO FAR THERE ARE MANY AGENCY THAT'S DO NOT ALLOW PATENT COSTS AS A DIRECT COST. IT CAN ALWAYS BE USED ON THE FEE OR AGENCIES OR COMPANIES COULD NEGOTIATE PATENT COSTS AS PART OF THEIR INCORRECT COST RATE. THAT'S AGENCY-BY-AGENCY. IT'S HARDER TO DO AT THE NIH THAN IT IS AT OTHER AGENCIES. >> MY QUESTION IS LEAVING ASIDE THE REST OF THE NIH BUDGET, JUST IN THE SET ASIDE, WHICH IS EARMARKED TO GROW, COULD THE GROWTH MARGIN BE USED FOR SPECIAL PURPOSE AS OPPOSED TO JUST ADDITIONAL PHASE ONE AND PHASE TWO GRANTS? BECAUSE THAT'S THE DISCRETION OF THE AGENCY. >> SO THE LEGISLATION -- SO WE ARE STILL FORBIDDEN TO SPEND SBIR DOLLARS ON PHASE THREE SO WE CANNOT USE THE SEATSIDE NO MATTER HOW MUCH IT PAYS FOR PHASE THREE. THERE ARE PROVISIONS WITHIN THE REAUTHORIZATION TO ALLOW US TO BE CREATIVE, GIVEN THAT WE HAVE MORE MONEY. WE CAN DEVELOP SOMETHING CALLED A COMMERCIAL READINESS PILOT, WHICH IS NEW FOR NON-DEFENSE AGENCIES WHERE WE MIGHT USE SOME OF THOSE TO MAKE FOLLOW-ON AWARDS PAST GUYS WHERE WE'RE THINKING ABOUT THAT RIGHT NOW TO GROW THE PHASE TWO B PROGRAM WITH THAT. BUT NOT ON PHASE THREE. THAT'S STILL NOT ALLOWED WITHIN THE PROGRAM. ALTHOUGH PHASE TWO B IS A STRETCH OF A PHASE TWO. SO THERE IS ROOM FOR CREATIVITY IN HOW YOU DEFINE THINGS. >> DEBRA ELLIES? >> YEAH, [INAUDIBLE] >> YOUR MIC IS OFF. VOIR. I HAD ONE OTHER COMMENT ABOUT THE NOT THE VALLEY OF DEATH BUT THE CHASM. ONE THING I'VE NOTICED IS REVIEWERS WERE ASKED TO FIND INNOVATION IN A PROPOSAL. WELL, ONCE YOU GET DOWN THE ROAD OF DEVELOPMENT, THERE IS NO INNOVATION AT THIS POINT. WE'RE JUST -- IS THAT BETTER? >> BRING IT CLOSER. >> OKAY. SO WE'RE JUST -- WE'RE POISED TO FIND INNOVATION IN THE PROPOSAL, BUT ONCE YOU GET DOWN TO A SPECIFIC TASK IN DEVELOPMENT, IT'S ALL THE SAME. THE DRUGS GO DOWN THE SAME PATH. YOU HAVE TO DO A LARGE AND SMALL AN SKPALEMAL AND ALL THE SAME GOP TALKS. THERE IS NOTHING INNOVATIVE ABOUT THAT. SO TRYING TO MAYBE AMELIORATE THAT IN A PROPOSAL, I DON'T KNOW IF THERE IS ANY WAY WE CAN CHANGE THAT SO THAT PEOPLE WANTING TO DO LET'S SAY A PHASE TWO OR MAYBE EVEN A PHASE TWO THAT WILL TAKE YOU CLOSER IT A PARTNERSHIP? THAT MIGHT HELP AS WELL. >> JUST ADDRESS THE ORIGINAL QUESTION. BY THE WAY, THANKS FOR THE POINTING OUT OF THE HOW WE'RE GOING TO PHASE THREE OR PHASE THREE EQUIVALENT MIGHT BE FUNDED. THAT'S GREAT. I THINK WE STOP HERE AND WE ALL GO HOME, I THINK IT'S GREAT. YOU ASKED ABOUT THE DIFFERENT INTERESTS OF THE PARTIES CONCERNED, IT BE THE FEDERAL GOVERNMENT, ACADEMIC, PRIVATE INDUSTRY, ET CETERA, ET CETERA. THEY ALL HAVE DIFFERENT INTERESTS, DIFFERENT GOALS. PERHAPS COMPETING. THEY DON'T ALL HAVE TO BE THE SAME INTERESTS OR GOALS. WHAT THEY NEED TO BE IS ALIGNED. MANY PARTNERSHIPS DON'T HAVE -- DON'T HAVE THE SAME GOALS. THEY'RE ALIGNED. IF THEY'RE NOT ALIGNED, YOU HAVE FAILURE. BUT AS LONG AS THE DIFFERENT PARTIES THAT ARE COMING TO THE TABLE HAVE DID SO MY GOAL MAY BE TO DEVELOP A PRODUCT. THE VENTURE CAPITAL GOAL IS TO MAKE MONEY. THOSE ARE TWO VERY DIFFERENT GOALS. AS LONG AS THEY'RE ALIGNED, THAT'S GREAT. THEIR GOAL IS TO IMPROVE HEALTH, THAT'S A DIFFERENT GOAL ALTOGETHER. SO ALL THREE HAVE TO BE ALIGNED. IF THEY'RE ALIGNED, YOU HAVE SUCCESS. >> ANYBODY ON THE PHONE HAVE COMMENTS? TO THAT QUESTION? OKAY. >> Caller: I'D LIKE TO MAKE A COMMENT ON THE BUSINESSES THAT ARE FUNDING PATENTS, BOTH SONICARE AND MAGIC WHEELS HAVE A NUMBER OF PATENTS AND I FOUND THAT THE BIG COST IS NOT FILING THE INITIAL PATENT. AND I WANT TO BE ABLE TO USE THE 7% FEE TO COVER THAT. AND SO I WAS WONDERING WHAT THE OTHER PEOPLE WHO HAVE PROPOSED THINGS FOR PATENTS HAD IN MIND. IT CAN TAKE YEARS WAY BEYOND THE PERIOD OF A GRANT TO ACTUALLY GET A PATENT THESE DAYS, ESPECIALLY WHEN THE PATENT OFFICE WAS BROKEN IN THE LATE 90S AND EARLY 2000. SO IT WOULD TAKE FIVE YEARS JUST TO GET A PATENT. AND I WAS WONDERING WHAT THE FOLKS WHO WANTED MORE FUNDING HAD IN MIND ANYWAY. >> YEAH, THIS IS BOB SCHMIDT. AND I WOULD ARGUE THE PATENT OFFICE IS STILL BROKEN. TYPICALLY OUR PATENTS, GOT ONES GET THROUGH AT ABOUT SIX YEARS. NORMALLY THEY'RE SEVEN OR EIGHT YEARS NOW FOR PROSECUTION. AND IT WASN'T USING THE FEE THAT I WAS SUGGESTING. THAT WE CAN DO NOW. IT'S ALLOWING IT AS AN ALLOWABLE OVERHEAD AS AN INDIRECT COST. SO IT'S TO ALLOWABILITY. AND WE'RE GOING TO DO IT. WE'RE GOING TO DO THAT NO MATTER WHAT HAPPENS BUT I THINK IT SHOULD BE AN ALLOWABLE COST WITH NIH AS IT IS WITH DOD. >> Caller: THE COSTS COME YEARS AFTER THE GRANT IS FINISHED. HOW DO YOU DO THAT? >> BECAUSE IF YOU ARE DOING MULTIPLE ONES, YOU PUT IT ON LATER AS AN OVERHEAD BECAUSE IT'S NOT ALIGNED WITH A SPECIFIC PROJECT THAT YOU HAD. SO IF YOU ONLY HAVE ONE SBIR AND YOU ARE DONE, THEN YOU CLOSE OUT YOUR YEAR, THAT'S ALL YOU GET. BUT THIS ALLOWS YOU TO DO MULTIPLE ONES JUST IN YOUR INDIRECT COST. >> Caller: ONCE IT WAS DONE, THAT WAS IT AND THE PATENT STUFF CAME YEARS LATER. >> WELL, -- >> Caller: VERY SIGNIFICANT COSTS TOO, LIKE $100,000 PER PATENT. >> AND BELIEVE ME. IT'S A LOT MORE WHEN YOU ARE TALKING ABOUT INTERNATIONAL PATENTS. ALSO ON DR. AUGUSTINE'S COMMENT ON THE RISKS, I THINK THERE IS A QUESTION OF PORTFOLIO SELECTION. SO SOME OF THE THINGS YOU ARE GOING TO TAKE ARE VERY HIGH-RISK TAKE A LONG TIME BUT HUGE RESERVE. HUGE CAPABILITIES. I MEAN, DARPA IS THE PAR EXCELLENCE ON THAT AND CERTAINLY THE GENOME WOULD FALL INTO THAT. HUGE RISK WHEN YOU STARTED AND TREMENDOUS PAYOFFS. AND THEN YOU GOT LITTLE GIZMOS OF THINGS LIKE WE DO WHICH ARE NOWHERE NEAR THE KIND OF RISKS AND HAVE MUCH SMALLER PAYOFFS BUT STILL NICE PAYOFFS. YOU NEED A PORTFOLIO SELECTION TO SAY THIS IS WHERE YOU ARE GOING TO GO AND THAT'S UP TO THE PANELS HERE TO BE ABLE TO SAY WHAT TO DO. >> OKAY. >> BACK TO YOUR PATENT COMMENTS, HOW WOULD YOU FEEL ABOUT A FIRST-FILE SYSTEM AS OPPOSED TO A FIRST-TO-EVENT? >> I-FOOT TOOTH AND -- I FOUGHT TOOTH AND NAIL AGAINST THE BILL AND I CALL IT THE END OF THE AMERICAN DREAM ACT. THIS FIRST-TO-FILE VERSUS THE FIRST-TO-INVENT -- THAT IS IMPORTANT BUT IT'S REALLY THE RED HERRING IN ALL OF THIS. THE REAL PROBLEMS ARE IN THE ABILITY FOR COMPETITORS TO TAKE TWO BITES AT YOU BEFORE THE PATENT ISSUES AND A THIRD BITE AFTER. AND SO THE MECHANISM FOR THIS IS, IF I'M BIG FARMA AND I SEE ONE OF THESE CRUMMY LITTLE COMPANIES COMING ALONG, INVENTING THIS NEW DRUG WHICH IS GOING TO GET RID OF MY BLOCKBUSTER, I'M VERY UPSET ABOUT THAT. SO I CAN GO IN AND LOOK AND I CAN TAKE MY TEN INTERNS AND COME UP WITH 500 PIECES IN A WEEK, SEND IN BOXS OF STUFF TO THE PATENT EXAMINER, WHO THEN LOOKS IN HIS -- HIS BONUS IS BASED ON HOW MANY PATENTS HE PUTS THROUGH SO HE'S GOT TO DO ONE A WEEK OR SO IN THE PATENT OFFICE. SO HE LOOKS THAT THE AND SAYS THIS IS AT LEAST THREE MONTHS' WORK TO BE ABLE TO GO THROUGH THESE 500 DPROUMENTS THIS ONE GUY WHO IS OPPOSING IT. I AM GOING TO EXTEND TO THE INVENTOR AND LET THEM LOOK AT IT. SO IT COMES IN INTO THE INVENTOR'S PATENT ATTORNEY WHO DESCRIBES THE PROBLEM. THE INVENTOR IS THINKING, GEE, I'VE GOT EIGHT PEOPLE. NOW I CAN'T DO THIS SO HE'S GOING TO SAY YOU TAKE CARE OF IT. THE PATENT ATTORNEY PUTS HIS TEN INTERNS ON THIS THING AND CHARGES $IT AN HOUR. ALL OF A SUDDEN HE'S GOT A QUARTER MILLION DOLLAR BILL THAT THE INVENTOR ISN'T GOING TO TAKE LONG TO BE ABLE TO FIGURE THIS OUT AFTER HE'S GOT A MONTH OR TWO OF BILLS ON THIS THING. AND THAT'S FROM ONE GUY. HE MIGHT HAVE FIVE OR SIX COMPETITOR THAT'S ALL DO THE SAME THING. AND THEN THEY GET A SECOND BITE AT THE APPLE PRIOR TO THE TIME TO THE GRANT ISSUING AND THEN A THIRD BITE AFTER IT ISSUES. SO ALL OF A SUDDEN THE BERKELEY STUDY IN 2008 SAID IT WAS $38,000 TO GET A PATENT. NOW WE'RE UP TO A HALF A MILLION DOLLARS AND THE BIG THING IS I'M A MEMBER OF FOUR DIFFERENT ANGEL GROUPS AND THE MANTRA THERE IS YOU CAN'T RAISE MONEY UNTIL YOU GET A PATENT. YOU CAN'T RAISE MONEY UNTIL YOU GET A PATENT AND NOW YOU CAN'T GET A PATENT UNTIL YOU RAISE MONEY. SO IN DIFFERENCE TO THE PRIOR HOUSE BILL, THE SENATE BILL WAS S 23 SO I USED TO CALL THAT CATCH 23 OF YOU JUST CAN'T GET THERE ANYMORE. THIS BILL ENDS SMALL INVENTING IN AMERICA. SO WE'RE TOAST AND GETS GETTING WORSE IN CONGRESS RIGHT NOW BECAUSE THEY ARE PUTTING -- >> WE'RE NOT HERE REALLY TO CHANGE THE PATENT LAW. >> MAYBE I CAN JUST ADD TO THAT? THE PATENT COSTS, I SUGGESTED, I SAID MODEST COSTS -- YES, PATENTS TAKE A LONG TIME TO GET AND THEY COST MUCH MORE THAN THE SBIR CAN FUND. WHAT YOU NEED IS A SMALL AMOUNT OF MONEY OF DIRECT COSTS, NOT INDIRECT COSTS BECAUSE THAT MEANSV TO NEGOTIATE WITH THE NIH AND THAT'S JUST AN AGON DON'TŽ ITUgM SHOULD BET7@s–– A4>u DIRECTVn COSTq ($EIAND AS YOU SAY FIRST-TO-FILE, THEREFORE IT GIVES YOU SOME FUNDS TO FILE. WE'RE NOT EXPECTING TO YOU FINISH THE%ePH WE'RE JUST EXPECTING TO HELP FUND PATENT PROSECUTION IN THE FIRST INSTANCE DURING THAT PHASE. SO THAT'S WHAT YOU NEED TO BE ABLE TO DO. >> OKAY. >> THE $5 TOO OF KPESHLES COST -- SFO >> Caller: INITIAL FILING OF PATENTS AND I DON'T SEE HOW YOU COULD ESTIMATE WHAT IT'S GOING TO BE IN THE FUTURE BECAUSE IT'S SO FAR OUT. I WAS NOT UNHAPPY WITH HAVING THE MONEY TO FILE FOR A FEW PATENTS. IT WASN'T THAT BAD. AND I GUESS WHAT SOMEBODY IS TRYING TO SAY IS THE 7% ISN'T ENOUGH. THEY GOT TOO MUCH OTHER INDIRECT EXPENSES OR SOMETHING LIKE THAT. >> IT MAY BE THE CASE, IT DEPENDS ON THE ORGANIZATION, THE STAGE, SO FORTH. >> Caller: I KNOW AS AN OPERATING COMPANY LIKE SONICARE4Öq, 50% OF OUR BUDGET WAS PATENTS AND WE HAD DOZENS OF PATENTS THAT WE FILED FOR AND PROSECUTING THEM AND DEFENDING THEM WAS A HUGE EXPENSE. IT'S THE SAME WITH OTHER COMPANIES. I DON'T SEE HOW A GRANT COULD ACTUALLY COVER ANY OF THAT. THAT'S PART OF A BUSINESS EXPENSE ONCE YOU GET GOING. >> WELL I WANT TO THANK THE PANELISTS. I'VE BEEN TOLD TO OUR TIME HAS ENDED. FIRST OF ALL, THANK ALL THE PARTICIPANTS. I SORT OF SAID THERE ARE ABOUT SEVEN ISSUES THAT WE TALKED ABOUT, WHICH I'LL JUST MENTION. THE FIRST, OF COURSE, IS THE SBIR PROGRAM THAT HAS THE DIVERSITY OF APPLICATIONS AND I THINK THE IDEA THAT ONE SIZE FITS ALL IS PROBABLY NOT TRUE EVEN WITH THE RELATIVELY LIMITED NUMBER OF PANELISTS HERE. WE SEE QUITE DIFFERENT APPROACHES AS TO HOW SBIR USES. SECONDLY, THIS HAS BEEN RAISED MANY TIMES BEFORE THE REVIEW PROCESS AND THE TIMING IS VERY RICKETIVE. THERE WILL PROBABLY BE MORE DISCUSSION. COMMERCIALIZATION POTENTIAL IS ANOTHER QUESTION ABOUT HOW MUCH FOCUS OR MORE FOCUS SHOULD BE BROUGHT IN THE REVIEW PROCESS LOOKING AT THAT. THE IDEA OF SBIR MILLS I SORT OF KNEW ABOUT BUT APPARENTLY THAT'S STILL WITH US. THE RULES ARE A BIT PROBLEMATIC NOT ONLY THE TIMING BUT WHAT YOU CAN USE THE MONEY FOR AND WE'LL HEAR MORE FROM THE VENTURE CAPITAL COMMUNITY ON HOW THAT MAY IMPEDE THEIR PARTICIPATION. PATENT COSTS AND FINALLY THE CHASM, WHICH PROBABLY NEVER -- I THINK WHOEVER MENTIONED YOU ARE NEVER OUT OF THE CHASM IS PROBABLY THE RIGHT WAY OF LOOKING AT IT. AND NO MATTER HOW MUCH MONEY THE NIH WOULD BE WILLING TO PUT IT, IT PROBABLY WOULD NOT BE SUFFICIENT TO SOLVE EVERYBODY'S PROBLEM. BUT I THINK SOME CONSIDERATION TO HOW WE COULD PLAY WITHIN THE RULES PERHAPS IN CERTAIN SITUATIONS MIGHT BE USEFUL. GAIL? >> JUST ONE SECOND. BILL, I THINK THERE WAS ONE OTHER TOPIC THAT WAS RAISED IN BOB'S PRESENTATION ON A SLIDE IN TERMS OF WORKING WITH F.D.A. TO SPEED APPROVALS. AND I WOULD POINT OUT THAT THE PEA CAST REPORT ON DRUG DEVELOPMENT LAST WEEK CALLS FOR A LOT OF CHANGES IN TERMS OF F.D.A., IF YOU HAVEN'T SEEN THAT REPORT, I WOULD ENCOURAGE YOU TO TAKE A LOOK TAT AND SEE IF YOU AGREE WITH IT BECAUSE IT RELATES MORE IN YOUR FIELD TO DEVICES. BUT I THINK WE ALL, IF YOU REVIEW THE MINUTES OF OUR LAST MEETING, THAT BLUNT HAS ESTABLISHED CENTERS IN RELATIONSHIP TO THEIR SBIR PROGRAM, AND I THINK IF I UNDERSTAND CORRECTLY, SUSAN, A PART OF THESE CENTERS IS REGULATORY MAYBE TO INVENT OR INNOVATE AS IT RELATES TO REGULATORY APPROVAL AND TO HELP. AND PROBABLY CAN TALK ABOUT IT OVER THE BREAK. BUT WANTED TO MAKE THAT POINT. >> THANK YOU TO EACH OF THE PANELISTS HERE IN THE ROOM AND THOSE OF YOU IN CYBERSPACE. IT'S BEEN A VERY INFORMATIVE SESSION AND THANK YOU FOR SHARING. [APPLAUSE] WE ARE RIGHT ON TIME SO WE CAN TAKE A 15-MINUTE BREAK AND PICK UP AT ABOUT 11:00, WHEN WE'LL HEAR FROM OUR SECOND PANEL. >> OKAY, WELL, THANK YOU FOR BEING BACK PROMPTLY. WE WILL CONTINUE -- ONE BRIEF ANNOUNCEMENT. FOR THOSE OF YOU WHO -- AT THE END OF THE DAY, IF YOU WILL TELL THE FOLKS OUT AT THE DESK HERE, THEY WILL ARRANGE TAXIS FOR YOU. AND WITH THAT, GAIL, LET ME TURN BACK TO YOU AND THANK YOU FOR ARRANGING THE SECOND SESSION. >> I THINK THAT THIS FIRST SESSION WILL BE HARD TO BEAT BECAUSE WE GOT A LOT OF GOOD INPUT FROM OUR PANELISTS. BUT NOW WE ARE TALKING TO THE INVESTORS, OR HEARING FROM THE INVESTORS, WHICH IS AN EQUALLY IMPORTANT GROUP. AND DAN GOLDEN WILL SHARE THIS AND MODERATE THIS SESSION AND SO DAN, IF YOU CAN HAVE SOME INTRODUCTORY COMMENTS THAT YOU'D LIKE TO MAKE AS WELL. >> THANK YOU, ZBALE GAIL. WE HAVE ABOUT A BILLION DOLLAR INVESTMENT FUND HERE, AND WE HEARD FROM THE PEOPLE WHO APPLIED FOR THE PROPOSALS. IT IS KEY TO HAVE THE INVESTORS WHO WILL TAKE THEM ACROSS THE FINISH LINE TALK TO US ABOUT HOW WE COULD IMPROVE THE PROCESS. AND I PUT SLIDES -- I TOOK THE LIBERTY OF TAKING GAIL'S SLIDE NUMBER TEN AND PUTTING IT UP HERE. THIS IS THE PROCESS THAT THE NIH IS NOW USING. SO LET'S GO TO THE NEXT CHART. OH, HE GOT TO PRESS A BUTTON. I'M SORRY. I HIT IT TOO HARD. OKAY, THERE WE GO. THESE ARE THE QUESTIONS WE'VE ASKED YOU TO ADDRESS. AND THE FIRST TWO QUESTIONS REALLY DEAL WITH YOUR EXPERIENCE IN INTERACTING WITH SMALL BUSINESS. THIS IS THE FIRST QUESTION. THE SECOND QUESTION ASKS YOU TO TELL US HOW DO YOU PREDICT SUCCESS AND WHAT MILESTONES DO YOU LOOK FOR? AND I THINK THESE ARE IMPORTANT, BUT THE MOST IMPORTANT IS WE'D LIKE TO GET YOUR FEEDBACK ON WHAT WE OUGHT TO DO TO CHANGE THE PROCESS. SO WE'VE TAKEN THESE COMPANIES TO A POINT AT WHICH YOU HAVE CONFIDENCE TO INVEST, BECAUSE IN THE END, IF YOU DON'T INVEST, IT'S NOT GOING TO BE SUCCESSFUL. SO AS YOU GIVE YOUR COMMENTS, WY APPRECIATE IF YOU HIT THOSE THREE POINTS. AND I'D LIKE TO ASK THAT THERE BE TIME FOR DISCUSSION. TAKE FIVE TO SEVEN MINUTES TO INTRODUCE IT, TEN MAX AND I THINK WE'LL GET THROUGH AND STILL HAVE LOTS OF TIME FOR DISCUSSION, BECAUSE AGAIN, THIS IS A VERY VALUABLE INPUT. THE OTHER PART OF IT IS, YOU HEARD THAT WE DO A GREAT SCIENTIFIC PEER REVIEW PROCESS, AND IF YOU LOOK AT THE -- I HAVE TO GO BACK. STEP NUMBER THREE IS SCIENTIFIC PEER REVIEW. BUT SHOULD THERE BE SOME WAY OF HAVING INVESTOR PEER REVIEW TO SEE IF IT MAKES SENSE BUT THEN CAN YOU DO INVESTOR PEER REVIEW WITHOUT CONFLICT OF INTEREST? AND THAT IN THE PAST HAS BEEN HOLDING US BACK. SO WE WOULD VERY MUCH APPRECIATE YOUR VIEWS ON THESE ISSUES. SO WITH THAT, LET ME STOP AND ASK THE FIRST PERSON. I GUESS CHRISTINA? >> SO I'M CHRISTINABORO, THE MANAGING DIRECTOR OF PARTNERS. TELL YOU A LITTLE BIT ABOUT IT AND ADDRESS SOME OF THE QUESTIONS THAT WERE POSED TO THIS PANEL. SEARCH US A FUND THAT HAS BEEN AROUND 26 YEARS. WE STARTED AS THE TECH TRANSFER ARM AT THE UNIVERSITY OF CHICAGO AND OUR LABS -- >> SORRY TO INTERRUPT. IS YOUR MIC ON? >> YES. >> OH, IT'S NOT LIGHTING UP. >> IN THE 26 YEARS THAT ARCH HAS BEEN AROUND, WE'VE RAISED -- WE'VE INVESTED IN OVER 150 COMPANIES, MANY OF WHICH ARE TRUE TO OUR ROOTS OF WORKING WITH ACADEMIC AND NATIONAL LABS. WE TEND TO BE THE FIRST MONEY IN, OFTEN PARTICIPATING IN THE SERIES A. ARCH HISTORICALLY HAS FOCUSED ON BIG INNOVATIONS, BIG IDEAS, PARADIGM SHIFTING, HOLY GRAIL SCIENCE. AND AS AN EARLY INVESTOR, IT'S OUR BELIEF THAT THAT IS WHERE THE BIG RETURNS LIE, AND THAT'S WHERE SUCCESSFUL COMPANIES ARE BORN. AND OUR BIGGEST WINS TO DATE HAVE BEEN EXACTLY THOSE TYPES OF INVESTMENTS AND IT'S SOMETHING THAT WE WILL CONTINUE TO DO AS WE HOPEFULLY CONTINUE TO INVEST IN NEW COMPANIES. WE'RE CURRENTLY OPERATING OUT OF FUND SEVEN, WHICH IS A $400 MILLION FUND AND HAVE $1.5 BILLION UNDER MANAGEMENT. THE THINGS THAT WE LIKE TO INVEST IN TEND TO BE VERY RISKY AND THINGS THAT MANY PEOPLE HAVE SAID WOULDN'T WORK OR COULDN'T WORK OR GO AGAINST ALONG. FOR INSTANCE, WE WERE EARLY INVESTORS IN A COMPANY WHICH WAS BASED ON THE IDEA OF SUSPENDED ANIMATION IN MAMMALS USING HYDROGEN SULFIDE TO PUT MACALS INTO A STATE THAT MADE THEM ACT AND LOOK LIKE RODENTS, SOMETHING THAT WAS PROBABLY NOT MAYBE WOULD NOT HAVE MADE IT THROUGH MANY PEE REVIEWED PANELS 20 YEARS AGO. BUT IN FACT IT DID WORK AND WE STARTED THE COMPANY. BASED ON THE DATA THAT MARK ROB AT THE HODGE PUT A SMALL AMOUNT INTO THE STATE OF ANIMATION AND THEN WAKE THEM UP 24 HOURS LATER BY REMOVING THE HYDROGEN SULFIDE. AND THAT WAS THE DATA. MOVING FROM MICE TO MADE IT AN INVESTABLE IDEA, IN OUR MIND AND IT'S THE IDEA THAT ACTUALLY ONE OF THE PANELISTS ANDY SCHWAB JOINED NUS THAT INVESTMENT. AND WHEN YOU TALK ABOUT DERISKING TECHNOLOGIES OUT OF ACADEMIC LABS, I THINK THOSE ARE THE THINGS THAT INVESTORS LOOK FOR. THERE IS USUALLY ONE OR TWO KEY EXPERIMENTS THAT WILL FUNDAMENTALLY DERISK A TECHNOLOGYT WON'T DERISK EVERYTHING. THERE IS STILL LOTS OF MARKET. THERE IS PLENTY OF GOOD DRUGS THAT ARE LOUSY PRODUCTS. WE'VE HAD SOME IFVou OUR PORTFOLIO. IT'S A PAINFUL, PAINFUL PROCESS. I THINK WE HEARD ABOUT ONE THIS MORNING. BUT ONE THING WE ABSOLUTELY LOOK FOR AND I THINK IS SOME PLACE WHERE THE SBIR AND STTR PROGRAM CAN REALLY ADDRESS AND IS ADDRESSING IS THAT ONE OR TWO KEY FUNDAMENTAL DOES IT WORK, WILL IT WORK, IS THIS RISKY IDEA GOING TO ACTUALLY PLAY OUT FROM A TECHNOLOGY STANDPOINT? I'LL TALK ABOUT ANOTHER EXAMPLE OF FIGHTING AGAINST THE HOLY GRAIL IDEAS. WE STARTED A COMPANY A WHILE AGO, FOUR OR FIVE YEARS AGO CALLED SOLARIA THAT IS MORE OF A LIFE SCIENCE GROUP, BUT I'LL BREAK IT INTO MORE OF THE STTR CROWD. THIS COMPANY WENT AFTER THE IDEA OF OCM OXIDATIVE COUPLING OF METHANE AND IT'S SOMETHING THAT THE DOWS AND DUPONTS HAVE BEEN WORKING ON FOR 30-PLUS YEARS AND HAVE MADE VERY LITTLE PROGRESS. WE WENT AFTER THIS USING A TECHNOLOGY OF PHASE DISPLAY AND INORGANIC MATERIALS AND GOT IT TO WORK AND WE NOW HAVE A PILOT SCALE FACILITY THAT CAN TURN NATURAL GAS INTO LIQUID FUEL. , WHICH AS IT TURNS OUT THE TIMING HAS BRINT ADVANTAGEOUS, SEEING AS THIS COUNTRY HAS -- I THINK IT LASTS ABOUT 150 YEARS OF NATURAL GAS UNDER OUR FEET AND COUNTING. SO THROWS THE IDEAS THAT WE THINK ARE WORTH SFLEFG IS A SERIES AND I THINK THE NIH HAS SUPPORTED AMAZING RESEARCH AND HAS LITERALLY CHANGED THE WORLD AND CHANGED I WOULD SAY BILLIONS OF PEOPLE'S LIVES WHEN YOU COUNT THE PATIENTS AND THE PEOPLE WHO REALLY CARE FOR THOSE PATIENTS. AND I SEE THAT AS JUST A TREMENDOUS, TREMENDOUS ASSET TO THE UNITED STATES. A LOT OF THE RESEARCH THAT MADE THOSE CHANGES POSSIBLE WAS HIGHLY RISKY. AND TO ADDRESS COMMENTS THAT WERE MADE THIS MORNING, I THINK THE HIGH LEVEL OF RISK AND THE HIGH LEVEL OF REWARD W WE NEED TO CONTINUE INVESTING IN THOSE IDEAS. THEY MAY NOT GET THROUGH PEER REVIEW BECAUSE THEY FIGHT AGAINST OR THEY MAY BE A LITTLE TOO OUT THERE AND MAINSTREAM -- THE MAINSTREAM MIGHT VIEW THEM AS IT'S TOO HIGH OF A CHANCE THAT THEY'LL FAIL. AND MY ANSWER IS IF THE IMPACT IS LARGE ENOUGH AND THE RISK IS ADDRESSABLE, THEN WE SHOULD REALLY CONSIDER SOME PERCENTAGE OF THE PROGRAM GOING TO SUPPORT THOSE REALLY BIG IDEAS. I THINK IT IS A PORTFOLIO TO ADDRESS COMMENTS THAT WERE MADE THIS MORNING. THERE IS A PLACE FOR THINGS THAT ARE LOWER RISK, MAYBE LOWER REWARD BUT THE THING THAT KEEPS ME UP AT NIGHT IS THE US LOSING OUR ABILITY. AND WE HAVE SOME AMAZING SUCCESS STORIES THIS YEAR. I THINK WE ALL CHEER TO SEE CURIOUSITY LAND ON MARS. IT'S INSANE THAT THAT WORKED, AND IT JUST MAKES ME SO PROUD. BUT WE HAVE TO CONTINUE TO DO THAT. SO I HAVE OTHER COMMENTS BUT I'LL SAVE THOSE FOR THE Q&A. >> LET ME JUST COMMENT ABOUT THE CURIOUSITY. CURIOUSITY WAS BORN OUT OF TWO FAILURES ON MARS. MARS '9LE. A LAND THAT DIDN'T LAND BECAUSE OF A SMALL PROBLEM AND AN ORBIT THAT DIDN'T ORBIT. THE REACTION IN THE PRESS WAS -- AND IT CAME FROM A FINE COMPANY THAT NORM WAS IN CHARGE OF -- THE CRITICISM WAS ABOUT A JUNIOR SOFTWARE ENGINEER THAT DIDN'T UNDERSTAND MKS AND UNITS AND THEN THERE WAS A SLIGHT SPRING PROBLEM. OUT OF THE TWO FAILURES ON MARS, WITHIN A FEW MONTHS, WE CONCEIVED CURIOUSITY. AS BIG AND BOLD, THE HUMAN BRAIN LEARNS NOT BY BEING PERFECT. THE HUMAN BRAIN LEARNS BY MAKING ERRORS. AND TOO LITTLE RISK TAKING IS DONE BECAUSE IN OUR SOCIETY, WE ALWAYS STRIVE TO BE PERFECT, WHICH IS NOT POSSIBLE, BUT IT IS THOSE ORGANIZATIONS THAT HAVE FAILURE ARE USUALLY THE ONES THAT DO THE BEST. I COULDN'T HELP MYSELF. >> I LOVE THAT. WINSTON CHURCHILL ONCE SAID "SUCCESS IS NOTHING MORE THAN GOING FROM FAILURE TO FAILURE WITH UNDIMINISHED ENTHUSIASM ." [LAUGHTER] >> THE BRAIN LEARNS FROM FAILURE, MY BRAIN MUST REALLY BE FULL. [LAUGHTER] >> I'M DELIGHTD TO HAVE BEEN ASKED TO SERVE ON THIS PANEL. MY NAME IS ALEX DEWINTER AND I'M THE PARTNER. IT IS A IT'S-YEAR-OLD VENTURE CAPITAL FIRM BASED IN MIDLAND PARK. WE INVEST IN IT, CLEAN TECH AND LIFE SCIENCES. I'M ON THE LIFE SCIENCES SIDE. I GREW UP IN WASHINGTON, D.C.. MY PARENTS WERE DELIGHT TOAD OF A -- I HAVE A REASON TO COME OUT HERE. MY BACKGROUND SIS USED TO WORK FIRE COUPLE OF STARTUPS, INCLUDING SCIENCES WHICH RECEIVED $6.6 MILLION IN A GENOME GRANT PROJECT. SO THAT'S SOME OF THE COLORATION I'D LIKE TO GIVE IN THE REMARKS. IT IS AN EXCELLENT EXAMPLE OF HOW GOVERNMENT GRANTS HAVE MANAGED TO ACCELERATE COMMERCIALIZATION AND SCIENTIFIC INNOVATION IN A VERY FOCUS THE PARTICULAR AREA WHERE AS THE SBIR SEEMS TO BE MORE BROADLY BASED. IF YOU LOOK AT VERTICALS OF SCIENCE AND INNOVATION, I THINK THE HUMAN GENOME PROJECT IS AN EXCELLENT EXAMPLE OF WHERE GOVERNMENT FUNDING WOULD MAKE A HUGE DIFFERENCE. A COUPLE OF THE COMMENTS THAT WE RECEIVED BEFOREHAND I'LL ADDRESS. IN TERMS OF -- ONE OF THE THINGS I SHOULD SAY I ALSO SERVED AS A SCIENTIFIC REVIEWER BECAUSE I HAVE A PH.D -- FOR SOME OF THE SBIR GRANTS FOR THE NATIONAL CANCER INSTITUTE. SO NOW I'VE HAD A CHANCE TO SEE THE PROCESS OF SBIR REVIEW FROM THAT SIDE OF THE TABLE IN ADDITION TO SEEING THE PROCESS OF STARTUP COMPANIES COMING IN THROUGH VENTURE CAPITAL FIRM. AND THERE ARE SOME INTERESTING DIFFERENCES. ONE OF THE DIFFERENCES IS THAT THERE IS VERY LITTLE ATTENTION PAID TO PATENTS AND TO PATENT FUNDING SPECIFICALLY. ANOTHER THING I WOULD SAY IT'S CERTAINLY THE PHASE TWO B PROCESS. THERE IS SOME EMPHASIS PUT ON BUT NOT AT THE SAME LEVEL WE WOULD PUT ON IN A VENTURE CAPITAL FIRM. THE MANAGEMENT TEAM THAT'S BEHIND THE INNOVATION. AND IN A VENTURE CAPITAL FIRM FREQUENTLY YOU INVEST ENTIRELY ON THE BASIS OF THE MANAGEMENT TEAM, RECOGNIZING THE FACT THAT RARELY DOES EVERYTHING GO AS PLANNED. SO WHEN A COMPANY DOES NEED TO PIVOT, YOU RELY ON THE FACT THAT THIS TEAM HAS THE EXPERIENCE AND KNOW-HOW TO BE ABLE TO MAKE A MEANINGFUL DIRECTIONAL SHIFT INTO A SUCCESSFUL VENTURE. THE SBIR SEEMS TO BE MORE AROUND THE TECHNICAL ABILITY OF THE TEAM RATHER THAN THE LEADERSHIP ABILITY OF THE TEAM. THAT WAS SOMETHING WHICH WAS FAIRLY CLEAR TO ME UPON REVIEWING SBIR'S. ONE OF OTHER ASPECTS OF THE SBIR'S IS CERTAINLY THIS PHASE APPROACH, GOING FROM PHASE ONE TO $2 TATTOO TO FEAS TO, WE HE BELIEVE IS $1.5 MILLION. IT'S A REASONABLE SUM TO DO SEED FUNDING. WE'VE HAD COMPANIES THAT WE'VE FUNDED AND FORTUNATELY FOR THE COMPANIES TYPICALLY WERE TRYING TO RAMP THEM RAPIDLY. AND SO $225,000 IS BASICALLY A MONTH'S WORTH OF SPENDING FOR THEM. AND SO THE TIME AND EFFORT REQUIRED TO APPLY FOR THAT GRANT BEFORE YOU CAN THEN APPLY FOR THE PHASE TWO IS FREQUENTLY NOT MERITED BY THE AMOUNT OF FUNDING SO THAT HAS BEEN A CHALLENGE FOR SOME OF OUR COMPANIES AS NELOOK AT SBIR FUNDING. SOME OF THE THINGS THAT I'D SAY THE SBIR PROGRAM IS DOING EXTREMELY WELL ACTUALLY FOR THE NATIONAL CANCER INSTITUTE IN PARTICULAR. MIKE WINE GARDEN WHO HAS BEEN ACTIVE IN TRYING TO FOSTER MINGLING BETWEEN INVESTORS AND THE SBIR RECIPIENT OF THE GRANTS. SO WE'VE HAD NOW TWICE IN SILICON VALLEY HE ORGANIZES THESE INVESTOR FORUMS WHERE HE BRINGS OUT THE MOST PROMISING OF THE SBIR RECIPIENTS FROM THE NATIONAL CANCER INSTITUTE AND THEY CHOOSE THE MOST PROMISING ONES ON THE BASIS OF HAVING THE INVESTORS HIGHLIGHT THE PARTICULAR COMPANIES WHICH ARE THEN SELECTED TO COME OUT AND PRESENT IN FRONT OF A WHOLE AUDIENCE OF INVESTORS. AND PROACTIVE IN TRYING TO GATHER ALL THE INVESTORS HE CAN FOR THESE FORA AND THEN HAVE THE RECIPIENTS COME UP THERE AND PRESENT THEIR COMPANIES AND THEN BASICALLY DO A PITCH IN TERMS OF HOW MUCH MONEY THEY REQUIRE. I THINK THOSE ARE EXCELLENT WAYS OF FOSTERING THE COMMUNICATION BETWEEN THE PRIVATE AND PUBLICLY FUNDED COMPANIES. THEN I WOULD SAY THERE WAS ONE OTHER QUESTION IN TERMS OF HOW MUCH WEIGHT DO WE PUT ON COMPANIES THAT USE SBIR FUNDING? ON THE SIDE OF THE -- THESE COMPANIES HAVE BEEN THROUGH A THOUGH VETTING PROCESS ZBLIMT I MADE A COMMENT EARLIER ABOUT AROUND THE FACT THAT IT TAKES WHITE QUITE A WHILE TO RECEIVE FUNDING. BUT YOU KNOW THAT THEY'VE GONE THROUGH QUITE A VIGOROUS SCREENING PROCESS. WE DO TAKE THEM QUITE A BIT MORE SERIOUSLY. >> THANK YOU. HELEN? IS THIS HELEN? THANK YOU FOR HAVING ME HERE. I WANT TO CHANGE THE CONTEXT OF THIS JUST A LITTLE BIT IF I CAN. SO BY WAY OF INTRODUCTION, I AM A VENTURE CAPITALIST BUT WE'VE GOT QUITE ENOUGH ON THE PANEL. WHAT I'D LIKE TO DO IS FOCUS ON ANGEL INVESTING. I STARTED A GROUP CALLED LIFE SCIENCE ANGELS, WHICH IS THE LARGEST GROUP IN THE COUNTRY FOCUSED SOLELY ON BIOTECH DIAGNOSTICS BUT I AM CHAIR OF THE ANGEL RESOURCE INSTITUTE. THE KOFFMAN FOUNDATION WAS WISE ENOUGH A DECADE AGO TO ETHIS ANGEL THING COMING UP AND CREATED ANGEL CAPITAL ASSOCIATION.ORG AND ANGEL RESEARCH INSTITUTE.ORG AND I SUGGEST THOSE AS REFERENCES FOR YOUR GROUP. ANGEL CAPITAL ASSOCIATION IS LIKE NBCA TO ANGELS. IT IS THE LOBBY POLITICAL ORGANIZATIONAL GROUP OF THEY. THE RESOURCE INSTITUTE STUDIES, PROMOTES, AND TEACHES ANGEL INVESTING, MENTORING, FOR EXAMPLE, OF TWO VERY INTERESTING RESOURCES. THE REASON I WANT TO STRESS THAT IS BECAUSE IT'S NOT JUST THAT NIH IS TRYING TO FIGURE OUT THIS NEW PARADIGM OF HOW TO BE MORE INVOLVED IN COMMERCIALIZATION AND MORE FOCUSED. IT'S IMPORTANT TO UNDERSTAND THE CONTEXT IN WHICH THAT WAS. VENTURE CAPITAL HAS ESSENTIALLY COLLAPSED OUT FROM UNDER NEATH THE SYSTEM IN MED TECH AND BIOTECH. IF ONE LOOKS AT THE POST 2008 REALIGNMENT OF THE MARKETS, ROUGHLY TWO THIRDS OF THE CAPITAL AND TWO THIRDS OF THE VENTURE FIRMS THAT WERE AVAILABLE TO FUND LIFE SCIENCE PROGRAMS ARE GONE. THEY'RE NOT IN THE SYSTEM. SO IT'S NOT JUST THAT YOU NEED TO BE MORE EFFECTIVE. IT'S THAT YOU WILL HAVE NOW BECOME A FAR MORE CRITICAL PART OF THE PROCESS THAN REALLY AT ANY TIME IN THE LAST FIVE YEARS. I THINK IT'S VERY ESSENTIAL TO TEE IT UP IN THAT CONTEXT. WE KNOW WHAT'S NOT GOING TO WORK. THIS WHOLE A ROUND B ROUND C ROUND THING WITH ALL OF THE MILESTONE VALUATION INFLECTION POINTS WE USED TO USE. THAT'S JUST GONE. THEY DON'T WORK ANYMOREN A DECADE OR SO WE'LL PROBABLY HAVE A NEW SET OF MODELS AND WE WILL BE CLEAR WHAT WORKS IN THE FUTURE. WHERE NO ONE EXACTLY KNOWS WHAT WORKS AND EVERYONE'S TRYING EVERYTHING. SO YOU ARE SEEING NEW ALIGNMENTS OF ALL KINDS TAKE PLACE AND THAT'S ACTUALLY WHAT I'D LIKE TO TALK TO YOU A LITTLE BIT. TO PUT THE SIZE AND THE SCOPE OF THIS IN CONTEXT. ACCORDING TO THE UNIVERSITY OF NEW HAMPSHIRE THERE IS ROUGHLY 22 BILLION PER YEAR SPENT BY ANGELS IN OUR ECONOMY. THAT IS THE SAME SIZE AS VENTURE CAPITAL. WHAT IS UNIQUE ABOUT IT IS TWO THINGS. ONE, IT'S OUR MONEY. THE DIFFERENCE BETWEEN ANGEL CAPITAL AND VENTURE CAPITAL IS ANGEL CAPITAL IS OUR MONEY. IT'S OUR KIDS' COLLEGE FUND DIVERTED. VENTURE CAPITAL IS OTHER PEOPLE'S MONEY. THEY GET PAID TO MANAGE THAT MONEY. WE DO NOT GET PAID AS ANGELS TO MANAGE OUR KIDS' COLLEGE FUND MONEY AND THAT'S THE FUNDAMENTAL DIFFERENCE BETWEEN THEM. ANOTHER FUNDAMENTAL DIFFERENCE IS VIRTUALLY ALL OF ANGEL MONEY IS SEED MONEY. VIRTUALLY ALL OF VENTURE MONEY IS NOT SEED MONEY. MOST OF WHAT'S HAPPENED WITH THE COLLAPSE IN VENTURE CAPITAL BY NUMBER AND BY DOLLAR AMOUNT IS THEY ARE BEING FORCED TO PROP UP THEIR OWN PORTFOLIOS SO MOST OF THEIR INVESTING GOES INTO THEIR PORT FOALIOR WHERE VALUATIONS ARE ATTRACTIVE AND IF YOU CAN INVEST IN A A ROUND PRICE, WHY ON EARTH WOULD YOU INVEST NAN A ROUND? THAT'S PRETTY MUCH WHAT'S GOING ON FRAY VENTURE CAPITAL WORLD. SO ANGELS ARE REALLY WHERE THE SOURCE -- WHERE THE HANDOFF IS FOR YOUR SBIR PROGRAMS. WHAT REALLY IS MAKING A DIFFERENCE, WHAT REALLY IS COMMERCIALIZING WHEN YOU COMMERCIALIZE I'LL BET IS ANGEL FINANCING. IF YOU DID A STUDY OF HOW MANY OF YOUR SUCCESSFUL COMPANIES, SUCCESSFUL BEING DEFINED BY FINANCING, GOT ANGEL MONEY, I'D BE SURPRISED IF IT WASN'T 100%. IT'S CERTAINLY A LARGE PERCENT WHERE AS CERTAINLY A SMALL PERCENT WOULD GET VENTURE FINANCING. THAT'S A LONG WINDED WAY OF SAYING I THINK YOU NEED TO PAY ATTENTION TO THE ANGEL PHENOMENAL NONE AND WAYS IT MIGHT BE SYNERGYISTIC IN WHAT YOU ARE DOING. THERE ARE THREE ASPECTS OF THE PROBLEM I THINK THAT NEEDS FOCUS ON. MONEY FOR SURE, VENERING AND DATA. SO THERE ARE A NUMBER OF REPORTS AND DATA SOURCES THAT ARE AVAILABLE TO YOU. MEDIC ON THE MEDIC ON THE LIFE SCIENCE SIDE FOR THE VENTURE CAPITALISTS TALKS ABOUT THE ISSUES AND INVESTING IN MED TECH AND BIOTECH STARTUPS. FOR THOSE NOW THAT CAN GET FUNDED, 85% OF THEM GO OFF-SHORE. SO OUR DOLLARS ARE USED WHEN A STARTUP COMPANY CAN GET ACCESS TO THAT MONEY. LE 5% OF THAT TECHNOLOGY AND THOSE COMPANIES GO OFF-SHORE. WE WON'T TALK ABOUT THAT PROBLEM. ANOTHER PROBLEM IS THE LACK OF INCREASE IN VALUATIONS. SO IT USED TO BE THAT THERE WERE A NUMBER OF INFLECTION POINTS. THERE AREN'T ANY INFLECTION POINTS IN THE NEW MODEL. YOU EITHER HAVE HUMAN DATA OF EFFICACY OR YOU DON'T BE HAVE DATA. SO THIS CHASM OF DEATH MEANS WHERE IT IS DATA SIGNIFICANT ENOUGH TO GET LARGE FUNDING SOURCES LIKE STRATEGICS THAT WE HAVE ON THE PANEL OR THE LARGER VC'S WHO ARE LEFT TO INVEST. THAT HAS TO BE SOME EVIDENCE OF HUMAN DATA. SO ON THE BIOSIDE OBVIOUSLY THAT STAYS TO BE. ON THE DEVICE SIDE IT'S SOME KIND OF PILOT STUDYT DOESN'T HAVE TO BE A DOUBLE BLIND PLACEBO CONTROLLED STUDIO BUT SOME STUDY THAT SHOWS OR AT LEAST STRONGLY SUGGESTS EFFICACY IN HUMANS. SO THOSE ARE REALLY -- THAT'S WHY THIS CHASM EXISTS. DOING A BUNCH OF RAT SPERLETS, HAVING A BENCH PROTOTYPE -- ALL THOSE THINGS THAT USED TO RAISE VALUE, DON'T RAISE VALUE ANYMORE. IT'S SUCH A TIGHT FINANCING CLIMATE, THE C ROUND IS PRICED THE SAME AS THE A ROUND, SO YOU'RE NOT GOING TO GET A STEP UP IN VALUE. SO WHY SHOULD EARLY STAGE INVESTORS AND ANGELS AND THE SBIR FUND THINGS WHEN THERE IS NO STEPUP IN VALUATION? WE HAVE TO GET THINGS TO INFLECTION POINTS. WHERE THEY'RE ACTUALLY -- THERE ARE CHANGES IN VALUEUATIONS. THAT IS THE PUMP THAT DRIVES THE SYSTEM. SO YOU ARE GOING TO NEED TO HELP PILL FILL THAT GAP. IT GENERALLY RUNS TWO TO THREE MILLION ON THE DEVICE SIDE AND MAYBE FIVE MILLION ON THE BIO SIDE. AT LEAST THOSE ARE THE NUMBERS THAT I'VE SEEN SO FAR. LET'S TALK ABOUT MENTORING FOR A MINUTE. WHAT THEY ALSO NEED IS COMMERCIALIZATION EXPERIENCE. THERE ARE STUDIES -- I CAN GET YOU THE SITE -- SUGGESTING THAT A PROPER MENTORING AT AN EARLY STAGE IN A COMPANY'S FUNDING IS WORTH A HALF A MILLION TO A MILLION DOLLARS IN CASH. THAT IS CASH THEY DON'T HAVE TO RAISE. CASH THEY CAN BE MORE PRECISE ABOUT IN HOW THEY ARE SPENDING THEIR PRODUCT. SO I THINK FOCUS ON THE MENTORING SIDE OF THIS IS VERY IMPORTANT. INVOLVE LOCAL ANGEL GROUPS IN THE GRANT PROCESS IF NOT FROM A CAPITAL STANDPOINT THEN FROM A MENTOR AND INTELLECTUAL CAPITAL STANDPOINT. THE REASON THIS IS A GOOD IDEA IS ONE, ANGELS TEND TO BE CASHED OUT ENTREPRENEURS. THEY TEND TO BE PEOPLE WHO HAVE SUCCESSFULLY COMMERCIALIZED SOMETHING. SO WE DON'T UNDERSTAND THE SCIENCE OR THE TECHNOLOGY, EVEN A SMALL DEGREE AS DO YOU. BUT WE DO UNDERSTAND THE COMMERCIALIZATION PATHWAYS FAIRLY WELL. AND AS I SAID BEFORE, WE'RE WRITING CHECKS OUT OF OUR OWN CHECKBOOK, SO PROTECTING YOUR OWN INVESTMENT AND HAVING COMMERCIALIZATION EXPERIENCE TEND TO BE REALLY GOOD ELEMENTS FOR HELPING SCIENTISTS AND PHYSICIANS AND VENTORS GET THEIR IDEAS TO MARKET. I NOTICE THIS YEAR THAT CALIFORNIA WENT THIS WAY IN WHATEVER THE EQUIVALENT OF THE CALIFORNIA SMALL BUSINESS GRANT PROCESS IS. THEY INVOLVED ANGRY ELETS AND VENTURE CAPITALISTS FOR THE FIRST -- AND THEY SERIOUSLY LOOKED AT WHAT IF OF A REALLY EXCELLENT SCIENCE PROJECT, TREMENDOUS POTENTIAL FOR THE FUTURE BUT COMPLETELY UNFINANCEABLE IN THE CURRENT ENVIRONMENT? HOW DO YOU HANDLE THAT FROM A GRANT STANDPOINT? THAT'S AN ISSUE YOU WILL FACE. I THINK HAVING PEOPLE WHO HELP COMMERCIALIZE THINGS IN THE PAST IS ONE GOOD WAY TO DO THAT. WE TALK ABOUT PHASE THREE, VARIOUS IDEAS AROUND THE PHASE THREE. MAYBE IT IS A POSSIBLE MILESTONE EITHER WHERE YOU REQUIRE ANGELS TO HAVE INVESTED AS AN ELEMENT OF YOUR INVESTING IN THE FIRST PLACE OR ALONGSIDE OF YOU INVESTING. SO THAT THERE IS SOME COMMERCIAL VALIDATION BY PEOPLE WITH SECTOR EXPERIENCE AS ACTUALLY PART OF WHAT YOU LOOK AT IN TERMS OF MAKING YOUR GRANTS. THE OTHER AREA I WOULD URGE YOU TO HELP WITH IS DATA. THERE IS REALLY NO VIABLE DATA ON THIS. THIS YEAR THE ANGEL RORS INSTITUTE STARTED PUBLISHING WHAT'S CALLED A HALO REPORT. FOR THE FIRST TIME THAT WILL BE TO ANGEL INVESTING WE HOPE WHAT PRICE PRICE WATERHOUSE MONEY IS. WHERE IS INVESTMENT AND TECHNOLOGY GOING? IT'S AN INTERESTING EXPERIMENT. THAT NEEDS SUPPORTED. WE ARE DOING THAT RIGHT NOW OUT OF THE NONPROFIT. MAYBE TLAES WAY YOU CAN WORK TOGETHER WITH THAT. WE HAVE NOT GOTTEN YET TO A DEGREE OF GRANULARITY WHERE WE CAN TEASE OUT MED TECH AND BIOTECH BUT THINK HOW WONDERFUL IF YOU GUYS ARCHIVE VIEW OF WHAT'S BEING FUNDED ON MED TECH AND BIOTECH SIDE AT THE EARLIEST STAGES ACROSS THE COUNTRY. THAT'S A HUGELY IMPORTANT DATABASE THAT DOES NOT EXIST. SO I THINK THAT'S REALLY GOT TO BE PART OF THE ANSWER. REALLY UNDERSTANDING WHO IS DOING WHAT. ARE TEN PEOPLE TRYING TO START THE SAME COMPANY IN THE SAME AREA OR WHAT ACTUALLY IS GOING ON? I THINK DATA AND RESEARCH IS GOING TO BE AN IMPORTANT PART OF THIS AND PERHAPS WORKING WITH ARI IS SOMETHING YOU WOULD THINK ABOUT. AND THAT'S PROBABLY ENOUGH FOR ME TO START WITH. LET ME JUST STOP WITH THAT. >> THAT'S PLENTY. [LAUGHTER] ANDREW? >> WELL, I'M ANDY SCHWAB, ONE OF THE FOUNDING MANAGERING PARTNERS OF AN EARLY STAGE LIFE SCIENCE INVESTMENT FIRM HEADQUARTERED IN CALIFORNIA WITH OFFICES IN BOSTON. AND WE'RE IN THE DRUG DISCOVERY DEVELOPMENT SO WE MAKE INVESTMENTS IN TOOLS AND DIAGNOSTICS AND OTHER PARTS OF DEVICES, OTHER PARTS OF LIFE SCIENCES AND I THINK VERY SIMILAR TO CHRISTINA AND THE ARCH INVESTMENT, WE'RE REALLY LOOKING FOR THE NEXT BIG THING. OUR COMPANIES NEED HUNDREDS OF MILLIONS OF DOLLARS TO GET FROM IDEA TO COMMERCIALIZED PRODUCT, WHETHER IT'S A DRUG OR SOME OTHER TWICE, -- DEVICE, ET CETERA. AND I THINK AS YOU THINK ABOUT WHAT THAT MEANS JUST BY DEFINITION THAT TENS OF HUNDREDS OF MILLIONS OF DOLLARS THAT OUR COMPANIES NEED ARE INCONSISTENT IN SOME WAYS WITH STARTING WITH SBIR GRANTS AND STARTING WITH SMALLER AMOUNTS OF MONEY, LESS THAN $10 MILLION. EVERYTHING WE DO IS EARLY STAGE. MOST OF OUR INVESTMENTS IN THERAPEUTICS WOULD BE AT SOME PRECHRAINGICAL STAGE. THERE WOULD BE SOME PROOF OF CONCEPT IN AN ANIMAL OR MAYBE AN INVITRO SCREENING AND SO WE'RE REALLY THERE AT THE BEGINNING. BUT AS ALEX SAID, ONCE WE GET INTO THE COMPANIES, WE NEED TO GET THROUGH THE DEVELOPMENT, WHICH IS LONG AND COSTLY. AND WE COULD TALK ABOUT THE F.D.A. P ALL SORTS OF OTHER PARTS OF THE PROCESS. BUT OVERALL I THINK WE NEED TO MAKE SURE THAT WE'VE GOT ENOUGH CAPITAL FROM A FUND PERSPECTIVE OR OUR MOST RECENT FUND IS $200,000. WE'RE NOT ONE OF THE FIRLES THAT GOT HIT BY THE FINANCIAL CRISIS. WE HAVE A COUPLE HUNDRED MILLION DOLLARS TO INVEST AND CONTINUE TO DO SO. I THINK THE INTERESTING QUESTION, AS I WAS THINKING ABOUT HOW SBIR IS THE REALITY IS THEY DON'T REALLY. IF I WENT BAX, WE'VE MADE 40 INVESTMENTS OVER OUR HISTORY. I'M SURE THE NUMBER IS LESS THAN A COUPLE THAT HAVE SBIR/STT SBIR/STTR MONEY. ONE IS THE QUESTION OF WHAT ARE THE GOALS OF THE PROGRAM VERSUS WHAT ARE OUR GOALS? BUT ANOTHER I THINK IS JUST THE UNFORTUNATE REALITY THAT IF YOU ARE A VERY SUCCESSFUL ENTREPRENEUR, YOU ARE VERY SUCCESSFUL RESEARCHER AT ONE OF THE MAJOR UNIVERSITIES, YOU DON'T REALLY NEED TO GO THROUGH THE PROCESS TO GET CAPITAL. YOU CAN -- YOU HAVE ANGELS WHICH WILL FUND YOU. YOU HAVE VC'S WHO WILL FUND YOU P PRETEND AND FAMILY WHAT WILL FUND YOU. SO IN GENERAL THOSE KINDS OF PEOPLE I THINK ARE OUTSIDE OF THE SBIR PROCESS AND I'M NOT SAYING THAT'S RIGHT OR WRONG. THAT'S THE REALITY OF THE SYSTEM. ALEX' POINT IS IMPORTANT THAT ONCE OUR COMPANIES GET FUNDED, THE TIME AND PROCESS TO ADD ON A COUPLE OF MILLION DOLLARS TAKES TOO LONG AND IT'S NOT IMPORTANT ENOUGH FOR US TO SIT AND WAIT TO SEE WHETHER WE'RE GOING TO GET THE MONEY TO MOVE FORWARD. SO IT WILL BE FANTASTIC TO TRY AND ALIGN OUR INCENTIVES MORE. AND THE QUESTION -- IS IT AN INVESTMENT FUND OR ARE THE GOALS TO CREATE JOBS OR PUT PRODUCTS INTO PATIENTS? IF IT'S REALLY TO PUT DRUGS ON THE MARKET, YOU'VE GOT TO BE CONNECTED TO BOTH VENTURE CHRAFLETS AND FORMER COMPANIES BECAUSE YOU ARE TALKING ABOUT HUNDREDS OF MILLIONS OF DOLLARS AND DIAGNOSTICS AND MAYBE MAYBE AND OTHER PARTS OF THE CYCLE, OTHER TYPES OF PRODUCTS. MAYBE THERE ARE ANGELS FROM OTHER FUNDING RESOURCES D SHALL SOURCES TO GET THINGS OUT OF THE WAY. AS I SIT BACK AND THINK ABOUT HOW TO BE HELPFUL, TOOK A COUPLE OF YEARS TO PINE OUT GOOD IDEAS IT FIND THEM. AND IT'S A GREAT PROGRAM WITH BOTH ANGELS AND VC'S TO DO THAT. WE WOULD BE HAPPY TO THINK ABOUT HOW DO YOU GET PROJECTS THAT ARE WORTH COMMERCIALIZING OVER THE LONG TERM. >> I ASK A IF I QUESTION I RAISED IN ANY INTRODUCTION. DO YOU SEE ANY CONFLICTS OF INTEREST? WE HEARD THERE MIGHT BE CONFLICT INTEREST OF, GIVEN ALL THE GOVERNMENT RULES FOR YOU TO PARTICIPATE IN THE PROCESS OF SELECTION. COULD YOU COMMENT ON THAT? >> YEAH. MANY IT'S OBVIOUSLY A CRITICAL QUESTION. I THINK THE REALITY OF THE SITUATION IS WE INVEST IN FOUR COMPANIES A YEAR, AS A FIRM AND WE SEE 500 OR SOME NUMBER LIKE THAT. THE LIKELIHOOD TAI COMPANY CHAHETHA WE SEE THROUGH THE PROCESS WILL BE SOMETHING THAT WE WANT TO FUND IS LOW JUST BY THE PURE MATH. I THINK THAT LET'S SAY -- THEY TAKE THE HARDER ONES WHERE SOMETHING WE ARE INTERESTED IN AND WANT TO INVEST AT SOME STAGE. I THINK YOU'D HAVE TO SET UP SOME SORT OF PROCESS SUCH THAT WE COULDN'T RAILROAD THE PROCESS OR WE COULDN'T BE DRIVING THE LEAD. WE'D HAVE TO WORK WITH OTHER FIRMS AND MAKE SURE THERE WAS TAI TRUE MARKET TEST OF WHAT THE RIGHT VALUE AND WHAT THE RIGHT PATH SHOULD BE SO THAT WE ALL KEEP OURSELVES CLEAN. THE LIKELIHOOD IS GIVING ADVICE THAT WOULD BE USEFUL BUT NOT RELEVANT TO US SPECIFICALLY. >> THERE IS A FAIRLY CLEAR PROCESS TO DECLARE ANY CONFLICTS OF INTEREST. SO YOU GO THROUGH THAT PROCESS AND YOU GENERALLY HAVE PRETTY MUCH VETED YOURSELF TO AVOID ANY. >> THANK YOU. >> MANY I AM WITH LILY AND A PARTNER WITH LILY CENTERS. I AM PROBABLY -- THE GRANTING PROCESS AND I'LL JUST SAY THAT AS A CAVEAT. PERHAPS I COME FROM A TOTALLY DIFFERENT PERSPECTIVE ON LOOKING ON WHAT I HEARD SAIG TODAY AND HOW THINGS MIGHT CHANGE. ALSO,000 END I'LL DESCRIBE A LITTLE BIT ABOUT LILY VENTURES AND MY BACKGROUND AND HOW DO WE PREDICT SUCCESS AND SEE WHERE WE GO FROM THERE. LILY VENTURES WAS STARTED IN 2001. IN 2009 WE SPUN OUT AND START OUT WITHIN LILY AND SPUN OUT IN 2009 AS A SEPARATE VENTURE CAPITAL GROUP. LILY REMAINS SO THE EASIEST WAY TO THINK ABOUT US IS WE'RE A TRADITIONAL VENTURE CAPITAL FIRM WHO HAPPENS TO HAVE A SINGLE SOURCE IF OUR CAPITAL. TURNS OUT IN THIS ENVIRONMENT WE'VE ALL BEEN TALKING ABOUT OUR CHASM OF DEATH OF HAVING A LIMITED PARTNER THAT UNDERSTANDS THE LIFE SCIENCES IS VERY USEFUL JUST IN TERMS OF REALIZING THAT STRUCTURE AND THE NATURE OF THESE KINDS OF INVESTMENTS WE MAKE. LILY VENTURE HAS $170 MILLION CAPITAL AND ARE LOOKING AT THE EARLIER STAGES AS WELL. THE PREFERRED PLATFORM COMPANIES AND BY PLATFORM IS THE A VERY BROAD CONCEPT THAT COULD COVER A LOT OF THINGS. BUT REALLY IS THE LOOKING AT WAYS TO MAKE INTERESTING MOLECULES THAT HAVE A MAJOR IMPACT ON DISEASE GOING FORWARD. MY BACKGROUND IN THIS CONTEXT -- I SPENT ABOUT 22 YEARS IN THE BIOPHARMACEUTICAL INDUSTRY IN A VARIETY OF COMPANIES, THE LEAST LAST SEVEN OF WHICH I WAS RESPONSIBLE FOR DECIPHER AS A BIOTHERAPEUTIC DIVISION AND ALSO MY GROUP HAD THE RESPONSIBILITY FOR MAKING SURE THAT IT MADE IT SUCCESSFULLY THROUGH AT LEAST PHASE TWO GROUP OF CONCEPTS STUDIES IN THE CLINIC. MY COMMENT WAS AND A BIT OF REALIZATION THAT DOING SCIENCE IT'S ALL ABOUT FAILURE. I THINK SCIENTISTS ARE THE GREATEST OPTIMISTS IN THE WORLD BECAUSE EVERY EVERY EXPERIMENT DOESN'T WORK LIKE YOU THINK IT IS GOING TO WORK. IN THIS CONTEXT "SCIENCE AND FAILURE" IT BECOMES CRITICAL THAT IF YOU WORK ON SOMETHING THAT YOU AT LEAST CHOOSE SOMETHING THAT IF IT'S SUCCESSFUL, IT'S GOING TO BE USEFUL AND PARTICULARLY IN THE PHARMACEUTICAL ENVIRONMENT THAT WAS TRUE. I THINK YOU CAN APPLY THE SAME KIND OF CONCEPT TOWARDS THE COMPANIES IN WHICH WE INVEST. YOU CLEARLY WANT THEM TO BE DOING WORK ON SOMETHING THAT IF THEY'RE JEMBLINGS IT WILL BE USEFUL. THE TRICK IS HOW DO YOU DETERMINE WHAT IS LIKELY TO SUCCEED? ALL OF US WANT TO SUCCEED. HOW DO WE DO THAT, PARTICULARLY IN THE LIFE SCIENCE AND THERAPEUTIC SIDE WHERE WE'RE LOOKING AT THIS MASSIVE IS IT TIME FROM WHEN WE FIRST INVESTED TO WHEN WOULD WE ACTUALLY COMMERCIALIZE SOMETHING. AND WHEN I WAS ON THAT BIOPHARMACEUTICAL SIDE, I PREDICTED WHAT MY JOB WAS 12 YEARS FROM NOW. IT'S VERY SIMILAR AND YOU HAVE TO PREDICT YES, IT WILL BE SUCCESSFUL AND SIGN MY NAME ON IT AND EVERYTHING FOLLOWS FROM THAT. ON THE INVESTMENT SIDE IT MAY BE A LITTLE BIT SHORTER BUT YOU HAVE TO PLAN LIKE ANDY SAID, PLAN FOR CLINICAL DEVELOPMENT AND ULTIMATE COMMERCIALIZATION OF THE COMPANIES IN WHICH WE INVEST. BUT GIVEN THAT HOW DO WE LOOK AT PROXIES THAT CAN TELL US WILL SOMETHING BE SUCCESSFUL? I THINK THE BOTTOM LINE IS TO REALIZE THAT WE REALLY KNOW NOTHING ABOUT HUMAN DISEASE AND THAT'S WHY WE SEE OURSELVES EXPERIENCING THE VALLEY OF DEATH. BECAUSE THE REALITY IS IF YOU DO CLINICAL TRIALS, IT IS REALLY AN INFLECTION POINT BECAUSE YOU I DON'T HAVE THE DATA THAT SAYS IT'S GOING TO BE SUCCESSFUL. ABOUT THE FIRST TIME YOU SEE DATA THAT WILL TELL YOU WHERE YOU MIGHT BE+++ THEY WERE FEW AND FAR BETWEEN. I THINK THERE WAS ONE THAT I READ THAT EVEN HAD A SEMBLANCE OF WHAT THEY WERE LOOKING FOR TO DO IN THE SHORT TERM THAT WOULD THEN PREDICT GOING FORWARD IN THE LONG TERM. AS YOU CAN TELL, THIS IS IMPORTANT TO ME SO I WILL JUST STOP HERE WITH MY TIME AND OPEN IT FOR Q&A. THANK YOU. >> THANK YOU VERY MUCH. THANK YOU TO EVERYONE. IT'S REALLY INTERESTING HEARING FROM A SIDE WE HAVEN'T HEARD FROM YET SO I'D LIKE TO THROW IT OPEN TO QUESTIONS FROM EVERYONE ON THE PANELY >> I APPRECIATED THAT LAST POINT VERY MUCH. HOW DO YOU FIGURE OUT WHETHER IT'S GOING TO MAKE A DIFFERENCE? THAT IS SO CRITICAL TO US IN TERMS OF OUR INVESTMENTS. AND INCLUDING THE SBIR. SO DOTING THE I'S, CROSSING THE T'S, HAVING A PROTOCOL, HAVING SOME PRELIMINARY DATA IS ALL WELL AND GOOD BUT THAT'S THE CRITICAL. THE SIGNIFICANCE PART REALLY BECOMES CRITICAL IN WHAT WE DO. AND YOU ADDRESSED IT, SO YOU HAVE PEOPLE IN YOUR GROUP THAT DOES THAT OR DO YOU SEND IT OUT? >> BOTH. OUR GROUP AND MYSELF HAVE SOME EXPERIENCE IN A PHARMACEUTICAL INDUSTRY. ONE OF MY PARTNERS, STEVE HALL, HAS MORE EXPERIENCE THAN I DO IN THE PHARMACEUTICAL INDUSTRY AND OUR THIRD PARTNER AT TORRES HAS BEEN INVOLVED IN THE CORPORATE SIDE AS WELL AS THE VC SIDE FOR ABOUT 20 YEARS. P OBVIOUSLY, WE HAVE TIES AT LILY, WE'RE ABLE TO LEVERAGE IT AS WELL. THAT BEING SAID, WE ALSO GO TOGETHER AND DO ADDITIONAL INFORMATION. I THINK IT TAKES THAT VERY DEEP UNDERSTANDING OF THE DIRECTION IN WHICH YOU ARE GOING. A SIMPLE EXAMPLE WOULD BE YOU LOCK AT THE INHIBITORS FOR RA, AND YOU KNOW EXACTLY HOW GOOD THEY ARE. CAN YOU DEFINE A THESIS THAT ALLOWS YOU TO DIFFERENTIATE FROM THE QUALITY THAT THOSE DRUGS HAVE? AND IF YOU CAN, IS THAT THESIS SUBSTANTIAL ENOUGH THAT IT WILL CREATE AN OPPORTUNITY FOR ANOTHER DRUG TO BE SUCCESSFUL? SO I WOULD ARGUE IT'S NOT REALLY ROCKET SCIENCE TO GET THERE BUT IT DOES TAKE SOME VERY CORRECTAL THINKING ABOUT WHAT'S GOING TO BE IMPORTANT. AND IT GETS BACK TO NOT WHAT YOU WANT TO ACHIEVE BUT REALISTICALLY WHAT WILL BE ACHIEVED WHEN YOU GET TO THAT END POINT. >> IF I CAN FOLLOW UP ON THAT ONE POINT. OKAY, TO YOUR POINT WITH THE TREATMENT OF RESUMEDOID ARTHRITIS FOR EXAMPLE, NOW WE HAVE A WHOLE NEW MODEL OF DRUGS, BUT THERE IS SUCH A BIG LAG TIME THAT IT'S REALLY HARD TO FORESEE -- OBVIOUSLY YOU HAVE TO KNOW WHAT'S GOING ON AT THIS POINT -- BUT YOU HAVE TO HAVE A VISION OF WHAT'S GOING TO BE TEN YEARS DOWN ROAD BECAUSE OTHERWISE YOU LOOK UP NOW AND THE ANTI-RA'S ARE NOT JUST -- >> I AGREE TO THE LE. I THINK YOU WANT TO LIMIT IT BY WHAT YOU NO TODAY. I THINK A REASONABLE EXPECTATION IS THAT IF YOU HAVE AN IDEA, SOMEONE ELSE HAS THE SAME IDEA AT LEAST ONCE. SO YOU HAVE OTHER PEOPLE WORKING ON IT. PART OF IT GETS BACK TO YOU HAVE DIFFERENTIATION WITH YOUR STRATEGIES AND MOLECULES, WITH YOUR SPECIFIC DETAILS OF YOUR APPROACH THAT YOU THINK ARE UNIQUE OR YOU BELIEVE THAT ARE UNIQUE FROM EVERYTHING YOU KNOW. THAT DOESN'T MEAN YOU'RE NOT GOING TO GET BROAD-SIDED HALFWAY THROUGH, RIGHT? I REALLY DON'T KNOW HOW YOU'D GET AROUND THAT. THE OTHER POINT, THOUGH, IS TO NOTE THAT THERE ARE SEVERAL ANTI-PNF'S OUT THERE ALL OF WHICH ARE DOING FAIRLY WELL BECAUSE THAT IS A REASONABLY LARGE MARKET AND STILL HAS A LOT OF MEDICAL NEEDS, WHICH IS WHY WE HAVE NEW AGENTS, ET CETERA COMING OUT AND CAN TELL US ABOUT SOME OF THE SMALL MOLECULE ONES. SO THERE CLEARLY IS ROOM. IT'S JUST A VERY SEGMENTED MARKET. THAT'S ANOTHER WAY TO APPROACH IT. SUFFICIENT SIZE AND VARIATION, IT MIGHT PROVIDE A NICHE THAT THEN IS USEFUL. I THINK THAT SORT OF ANSWERS YOUR QUESTION. >> THANK YOU. >> IF I COULD MAYBE OFFER A LITTLE BIT DIFFERENT PERSPECTIVE ON THAT. WE DON'T TEND TO LOSE MONEY ON THE SCIENCE AND TECHNOLOGY OF THINGS. WE'RE ACTUALLY FAIRLY GOOD AT SORTING OUT WHAT'S LIKELY TO WORK OR NOT WORK AND I DON'T MEAN BECAUSE WE'RE SMARTER THAN ANYBODY BECAUSE WE HAVE ACCESS TO YOU ALL AND WE CAN GET A LOT OF OPINIONS. WHAT WE TEND TO LOSE MONEY IS ON THE COMMERCIALIZATION AND THE TEAM. SO TO ME, INNOVATION IS INVENTION THAT MADE IT TO MARKET, AND IT'S NOT INNOVATION THAT IT DIDN'T SHALL IF IT DIDN'T. SO THE THING THAT WE'RE ACTUALLY TRYING TO PICK ARE THE PEOPLE AND THE COMMERCIALIZATION PATHWAY. THAT'S GOING TO BE THE PART THAT'S CRITICAL. THE SCIENCE AND TECHNOLOGY IS NECESSARY BUT NOT SUFFICIENT. I UNDERSTAND THAT'S A BIT OF A CORE CHALLENGE TO THINK ABOUT BUT I WOULD URGE YOU TO THINK ABOUT THAT BECAUSE SERIOUSLY THAT'S WHERE I THINK IF YOU GO DONE A LINE AND ASKED PEOPLE TO TALK ABOUT WHERE THEY FAILED IN INVESTMENT, IT'S GOING TO BE ON COMMERCIALIZATION PATHWAYS A LOT MORE OFTEN THAN ON THE SCIENCE AND TECHNOLOGY. >> MY QUESTION CONCERNS THE NEED FOR HUMAN DATA IN ORDER TO ATTRACT VC FUNDING, WHICH IS GENERALLY PERCEIVED, I THINK BY SBIR COMMUNITY AS A NECESSITY. AND ALAN MENTIONED AT THE INFLECTION POINT AND VALUATION OF A COMPANY, NOT SURPRISINGLY CHANGES IN A POSITIVE WAY WITH THAT. BUT I THINK I HEARD ALEX AND ALSO ANDREW MENTION THAT THAT IS NOT NECESSARILY NEEDED, THAT THEY ALSO INVEST IN COMPANIES THAT SHOW SOME PRELIMINARY INDICATION OF VALUE BASED ON ANIMAL STUDIES. SO I'D LIKE TO HEAR SOME COMMENT ABOUT THAT. OR CLARIFICATION. >> MANY OF THE COMPANIES, ALMOST ALL OF THE COMPANIES WE INVEST IN THIS LIFE SCIENCES DO NOT HAVE HUMAN DATA. AND IN FACT, MANY OF THOSE COMPANIES HAVE DONE VERY ATTRACTIVE DEALS WITH FARMA. I WOULD POINT TWO IN OUR PORTFOLIO RIGHT NOW. ADI—S DID A $140 MILLION CASH DEAL WITH SELL GENE FOR A PRECLINICAL TECHNOLOGY PLATFORM. THAT COMPANY AT THE TIME WAS YEARS WAY FROM THE CLINIC. WE'VE ALSO DONE A DEAL BY SERA, WHICH SIS AN ANN HARBOR-BASED COMPANY THAT DID AN ATTRACTIVE DEAL WITH MERCK SORT OF ADDRESSING THIS ANTI-TNF RA-SMALL MOLECULE WHAT HAPPENS IN THE NEXT TEN YEARS. AND I THINK THE FACT THAT IT WAS SUCH AN UNUSUAL TARGET AND SUCH AN UNUSUAL SPACE OR SUCH AN ATTRACTIVE SPACE MADE MARK MUCH MORE AMENABLE TO OPEN UP THEIR CHECKBOOK AND WRITE US IN THAT CASE A $12 MILLION UPFRONT FEE. MSH AND THERE HAS BEEN A LOT OF OTHER EXAMPLES. REATTA DID A $44 MILLION DEAL WITH ABBOTT. I THINK THERE ARE CASES AND THERE ARE SITUATIONS WHERE PHASE ONE DATA AND PHASE TWOA DATA WILL BE NECESSARY TO GET VENTURE INVESTORS. BUT TO ADDRESS THE QUESTION THAT ALAN WAS JUST TALKING ABOUT SOMETIMES IF THE IDEA IS BIG ENOUGH AND THE MARKET'S INTERESTING ENOUGH, VENTURE INVESTORS WILL MAKE IT AND FARMA WILL STAND UP AND TAKE NOTICE AND WRITE VERY LARGE CHECKS AT A VERY EARLY STAGE AND THAT'S SOMETHING WE SPEND A LOT OF TIME THINKING ABOUT AND TRYING TO IDENTIFY THOSE PARTICULAR IDEAS. >> I THINK WE SHOULD ADD, THOUGH, THERE ARE PROBABLY FIVE OF US AT THE TABLE THAT WOULD DO THAT. THERE ARE PROBABLY ANOTHER 15 OF US IN THE COUNTRY SLASH WORLD THAT WILL DO THAT. JUST TO GIVE SCALE THERE ARE PROBABLY 20 FIRMS MAYBE THAT WOULD INVEST IN PRECLINICAL SCIENCE AND THERE USED TO BE 100 OR WHATEVER THE RIGHT NUMBERS ARE SO THAT THAT PART OF THE MARKET HAS JUST CHANGED CONSIDERABLY. THAT'S EXACTLY THE POINT. I THINK THAT'S WHAT TIES TOGETHER. WHEN PEOPLE SITTING HERE CAN NAME THE ONES THAT GOT THOSE DEALS BEFORE HUMAN DATA, THAT SUGGEST TO YOU THERE AREN'T THAT MANY OF THEM. SO THERE ARE FIRMS THAT DO THEM. IT'S SCALE WHERE AS IF YOU TAKE IT ON THE ANGELS SIDE, ANGEL INVESTING IS ABOUT A THIRD OF AT LEAST FROM THE DATA WE CAN GATHER, THE HEALTHCARE INVESTING NUMBERS ARE SIMILAR TO WHAT YOU SEE IN VENTURE. IT'S ABOUT A THIRD OF ANGEL INVESTING SO THAT WOULD SUGGEST A MUCH LARGER NUMBER OF THESE BEING FUNDED AND THAT WOULD SUGGEST THEY ARE FUNDED HUMAN DATA. >> LET ME MAKE ANOTHER COMMENT, TOO, THAT WE'RE EARLY INVESTORS. IN FACT, THE FIRST FOUR INVESTMENTS WE MADE NONE OF THE COMPANIES HAD A MOLECULE THAT WAS A CLINICAL CANAT STAGE BECAUSE THEY WERE WELL BEFORE HUMAN DA AND THAT HAS TYPICALLY BEEN OUR PATTERN OVER THE LAST SEVERAL YEARS. BUT WHAT IT ILLUSTRATES FOR US IS WE TEND TO BE A LITTLE BIT CONTRARIAN. SO IF WE CAN INVEST NOW AND WE WERE LUCKY ENOUGH TO AFTER 2000 -- 2008. WE'RE IN A POSITION THEN IN THE NEAR FUTURE THEN TO HAVE OUR COMPANY AT JUST THE RIGHT PLACE WHERE THERE WILL BE A GAP IN A BUNCH OF MOLECULES IN A PHASE ONE, PHASE TWO AREA THAT WILL BE NEEDED TO ADDRESS SOME OF THESE ISSUES. >> OTHER QUESTIONS? SO IF SERIES C HAVE THE SAME VALUATION OF SERIES A, HOW DO YOU GET PEOPLE TO INVEST? >> IDEALLY YOU DON'T DO A SERIES C. THAT'S OUR CURRENT GOAL IS TO HAVE COMPANIES THAT DO A SERIES A AND MAYBE A SERIES B, MAYBE IT'S A LITTLE BIT OF AN UPROUND. WE'VE BEEN SUCCESSFUL IN DOING SERIES B UPROUNDS AND THEN WORK WITH CORPORATE PARTNERS TO BRING IN THE ADDITIONAL FUNDS INTO THE COMPANY. DOESN'T ALWAYS WORK THAT WAY AND I WAS SMILING WHEN ALAN MENTIONED ABC. FOR THE LAST COUPLE OF YEARS WE'VE ALL BEEN SAYING DOWN IS THE NEW FLAT AND FLAT IS THE THE NEW UP. SO THERE IS A LOT OF COMPANIES, A LOT OF CASES WHERE YOU ARE HAPPY TO BE FLAT. SO THE GOAL IS STARTING VERY EARLY, PRESERIES A SO YOU ARE THINKING ABOUT YOUR CORPORATE PARTNERSHIPS AND WHAT THE LANDSCAPE IS. >> I'M SORRY. >> SO A COMPANY SPUN OUT OF PARADIGM. WE PUT THE FERS THIS THAT SO FIRST MILLION IN, THOSE ARE GOOD THINGS. WE GOT 20 CENTS ON THE DOLLAR IN THAT IPO BECAUSE BY THE TIME THE IPO THEY HAD RAISED OVER $200 MILLION. SO IT RAISES EXACTLY YOUR QUESTION. WHY THE HELL WOULD YOU DO THAT? AND UNFORTUNATELY, THE ANSWER IS WE'RE NOT NOW. SO IF YOU GO TO THE DATA, WHAT LITTLE DATA THERE IS ON THIS, YOU SEE A PECIPTOUS DROP IN BIOTECH INVESTMENT ON THE ANGELS SIDE AND A DROP IN INVESTING ON THE ANGELS SIDE. SO WHAT'S BECOMING VISIBLE IN THE DATA IS TRUE INNOVATION IS NOT EVEN BEING FUNDED BY ANGELS NOW BECAUSE OF THESE ISSUES WITH CAPITAL RISKS. >> I GUESS THE OTHER THING WY ADD IS THAT THE FUN PART OF THIS IS THE ENTREPRENEURS, IT IS STARTING COMPANIES AND BEING THERE FOR INNOVATIONS. SO AS MUCH AS WE'RE LAMENTING STATE OF THE FINANCIAL MARKETS, UPGROWTH IS INCREDIBLE AND PEOPLE THAT ARE BRILLIANT ARE WILLING TO BET THEIR LIVES ON THEIR NEW COMPANIES. AND SO THAT'S THE FUN PART AND THAT'S WHY WE DO IT. AND THE QUESTION IS HOW DO YOU BUILD THE RIGHT TEAM AROUND THEM AND PUT THE RIGHT STRATEGY IN PLACE AND THINK ABOUT COMMERCIALIZATION, HOW DO YOU FUND THEM TO BE SUCCESSFUL BECAUSE THAT'S THE FUN PART OF THIS BUT IT'S NOT SIMPLE. >> NORM, YOU HAVE A QUESTION. >> YES. I HAD A QUESTION OF CLARIFICATION. YOU MENTIONED THAT 85% OF SOME CATEGORY OF FUNDS WERE GOING OVERSEAS. COULD YOU SAY AGAIN WHAT IT WAS THAT YOU WERE REFERRING TO? >> YES. SORRY. MEDEK, WES A GROUP THAT NBCA FUNDED CREATED TO LOOK INTO THIS DECLINE IN LIFE SCIENCES, I'LL SEND YOU THEIR SLIDE TECH DECK IT AND IT'S AVAILABLE ONLINE. WHAT WE'VE FOUND IS VC'S WITHDRAWING FROM EARLY STAGE AND LONG CAPITAL PROJECTS. SO OF THOSE THAT ARE FUNDED, TAKING THE PULE OUT AT 100% OF COMPANIES FUNDED, IT'S 86% OF THOSE FUNDED GO OFF-SHORE TO DO ALL OF THEIR CLINICAL WORK AND RUN THE PILOT STUDY AND THE FOLLOWON CLINICAL STUDIES AT AN INCREASING NUMBER STAY OFF-SHORE AND DON'T EVEN FILE FOR PMA IN THE UNITED STATES. THAT'S BECOMING A TREND NOW. >> THAT WOULD BE TERRIFIC. >> I'LL SEND IT THIS AFTERNOON. >> THANK YOU. >> I AM NOT VERY ARTICULATE IN THIS AREA AREA THAT YOU ARE TALKING ABOUT. BUT I'VE SPENT SOMETIME IN RUSSIA, PARTICULARLY WITH SKOKVA AND PARTICULARLY GIVING LECTURES TO UNIVERSITY, THEIR 100 MOST TALENTED SCIENTISTS AND WAS MADE AWARE RECENTLY OF THE DISORGANIZATION THAT THE GOVERNMENT HAS GIVEN A LOT OF MONEY TO A PROGRAM SIMILAR TO THE SBIR GRANT PROGRAM HERE. AND WHAT THIS INDIVIDUAL THAT DIRECTS THAT PROGRAM COMMENTED UPON IS THE FACT THAT THEY HAVE THE MONEY BUT OBVIOUSLY THEY'VE NOT YET BEEN ABLE TO IDENTIFY THE PROJECTS TO REALLY INVEST IN. WE HAVE THE U.S.-RUSSIA FORUM ON THE BIOMEDICAL SCIENCES AND PAT CONVERTY WHO MANAGES THE RUSSIA FUND, ENDED THE DISCUSSION BY SAYING THAT SHE HADN'T SPENT A LOT OF MONEY IN RUSSIA BECAUSE OF A LACK OF THE LOT OF THE INFRASTRUCTURE AND PROTECTION OF INTELLECTUAL PROPERTY AND ET CETERA. I WAS WONDERING IF ANY OF HAVE YOU ANY IDEAS OF HOW YOU COULD TAKE ADVANTAGE OF THE FUNDS THAT ARE THERE, MATCH THEM WAY GOOD IDEA HERE WITHOUT LOSING THE INTELLECTUAL PROPERTY TO RUSSIA. NOT SAID THAT VERY WELL BUT IT SEEMS LIKE THERE IS THIS BIG MISMATCH RIGHT NOW WHERE YOU HAVE GOOD MONEY, BIG MONEY AND GREAT SCIENCE HERE. A LOT OF IT GOING UNFUNDED AND NOBODY, ESPECIALLY THE PATIENTS ARE NOT BENEFITING FROM THAT. >> THAT'S INTERESTING. I THINK IT'S DIFFICULT FOR US TO CONVINCE RUSSIAN INVESTORS, ALTHOUGH WE WILL SAY SOME OF THEM ARE DOING IT ON THEIR OWN. SKY TECHNOLOGIES IS A MEGAFUND, WHICH MAZ LATELY BEEN QUITE ACTIVELY INVESTING. THERE HAVE BAIN NUMBER OF RUSSIAN INVESTORS WHO ARE STARTING STARTUP FUNDS AND COINVESTING IN AMERICA NOW SO IT IS ALREADY HAPPENING. >> THERE IS A CONFERENCE AT THE END OF OCTOBER IN MOSCOW OVER INNOVATIONS. RUSS NANO IS SPONSORING THAT ONE AND THERE WILL BE SOME INTERESTING DEVELOPMENTS OUT THAT HAVE. I THINK IT MIGHT BE GOING THE OTHER WAY. WE'VE HAD AN INVESTMENT FROM TROIKA, WHICH IS A RUSS NANO KIND OF VENTURE FUND. AND THEY INVESTED IN OUR COMPANY BUT WHAT THEY'VE OFFERED THAT COMPANY TO SET UP THEIR RESEARCH TO MOVE THEIR RESEARCH FACILITY TO RUSSIA IN TERMS OF GRANT AND CLINICAL TRIALS IS SOMETHING THAT MAKES A BOARD OF DIRECTOR STOP AND THINK VERY HARD ABOUT WHETHER TO DO IT. THANK YOU. >> ANY OTHER QUESTIONS? WELL, WITH THAT, LET ME THANK THE PANEL. THIS WAS JUST TERRIFIC. I AM GOING TO WITHHOLD SUMMARIZING BECAUSE I WANT TO REFLECT ON SOME OF THE THINGS YOU SAID BECAUSE THERE ARE SOME CONFLICTS IN MY MIND. WE WILL DIGEST IT AND THANK YOU AGAIN FOR COMING. [APPLAUSE] >> YES, INDEED AND ON BEHALF OF ALL OF US THANK YOU VERY MUCH. IT WAS AN INFORMATIVE SESSION AND YOU GIVE US A LOT TO THINK ABOUT. WHAT I WILL SUGGEST P IT'S ACCEPTABLE TO YOU, MAYBE WE SHOW THE VIDEO BEFORE LUNCH SO THAT EVERYBODY WILL BE HERE TO SEE. >> THAT WILL BE UNDERSTANDING -- OUTSTANDING. >> WHY DON'T WE PLAN TO DO THAT NOW? I'M TOLD IT'S BEEN SET UP. AND AFTER THE VIDEO WE WILL TAKE A PHOTOGRAPH OF THE MEMBERS OF THE PANEL AND -- THAT HAS BEEN OUR TRADITION. >> WE DON'T WANT TO MESS WITH TRADITION, DO WE? >> AND THEN AFTER THAT WE'LL GO TO LUMP. I'LL SAY A FEW WORDS BEFORE THAT. PERHAPS IF YOU WANT TO MAKE ANY MORE INTRODUCTORY? >> AGAIN, THIS WAS A REMARKABLE WEEKEND THAT HAPPENED IN WASHINGTON, D.C. SEPTEMBER 7-THE, INCLUDING PANELS THAT WERE HELD AT GEORGE WASHINGTON ON SUNDAY MORNING AND AT THE KENNEDY CENTER SATURDAY FIGHT, IT WAS A COMBINATION OF SCIENCE AND ENTERTAINMENT ABOUT THE VALUES OF MEDICAL RESEARCH. THE PART OF THIS THAT WE HAD THE MOST SIGNIFICANT ROLE IN ORGANIZING WAS THIS EVENT ON SATURDAY WITH SOME00 INDIVIDUALS THAT CAME TO NIH FOR THIS SERIES OF PRESENTATIONS. THEY WERE DONE IN THE NATCHER AUDITORIUM BECAUSE THAT'S OUR LARGER AUDITORIUM. GET PEOPLE A SENSE OF OTHER THINGS THAT GO ON ON THE CAMPUS BECAUSE IT WAS PRETTY HARD TO IMAGINE GIVING 700 PEOPLE A TOUR. INSTEAD WE SET UP A LIVE CAM WHICH WAS ABLE TO MIGRATE AROUND TO VARIOUS PLACES, TALK TO SCIENTISTS WHO WERE IN THE MIDDLE OF DOING EXPERIMENTS OR IMAGING FACILITIES OR OTHER THINGS. I SERVED AS THE ROVING REPORTER, WHICH WAS A LOT OF FUN AND AMAZINGLY THE TECHNOLOGY ALL WORKED BECAUSE THIS HAD TO BE DONE IN REALTIME AND YOU COULD IMAGINE THE DISASTER THAT COULD HAVE POTENTIALLY HAVE OCCURRED. ALL OF THIS HAS BEEN CAPTURED ON VERY HIGH-QUALITY VIDEO AND WE HAD THE PRIVILEGE OF WORKING WITH THE MILKIN INSTITUTE TO DO ALL THESE THINGS WITHOUT USING TAXPAYERS' MONEY AND I THINK THAT WAS A REALLY WONDERFUL PARTNERSHIP. SO WE HAVE ENDED UP WITH SOME VERY HIGH-QUALITY VIDEO. WHAT YOU WILL SEE IS A COMPRESSED TEN MINUTES THAT TRIES TO CAPTURE SOME OF THE HIGH POINTS THAT HAVE FOUR OR FIVE HOURS THAT WE HAD ON THE NIH CAMPUS. SO WITH THAT, GOT THROUGH SECURITY NOW. THAT WAS NOT A SMALL MATTER. YEAH, AS FAR AS I KNOW, EVERYBODY WAS ABLE TO GO HOME. >> GOOD MORNING, EVERYBODY. WELCOME TO THE NATIONAL INSTITUTES OF HEALTH. WE'RE THRILLED TO HAVE YOU HERE ON A DAY THAT IS GOING TO BE FULL OF EXCITING SCIENCE. WE'RE GOING TO TELL YOU ABOUT ADVANCES THAT ARE OCCURRING IN THE LABORATORY SUPPORTED BY NIH ACROSS THIS COUNTRY AND THE REST OF THE WORLD. AND I WOULD LIKE TO MOVE US THEN ON TO THE FIRST PANEL. >> THE SINGLE MISSION ABOUT THIS EVENT IS THAT SCIENCE MATTERS AND THAT WE WANT TO CELEBRATE THE SUCCESSES THAT THIS COUNTRY HAS EXPERIENCED, THAT DOES TRANSLATED INTO EXTRAORDINARY LIFE-SAVING THERAPIES, TREATMENTS, AS WELL AS HAVING SIGNIFICANT ECONOMIC IMPACT. ON STAGE HERE TODAY TO WORK WITH FRANCIS AND THIS TEAM OF EXPERTS HERE AT THE NIH TO FIGURE OUT BIPARTISAN PLANS TO TAKE US FORWARD TO ENSURE THAT WE IN AMERICA CAN MAINTAIN OUR PREEMINENCE IN SCIENCE. [APPLAUSE] >> AFTER BEING DIAGNOSED WITH H.I.V. IN 1988, I PROGRESSED TO AIDS BY 1994. AND I RESPONDED WELL TO THE NEW THERAPIES AND BEGAN TO GET MY LIFE BACK. I WANTED MORE THAN ANYTHING ELSE IN THE ENTIRE WORLD WAS TO BE A MOM. SO AFTER TURNING 30, I REALIZED THAT THE SCIENCE WAS FALLEN AT A PLACE WHERE MY RISK OF TRANSMITTING H.I.V. TO AN INFANT WAS LESS THAN TWO PERCENT. THAT WAS GREATER THAN A 9LE PERCENT CHANCE THAT I WOULD HAVE A CHILD WHO WAS UNINFINITYED AND -- UNINFECTED AND IT WAS TIME FOR ME. SO 14 YEARS AND ONE DAY AFTER THE DOOR TO MOTHERHOOD HAD AN SEEMINGLY SHUT, I GAVE BIRTH. [APPLAUSE] TO A BEAUTIFUL, HEALTHY H.I.V.-FREE BABY GIRL AND 20 MONTHS LATER TO HER SISTER SOPHIA ALSTON AND THESE ARE MY MIRACLE BABIES. [APPLAUSE] >> HI, I'M DANIELI AND THE I'M HERE IN THE IMAGING FACILITY AT THE NIH CLINICAL CENTER. THIS IS WHERE WE DEVELOP AND TEST NEW IMAGING TECHNOLOGIES TO PEER INSIDE THE LIVING BRAIN TO LOOK AT ITS STRUCTURE IN GREAT DETAIL AND FUNCTION AND DISEASES LIKE ALZHEIMER'S DISEASE TO LOOK AT WHERE THAT BEGINS TO GO WRONG. >> SO DANNY WAS TALKING ABOUT THESE APPROACHES, THESE IMAGES AND CHALLENGES WERE NOT GETTING THESE SIGNALS FAST ENOUGH. WE NEED APPROACHES THAT CAN LOOK INTO THE LIVING BRAIN AT THE SPEED OF THOUGHT. SO TO SUM UP THESE APPROACHES IF REALITY WE NEED ENGINEERS AND PHYSICISTS. IF WE'RE GOING TO UNLOCK THIS FUTURE, WE NEED COMPUTERg i SCIENTISTS SO THAT THEY CAN TELL'3 US WHAT THEY MEAN. AND WE NEED POLICYMAKERS TO WRESTLE WITH HOW TO INTEGRATE THESE APPROACHES INTO A LARGER HEALTHCARE DELIVERY SYSTEM. IF WE ARE GOING TO UNLOCK THIS FUTURE, WE NEED TEACHERS AND PATIENTS AND WE NEED THEIR FAMILIES. ULTIMATELY, WE NEED YOU. IT HAS NO RESPECT FOR GENERATIONAL, RACIAL, OR GENDER BOUNDARIES. AND THE TRUE COST TO SOCIETY IS AN EROIGS ROGATION OF THE PRINCIPLE THAT OUR FOUNDING FATHERS HELD MOST DEAR. THESE DISORDERS ROB US OF LIBERTY, HOPE AND SENSE OF SELF. >> SO DIANE A WORD ABOUT WHAT GOES ON HERE IN THIS SPECIAL LABORATORY? >> SURE. THANK YOU FOR INCLUDING US IN THE CELEBRATIONS. SO THE INCREDIBLE RESEARCH HERE, WHAT WE DO IS WE USE SPECIAL RAIN FROM RED CAMERAS LOCATED AROUND THE ROOM AND THEY HELP US AN BE LIES AND QUANTIFY HUMAN MOTIONS SUCH AS WALKING AND OTHER SKILLS THAT WE DO EVERY DAY ALMOST WITHOUT THINKING. BUT WHAT WE STUDY HERE ARE PATIENTS THAT HAVE DISORDERS NEWER LOGIC DISEASES AND FOR THEM SIMPLE MOVEMENTS CAN BE VERY DIFFICULT. >> SO THIS IS IMPRESSIVE TECHNOLOGY THAT MAYBE WE SHOULD REVEAL WHO OUR VOLUNTEER IS. OH, MY GOODNESS! IT'S JOHN O'HURLEY. STAR OF SEINFELD, MR. PETERMAN, WELCOME. >> THANK YOU VERY MUCH. >> AS WELL AS THE HOST OF "FAMILY FEUD" YOU ARE A STAR OF "DANCING WITH THE STARS". >> THANK YOU. >> CAN YOU SHOW US A SPECIAL MOVE? >> AS YOU CAN SEE, I PICKED A HECK OF A DAY NOT TO SHAVE MY LEGS. >> PROUD TO WORK WITH THE DEPARTMENT OF DEFENSE, THE RESEARCH PROJECT AGENCY AND THE VETERANS ADMINISTRATION IN TRYING TO PROVIDE NEW TECHNOLOGIES THAT WILL ASSIST THESE WOUNDED WARRIORS TO ACHIEVE A BETTER OUTCOME. [APPLAUSE] >> THANK YOU, JONATHAN. AND ALSO THANK YOU TO PAUL. BOTH VERY INSPIRATIONAL VIGNETTE AND TELL US ABOUT THE REMARKABLE ADVANCE THAT'S RIGHT AVAILABLE TODAY IN MODERN MEDICINE. AND THESE ADVANCES OF COURSE, WOULD NOT BE POSSIBLE WITHOUT PRIOR ADVANCES IN SCIENCES. IT TRULY IS A CELEBRATION OF SCIENCE. HOWEVER, PLEASE, AS WE MIGHT BE, WITH THESE REMARKABLE ADVANCES, WE MUST NOT BE SATISFIED. THIS IS AT THE UNIVERSITY OF PITTSBURGH AND DR. SCHWARTZ AND BON JER'S GROUP. THIS GENTLEMAN OVER HERE TIM SUFFERED A SEVERE INJURY MUCH LIKE CHRISTOPHER REEVE. HE CAN'T MOVE HIS LEGS. HE IS CONTROLLING HIS ARM JUST BY THINKING ABOUT IT. LOOK AT THE LOOK ON HIS FACE. A MAN WHO CAN'T MOVE ANYTHING CAN MOVE. BY THINKING ABOUT IT. MORE IMPORTANT, LOOK AT THE FACE OF HIS FIANCE. WHAT DO PATIENTS WANT? FORGET WHAT WE WANT. WHAT DO PATIENTS WANT? PATIENTS WANT TO BE RESTORED AND THEIR EXPECTATION IS THIS. >> IN 1986 THE HUMAN GENOME PROJECT HAD BEEN CONCEIVED WITH THE SPECIFIC AMBITION OF GETTING A D.N.A. SEQUENCE FROM A SINGLE PERSON AND PUTTING THAT IN THE DATABASE FOR MEDICAL RESEARCHERS TO USE. THERE WAS ALSO AT THAT TIME THE DREAM THAT THE SEQUENCE AND THE SEQUENCING METHODS WOULD BE USED IN THE CLINIC SO ONE DAY INDIVIDUALS WOULD GO IN FOR MEDICAL TREATMENT BASED UPON THEIR D.N.A. SEQUENCE. SO IT'S MY GREAT PLEASURE TODAY TO INTRODUCE YOU TO A FAMILY WHO ARE PIONEERS IN THE PARTICIPATION OF THE USE OF GENOMIC SEQUENCING IN MEDICINE. >> MY NAME IS RETTA BARRY AND I AM THE MOTHER OF NOAH AND ALEXIS. WHEN WE BROUGHT THEM HOME FROM THE HOSPITAL THE FIRST DAY, WE KNEW THAT SOMETHING WAS WRONG. >> WE REALLY WEREN'T A NORMAL FAMILY. WHENEVER WE WENT OUT, I KNEW I COULDN'T GET FURTHER FROM THE CAR THAN I COULD CARRY ALEXIS BACK. WHEREVER WE WOULD GO, I WOULD CATCH PEOPLE STARING AT HER. AND I COULD SEE IN THEIR EYES, I COULD SEE THAT THEY WERE THINKING, THAT'S A CHILD WITH REAL SERIOUS PROBLEMS. >> THIS IS A PICTURE OF HER AS SHE WAS AT ONE POINT. NOAH, ON THE OTHER HAND, HAD A COMPLETELY DIFFERENT PRESENTATION. HE DROOLED. HE WOULD THROW UP WHATEVER HE ATE. AND THEY WERE COMPLETELY CHALLENGED. >> RETTA ASKED ME ONE DAY DO YOU THINK IT'S POSSIBLE THAT WE SHOULD GET ALEXIS INTO SEQUENCED? WE REACHED OUT TO DR. GIBBS AT BAYLOR COLLEGE OF MEDICINE. AND HE AND HIS TEAM TOOK ON THE CASE. >> FOR THE FIRST TIME WE HAVE EVIDENCE OF WHAT WAS GOING ON WITH THEM THROUGH WHOLE GENOME SEQUENCING. AND WITH THIS EVIDENCE WE WERE ABLE TO TAKE THE INFORMATION BACK TO THE NEUROLOGIST, WHO THEN ADDED ANOTHER IMMUNOACID ONTO THE REGIMEN AS MEDICATION AND WITHIN TEN DAYS OF STARTING THIS NEW THERAPY, ALEXIS WAS BACK. SO NOW WE HAVE THIS NEW LIFE. WE HAVE KIDS THAT WERE DOING THINGS THAT WE NEVER DREAMED POSSIBLE. IF YOU ARE INTERESTED, I THINK THAT NOAH AND ALEXIS MIGHT BE BACKSTAGE IF YOU WOULD LIKE TO MEET THEM. WOULD ANYONE LIKE TO MEET THEM? [APPLAUSE] AND OUR OLDER SON JACK AS WELL. [APPLAUSE] IF >> WE AT NIH AND TOGETHER WE WILL TURN TODAY'S DREAMS INTO TOMORROW'S CURE. THANK YOU VERY MUCH, EVERYBODY. HAVE A GREAT DAY. THANK YOU. [APPLAUSE] >> THAT'S JUST A SNAP SHOT OF THE EXPERIENCE THAT WE ALL HAD THAT DAY. STORIES OF SCIENCE, OF HUMANS THAT HAVE BEEN TOUCHED IN REMARKABLE WAYS NOT TEN YEARS FROM NOW BUT NOW. I DON'T THINK ANYBODY WHO WAS THERE WENT WAY UNTOUCHED. I SPOKE TO PEOPLE LEAVING THE AUDITORIUM AFTER THOSE FIVE HOURS, MANY WHOM SAID I THOUGHT I KNEW NIH BUT I HAD NO IDEA THAT THESE KINDS OF THINGS WERE GOING ON AND THAT THIS WAS POSSIBLE. WORKING HARD TO FIGURE OUT HOW BEST TO EXPORT ALL THESE MATERIALS TO TRY TO GET THEM IN FRONT OF PEOPLE WHO WORK THERE IN THAT AUDITORIUM. THE VIDEOS ARE UP ON THE MILKIN INSTITUTE SITE AND WE ARE TRYING TO FIGURE OUT HOW BEST TO DO THE MOST POSSIBLE PROMOTION OF THIS BE NON-A WAY THAT I KNOW REPRESENTS ANY INCORRECT REPRESENTATION OF SCIENCE BUT JUST THE EXCITEMENT AND THE IMPACT THAT IS NOW POSSIBLE. >> FRANCIS, MAYBE YOU WANT TO ADD TO THE POLITICAL INTEREST IN IT. >> WELL, YOU SAW ERIC CANTOR ON THE STAGE AT THE NATCHER AUDITORIUM SPEAKING AND SITTING NEXT TO HIM OHIOER, WHO IS THE MINORITY WHIP IN THE HOUSE. SO REMARKABLY BIPARTISAN DEMONSTRATION THAT MEDICAL RESEARCH IS NOT SOMETHING THAT OUGHT TO BE CONSIDERED ONLY THE SPECIAL SKBRISHLET OF ONE PARTY OR ANOTHER AND THAT SENSE WAS VERY MUCH THERE IN THE EVENING. AT THE KENNEDY CENTER, HARRY REID SPOKE. NANCY PELOSI SPOKE, QUITE A NUMBER OF MEMBERS OF CONGRESS WERE PRESENT BOTH FOR THE RECEPTION AHEAD OF TIME AND AFTERWARDS. IT WAS A VERY CONSIDERATE EFFORT ON THE PART OF FASTER CURES AND THE MILLIN INSTITUTE TO TRY TO CREATE AN ENVIRONMENT WHERE PEOPLE WOULD APPRECIATE HOW VALUABLE MEDICAL RESEARCH IS FOR HUMAN HEALTH AND FOR THE ECONOMY AND THERE WAS A LOT OF INFORMATION THERE ABOUT THAT PART OF IT AS WELL AT THIS DIFFICULT TIME FOR OUR COUNTRY. AND ONE HOPES THAT THOSE MESSAGES NOT ONLY WERE HEARD BUT WILL BE REMEMBERED IN THE COURSE OF THE NEXT MONTHS AND YEARS. >> WE PROBABLY HAVE DATA BECAUSE THIS KIND OF MATERIAL GOES SKPRIRLE IT'S STUNNING, ACTUALLY. THOUSANDS AND MILLIONS OF PEOPLE DOWNLOAD, LOOK, SEND COMMENTS AND IT'S REALLY A NEW WORLD OF COMMUNICATION AND EDUCATION. >> INDEED. >> IF ANYBODY WONDERED WHY WE'RE HERE, THAT'S THE ANSWER. I THINK OF ALL THE WORDS YOU CAN WRITE, THE TESTIMONY YOU CAN GIVE. IF YOU CAN GET THOSE VIDEOS IN FRONT OF EVERY MEMBER OF CONGRESS AND THE PUBLIC, WHAT I SERVICE THAT WOULD BE. SO WORTH DOING. WELL, THANK YOU FOR SHARING THAT. SO AT THIS POINT WHAT WE WILL DO IS TAKE A BREAK. THE MEMBERS WILL GATHER FOR PICTURES. >> IF EVERYONE WOULD TAKE YOUR PLACES PLEASE THAT WE'LL START OUT RIGHT ON TIME FOR THE AFTERNOON SESSION. THANK YOU EVERYBODY FOR KEEPING US ON SCHEDULE THIS MORNING. AS WELL AS PROVIDING A STIMULATING DISCUSSION. TO BEGIN THE AFTERNOON WE'RE VERY FORTUNATE IN TERMS OF HAVING A SPEAKER THAT WILL SET THE STAGE FOR US, DR. GURURAJ DESHPANDE IS AN INDIVIDUAL WHO HAS RUN PROBABLY MORE COMPANIES THAN ON THE FORTUNE 500 LIST. AND HAS RUN THEM WELL. AN OLD FRIEND OF MINE OF MANY OTHERS AROUND THIS( TABLE, SO WE'RE AWFULLY PLEASED, DESH, THAT YOU COULD BE WITH US AND I'M NOT GOING TO SPEND A LOT OF TIME ON THE DETAILS OF YOUR BACKGROUND BECAUSE WE HAVE YOUR BIOGRAPHY WE'D RATHER HEAR FROM YOU. WITH THAT WE'LL TURN THE PODIUM OVER TO YOU, DESH. YOU'RE GOING TO SPEAK FROM THERE, FINE. >> THANK YOU. I THINK I WAS ASKED TO COMMENT ABOUT TWO THINGS, ONE IS I COCHAIR A NATIONAL COUNCIL ON INNOVATION AND ENTREPRENEURSHIP. HOW WE CAN USE IN KNOW SEPARATION ENTREPRENEURSHIP TO FUEL THE ECONOMY. SECONDLY THE CENTER THAT WE STARTED AT MIT FOR INNOVATION. THE NACI YOU HAVE HEARD ROUGHLY IN THE U.S. WE STARTED ABOUT 500,000 NEW COMPANIES EVERY YEAR AND THEY CONSISTENTLY GENERATE FOUR MILLION JOBS A YEAR. THE QUESTION IS, WHAT DO WE HAVE TO DO TO ACTUALLY SPEED UP THAT FOUR MILLION YOU NEED TO DO MORE COMPANIES BUT MORE THAN THAT YOU NEED TO SPEED UP THE FORMATION OF THE COMPANY SO THAT THEY GET TO BE GOOD COMPANIES. THERE ARE FOUR ELEMENTS THAT COME TOGETHER TO DO THESE COMPANIES. NUMBER ONE YOU NEED A GOOD IDEA. AND YOU SPEND ABOUT $150 MILLION IN RESEARCH AND DEVELOPMENT I THINK THAT IS GOING TO BE THE PRIMARY TOPIC OF WHAT I'M GOING TO SAY TO HOW DO WE SPEND THAT 150 MILLION IN WAY SO THAT MORE OF THOSE IDEAS CAN ACTUALLY LEAD TO EITHER SOCIAL OR ECONOMIC IMPACT. SECONDLY YOU NEED AN ENTREPRENEUR WHO CAN ACTUALLY TAKE THE IDEA AND DO SOMETHING WITH IT. YOU NEED MENTORS AND THEN YOU NEED ACCESS TO CAPITAL. OF THE FOUR AREAS IN WHICH NACIE WORKED ON THE LAST COUPLE OF YEARS I'LL COME BACK TO THE 150 MILLION WHAT WE CAN DO THERE. ON THE OTHER SIDE PROMOTING ENTREPRENEURS AND MENTORSHIP WE LAUNCH ADD PROGRAM CALLED START UP AMERICA, TO ACTUALLY ENCOURAGE AND GET MORE VISIBILITY TO THAT PART OF THE PROGRAM. IT ACCESS TO CAPITAL, SPOKE TO THE INVESTORS AND VENTURE CAPITAL LISTS AND WE PROPOSED RECOMMENDATION WHICH HAD BIPARTISAN SUPPORT IT GOT PASSED AS A JOBS ACT WHICH WAS SIGNED IN TO ACT ABOUT FOUR MONTHS AGO. COMING BACK TO THIS HOW DO WE MAKE RESEARCH IDEAS HAVE A BIGGER IMPACT, I JOINED THE MIT BOARD ABOUT 12 YEARS AGO AND I DIDN'T GO TO MIT SO MY REASON FOR JOINING MIT WAS, A LOT OF THE COMPANIES THAT WE STARTED IN '70s AND '80S THE IDEAS CAME FROM BELL LABS AND IBM AND SO ON. BUT GIVEN THE GLOBAL ECONOMY, COMPANIES CANNOT SORT OF FUND THOSE BELL LABS ANY MORE WHICH CASE CENTER OF GRAVITY FOR IDEAS HAVE MOVED BACK TO UNIVERSITY. SO OUR PHILOSOPHY AT MIT WAS TO SEE HOW THE UNIVERSITY CAN BECOME A BIGGER SOURCE OF IDEAS FOR ENTREPRENEURS TO HAVE THE OPPORTUNITIES THAT WE HAD. AND SO MIT DOES RESEARCH WORTH ABOUT $5-6 MILLION AND THEY'RE ALL PRETTY GOOD. THE QUESTION IS, CAN THEY BE BETTER. SO WE FOUND THAT THE MISSING IDEA IN THAT PART IS THE FACT THAT THE IDEAS DON'T HAVE AN IMPACT UNLESS THEY HAVE -- THEY ARE DIRECTED TO SOME BURNING PROBLEM IN THE WORLD. AND SO HOW DO YOU MAKE THAT HAPPEN. THE SIMPLE FORMULA THAT WE WORKED ON IS INNOVATION PLUS RELEVANCE IS EQUAL TO IMPACT. HOW DO YOU BRING RELEVANCE TO THE INNOVATION. THERE'S ABOUT A THOUSAND FACULTY AT MIT AND 50 FACULTY WHICH WHO ARE WORKING ON PURE SCIENCE, NOBEL PRIZE KIND OF IDEAS AND THEY DON'T REALLY WORRY THAT MUCH ABOUT IMPACT. WE NEED TO LEAVE THEM ALONE. BUT MOST OF THE OTHER 90% OF THE PEOPLE WHENEVER THEY COME UP WITH AN IDEA TO HAVE A HUGE DESEWER FOR IMPACT, THEY WANT TO PURE CANCER, DO SOMETHING BIG IN THE WORLD. BUT THEN IF YOU GO TALK TO THEM TWO MONTHS FROM THEN, THEY HAVE TEN MORE IDEAS BECAUSE THAT'S THEIR BUSINESS. IT'S TO GENERATE LOTS OF IDEAS. THE KEY VALUE ADDED IN THE WHOLE PROCESS IS TO HELP THEM PICK AND CHOOSE SO THAT IDEA WOULD HAVE IMPACT ON THE WORLD. WHAT HAPPENS TODAY IS THAT BECAUSE INNOVATION YOU CANNOT MANDATE INNOVATION, YOU HAVE TO CREATE NURTURING ENVIRONMENT FOR PEOPLE, THE COMMUNITIES GET FORM WHERE PEOPLE COME UP WITH A LOT OF INNOVATIONS. BUT OVER THE COURSE OF TIME THEY GET FURTHER AND FURTHER REMOVED FROM THE REAL WORLD. SO THE THING WAS HOW DO WE BREAK THAT. IT'S A LITTLE BIT LIKE ENGINEERING. INNOVATION, RESEARCH IS WHERE ENGINEERING WAS 50 YEARS AGO, 40, 50 YEARS AGO HE CAN NEARS DESIGNED A PRODUCT IN A DARK ROOM SOMEWHERE THEN AFTER THE PRODUCT WAS DONE THEY HIRED SALES AND MARKETING TO PEDAL THE PRODUCT. THAT YOU WOULD NEVER DO TODAY. THE BEST INNOVATORS TODAY THEY COME UP WITH THE WHOLE THING THE BEST OF THEM GET PATENTS THEN TECHNOLOGY LICENSING OFFICES TRY TO PEDAL THE IDEAS, RIGHT? SO WHAT WE DID AT MIT IS TO HAVE -- CONNECT THE FACULTY AND GRADUATE STUDENTS TO THE RELEVANCE UP FRONT. SO AS THEY THINK ABOUT THE IDEA AS NAVIGATE THROUGH THE IDEA IS MORE LIKELY THAT WHEN THEY ACTUALLY COMPLETE THE IDEA THERE'S MORE TALL PULL IN THE MARKETPLACE. AND SO CONNECTING THE PEOPLE FROM OUTSIDE OF THAT GROUP, THE UNIVERSITIES, TO THE RESEARCHERS IT'S REALLY THREE THINGS, SELECT, CONNECT AND DIRECT. FACULTY APPLIES AND SAY, HEY, I HAVE THIS IDEA, MAYBE IT'S WORTH SOMETHING WE GIVE THEM A SMALL GRANT MAYBE $50,000 OR $150O THEN MIT DOES RESEARCH IN 15 AREAS, WE HAVE THESE 15 PEOPLE. THESE CAPITALISTS OR ENTREPRENEURS WHO HAVE THE KNOWLEDGE IN THAT PARTICULAR AREA. THEY ACTUALLY SPENT TWO, THREE DAYS A MONTH AT MIT, VOLUNTEER. THEN SURROUNDED BY FIVE OR SIX EXPERT VOLUNTEERS, IT'S A WAVE OF 15, 100, 300, THESE PEOPLE WHO ARE AVAILABLE TO FACULTY AND GRADUATE STUDENTS WHICH THEY TREMENDOUSLY ENJOY BECAUSE IT GIVES THEM A VIEW IN TO THE OTHER PART OF THE WORLD. AND SO WHAT HAPPENS IS AS THEY SELECT THESE IDEAS AND AS THEY -- THE DIRECTION IS NOT REALLY SOMEBODY TELLING THESE PEOPLE WHAT TO DO, BUT SLIGHTLY TAPPING IT ONE WAY OR THE OTHER. IF THERE ARE MULTIPLE IDEAS THAT INNOVATOR CAN PURSUE, THIS THING REALLY HAS AN IMPACT. SO WHAT IT DOES, JUST CHANGES THE CULTURE OF HOW YOU INNOVATE IF YOU HAVE DESIRE FOR IMPACT. SO WE'RE FUNDED ABOUT 90 PROJECTS, 26 HAVE ACTUALLY BECOME COMPANIES. BUT MORE THAN THAT I THINK IT ACTUALLY CHANGES THE CULTURE. NSF RECENTLY LAST YEAR ANNOUNCED A PROGRAM AND WORKED TOGETHER WITH OUR FOUNDATION TO LAUNCH THE PROGRAM AND WHAT THEY'RE DOING IS NSF IS ROUGHLY ABOUT $7.4 BILLION, HALF IS PURE RESEARCH, HALF IS TRANSLATION FALL. PEOPLE DO HAVE A DESIRE FOR IMPACT. THEY CAME UP WITH A PROGRAM WHERE THEY SAID, WELL, IF PEOPLE -- THEY DO 25 GRANTS A QUARTER, ABOUT 100 GRANTS A YEAR. $50,000 APIECE. AND THE P.I. HAVE TO APPLY FOR THE GRANT TOGETHER WITH THE MENTOR. SO THEY HAVE TO ACTUALLY FIND A MENTOR BECAUSE THAT'S ONE OF THE BIGGEST ASSETS THIS COUNTRY HAS. LOT OF THE COUNTRIES DON'T HAVE ENOUGH PEOPLE WHO HAVE DONE COMPANIES AND VENTURE CAPPALLISTS AND ANGEL INVESTORS BUT U.S. IS ONE OF THE PLACES WHERE YOU HAVE A LOT OF THESE PEOPLE AND THE SERVICE COST WAS FOR 20-YEAR-OLDS WHO THEY COULD DO COMMUNITY SERVICE, NO REASON WHY WE SHOULDN'T HAVE A PROGRAM FOR MORE SENIOR PEOPLE WHO CAN CONTRIBUTE TO THE ECONOMY. SO THE P.I., THE PRINCIPAL INVESTIGATORS, FIND A MENTOR THEN APPLY TO NSF, IF THEY DO GET THE GRANT THEY TAKE THE 25 PEOPLE PUT THEM THROUGH A BOOT CAMP AT STANFORD FOR A WEEK TO DEVELOP THE PROGRAM. THEN AFTER THAT, WORK WITH THE MENTOR ALSO THEY GET ALL THESE PEOPLE TOGETHER EVERY FRIDAY FOR AN HOUR FOR ABOUT TEN WEEKS. A LOT OF THAT STUFF I THINK HAS A HUGE IMPACT IN TERMS OF ABILITY TO COME UP WITH IDEAS HOW -- BECAUSE THERE'S ALWAYS A BIG DISCONNECT BETWEEN THE RESEARCH COMMUNITY AND WHAT NEEDS TO HAPPEN. THE PROFESSOR SOMETIMES GETS CONFUSED WITH THE ENTREPRENEUR. THEY THINK THAT IF THEY HAVE AN IDEA THAT THEY ARE THE ENTREPRENEUR. SOMEHOW ENTREPRENEURSHIP DOESN'T WORK TOGETHER. THERE'S ALWAYS A MISUNDERSTANDING, PROFESSOR THINKS THAT HIS IDEA ONCE IT'S SOMEWHAT WORKING IN THE LAB THAT IT'S A DONE DEAL. THEY DON'T REALIZE THAT YOU HAVE TO CROSS ANOTHER THOUSAND BRIDGES BEFORE IT ACTUALLY HAS ANY CHANCES OF BEING SUCCESSFUL. THE PEOPLE ON THE OUTSIDE FEEL THE SAME WAY. THE ANGEL INVESTORS AND VENTURE CAPITALISTS THEY FEEL LIKE THEY DON'T HAVE ACCESS TO THE ELITE UNIVERSITIES IF ONLY THEY HAD A PASS THEY COULD WALK IN TO CAMPUS AND FUND ABOUT TEN IDEAS. DOESN'T HAPPEN THAT WAY. IT'S NOT LIKE IDEAS ARE READY TO BE FUNDED. ANYTHING WE CAN DO TO FOSTER THAT BRINGING RELEVANCE TO INNOVATION, WHEN WE DO THAT WE SHOULD BE CAREFUL NOT TO BRING THESE PEOPLE TO INTER-ACT TO THE COMMUNITY TO BE ON THE SAME PAYROLL. THEY SHOULD NOT BE PEOPLE -- OR RESEARCH LABS HIRE BECAUSE IF YOU HIRE THEM ONCE THEY BECOME A PART OF THE COMMUNITY YOU LOST THE VALUE. YOU HAVE TO HAVE PEOPLE WHO ARE NOT ON THE PAYROLL. VENTURE CAPITALISTS AND ENTREPRENEURS WHO MAKE A LOT OF MONEY. BUT SAT THE SAME TIME THEY'RE AVAILABLE. IN FACT CAPITAL LIST, SO FASHIONABLE TO BE A CAPITALIST AT MIT THAT THERE IS A BIG WAITING LIST. WE CAN DEMAND, UNPLEASED THIS AND THIS YOU CANNOT BE A CAPITALIST. IT'S A HUGE VALUE FOR THEM TO HAVE A VIEW IN TO RESEARCH COMMUNITY AND TO KNOW WHAT IS COMING. I THINK WITH THOSE COMMENTS I CAN ANSWER ANY QUESTIONS THAT YOU MAY HAVE. >> TERRIFIC. THE FLOOR IS OPEN TO QUESTIONS. GAIL, DO YOU WANT TO START? >> THANK YOU. VERY EXCITING. THE PROGRAM THAT NSF HAS PUT IN PLACE HOW MUCH DID YOU SAY THE TOTAL AMOUNT DEVOTED TO THAT IS OF YOUR BUDGET? >> IT'S 50,000 TIMES. $5 MILLION. >> THEY MUST HAVE NOT PUT IN PLACE AN EVALUATION PROGRAM TO EVALUATE THE OUTCOME AND CAN YOU TELL US A LITTLE ABOUT WHAT METRICS THEY'RE USING? >> RIGHT. I THINK INSTRUCTED SOMEBODY TO GET ALL THE DETAILS BUT THE OVERALL THEME YOU NEED A MENTOR. THAT AUTOMATICALLY SAYS THAT THE IDEA IS WORTH SOMETHING. THE PEOPLE VALUE THESE PEOPLE, ARE PEOPLE WHO ARE ABLE TO REACT VERY QUICKLY. I THINK IT'S A SMALL GRANT AND IT GETS DONE IN NO TIME AND PEOPLE GET THE MONEY AND THINGS GET MOVING. >> THANK YOU. >> ANY OTHER QUESTIONS OR COMMENTS? PLEASE, FRANCIS. >> SORRY I CAME IN COUPLE MINUTES LATE AND MAYBE YOU SAID SOMETHING ABOUT THE MIT EXPERIENCE, I'M CURIOUS WHEREVER YOU SEE THE MOST SIGNIFICANT CACHE OF IDEAS THAT DO HAVE THE POTENTIAL FOR SUCCESSFUL COMMERCIALIZATION IS THAT IN THE SENIOR FACULTY, THE MID CAREER FACULTY, THE JUNIOR FACULTY OR THE POSTDOCS OR GRADUATE STUDENTS AND ARE WE PROVIDING PATHWAYS FOR ALL OF THOSE INDIVIDUALS TO HAVE THIS KIND OF SUCCESSFUL COMMERCIALIZATION OR ARE WE FOCUSING PARTICULARLY ON THE MORE SENIOR ONES? >> YOU KNOW, I THINK AT MIT FOR EXAMPLE YOU HAVE SOME PEOPLE LIKE BOB LANGER WHO IS SO GOOD, HE CRANKS OUT A COMPANY EVERY WEEK, RIGHT? BUT HE ALSO UNDERSTANDS THAT HE'S NOT THE ENTREPRENEUR. HE CRANKS OUT IDEAS AND TYPICALLY HIS POSTDOCS OR GRADUATE STUDENTS LEAVE THEN START COMPANIES. ACTUALLY THE NUMBER OF YOUNG PEOPLE, IT'S THE FACT THAT THIS CENTER EXISTS THEN NURTURE THIS KIND OF RELEVANCE CONNECTION HAS BEEN A BIG TOOL IN TERMS OF INCLUDING FACULTY. THERE'S MORE APPLIES TO THE PROGRAMS FOR MORE SENIOR PEOPLE. AND GRADUATE STUDENTS LOVE IT, BECAUSE THEY REALLY APPRECIATE THE CONNECTION THAT THEY GET TO THE REST OF THE WORLD OUTSIDE THE CAMPUS. TYPICALLY WHAT HAPPENS IS THAT IF THE PROFESSOR WHO COMES UP WITH THE IDEA THEN TOGETHER THEY DEVELOP THE IDEA, THE PROFESSOR CONTINUES TO STAY AT THE INSTITUTE, MAY TAKE SABBATICAL FOR A YEAR OR TWO. BUT IT'S TYPICALLY THE POST DOC OR GRADUATE STUDENT THAT MAY GO WITH THE COMPANY. THEY MAY MAY NOT BE THE FOUNDER MAY NOT ENOUGH EXPERIENCE TO BE SORT OF THE PERSON. THEY WOULD BE A PART OF THE FOUNDING TEAM. >> TO FOLLOW UP, IF IT ACTUALLY WERE THE CASE THAT THE SENIOR POSTDOCS HAD THE IDEA, NOT THE SENIOR FACULTY PERSON, SENIOR POST DOC TRYING TO FIGURE OUT WHAT MY CAREER PATH, GOSH, MAYBE THIS IS MY CALLING. TO BE AN ENTREPRENEUR, WHAT HAPPENS TO THAT PERSON, DO THEY HAVE AN OPPORTUNITY TO GET THE KIND OF MENTORING ABOUT HOW TO AVOID ALL THOSE MANY PITFALLS THAT OTHERWISE WILL RUIN THAT VISION. >> ABSOLUTELY. I THINK WHAT HAPPENS IS THAT THEY BECOME EITHER CTO OR SOME SCIENTIFIC PERSON WITHIN THE COMPANY, MAY NOT NECESSARILY BE THE C.E.O. OF THAT PARTICULAR COMPANY BUT THEN HAVE AN OPPORTUNITY TO BE WITH THE COMPANY. THE GRADUATE STUDENTS AND POSTDOCS ARE MOST LIKELY TO GO WITH THE COMPANY THAT GETS FOUNDED THAN THE FACULTY. >> I'M ASKING DOES MIT PROVIDE THAT KIND OF MENTORING AND ENCOURAGEMENT AND ADVICE FOR SOMEBODY WHO IS IN THAT ROLE ABOUT WHETHER TO TAKE THIS LEAP AND WHETHER THEIR IDEAS ARE LIKELY TO BE SUCCESSFUL OR IS THAT ADVICE GENERALLY ONLY AVAILABLE TO PEOPLE WHO ARE FACULTY? GENERALLY AVAILABLE. BUT MYTH IS TRYING TO DO MORE AND MORE TO LOOK AFTER THE POSTDOCS. BECAUSE THE POST DOC COMMUNITY IS A FORGOTTEN COMMUNITY. THERE ARE PROGRAMS FOR FACULTY AND GRADUATE STUDENTS AND MYTH NOW HAS 1200 POSTDOCS. IT'S A LARGE COMMUNITY. LAST TWO OR THREE YEARS AND NEW PROVOST HAS REALLY TAKEN THAT UP AS CHALLENGE TO MAKE SURE THAT THE MOST DOCKS WHO COME IN HAVE CAREER PATH AND NOT JUST BE THERE AS SOMEBODY TO HELP SOMEBODY ELSE OUT. >> JUST WANTED TO CONGRATULATE YOU ON YOUR TALK AND ON THE STREET. I AM A FORMER CORPORATE MEMBER OF THE CENTER AND HAVE LOT OF DIRECT EXPERIENCE WITH IT. I THINK IT'S VERY UNIQUE IN THE COUNTRY AND IN THE WORLD, OF COURSE THE MIT HILL EUOR ECOSYSTEM IS HILL CREW IS EQUALLY UNIQUE AND PROCEED TUCKTIVE I WONDER IF FRANCIS ALLUDEED TO THIS WHETHER THAT SCALEABLE, WHETHER THAT COULD BE REPLICATED YOU DON'T SEE IT VERY MANY OTHER PLACES. >> RIGHT. WHAT INAND IS THAT THE DESIRE FOR IMPACT IS HUGE ON PART OF MOST OF THE PEOPLE WHO ARE THINK ERS. BUT THERE'S A DISCONNECT. THEY DON'T GET THE OPPORTUNITY TO INTER-ACT WITH THE OTHER PART OF THE WORLD. SO OBVIOUSLY THERE'S -- WE GET A LOT OF CALLS FROM LOTS OF UNIVERSITIES TO START A CENTER LIKE THAT. OBVIOUSLY OUR FOUNDATION DOESN'T HAVE THAT LEVEL OF FUNDING. SO WE DO HAVE FOUNDATION HIRED AN EXECUTIVE DIRECTOR TO FORM UNIVERSITY INNOVATION NETWORK. WE HAVE A LOT OF UNIVERSITIES NOW WHO COME AND SHARE THEIR FACULTIES. I THINK IT'S QUESTION, IF YOU HAVE A THOUSAND FACULTY IN ANY UNIVERSITY THERE WILL PROBABLY BE NATURAL BOB LANGERS OF THE WORLD THEN I THINK IF YOU JUST CREATE THAT ACCESS, I'M SEEING A LOT OF DESIRE ON A PART OF A LOT OF THE UNIVERSITIES. THEY SEE IT'S PUSHING IT PRETTY HARD. WE HAD I THINK LOT OF THE UNIVERSITY PEOPLE JUST MET DAY BEFORE IN WASHINGTON, ABOUT 150 UNIVERSITY PRESIDENTS SIGNED THIS LETTER SAYING THAT THEY ARE GOING TO TAKE THIS SERIOUSLY AND REALLY DO THINGS THAT COULD ACTUALLY CREATE THE IMPACT WITH THE RESEARCH DOLLARS THAT THEY SPEND AT THE CAMPUS. THERE IS DESIRE ON PART OF A LOT OF UNIVERSITY TO BE IMPACTFUL WITH THEIR EFFORTS. AND U.S. IS STILL NUMBER ONE IN THE WORLD IN TERMS OF INNOVATION ENTREPRENEURSHIP BUT SO FAR IT'S BEEN A NICE THING TO HAVE BUT FOR THE NEXT 20 YEARS IF YOU LOOK AT IT, IT'S THE ONLY THING TO HAVE IN TERMS OF THE COMPETITIVE ADVANTAGE. SO I THINK WE HAVE TO SOMEHOW PUSH IT HARDER AND HARDER TO MAKE SURE THAT EVERYBODY TAKES THAT PART OF IT A LITTLE BIT MORE SERIOUSLY. SOMETIMES PEOPLE GET ALL CONFUSED ABOUT THE FACT THAT ARE WE GIVING UP PURE SCIENCE. ARE WE BECOMING LESS RIGOROUS WITH THE RESEARCH BY BRINGING A LOT OF THE RELEVANCE IN. I HAVE FOUND THAT THAT IS NOT REALLY THE CASE. YOU NEED THAT RIGOR, OTHERWISE YOU WON'T SHINE WITH THAT RELEVANCE JUST TRYING TO DO SOMETHING THAT ALL OF -- THEN VALUE ADDED THERE. >> SO THIS MORNING WE HAD THE SPEAKERS MENTION VALUED LEARNING FROM FAILURES. AND CULTURE OF LEARNING FROM EXPERIENCE. IS THERE ANY ORGANIZED WAY THAT THIS IS DONE AT MIT OR OTHER PLACES WHERE YOU'RE ASSOCIATED TO SAY BEYOND ANECDOTES. >> IT'S THAT AT LEAST WHEN YOU START THE WORK YOU WANT TO BE VERY CLEAR ABOUT WHAT IS THE RISK AND WHAT IS IT THAT YOU'RE TRYING TO PROVE. FOR EXAMPLE, ONE OF THESE GRANTS, WHEN YOU GET A GRANT LOT OF TIMES PEOPLE WHO HAVEN'T TALKED THROUGH IT COME BACK SAY, GIVE ME HALF A MILLION DOLLARS. THEN YOU SAY, WHY, BECAUSE THEY'RE TRYING TO DO 20 THINGS. YOU SAY, WHY, WHICH OF THESE THINGS DO YOU REALLY NEED TO MAKE WORK, FOR THIS IDEA TO BE POWERFUL, TO BE IMPACTFUL, SO YOU HONE DOWN THAT IDEA AND THERE'S A RISK TO IT. BUT WHEN YOU REDUCE THAT RISK AND WORK ON THAT PARTICULAR IDEA AT LEAST YOU KNOW, SO YOUR FOCUS MORE ON THAT PARTICULAR IDEA. IF YOU HAVE TO FAIL, YOU FAIL QUICKLY. THOUGH MAY COME BACK WITH ANOTHER GRANT SAY, THAT DIDN'T WORK BUT MAYBE THIS WILL WORK. I THINK IT'S JUST IN THAT EXPERIMENTATION, CYCLE THROUGH THE IDEAS A LOT FASTER, THAT'S THE LEARNING. >> WE'VE BEEN PAYING A LOT OF ATTENTION TO YOUR IDEAS AND TO THE LETTER, WE VERY MUCH AGREE WITH THE IDEA THAT IF INNOVATION PLUS RELEVANCE TO HAVE IMPACT, WHAT WE'RE TRYING TO DO IS TO FIGURE OUT HOW TO DO A BETTER JOB OF DEFINING THE RELEVANCE AND DEFINING WHAT SOME OF THE CRUCIAL PROBLEMS ARE SO THAT WE CAN TAP IN TO THE INNOVATION WITHIN THE COMMUNITY. WE FIND THAT THAT'S OFTEN QUITE CHALLENGING, IT IS OFTEN HARDER -- EASIER TO GET PEOPLE TO COME UP WITH IDEAS THAN IT IS FOR THEM TO COME UP WITH AN IMPACTFUL PROBLEM. WE'RE SPENDING A LOT OF EFFORT IN TERMS OF TRYING TO -- WHY HAVEN'T WE SOLVED PROBLEMS INTERN AREAS MADE A LOT OF PROGRESS. ONE OF THE OPPORTUNITIES, CAN YOU GIVE US SOME SUGGESTIONS IN TERMS OF HOWbNx TO DO SOME OF THAT DEFINITION BETTER, ARE THERE WAYS TO CROWD SOURCE, FIND THAT YOU HAVE TO BE REALLY APPRECIATE WHAT YOU'RE SAYING ABOUT NOT GETTING TOO FAR OUT OF THE REAL WORLD BECAUSE IT'S WHEN YOU ARE REALLY TRYING TO SOLVE A PROBLEM THAT YOU REALIZE THAT YOU ACTUALLY HAVE A BARRIER. I'M WONDERING IF YOU HAD SOME SUGGESTIONS IN TERMS OF HOW WE MIGHT DO THAT SO THAT NOT NECESSARILY WE'RE MORE EFFICIENT, I'M NOT SURE EFFICIENCY IS WHAT WE'RE LOOKING FOR BUT EFFECTIVENESS WOULD BE REALLY GOOD. >> I THINK THE SERENDIPITY IS A BIG PART OF THIS WHOLE SITUATION. YOU CAN'T REALLY DICTATE THAT PART OF IT. BUT WHAT YOU CAN DO, YOU CAN IMPROVE CHANCES TREMENDOUSLY BY BRINGING THOSE COMMUNITIES TOGETHER. MIT IS SO CONNECTED, IT WAS FUNNY ABOUT SIX OR SEVEN YEARS AGO WE HAD THIS POSTER SESSION WHERE ALL THE PROFESSORS WOULD TALK ABOUT THEIR IDEAS AND WE HAD VENTURE CAPITALISTS AND ANGEL INVESTORS AND ENTREPRENEURS WALK AROUND SAY WHY NOT THIS, WHY NOT THIS. AT THE END OF THE CONFERENCE THIS YOUNG PROFESSOR WAS ALL SMILES, I SAID, WHY ARE YOU SMILING? HE SAID, I MET A VENTURE CAPITALIST. I THINK THERE IS A BIG BRIDGE BETWEEN THE TWO COMMUNITIES. SO THE MORE YOU CAN BRING THEM TOGETHER, YOU CAN'T FORCE IT, EITHER. YOU CANNOT SAY, THIS GUY IS A DOMAIN EXPERT IN THIS PARTICULAR AREA HE SHOULD BE YOUR MENTOR, THAT DOESN'T WORK. I THINK HAT TO BE A LITTLE BIT MORE OF A NATURAL SELECTION AND ALL WE CAN DO AS POLICY PERSON IS TO MAKE MORE OF THOSE PEOPLE AVAILABLE TO EACH OTHER. AND THERE IS A HUGE DESIRE ON BOTH PARTIES. I DON'T THINK YOU HAVE TO WORK REALLY HARD. YOU DON'T HAVE TO BRIBE ANYBODY TO CONNECT EACH OTHER BUT IF THERE'S WAY TO FACILITATE THAT I THINK THAT WOULD IMPROVE THE CHANCES. >> WE HAVE TIME FOR ONE MORE QUESTION. THEN, DESH, I'LL TAKE THE LIBERTY THEN OF ASKING IT. I READ NUMBER OF STUDIES THAT HAVE DONE STATISTICAL ANALYSES, QUITE FEW COME TO THE CONCLUSION WHEN THEY'RE ADDRESSING WHERE DO GOOD IDEAS COME FROM FOR PRODUCTS OR SERVICES, THAT THE HIGHEST SUCCESS RATE COMES FROM IDEAS THAT ORIGINATE WITH PEOPLE THAT DEAL DIRECTLY WITH THE CUSTOMER, SALES PEOPLE, MAINTENANCE PEOPLE, COMPLAINT DEPARTMENT OR WHAT HAVE YOU. NEXT HIGHEST SUCCESS RATE COMES FROM THE LABORATORIES, HIGHEST FAILURE RATE COMES FROM THE HEADQUARTERS, PEOPLE ARE HEADQUARTERS WITH IDEAS. I JUST WONDER WOULD YOU AGREE WITH THAT AND HOW DO YOU -- YOU'VE TALKED ABOUT BRINGING THE PEOPLE TO LABORATORY AND VENTURE CAPITALISTS AND ANGELS TOGETHER BUT HOW ABOUT THE CUSTOMERS OUT THEREU THE PEOPLE, IN THIS CASE PEOPLE WHO ARE SEEKING HEALTH CARE, HOW DO WE GET THAT INVOLVED? >> I THINK IT'S FROM THE RESEARCH SIDE OF IT, YOU ARE LOOKING FOR A LITTLE BIT MORE BREAKTHROUGH AS OPPOSED TO INCREMENTAL THINGS. I DON'T KNOW IF IT'S WORTH CONNECTING THE ACTUAL END USER TO THE RESEARCHER. THAT IS TOO LITTLE. THERE WAS AN EXAMPLE. THIS PROFESSOR, DOUG HART, HE CREATED 3D CAMERA WHICH IS VERY SIMPLE CAMERA WITH THE HOLE THAT WENT AROUND AND AROUND AND CLICKED PHOTOGRAPHS TO DO FLUID DYNAMICS RESEARCH. HE THOUGHT HE WOULD APPLY TO CHECKING PEOPLE OUT OF THE AIRPORT, WHICH DIDN'T MAKE SENSE. BUT A COUPLE OF PEOPLE GOT INVOLVED THEY LOOKED AT 34 DIFFERENT MARKETS FOR THAT PARTICULAR IDEA. INSPECTION OF PARTNERS, FINALLY TURNED OUT THAT THE DENTAL IMAGING IS A $4 BILLION A YEAR MARKET. ONLY TECHNOLOGY THAT EXISTS TODAY IS BITING OF THAT GOOEY STUFF. HE TIMLY GOT FUNDED $6 MILLION THEY RECREATED THIS LITTLE THING THAT LOCKS LIKE A TOOTHBRUSH WHICH YOU SWIPE IT CREATES THE DENTAL IMAGE RIGHT DOWN TO NINE MICRONS WHICH NOW IS ON EVERY DENTIST'S CHAIR. I THINK IT'S LIKE A NEW IDEA THAT FINDS RELEVANCE IS ONE WAY TO DO IT. NOW HOW DO YOU FACILITATE PEOPLE COMING UP WITH MORE IDEAS THAT MAY HAVE RELEVANCE IS SOMETIMES WHAT WE DO GET WHOLE BUNCH OF THESE PEOPLE TOGETHER IN A ROOM,USÖ PROFESSORS AND PH D STUDENTS AND GRADUAL STUDENTS THEN INVITE FEW PEOPLE FROM SOME DOMAIN AND SAY, WELL, IF YOU HAD A WISH, WHAT PROBLEMS WOULD YOU LIKE TO HAVE SOLVED. THESE ARE MORE CTOs, THE COMPANIES, THEY CAN DREAM AS WILD AS THEY WANT SAY, WELL, I WISH. THAT TRIGARIES WHOLE BUNCH OF IDEAS, I DON'T THINK THERE'S NEED TO CONNECT RESEARCHERS TO THE END USERS, BUT TO SOMEBODY IN BETWEEN HE ACTUALLY HAS FILTERED OUT WHO KNOWS WHAT PROBLEMS COULD HAVE A BIG IMPACT. >> ON THIS POINT, AN ORGANIZATION CALLED RARE PROJECT, FOR AIR DISEASES. ONE OF THE THINGS THEY DO, BESIDES RAISING MONEY GENERALLY IS TO CONNECT DONORS WITH SCIENTISTS SO THE DONOR HAS A SENSE OF WHAT THE SCIENTISTS CAN BRING TO IT AND WHAT THEY'RE TRYING TO DO, DONORS SOME TIME, PATIENT ADVOCACY, FAMILIES AND ORGANIZATIONS ARE REALLY STRONGLY FOCUSED ON WHAT THEY SEE MOST PRESSING NEEDS AND MOST TROUBLING SYMPTOMS IN THE PATIENTS. IT'S PRETTY INTERESTING COMBINATION. >> I HAVE A QUESTION, I THINK MAY BE WRONG INTERPRETATION BUT, DESH, YOU SAID SOMETHING THAT I HOPE YOU CAN CLARIFY. THIS IS OBSERVATION I'VE MADE OVER THE LAST 20 OR 30 YEARS, DUE TO THE DESIRE FOR RELEVANCE, I'M TALKING ABOUT PUBLIC FUNDING NOT TALKING ABOUT PRIVATE FUNDING. DUE TO THE PUSH FOR RELEVANCE AND CREATING WEALTH AND ECONOMIC OPPORTUNITY. THERE HAS BEEN A LACK OF CONNECTIVITY TO THE INSPIRATION-DRIVEN RESEARCH THAT IS THE BASIS OF ALL THIS AND IN FACT INSPIRATION DRIVEN RESEARCH IN THIS COUNTRY IS IN TROUBLE FROM MY PERSPECTIVE. YOU MADE A STATEMENT, ABOUT TEN MINUTES AGO WHICH I FOUND A LITTLE DISCONCERTING I'D LIKE TO ASK YOU TO PERHAPS QUALIFY WHAT YOU SAID, BECAUSE IT IS THE INSPIRATION DRIVEN RESEARCH THAT OPENS UP EVERY POSSIBILITY AND THIS QUEST FOR GENERATING JOBS AND WEALTH AND RELEVANCE MAY BE MOVING IN THE WRONG DIRECTION FOR PERHAPS THE BIGGEST STRENGTH THAT AMERICA HAS, THE DIFFERENCE BETWEEN US AND OTHER COUNTRIES IS CRAZIER THAN MOST. AND IT IS THIS CRAZINESS THAT WE HAVE AND THIS UNDERSTANDING THAT DOESN'T HAVE TO BE A GOAL FOR THE RESEARCH THAT WE HAVE ACTUALLY FUNDED OVER THE YEARS. I WAS GOING TO REMAIN QUIET BUT I'D LIKE YOU TO CLARIFY THAT STATEMENT. >> I THINK IT'S TWO SEPARATE THINGS. THERE ARE PEOPLE WHO ARE WORKING ON VERY CORE BASIC IDEAS AND YOU SHOULD FUND THEM AND YOU DON'T NEED TO BOTHER THEM WITH RELEVANCE BECAUSE THEIR IDEAS COULD BE RELEVANT. BUT THERE IS A LOT OF PEOPLE WHO WORK ON TRANSLATION FALL RESEARCH AND WHO HAVE A HUGE DESIRE FOR IMPACT. IF YOU LOOK AT THE WHOLE SECTION, THERE ARE SOME PEOPLE WHO ARE DRIVEN BY THE PURE BEAUTY OF THE IDEA, INSPIRATIONAL RESEARCH, YOU SHOULD FUND THOSE PEOPLE. BUT THE OTHER PART OF IT THAT WHERE PEOPLE THINK THAT THEY'RE CREATING IMPACT THAT DOES NOT -- IT'S VERY BAD SUPPLY CHAIN. THEY COME UP WITH LOTS OF IDEAS, DRIVEN NOT BY -- THEY THINK THAT WHAT THEY'RE DOING IS COMING UP WITH IDEAS THAT WILL HAVE AN IMPACT. BUT WHAT HAPPENS IS, NO NEW IDEAS ARE A BAD IDEA BECAUSE EVERY NEW IDEA IS A GOOD IDEA. BUT IT'S -- SOME IDEAS COULD BE USEFUL, SOME FIVE YEARS FROM NOW, SOME 50 YEARS FROM NOW. AND ALL I'M TRYING TO DO IS TO SEE IF THERE'S A WAY, IF PEOPLE HAVE DESIRE FOR IMPACT IF THAT'S THEIR PRIMARY MOTIVATION, THEN DO THOSE IDEAS IN A WAY SO THAT THEY HAVE MORE IMPACT, WHICH DEVELOP SOCIAL IMPACT THEN CONTINUE TO FUND MORE RESEARCH. BUT NOT COMPROMISE THE BASIC INSPIRATIONAL IMAGE. >> BECAUSE PEOPLE RESPOND TO THE REWARD SYSTEM, AND THE EXPECTATION WHERE SOCIETY GIVES THEM NOT JUST FINANCIAL REWARDS BUT EMOTIONAL REWARDS THERE HAS BEEN REAL LOSS IN NATIONAL SUPPORT AS EXPRESSED THROUGH THE MEMBERS OF CONGRESS AND ALL I ASK IS, THAT THE RELEVANCE COMMUNITY SPEND SOME TIME SUPPORTING THE INSPIRATION-DRIVEN RESEARCH BECAUSE EVERYONE CAN'T BE CUT OUT TO DO IT, YET PEOPLE FEEL THAT'S WHERE THE REWARDS ARE. >> YOU KNOW, ACTUALLY -- WHEN I JOINED MIT12 YEARS AGO, THE BIG TERN AT MIT, WELL, IF YOU DO CENTER LIKE THIS WITH EVERY PROFESSOR CHASE MONEY AND CHASE OPPORTUNITIES OUTSIDE AND JUST BECOME A CONTRACT OR AND NOT EVEN DO RESEARCH. LEAVE A LITTLE -- BUT WILL THERE BE CORRUPTION OF INTELLECTUAL PURSUIT. >> THANK YOU VERY MUCH FOR SHARING THOSE THOUGHTS. THIS IS VERY HELPFUL. AT THIS POINT WE'LL TURN TO OUR THIRD PANEL OF THE DAY AND GAIL, I THINK YOU'RE GOING TO HOST THIS. >> WELL, I'M GOING TO CERTAINLY TRY TO HOST IT. I THINK RODERIC IS GOING TO MODERATE IT. WHY DON'T YOU LEAD OFF. >> THANK YOU, GAIL. THIS SESSION IS ON STRATEGIES FOR INCREASING COMMERCIALIZATION. I THINK THIS TOPIC IS -- THE DISCUSSION ALREADY BEEN PRIMED FOR DISCUSSION BASED ON THE TWO PRECEDING PANEL DISCUSSIONS THAT WE HAD. THIS GRAPHIC HERE SORT OF SUMMARIZES TO SOME EXTENT THE DISCUSSION THAT WE ENGAGED IN THIS MORNING AND THE PANELIST, IS THAT WE HAD, I WAS REALLY SORT -- SORT OF CAME, OCCUPIED TWO ENDS OF THE GROUPS REPRESENTED -- HERE IF I CAN GET MY POINTER. IT ISN'T WORKING. THE SMALL BUSINESS COMMUNITY ON THE LEFT-HAND SIDE THERE WHICH MAKES USE OF THE GRANT MECHANISMS. ON THE OTHER END THE VENTURE CAPITAL COMMUNITY WE HEARD FROM WITH CONSIDERABLE DISCUSSION ABOUT THIS GAP IN THIS PHASE OF THIS CONTINUUM FROM A BRIGHT IDEA TO A COMMERCIAL PRODUCT, BETWEEN THE END OF THE FUNDING HERE AND THE ABILITY TO ATTRACT AND SECURE VENTURE CAPITAL. HAVING BEEN DESCRIBED AT VARIOUS KINDS OF DIFFERENT MODIFIERS IN FRONT OF THEM. THERE WAS CONSIDERABLE DISCUSSION ABOUT THE NEED FROM THE NIH STANDPOINT TO BE A BIT MORE CONCERNED ABOUT THIS AND WAYS OF BRINGING THESE TWO FUNDING STREAMS TOGETHER, THE SBIR AND VENTURE CAPITAL SOURCES OF FUNDING AND MINIMIZING THIS GAP. THAT SETS US UP FOR THE DISCUSSION WE'RE ABOUT TO HAVE FEATURING FOUR PEOPLE THAT HAVE ESTABLISHED CENTERS CREATING TO SUCCESSFULLY NAVIGATE THIS SEQUINS FROM A GREAT IDEA. WELCOME, LISA. THE THREE FROM ACADEMIA FROM MII, STANFORD AND UC-SAN DIEGO WE'LL HEAR FROM EACH OF THEM. EACH HAS BEEN GIVEN TEN MINUTES AND THE QUESTIONS ARE BEING ASKED TO ADDRESS IN THEIR PRESENTATION OR TO DESCRIBE THE CHALLENGES THAT YOU FACE IN MOVING MISSING PRODUCTS FROM THE DISCOVERY PHASE TO COMMERCIALIZATION. SECOND, TO GIVE WHAT YOU CONSIDER THE CRITERIA THAT ARE IMPORTANT IN DETERMINING WHETHER OR NOT THE TECHNOLOGY IS RIGHT FOR INVESTMENT. AND THIRDLY, HOW EXISTING PROGRAMS AIMED AT MOVING BASIC DISCOVERIES IN TO THE MARKET CAN BE STRENGTHENED. OUR FIRST PANELIST, ONCE AGAIN, IS DESH. >> ACTUALLY YOU'VE BEEN GENEROUS ENOUGH TO GIVE ME ENOUGH TIME MAYBE I'LL DONATE MY TIME TO THE OTHER PANELISTS HERE. >> OKAY, KEVIN? [ NOT AUDIBLE ] >> I'LL INTRODUCE KEVIN A BIT WHILE WE'RE WAITING. CODIRECTOR OF SPARK TRANSLATION FALL RESEARCH PROGRAM AT STANFORD. KEVIN IS BOTH A PHYSICIAN AND A BUSINESS PERSON. THANK YOU VERY MUCH. THANK YOU VERY MUCH FOR THE OPPORTUNITY TO COME DISCUSS THE SPARK PROGRAM WHICH IS ONE WAY AT STANFORD WE TRY TO MOVE FORWARD THERAPEUTICS AND DIAGNOSTICS. WE HAVE SISTER PROGRAM I SHOULD MENTION CALLED BIODESIGN THAT DOES THE SAME FOR MEDICAL DEVICES. ONE OF THE PROBLEMS IN ADVANCING RESEARCH DISCOVERIES IN TO THE COMMERCIAL SECTOR IN TO THE CLINIC AND ACADEMIA, THERE ARE SEVERAL. ONE IS THAT OUR FACULTY ARE TRAINED TO DO THIS, WE TEND TO BE VERY SPECIALIZED TO BECOME WORLD EXPERTS IN OUR AREA, THERE FOR KNOWLEDGE OF WHAT IT TAKES TO DO APPLIED SCIENCE TO ADVANCE THE PROGRAM AND CAN BE RISKY ENOUGH TO WHERE COMMERCIAL SECTOR WOULD LIKE TO LICENSE IT WHERE YOU CAN MOVE IT IN TO THE CLINIC. NUMBER TWO, SOMETHING THAT WAS ALREADY MENTIONED BY DR. GOLDEN IS INCENTIVES. THE CURRENT INCENTIVES FOR CAREER ADVANCEMENT ARE REALLY BASED ON PUBLICATIONS AND GRANTS, AND THERE HAS NOT BEEN A LOT OF REWARD, PER SE, FOR MOVING SOMETHING IN TO THE CLINIC OR IN TO THE COMMERCIAL SECTOR. THIRD, IS FUNDING AVAILABILITY. FOR THE MOST PART FUNDING HAS TENDED TO FOCUS ON EITHER SIDE, EITHER THE VERY BASIC RESEARCH OR CLINICAL TRIAL THAT APPLIED STAGE OF RESEARCH IN THE MIDDLE HAS RECEIVED LESS, I THINK THAT IS CHANGING UNDER OUR CURRENT DIRECTORSHIP AT THE NIH. THEN OF COURSE LASTLY IT'S MUCH EASIER TO CURE RATS THAN PEOPLE. THE VALLEY OF DEATH HAS BEEN MENTIONED ALREADY, OR CHASM. WE HAVE ACADEMIC MEDICINE ON THE RIGHT. WE HAVE CULTURAL ISSUES IN MOVING THINGS FORWARD WE HAVE LACK OF KNOWLEDGE IN MOVING THINGS FORWARD, FUNDING ISSUE IN MOVING THINGS FORWARD TO INDUSTRY OR THE CLINIC AND THIS IS HOPEFULLY WHERE SPARK WILL STEP IN AND HELP. WEARER PROGRAM RUN OUT OF THE OFFICE OF THE DEAN OF THE MEDICAL SCHOOL. AND WE'RE ALSO A PARTNERSHIP BETWEEN THE RESOURCES OF THE UNIVERSITY AND LOCAL BIOTECH PHARMACEUTICAL AND HEALTH CARE INVESTMENT COMMUNITIES. WE REALLY HAVE THREEFOLD MISSION. ONE IS TO EDUCATE. WE WANT TO EDUCATE OUR FACULTY, OUR GRADUATE STUDENTS AND POST DOCTORAL FELLOWS ON THE PROCESS OF TRANSLATION. WHY DO WE DO THIS. OVER HALF OF OUR STUDENTS AND FELLOWS ARE ACTUALLY GOING TO GO IN TO INDUSTRY, THERE ARE NOT ENOUGH PHYSICIANS IN ACADEMIA EVEN IF THEY WERE SO INCLINED. ALSO HAVE ETHICAL DUTY TO THE TAXPAYERS WHO SUPPORT OUR RESEARCH, THEY'RE NOT OPPOSED -- LOT OF THEM HOPE THAT IN THE 20 YEARS WHEN THEY HAVE THE CANCER THEY'RE GOING TO BE BETTER OPTIONS FOR THEM IN TERMS OF TREATMENT. OUR SECOND GOAL TO MAKE THIS HAPPEN. TO SELECT PROJECTS AND ADVANCE THEM, DE-RISK THEM MOVE THEM TOWARD THE CLINIC. I SAY TO THE CLINIC OR COMMERCIAL SECTOR BECAUSE WE TAKE IN PROJECTS THAT ARE NOT GOING TO BE COMMERCIALLY ATTRACTIVE BUT WILL BENEFIT PATIENTS. THAT WOULD REPRESENT PROBABLY 25% OF THE PROJECTS. LIKE TO THINK MORE INNOVATIVE WAYS. AWFUL LOT OF MONEY IS SPENT CURRENTLY TO GET A DRUG APPROVED BY THE FDA AND WE'RE LOOKING FOR WAYS TO MAKE MOREÖ8 ECONOMICAL. OUR SELECTION CRITERIA ARE VERY BASIC AND SIMPLE. LOOKING FOR THERAPEUTIC OR DIAGNOSTIC PRODUCT IN DEVELOPMENT THAT ADDRESSES UNMET NEEDS. IT HAS TO BE NOVEL APPROACH AND WE'D LIKE SOME SENSE THAT WITHIN TWO TO THREE YEARS WE CAN DERISK IT ENOUGH TO ADVANCE IT EITHER TO THE COMMERCIAL SECTOR THROUGH LICENSING OR MOVE IT DIRECTLY TO THE CLINIC. WE DO GIVE SPECIAL CONSIDERATION TO RARE ORPHAN DISEASES AND -- BECAUSE THEY HAVE FIDUCIARY RESPONSIBILITY TO THEIR INVESTORS TO MAKE PROFIT. WHAT IS OUR SELECTION PROCESS. WE PULL TOGETHER COMMITTEE MADE UP OF DOZEN OR 15 FOLKS, FEW ARE ACADEMICS BUT VAST MAJORITY ARE PEOPLE FROM LOCAL BIOTECH PHARMACEUTICAL AND HEALTH CARE INVESTMENT COMMUNITIES. VERY KNOWLEDGEABLE GROUP AND THEY KNOW BOTH THE BIOLOGICAL SIDE, DRUG DEVELOPMENT SIDE AND DIAGNOSTIC DEVELOPMENT SIDE AS WELL AS COMMERCIAL IMPLICATIONS OF MOVING THINGS FORWARD. WE SOURCE OUR POTENTIAL PROJECTS FROM TWO PLACES. ONE WE ASK TECH TRANSFER OFFICE TO END US THE ABSTRACTS OF UNLICENSED DISCOVERIES THAT COULD BE EITHER THERAPEUTIC OR DIAGNOSTIC. SECONDLY WE SEND OUT REQUEST FOR PROPOSALS. VERY LOW BARRIER TO APPLY, ABOUT TWO PAGES WE ASKED THEM TO COVER WHAT THE PRODUCT IS, WHAT THE UNDERLYING SCIENCE IS, WHAT THEY'RE PROPOSING -- WHAT THEY SEE IS DEVELOPMENT PATH WHAT THEY HOPE TO ACCOMPLISH WITH TWO YEARS OF SUPPORT. ALL OF THIS IN TWO PAGES. THERE'S A LOT OF NARROW MARGIN. WE DO PAPER REVIEW OF THESE 200 OR SO REDUCE IT DOWN TO ABOUT 20 FINALISTS WE INVITE TO COME GIVE A PITCH. IT COVERS EXACTLY THOSE SAME TOPICS PLUS WHAT THEY KNOW ABOUT THEIR INTELLECTUAL PROPERTY. THEY HAVE TEN POINTS GIVE THE PITCH WE HAVE TEN MINUTES TO ASK QUESTIONS, KICK THE TIRES, SO FORTH. THESE PITCHES HAPPEN OVER ABOUT FOUR OR FIVE EVENINGS AT THE END WE'LL SELECT ROUGHLY TEN TO MOVE FORWARD IN SPARK. ONCE SELECTED PROJECT WILL BE FUNDING GENERALLY FOR TWO YEARS, OCCASIONALLY THREE IF IT'S AT VERY EARLY STAGE. WHAT'S OUR APPROACH. NUMBER ONE WE GIVE FUNDING, MONEY, VERY MODEST FUNDING ON AVERAGE $50,000 PER PROJECT PER YEAR. THE RANGE HAS BEEN FROM 8,000 TO JUST SHY OF 100,000 PER YEAR. THE FUNDING IS TIED DIRECTLY TO ACCOMPLISHMENT OF MILESTONES. WE DON'T GIVE THE 50 IN ONE FELL SWOOP OR GIVE ITAL ALL WE KEEP IT IN OUR OWN COFFERS AND THE TEAM THAT IS SELECTED FOR THE PROJECT SUBMITS FUNDING REQUEST FOR ACCOMPLISHMENT OF A PARTICULAR MILESTONE AND ASSOCIATED FUNDS. WE WILL GIVE THEM -- JIGGLE IT AROUND TO MAKE SURE IT'S REALISTIC, GIVE THEM THAT FUNDING WHEN THEY ACCOMPLISH THAT MILESTONE THEY CAN COME BACK ASK FOR MORE. WE DO EDUCATIONA YEAR LONG SEMINAR THAT THE SPARK PARTICIPANTS ARE REQUIRED TO COME TO COVERING DRUG AND DIAGNOSTIC DEVELOPMENT. WE STARTED THE VERY BASICS HOW DO YOU DEVELOP AN ASSAY FOR HIGH THROUGHPUT SCREEN. TAKE THEM THROUGH EACH OF THE CRITICAL STEPS. ENDING WITH COMMERCIAL TOPICS AT THE END. WE DO COVER INTELLECTUAL PROPERTY UP FRONT IF YOU BLOW THAT THEN WE'LL FUND YOUR PROJECT. ACADEMICS LIKE TO SPEAK PUBLICLY AND PUBLISH. THIRD THING WE PROVIDE IS MENTORSHIP. WE HAVE ABOUT 50 OR SO INDUSTRY VOLUNTEERS THEY RANGE FROM C.E.O.s OF COMPANIES, VENTURE CAPITALISTS, HEADS OF R&D, DOWN TO VERY CONCRETE SKILLS, SOMEONE WHO IS VICE PRESIDENT OF REGULATORY, FOR EXAMPLE. OR CHEMISTS OR FOLKS WITH EXETER TEASE IN ASSAY DEVELOPMENT. THEY COME ON REGULAR BASIS TO GIVE ADVICE THEY ALSO WILL 'DEVELOPMENT PARTICULAR PROJECTS AND HELP SEE THEM THROUGH. THEN LASTLY WE DO MATCHMAKING. AT THE APPROPRIATE TIME WE TRY TO CONNECT PROJECTS WITH INVESTORS, COLLABORATORS AND SO FORTH. A WORD ABOUT THE MENTORS. IN ADDITION TO WHAT I SAID, THEIR MOTIVATION. NUMBER OF OUR MENTORS WILL COME IN INITIALLY BECAUSE THEY'RE LOOKING FOR AN ENTREPRENEURIAL OPPORTUNITY, MAYBE NEXT BEST THING TO BRING OUT WE ENCOURAGE THAT. WE WANT THAT TO HAPPEN. BUT BY AND LARGE THESE PEOPLE ARE COMING BASICALLY EVERY WEEK BECAUSE THEY'RE HAVING FUN AND THEY ARE SEEING EXCITING THINGS. MOST OF THEM ARE PH Ds AND MDs WHO SPENT A LOT OF TIME IN ACADEMIA. THERE IS A BIG SENSE OF ALTRUISM. THEY GIVE AWFULLY LARGE AMOUNT OF TIME AND EFFORT. OF OUR 50, PROBABLY 25 SHOW UP EVERY WEEK EVEN TO THE SEMINARS WHICH IS SHOCKING TO ME. WHAT'S OUR APPROACH. ONE THING WE TRY TO DO IS INSTILL PROJECT MANAGEMENT. ACADEMIC WAYS TO FOLLOW MOST EXCITING RESEARCH IN THE RANDOM WALK WHAT WE'RE TRYING TO DO IS GET THEM TO KEEP THEIR EYE ON THE PRIZE. MOVE FORWARD TO GET‡„ TO THE DIAGNOSTIC OR DRUGS THAT THEY CAN GET FUNDED. VERY FIRST EXERCISE THEY DO IS WRITE THEIR TARGET PRODUCT PROFILE, PRESENT TO THE ADVISORS. AS I MENTIONED BEFORE OUR FUNDING -- ALSO REQUIRE OUR SPARKEES, WHICH WE CALL THEM TO COME EVERY WEEK TO THESE SEMINARS AND MEETING TO PROVIDE QUARTERLY PRONG YOU CAN UPDATE. THESE ARE GIVEN VERBALLY IN THE SETTING OF THE SEMINARS EVERY OTHER WEEK WE HAVE PROJECT UPDATE OR SIMILAR. THEY ARE ASKED TO PRESENT VERY BRIEFLY WHAT THEIR PRODUCT AND SCIENCE ARE BUT REALLY TO FOCUS ON WHAT THEIR MILESTONES WERE. THE EDUCATION I THINK I HAVE COVERED PRETTY MUCH WITH THE EXCEPTION OF WE DO OFFER GRADUATE STUDENT COURSE AND DRUG DISCOVERY ENCOURAGE THE STUDENTS TO GET INVOLVED AS WELL. WHAT ELSE DO WE DO, WE HELP MATCH UP OUR INVESTIGATORS WITH FACILITIES, WE HAVE 20 CORE SERVICE CENTERS AT STANFORD REPRESENTING HIGH THROUGHPUT SCREENING, ANIMAL IMAGING, FORMULATION AND SO FORTH, CRITICAL THINGS FOR MOVING DRUGS AND DIAGNOSTICS FORWARD. WE INTRODUCE OUR BASIC SCIENTISTS. WE TRY TO COME UP WITH SELECT CONTRACT RESEARCH ORGANIZATIONS SO THERE'S LOW BARRIER TO FIND THEM IF WE DON'T OFFER THE SERVICE ON CAMPUS. THEN MEN FOR SHIP. WHICH I MENTIONED PREVIOUSLY. ANYTHING FROM OVERALL STRATEGY TO SPECIFICS, YOU HAVE FAMILY OF KIDS IN HIGH THROUGHPUT SCREEN, HOW MIGHT YOU MODIFY THOSE MOLECULES TO MAKE THEM MORE POTENT, MORE BIOAVAILABLE. LASTLY BUILDING BRIDGES AS I MENTIONED. TO DATE WE'RE NOW IN OUR SIXTH YEAR OF SPARK. WE'VE HAD 60 PROJECTS, 33 ARE ACTIVE, 26 ARE GRADUATES. WE'RE A LITTLE BACK LOADED ON THAT. OF THE 67 ARE STUDENT-LED PROGRAMS. I SHOULD SAY THAT 30% OF OUR PROJECTS ARE PEDIATRIC PROJECTS WHICH IS REFLECTION OF THE TERRIFIC PEDIATRIC GROUP THAT WE HAVE AT THE UNIVERSITY. ABOUT 20% ARE GLOBAL HEALTH PROJECTS. [PHONE RINGING] THIS IS JUST A LIST OF THE PROJECTS WE TOOK IN TO SPARK THIS PAST YEAR TO GIVE YOU AN IDEA. CHINESE BOTANICAL FOR ULCERATIVE COLITIS IS A STUDENT-LED PROJECT. HE'S A PH D IN MUSIC. WE HAVE COMBINATION DIAGNOSTIC THERAPEUTIC FOR SARCOMA. DYING NOT PARTICULAR PANEL THAT SEEMS TO BE VERY EFFECTIVE IN PICKING UP WOMEN WHO WILL DEVELOP PREAUTO CLAMS I CAN'T. FIVE OR SIX OF THOSE ARE NEW MOLECULAR ENEMIES. WITH REPURPOSING, WE'LL TRY TO DEVELOP THEM INTERNALLY AS DEEPLY AS WE CAN. THEN TURN THEM OVER. WHAT ARE OUR METRICS OF SUCCESS. OUR HARD METRICS OF SUCCESS ARE THE FIRST TWO LISTED ON THAT SLIDE, NUMBER ONE IS PROJECTS ADVANCING TO THE CLINIC. NUMBER TWO IS PROJECTS THAT ARE LICENSED TO COMMERCIAL ENTITIES. WE'VE BEEN SURPRISED ACTUALLY THAT OUR SPARK PROJECTS HAVE RECEIVED A LOT OF FOLLOW-ON GRANT SUPPORT FROM INDUSTRY FROM, FOUNDATIONS AND FROM THE FEDERAL GOVERNMENT WHICH ACTUALLY DWARFS THE INVESTMENT BY THE DEAN'S OFFICE. OF COURSE EXCITED ABOUT PUBLICATIONS. IN TERMS OF EDUCATION, OUR WEEKLY SEMINARS WE RUN THEM ON WEDNESDAY EVENING THROUGHOUT THE CALENDAR YEAR 5:30 TO 7:30 AT NIGHT. WE WRITER OUR SPARK PEOPLE TO COME. WE HAVE ABOUT 70 DO 80 ATTENDEES PER WEEK. 30 ARE SPARK PEOPLE. 20 OR SO. 20 ARE INDUSTRY ADVICERS REMAINDER ARE FACULTY, POST DOCTORAL FELLOWS AND STUDENTS ACROSS THE UNIVERSITY WHO ARE INTERESTED IN LEARNING ABOUT THE TRANSLATION FALL PROCESS. OUR SPARK PROJECTS TO DATE AS I MENTIONED BEFORE, 27 HAVE COMPLETED SPARK, OF THOSE 27, TEN HAVE BEEN LICENSED. OF THOSE TEN, SEVEN HAVE GONE IN TO CLINICAL STUDIES. OF THOSE TEN, SEVEN ARE START UP, FOUR HAVE RECEIVED SBIRs, ACTUALLY TWO ARE CURRENTLY. ONE WAS LICENSED TO EXISTING SMALL BUSINESS WHICH ACTUALLY ALSO HAS OBTAINED SBIR TO DEVELOP THE PROJECT, TWO WERE LICENSED TO LARGE COMPANIES. ADDITIONAL FOUR OF THOSE 27 ARE IN THE CLINIC BUT UNLICENSED. EXAMPLES OF PROJECTS, ON OF OUR DERMATOLOGISTS HAS BEEN INVESTIGATING THE HEDGE HOG PATHWAY, IDENTIFIED AN INHIBITOR. SHOWING BENEFIT WITH SYSTEMIC EXPOSURE IN BOTH SPORADIC BASIL CELLS. WHY GO TOPICAL. IT HAS ALL SORTS OF ISSUES WITH THE CYP SYSTEM. NOT A GREAT DRUG TO BE -- >> CAN YOU WRAP UP. >> I CAN. CHALLENGES, AS MENTIONED PREVIOUSLY MARKED DECREASE IN VENTURE FUNDING FOR NEW BIOTECH COMPANIES. INITIATE CLINICAL STUDIES WE THAT HAVE THREE PROJECTS ON HOLD JUST FOR THAT REASON. I JUST WANT TO MAKE POINT WITH THIS SLIDE. THIS CAN BE TAUGHT, THESE ARE STUDENT PROJECTS THAT HAVE BEEN ADVANCING DEVELOPING THERAPEUTIC FOR GLOBAL HEALTH DISEASES. SPARK I THINK IS JUST AN EXAMPLE OF ENABLING ACADEMIA TO TAKE AN EXPANDED ROLE. >> THANK YOU, KEVIN. OUR NEXT PANELIST IS LISA KUREK. >> THANK YOU VERY MUCH I APPRECIATE THE OPPORTUNITY. I'M GREAT GRATEFUL TO BE HERE. I'M AN OUTLIER, I'M NOT A UNIVERSITY OR START UP COMPANY OR AT NIH. WHAT I'D LIKE TO DO TELL YOU ABOUT BBC MY FIRM, WHAT WE DO AND I THINK HISTORY OF BBC WILL SOMEBODY WHAT INSTRUCTIVE IN THE EVOLUTION OF SBIR AND I HOPE YOU DON'T MIND IF I BE THE CRITICAL TACTICIAN TO TALK ABOUT SOME OF THE SPECIFICS OF THE SBIR PROGRAM AND WHERE IT FA SALTATES AND WHERE IT HINDERS WHAT I THINK WE'RE HERE TO TALK ABOUT WHICH IS COMMERCIALIZATION. A BRIEF BACKGROUND, I'M A BIOMEDICAL ENGINEER BY TRAINING I DID A NUMBER OF YEARS OF ENGINEERING. I WAS LOUSY ENGINEERS I LOVED THE TECHNOLOGY BUT OTHER PEOPLE DEVELOPED IT BETTER THAN I DID. I WENT IN TO MARKETING THEN SALES. I WAS SO VERY HAPPY TO HEAR SALES WORD BECAUSE ALL WE'VE TALKED ABOUT, CUSTOMER AND SALES I THOUGHT I WAS GOING TO BE THE FIRST ONE TO SAY IT. I SOLD BIOTECH TOOLS AND MEDICAL DEVICE TECHNOLOGIES. I WAS IN THE BIOTECH TOOL SPACE WHEN I WAS APPROACHED BY A WOMAN IN ANN ARBOR, MICHIGAN HAD CONSULTING FIRM IT WAS CALLED BIOTECHNOLOGY BUSINESS CONSULTANTS, STARTED IN 1990. SHE WROTE THE SECOND SBIR GRANT IN THE STATE OF MICHIGAN TO BE FUNDED. AND NIH CALLED HER AND SAID, BY THE WAY DO YOU KNOW THAT YOU AND YOUR TWO RESEARCHERS AT THE UNIVERSITY OF MICHIGAN HAVE TO START A COMPANY. AT THAT TIME SBIRs WERE PRECOMPANY FUNDED BUT SHE HAD TO START THE COMPANY. THE COMPANY WAS SUCCESSFUL IN RAISING VENTURE CAPITAL WHICH IN MICHIGAN IN 1980s WAS A FEAT. IT MOVED TO THE WEST COAST WHICH IS WHAT ALL GOOD COMPANIES IN MICHIGAN DID IN 1980s AND STILL DO. WE STARTED BBC IN 1909, THERE WAS DEMAND FROM OTHER FACULTY TO SAY, HOW DID YOU START A COMPANY. IF YOU THINK ABOUT THE HISTORY OF TECH TRANSFER THIS WAS PRETTY EARLY IN THE EVOLUTION OF TECH TRANSFER OFFICES AS WELL. BBC WAS A SOLE PROPRIETORSHIP WHEN SHE FOUND ME. I'VE GOT THESE COMPANIES THEY'RE GETTING SBIRs BUT THEY'RE NOT GETTING PRAD YOU CAN TO MARKET. QUITE FRANKLY I DON'T KNOW ANYTHING ABOUT THAT BECAUSE I WAS 17 YEARS AT THE UNIVERSITY. I AT THAT TIME WAS VENTURE FUNDED COMPANY, PART OF THE MANAGEMENT TEAM. SO I LEFT MY SIX-FIGURE JOB, WHICH QUITE FRANKLY THE COMPANY DIDN'T DO GREAT ANYWAY, BUT I WENT TO BE A CONSULTANT. WE HAD A FASHION FOR -- PASSION FOR START UP COMPANIES, WE WAND THEM AND LIKED THEM BEFORE THEY GOT MONEY. IT'S A FUN THING DO DO BUT LOUSE WAY TO MAKE A LIVING. WE HAD TO FIGURE OUT HOW TO GET PAID TO DO WHAT WE DO. WE SPENT ABOUT FOUR OR FIVE YEARS SCRAPING TOGA LIVING, MOST OF WHOM HAD SOME INVOLVEMENT WITH SBIR. WHEN STATE OF MICHIGAN STARTED AN ECONOMIC DEVELOPMENT PROGRAM TO TRY TO DEVELOP LIFE SCIENCES CORRIDOR. THEY WERE PUTTING IT IN TO UNIVERSITY AND START-UP COMPANIES. THEY CAME TO US SAID, THIS IS A LITTLE BIT UNUSUAL BUT HE'D LIKE TO YOU WRITE A PROPOSAL TO DEVELOP PROGRAM TO PROVIDE COMMERCIALIZATION ASSISTANCE AND SBIR ASSISTANCE TO THE COMPANIES THAT ARE GOING TO BE BURGEONING OUT OF THIS LIFE SCIENCES CORRIDOR, IT WAS PEER REVIEWED, FUNDED, THAT WAS IN 2001. NOW IN OUR TENTH YEAR OF GETTING SUCCESSIVE FUNDING, COMPETITIVE PROGRAMS TO RUN BUSINESS DEVELOPMENT AND SBIR CONSULTING PROGRAMS IN THE STATE OF MICHIGAN F. THAT WE LEARNED HOW TO MAKE A LIVING. WE SAID THERE ARE UNIVERSITIES, THERE ARE ECONOMIC DEVELOPERS WHO WANT TO SEE COMPANIES, THERE IS FEDERAL MONEY THAT'S NOT BEING USED WISELY. WE LAST WE'RE WORK IN 18 STATES BOTH WITH UNIVERSITIES, ECONOMIC DEVELOPERS AND SOME SMALL COMPANIES. WE RUN SBIR ASSISTANCE PROGRAMS IN MICHIGAN, NEW HAMPSHIRE, DELAWARE, WE'RE ABOUT TO LAUNCH ONE IN NEW YORK CITY WITH THE NEW YORK CITY ECONOMIC DEVELOPMENT CORPORATION. WE PROVIDE COMBINATION OF TRAINING AND ASSISTANCE. I WANT TO MAKE ONE INTERESTING COMMENT, PERTAINS TO VENTURE CAPITAL. TEN YEARS AGO I WAS CRAZY WOMAN RUNNING AROUND MICHIGAN, GILL SAW ME RUNNING AROUND LIKE THE MICHIGAN SAYING "DO THESE SBIRs" THEY GOT VENTURE CAPITAL. I'M NOT CRAZY ANY MORE BECAUSE IT'S HARD TO GET VENTURE CAPITAL THAT I'VE BECOME SO POPULAR, IT'S WEIRD. WHEN YOU KNOW ABOUT THIS FUNDING CLIMATE IT'S A DIFFERENT CHALLENGE WHICH IS WHY WE WORK IN 18 STATES LAST YEAR. IN 2009 WAS WE STARTED TO RAMP UP SBIR MOSTLY THAT TYPE OF WORK NOW. WE'RE NOT GRANT WRITERS, WE BELIEVE SBIR IS STRATEGIC FUNDING STRATEGY FOR EARLY STAGE COMPANY. WE DO TON OF TRAINING. COUPLE OF THINGS I WANT TO TALK ABOUT IN THE PROGRAMS THAT WE RUN. BY THE WAY I INVITE ANY OF YOU LIKE TO SIT ON THAT SIDE OF THE FENCE SEE WHAT DO TO TRY TO GET THE COMPANIES PREPARED. WE DO THEM IN ABOUT TEN STATES RIGHT NOW. WE ARE JUST IN THE PROCESS OF GETTING AWARDED AN SBA GRANT THAT MATCHING GRANT WITH THE STATE OF MICHIGAN FISSURAL AND STATE TECHNOLOGY OUTREACH, FAST. MOST STATES USE IT TO DO SBIR ASSISTANCE WE'RE USING IT DO CONNECT THE COMPANIES IN MICHIGAN WITH COMMERCIALIZATION RESOURCES. WHOLE GOAL TO TAKE EVERY PHASE ONE AND PHASE TWO COMPANY TRY TO FIND THE GAP IN COMMERCIALIZATION ASSISTANCE THIS THEY NEED HOPEFULLY WITHIN THE STATE AND CONNECT THEM TOGETHER. THAT IS WHAT WE DO. I'M HAPPY TO ANSWER QUESTIONS ABOUT ANY OF THE SPECIFIC PROGRAMS THAT WE DO. IF I HAVE FEW MINUTES WANTED TO OFFER COUPLE OF PIECES OF TACTICAL STUFF ABOUT THE SBIR PROGRAM. I SEE SEVERAL HUNDRED, I KNOW MATT AND ROBERT KNOW WE WELL BECAUSE I SEND THEM QUESTIONS SAYING, I GOT A PROBLEM, THE RULES SAID THIS, MY COMPANY WROTE THIS, I'M CONFUSED. HELP. SO THEY HEAR FROM ME A FAIR BIT WHEN I'M TRYING TO SORT THROUGH SOME OF THE IN CONSISTENCIES. BECAUSE YOU ARE 27 INSTITUTES AND CENTER, 23 OF WHICH AWARD SBIRs ALL OF WHICH ARE UNIQUE AND DIFFERENT THAT'S GOOD NEWS AND BAD NEWS. WHEN YOU ARE ON THIS SIDE OF THE FENCE YOU'RE COMPANY IT CAN BE VERY CONFUSING THERE ARE A LOT OF INCONSISTENCIES. I BEG TO YOU LOOK AT THE EFFICIENCY OF YOUR TIMEFRAME OF YOU'RE PROGRAM. WHOEVER SAID PROPOSAL TO FUNDING IN FIVE MONTHS I WANT TO KNOW WHO YOU ARE AND HOW YOU DID IT. IT CAN BE 12, 14, 16 IT'S BEEN PARTICULARLY GOOD MONTH SEPTEMBER WHEN YOU'RE SPENDING ALL YOUR MONEY IN THE INTERESTING THINGS THAT YOU'RE SPENDING OUT YOUR BUDGETS ON THAT YOU GET FUNDED. TRY RUNNING A COMPANY, WAITING ON SBIR PHASE TWO IN 14 MONTHS GO BY SO THAT'S ONE ISSUE. YOUR REVIEW PROCESS WHILE VERY ROBUST IS GETTING A LOT BETTER. AGAIN I'VE BEEN DOING THIS FOR 17 YEARS. IT'S INTERESTING SCIENCE BUT NOT -- SORRY, I'M BLONDE, IT'S NOT MOVING TO COMMERCIALIZATION. LET ME LOOK AT MY OTHER NOTES. I'LL TELL YOU A STORY THEN THIS WILL HIGHLIGHT IT. I'VE GOT POTENTIAL GROUP RIGHT NOW, STATE ECONOMIC DEVELOPMENT ORGANIZATION WANTS TO PILOT A PROGRAM WHERE THEY IDENTIFY 20 PHASE ONE NIH PHASE ONE AWARDEES AND THEY WANT TO PROVIDE COMMERCIALIZATION ASSISTANCE TO MOVE THEM TO PHASE TWO. THEY'RE TALKING TO US ABOUT WORKING WITH THEM TO DO THAT. AND THEY HAPPEN TO BE LOCATED, NOT FAR FROM HERE SO THEY HAVE HAD ACCESS TO A NUMBER OF THE PROGRAM DIRECTORS OF THE VARIOUSNESS TAKE TOUTS THEY CALLED ME SAID, LISA WE'RE TRYING TO PUT TOGETHER AN ASSESSMENT PROCESS BECAUSE DIRECTORS ARE COMPLAINING THAT THE COMPANIES THAT THEY'RE WORKING WITH IN OUR FUNDING DON'T HAVE GOOD COMMERCIALIZATION. AND I SCRATCHED MY SAID AND I SAID WELL THAT'S INTERESTING BECAUSE THEY'RE THE DECISION MAKERS. SOME WAY, SHAPE OR FORM BETWEEN THE REVIEW PANEL AND THE PROGRAM DIRECTORS MAKING RECOMMENDATIONS UP THROUGH COUNCIL TO THE INSTITUTE DIRECTORS. YOU ARE MAKING THE DEPOSITIONS TO FUND THEM. SO THERE IS INHERENT COMPONENTS IN THE PROCESS WHERE DECISIONS GET MADE TO FUND COMPANIES THAT HAVE LITTLE OR MONTH COMMERCIALIZATION. EVIDENCE IN THEIR PROPOSALS. SO I THINK THERE'S A LOT OF THINGS THAT CAN BE DONE BETTER HERE. I'LL GIVE YOU ONE EXAMPLE. EVERY PHASE ONE SBIR SHOULD HAVE COMMERCIALIZATION PLAN REQUIRED. IT CAN BE THREE TO FIVE PAGES, IT DOESN'T HAVE TO BE 12 BUT SHOULD BE REQUIRED AND REVIEWERS SHOULD HAVE TO ADDRESS THE VIABILITY OF THAT AS WELL AS THE SCIENCE. SO THOSE ARE A COUPLE OF THINGS, I AM VERY STACK PARTICULAR CALL BECAUSE I KNOW EVER NUANCE OF THE PROGRAM, SO THOSE ARE SOME EXAMPLES AND I'M HAPPY TO TAKE QUESTIONS ON ANY OR ALL OF IT. >> IF ANYONE HAS A QUESTION WE CAN ENTERTAIN THAT NOW OR PROCEED TO ROWS BELL IF NOT. ROSIBEL. FLOOR IS YOURS. >> I HAVE A FEW SLIDES TO SHARE WITH YOU. GOOD AFTERNOON, THANK YOU FOR THE OPPORTUNITY OF BEING HERE. I AM ROSIBEL OCHOA -- CLOSER. I AM THE EXECUTIVE DIRECTOR OF THE CENTER AT THE UNIVERSITY OF CALIFORNIA SAN DIEGO. I'M HERE TO TALK TO YOU ABOUT OUR STRATEGY TO WORK ACCELERATION AND UNIVERSITY DISCOVERIES ARE PROCESSED. SOME BEST PRACTICES AND HALL THANKS WE FACE. ONE OF THE THINGS I WAS GOING TO SHARE WITH YOU SOME OF THE WAYS THAT YOU APPLY THEM. WE STARTED 11 YEARS AGO WITH DONATION OF A FOUNDATION WILLIAM VON LIEBIG CENTER. THE MISSION WAS TO ACCELERATE TRANSFER OF UNIVERSITY DISCOVERIES TO THE PRIVATE SECTOR AND TO PREPARE OUR STUDENTS FOR ENTREPRENEURIAL WORK. MOST OF OUR FACULTY DID NOT LOOK AT THE PROCESS AS A VIABLE OR -- DIDN'T HAVE IT IN THEIR MIND JUST FOCUSED ON PUBLICATION. THAT WAS A BIG CHANGE IN THE UNIVERSITY ESPECIALLY WHEN WE STARTED ON HOW TO CHANGE THE CULTURE OF THE ACADEMIA, ACADEMIC SECTOR. LET ME DEFINE WHAT WE MEAN -- WE ARE KNOWN AS PROOF OF CONCEPT CENTER. BUT THERE'S MANY VERSIONS OF PROOF OF CONCEPT CENTER I WANT TO DEFINE WHAT WE MEAN BY PROOF OF CONCEPT WHICH IS THIS DEMONSTRATION OF THE TECHNICAL PAM OF PERFORMANCE OF THE DISCOVERY THAT ALSO HAS DEMONSTRATED MARKET RELEVANCE OR VISIBILITY. IF YOU LOOK AT THE SLIDE THAT DR. PETTIGREW SHOWED YOU. WE ARE LOCATED INSIDE THE SCHOOL OF ENGINEERING BUT WE SERVE NOT ONLY THE WHOLE CAMPUS WHAT I SHARE WITH YOU SOME OF THE PROGRAMS THAT WE HAVE. WHAT WE CALL PROOF OF CONCEPT THROUGH COMBINATION OF BUSINESSMEN FOR SHIP AND GRANTS. WHAT IS IMPORTANT IS THE GRANTS REALLY PAY FOR GRADUATE STUDENT OR POST DOCTOR RESEARCHERS TO DO WORK IN THE LABORATORIES WITH THE SUPPORT OF THEIRTFACULTY. IN THE GUIDANCE OF MENTOR THAT UNDERSTANDS WHAT IS COMMERCIALIZATION PATH THEN MOVE THEM THROUGH THE CHANGES OF THE DEVELOPMENT. THIS EXPERT BUSINESSMEN FORKING TOGETHER WITH THE APPROACH THAT WE CAN SEE. WHAT ARE THE KEY ELEMENTS OF THE PROGRAM. WE PROVIDE GRANTS FROM 50 TO 100,000. FOR PROOF OF CONCEPT. WE HAVE FOUR GRADUATE PROCESS ON ENTREPRENEURIAL EDUCATION. WE'RE NOT AIMING TO TRAIN OUR STUDENTS TO BECOME ENTREPRENEURS BUT TO UNDERSTAND WHAT IT'S LIKE TO WORK IN AN ENTREPRENEURIAL INNOVATIVE COMPANY. MOST IMPORTANT IS WHAT HAPPENS WITH THE CENTER IS THE CHANGES THAT HAVE PROVIDED IN TO THE CULTURE AND AROUND SAN DIEGO HAS IN TO THE CULTURE OF -- WE PROVIDE A FORUM THAT BRINGS TOGETHER INNOVATIVE, ENTREPRENEURS, MENTORS, STUDENTS. WE MAKE IT OKAY FOR FACULTY AND STUDENTS TO THINK ABOUT COMMERCIALIZATION. WE HAVE DEVELOPED WHAT WE CALL TECHNOLOGY ACCELERATION PROGRAM THAT WE HAVE DEMONSTRATED NOT ONLY THAT THIS PLATFORM CAN BE LEVERAGED BY MULTIPLE INSTITUTIONS TO UNIVERSITIES. WE RELY A LOT ON OUR SUPPORT AND FINANCIAL SUPPORT AND MENTORING OF EXTERNAL WHAT IS THAT PROCESS FOR SCREENING TECHNOLOGIES. I WOULD SAY THAT WE REFINE OUR PROCESS PRETTY MUCH EVERY YEAR. BUT BASIC ELEMENT. FIRST WE START WITH A PROBLEM OR A NEED THAT HAS BEEN IDENTIFIED WITH -- IN THE CASE, FOR EXAMPLE, WE HAVE A PROGRAM THAT IS FUNDED THEY WERE INTERESTED IN CHALLENGING FACULTY AND RESEARCHERS FROM SOUTHERN CALIFORNIA TO THINK ABOUT SOLUTIONS THAT WILL IMPROVE HEALTH CARE TO THE COMMUNITY. WE STARTED WITH THAT, IT'S PUBLISHED. WE ISSUE PROCESS OF SOLICITATION , WE DO ASSIGN A MENTOR THAT HAS DOMAIN EXPERT THAT EARLY AS POSSIBLE IN THE APPLICATION PROCESS BECAUSE WE CALL THEM -- SHAPE THAT TO WHAT WOULD BE POTENTIAL APPLICATION. WE INVOLVED A LOT OF THE COMMUNITY, EXPERTS AND SPONSORS TO HELP IN THE SCREENING PROCESS, WE ALSO USE USERS OF THE TECHNOLOGY BECAUSE THEY WOULD BE CUSTOMERS, BUT WE WANT OUR INVENTORS TO HAVE PERCEPTION OR UNDERSTANDING HOW THEIR TECHNOLOGY DOWN THE ROAD MIGHT BE USED FOR APPLYING. WE HAVE A FORMAL PRESENTATION WHICH THE FACULTY OR THE STUDENT IS PREPARED TO PRESENT TO THE EXTERNAL PANEL OF EXPERTS. THESE EXPERTS SELECT FOR YEAR LONG COMMERCIALIZATION ASSISTANCE. THE PRESENTATION IS VERY SHORT. ONLY TEN MINUTES BUT MOST OF THE TIME REALLY DEDICATED TO THE Q&A SESSION BECAUSE WHAT WE BELIEVE IS THAT EVEN IF THEY ARE SELECTED FOR FUNDING THEY ALL HAVE EXPRESSED TO US THAT THEY LEARN FROM THAT EXPERIENCE OF LEARNING FROM INDUSTRY HOW THEY CAN ACTUALLY EVEN ALIGN OR ALLOW RESEARCH TO BECOMING MORE RELEVANT. WHEN WE SELECT OUR PROJECT THERE ARE SEVERAL CRITERIA. WE ALWAYS -- HOW INNOVATIVE THAT TECHNOLOGY, WHAT IT'S GOING TO BE. WHAT IS THE SIZE OF THE MARKET THE RELEVANCE TO PROVIDE THE IMPACT THAT THE GRANT THAT WE WILL PROVIDE WITHIN 12 MONTHS OF FUNDING. ALSO HOW NEEDED IS THIS FACULTY OR GRADUATE STUDENT TO THE PROCESS. THROUGHOUT THEM IT'S RELEVANT. WE WORKED WITH ADVISORS AND P.I.s TO DEVELOP TECHNOLOGY, DEMONSTRATION PLAN. WE HAVE MBA STUDENTS EARLY IN THE PROCESS TO HELP WHAT WE CALL THE INNOVATORS WITH MARKET RESEARCH, COMPETITIVE ANALYSIS TO START THINKING ABOUT BEING IN THE BUSINESS ACCUMEN AND EXPERIENCE PERSPECTIVE TO THE ENGINEERING AND SCIENCE EXPERTISE. WHAT WE LEARN THROUGH THE YEARS IS THAT THAT EXPERIENCE, THE PROFESSORS, MBA STUDENTS IS QUITE VALUABLE AND IMPORTANT BUT HAS TO BE MANAGED BECAUSE OF WHO HAS MORE VALUE AT THE TABLE. WE HAVE WHAT LOOK LIKES LINEAR PROCESS BUT IN REALITY IS REALLY LIKE CONCEPT. FURTHER WE HAVE SERIES OF STEPS WHICH WE SELECT AND GREEN TECHNOLOGY, AT THE END OF THESE -- WHAT COULD BE 16 MONTH PERIOD OF ENGAGEMENT WITH THE CENTER THE OUTCOME WILL BE START UP, A LICENSE OF THE TECHNOLOGY OR FOLLOW-ON FUNDING. WE DO PROVIDE OUR ADVISORS AND MENTORS AND VOLUNTEERS DO PROVIDE ASSISTANCE TO OUR PROFESSORS AND OUR STUDENTS WITH ACCESS TO SBIR FUNDING, PRIMARILY IN IDENTIFYING AND DESIGNING THAT COMMERCIALIZATION PATH. NOT AS MUCH FOR APPLICATION BUT HOW ARE YOU GOING TO COMMERCIALIZE TECHNOLOGY. WE PAIR WITH THE CITY OF SAN DIEGO NOW DEPARTMENT OF ENERGY TO RUN TECHNOLOGY ACCELERATION PROGRAM AND THESE ARE MULTI-INSTITUTION FALL CHALLENGES THAT ARE DESIGNED TO ADDRESS A PARTICULAR NEED OF THE SPONSOR. WE HAVE TO MODIFY OUR APPLICATION AND SELECTION PROCESS TO ALLOW MAXIMUM PARTICIPATION IN THE REGION. WE HAVE RUN SIX OF THESE CHALLENGES MORE THAN 13 IN UNIVERSITIES IN SOUTHERN CALIFORNIA HAVE PARTICIPATED. IN 2011, FOR EXAMPLE, WE RECEIVED 163 APPLICATIONS FROM 13 INSTITUTIONS THAT RECEIVE $1 MILLION IN PROOF OF CONCEPT GRANTS AND BUSINESSMEN FORKING, SEVERAL ARE START-UP COMPANIES MUCH IN FACT PROFESSOR IN THE MIDDLE IS PROFESSOR FROM UNIVERSITY OF SOUTHERN CALIFORNIA RECEIVE GRANT FROM QUALCOMM AND WENT ON PARTICIPATED IN NSF GRANT. SO, THE PROGRAM IS DOCUMENTED IN A WHITE PAPER THAT WE PUBLISHED AND AVAILABLE ON THE WEBSITE AND THAT DESCRIBES MORE ABOUT HOW THAT PROCESS IS IN THE SCREENING PROCESS. THESE ARE SOME OF OUR METRICS. BY NOW WE HAVE MORE THAN A THOUSAND STUDENTS THAT HAVE PARTICIPATED, THEY HAVE -- DESCRIBE TO THE POINT NOW WE HAVE TO DO ONLINE COURSES IN ORDER TO WORKSHOP THESE ARE FOR CREDIT, BY THE WAY. TWO-THIRDS OF THE FACULTY ENGINEERING INTER-ACTIVE WITH THE CENTER. MORE -- ENOUGH FROM THE SCHOOL OF MEDICINE FROM DIFFERENT ORGANIZATIONS. 110 INNOVATION HAVE RECEIVED $5 MILLION IN GRANTS. THIS IS ONE OF OUR EXAMPLES OF HOW CASE WE WORK WITH FACULTY. IN THE PRIVATE SECTOR TO THE RIGHT HAND SIDE YOU'LL SEE PROFESSOR AND MEMBER OF THE NATIONAL ACADEMY OF ENGINEERING. WE FUND THIS FIVE YEARS AGO FOR THERAPY THAT WAS GOING TO BE USED FOR TREATMENT OF MULTI-ORGAN FAILURE. DURING THAT PROCESS WE BROUGHT HIM TO SERVE ON THE PANEL. HE PROVIDED TWO ROUNDS OF FUNDING, WITH THE KNOWLEDGE. NOW THESE COMPANIES. NOW IS UNDERGOING THE STUDY OF THEIR TECHNOLOGY NOW BEING -- WE SUPPORT A LOT OF OUR STUDENTS. THESE FOR EXAMPLES OF SOME OF OUR STUDENTS IN BIOENGINEERING THAT WERE VERY INTERESTED IN COMMERCIALIZATION, WE PROVIDE AND GOT FUND WITH COURSES AND MENTORING. ALSO HAVE GONE ON ESPECIALLY ONE , HE WHAT TYPE OF RECOMMENDATIONS WE GIVE OUR INVENTORS WHEN THEY SUBMIT -- FIRST WE WANT TO UNDERSTAND WHY@Hœ– DO THEY WANT PURSUE COMMERCIALIZATION AND IF THEY'RE GOING TO THE APPLICATION NOT THINK ABOUT SBIR PROCESS AS JUST ONE MORE -- AS FUNDING ONE MORE GRANT. ALSO THINK ABOUT HOW THIS GRANT IS GOING TO BE SIGNIFICANT IN ADVANCING COMMERCIALIZATION. WE TELL THEM, YOU NEED TO CONSIDER THE FULL COMMERCIALIZATION PATH AND IF YOU DON'T, MANY DON'T HAVE THAT FULL AWARENESS OF THAT PROCESS WE BRING THEM EXPERTS AND PUT THEM IN CONTACT WITH CUSTOMER AND WITH THE USERS AND PRIVATE SECTOR SO THEY HAVE BETTER UNDERSTANDING OF WHAT IT IS GOING TO TAKE THE WHOLE TO CONTINUE. WE WANT TO HELP TO HAVE GOOD IDEA OF HOW COMPETITIVE IS THEIR TECHNOLOGY COMPARED TO WHAT IS OUT THERE. MANY TIMES THERE IS LOW VISIBILITY IN TERMS OF HOW MUCH BETTER THEIR TECHNOLOGY IS OR WHAT DOES IT SAY OUT THERE WE NEED TO HELP THEM TO THINK ABOUT THAT. WHAT HAVE BEEN SOME OF OUR LESSONS LEARNED AND BEST PRACTICES, AS I SAID WE HAVE PROVEN AND CHANGE EVERY YEAR BECAUSE WE ALWAYS LEARN SOMETHING NEW. WE REALIZE THAT VERY EARLY THAT RESEARCHERS HAVE VISIBILITY ABOUT WHOLE COMMERCIALIZATION TO CONTINUE ESPECIALLY IN THE AREA OF HEALTH CARE THEY DON'T APPRECIATE SOMETIMES HOW COMPLEX THIS IS AND NOT JUST ABOUT DEMONSTRATING THE TECHNOLOGY. WE WANT TO LEVERAGE RESOURCES AS MUCH AS POSSIBLE. WE WANT TO TARGET THE PROGRAM THROUGH THE NEEDS OF THE STAKEHOLDERS AND INNOVATORS IT'S LIKE CLEARING HOUSE FOR IDEAS. THIS IS NOT NEW BUT LOTS OF DUPLICATION IN THE SENSE THAT THERE ARE MORE SOLUTIONS FOR THE SAME PROBLEM. WHY WOULDN'T WE TRY TO CREATE, THESE INNOVATORS, THEIR TECHNOLOGIES, THEIR PROJECTS, THEY CAN PROVIDE VISIBILITY NOT ONLY TO INVESTORS AND INDUSTRY BUT ALSO TO EACH OTHER AND HOPEFULLY MAYBE TRY TO INVENT THE SAME THING TWICE. WE WANT TO BRING THE APPRECIATION OF THE CUSTOMER, APPLICATION AND TECHNOLOGY AS EARLY AS POSSIBLE NOW WE ARE TRAINING OR PRAYING MENTORSHIP AND COMMERCIALIZATION, EDUCATION TO STUDENTS EVEN WHEN THEY APPLY TO THE PROCESS NOT AFTER THEY REEF THE GRANT. WE INTEGRATING NBA STUDENTS AS EARLY AS POSSIBLE IS ALWAYS A GOOD THING. RESEARCHERS REALLY BENEFIT A LOT FROM THAT GUIDANCE. IT'S CRITICAL TO ENSURE PROPER USE OF FUNDS AND TECHNOLOGY ADVANCEMENT. WE DO NOT EXPECT FACULTY TO START COMPANIES. WE THINK THAT THE FACULTY ENGAGEMENT IN SUPPORT OF THE PROCESS IS CRITICAL WE DO HAVE AND FOCUS ON GRADUATE STUDENTS. MORE OF OUR MENTORING AND EDUCATION PROGRAMS ARE FOCUSED ON OUR STUDENTS. INNOVATION WITH ENTREPRENEURS GO NO WHERE WE VERY EARLY ON WANT TO BRING THE ENTREPRENEUR TO THE TABLE TO AT LEAST HAVE CONVERSATION WITH THE FACULTY AND INNOVATORS TO SEE IF THEY CAN ACTUALLY HAVE CHEMISTRY TOGETHER AND WORK TOWARDS THE COMMERCIALIZATION PROCESS TOGETHER, AS MUCH AS POSSIBLE UNIVERSITIES TEND TO BE SELF SUFFICIENT THERE'S A LOT OF RESOURCES IN SAN DIEGO IN THE COMMUNITY THAT THEY WANT TO HELP AND THEY WANT TO BE INVOLVED SO INSTEAD OF BRINGING BARRIER WE WANT TO OPEN THE DOORS HAVE THEM COME AND HELP. WITH THAT, I APPRECIATE YOUR TIME AND HAPPY TO ANSWER ANY QUESTIONS. >> THANK YOU, ROSIBEL. DESH, I'LL CIRCLE BACK TO YOU IN CASE YOU HAVE SOMETHING THAT YOU'D LIKE TO ADD. ON THIS PARTICULAR TOPIC OF -- ALTHOUGH YOU'VE TOUCHED ON IT IDEA. >> RIGHT. I THINK EVERYBODY IS SAYING SOMETHING SIMILAR. THERE ARE TWO PARTS TO THIS. ONE IS HOW DO YOU -- TO BRIDGE THE GAP THERE ARE TWO THINGS YOU CAN DO, YOU CAN MAKE MORE RESOURCES AVAILABLE. OR YOU CAN HAVE MORE SUCCESS. THE LEVEL OF FUNDING IN U.S. IS ROUGHLY ABOUT $23 BILLION IS WHAT THE ANGEL CAPITAL INVESTORS DO, ABOUT $23 BILLION IN VENTURE CAPITAL. I THINK THE BIGGEST IMPACT WE CAN HAVE IS BY PREPARING THE IDEAS THAT CAN BE MORE SUCCESSFUL. THAT IS I THINK YOU'LL NEVER FIND ENOUGH ACCESS TO CAPITAL BECAUSE NEVER MET AN ENTREPRENEUR WHO DOESN'T THINK HIS BEST ARE BEST IDEA. AT THE SAME TIME WE KNOW THAT NOT EVERY ENTREPRENEUR WILL BE SUCCESSFUL. I THINK IF WE CAN BRING THE IDEAS THAT WE'RE ALL TALKING ABOUT HERE IN TERMS OF GETTING THE IDEAS, THAT REALLY HAVE IMPACT NOT THE INSPIRATION FALL SCIENCE PART OF IT. IF THERE IS WAY TO REACH OUT TO COMMUNITIES OUTSIDE OF THE RESEARCH COMMUNITIES TO PREPARE THOSE IDEAS BETTER SOFA PEOPLE ACTUALLY START FIGHTING FOR TO FUND THOSE IDEAS AS OPPOSED TO SORT OF TRYING TO SAY, WE GOT TO FUND EVERY IDEA. IT IS RARE I THINK THE LOW HANGING FRUIT FOR ALL OF US. >> OKAY. UPDATES ON THE CALL FOR RFP, PROGRAM ANNOUNCEMENT WHATEVER IT IS. IS THERE A SECTION THAT LAYS OUT THE KINDS OF IMPACTS TO INSTITUTES THAT ARE CONSIDERED HIGH PROTORE TOTALLY OPEN COMPETITION. YOU ALL COME. >> IT VARIES. THAT MOST OF THE INSTITUTES HAVE FUNDING OPPORTUNITY ANNOUNCEMENTS WHICH ARE TARGETED, MY INSTITUTE GOING VERY HEAVILY TOWARDS THAT REALLY WITH THE IDEA OF TRYING TO ADDRESS, IDENTIFY NEEDS. IT'S A MYSTERY. >> I ENCOURAGE THAT. WITH THE USE OF WEB SESSIONS THAT ARE SORT OF Q&As FOR APPLICANTS AND KIND OF SERVICE THAT MAYBE OTHERS PROVIDEVI WE CAN HAVE BETTER CHANCE OF PROVIDING OPENFUL DIRECTION. I DON'T IMAGINE RULE OUT ANYBODY'S GREAT IDEA. BUT YOU AT LEAST GIVE THEM THE GUIDANCE OF WHAT PRIORITIES HAVE BEEN IDENTIFIED AND OPPORTUNITIES TO OBSERVE OR PARTICIPATE IN THE SESSIONS THAT FRAME THE GUIDANCE EACH CYCLE I WOULD THINK WOULD BE CONSTRUCTIVE AND HELPFUL ALSO. >> IF I CAN ADD ANOTHER IDEA TO THE CONCEPT WOULD BE TO ACTUALLY ENCOURAGE ANGEL INVESTORS TO COME IN TO THOSE IDEAS. THAT IS, THE ANGEL INVESTORS ARE PROBABLY SOME OF THE BEST RESOURCES THAT WE HAVE IN RESOURCE. THEY'RE INTERESTING IN FUNDING NEW COMPANIES. CO-INVESTING WITH THEM, USING THEIR EXPERTISE TO PREQUALIFY IDEAS IN ADDITION TO THE STUFF WOULD BE GREAT WAY TO SORT OF GET THAT RELEVANCE IN TO THE PROCESS AS OPPOSED TO TRYING TO MAKE THE PROCESS MORE AND MORE RIGOROUS. ULTIMATELY IT'S A JUDGMENT CALL THE QUESTION IS WHO HAS THE BEST JUDGMENT. THAT COMES FROM PEOPLE WHO HAVE EXPERIENCE AND WHO HAVE DONE THESE THINGS AGAIN AND AGAIN. [ NOT AUDIBLE ] >> COULD YOU TURN YOUR MIC ON. >> I JUST WANTED TO ENHANCE, YOU MAY BE FAMILIAR WITH THE PROGRAM CALLED NATIONAL SCIENCE FOUNDATION OFFERS, BUT WHERE IT'S FOLLOW-ON MONIES WHERE THEY WILL MATCH THIRD PARTY INVESTMENT AND IT'S PHENOMENAL WAY TO TRY TO GO OUT TO THE ANGEL COMMUNITIES AND GARNER LEVERAGE BECAUSE YOU CAN GO TO AN ANGEL SAY FOREVER DOLLAR THAT YOU GIVE ME ANOTHER 50 CENTS WILL COME FROM THE AGENCY. THESE ARE COMPETITIVE NOT A GUARANTEED MATCH STILL HAS TO BE A PROPOSAL GO THROUGH COMPETITIVE REVIEW PROCESS BUT ENCOURAGES ENTREPRENEURS TO HAVE INCENTIVE TO GO OUTLOOK FOR THIRD PARTY CAPITAL. DOESN'T HAVE TO BE ANGELS BUT VERY LOGICAL AND COMPELLING PLACE TO GO IT'S GOOD PLACE WHERE PEOPLE LIKE I GO TO THE ANGEL COMMUNITIES TO TRYg] TO EDUCATE THEM ABOUT SBIR TALK ABOUT LEVERAGE THEY GET FROM THEIR DOLLAR EARLIER ON IN THE SBIR TECHNOLOGIES WHICH HAVE GONE THROUGH ONE LEVEL OF VETTING. IF YOU'RE NOT FAMILIAR, NSF IS MUCH SMALLER BUT TAKE LOOK AT THE PHASE ONE B AND 2D. IF I CAN ADD ONE MORE THING TO THE PROGRAM WHICH I THINK IS ONE LITTLE PIECE THAT I WANT TO CLARIFY, ICOR IS PROGRAM THAT IS $50,000 WHERE P.I.s PUT TOGETHER TEAMS. THE THING THAT'S INTERESTING ABOUT IT. NSF WILL NOT FUND A FACULTY MEMBER TO BE P.I. ON SBIR OR -- THEY DO NOT ALLOW FACULTY TO BE BIIN THEIR ICOR THE FACULTY HAS TO HAVE NSF FUNDING, HAVE THE FIND THE MENTOR AND ENTREPRENEURIAL LEAD THERE HAS TO BE THIRD -- THAT ENTREPRENEURIAL LEAD IS OFTEN -- THEY ENCOURAGE IT TO BE A POST DOC WITH THE IDEA IT'S SIMILAR TO WHAT I THINK YOU GUYS ARE TRYING TO INCENT WITH THE SHIFT PROGRAM BUT MORE SPECIFIC IN THAT THE POST DOC IS EXPECTED. DOESN'T HAVE TO BE USUALLY IS MOVE TO THE COMPANY. THEY ARE PART OF A VELLETTING PROCESS, MAYBE A FAIRLY RIGOROUS GO-NO GO DECISION ON WHETHER THE TECHNOLOGY WILL HAVE LEGS. IF IT'S A GO THE ORGANIZATIONS, THE UNIVERSITIES THEY COME FROM THEN LOOK TO SBIR AS FUNDING SOURCE THAT ENTREPRENEURIAL LEAD WHO WENT THROUGH THE BOOT CAMP WITH THE FACULTY MOVES TO THE COMPANY. THE FACULTY STAYS AT THE UNIVERSITY DOING WHAT THEY DO. THEY DESIGNED THAT VERY DELIBERATELY TO HAVE MENTOR, AN ENTREPRENEUR AND FACULTY EACH PERSON IN AN APPROPRIATE ROLE. >> FRANCIS. >> I WANT TO FOLLOW UP ON THE QUESTION. IN TERMS OF THE WAY WE PUT FORWARD THE OPPORTUNITY FOR SBIR APPLICATIONS WITH 27 ICs AND PROGRAMS HAVING MYSELF LOOKED AT THAT WEBSITE IT GETS PRETTY OVERWHELMING. IS THERE A SENSE HERE WHILE GILL WAS SAYING GOOD THING THAT EACH INSTITUTE DECLARES WHAT SPECIFIC INTERESTS ARE, IS THERE BETTER WAY FOR US TO PRESENT OURSELVES MAYBE I'M ASKING LISA TO PRESERVE THOSE SPECIAL AREAS OF INTEREST WHERE INSTITUTE WILL BE ENTHUSIASTIC ABOUT A PARTICULAR APPLICANT. BUT NOT MAKE IT SO CONFUSING. >> YOU DO PHENOMENAL JOB OF TAKING YOUR PROGRAM, YOUR OMNIBUS SOLICITATION IS MOST AMAZING INVESTIGATOR POT OF MONEY FOR ENTREPRENEURS. BUT THEY DON'T GET IT. SIMILARLY YOUR SPECIAL SOLICITATIONS WHICH COME OUT AND ALL FORMS, SOME WITH STANDARD DEADLINES, SOME WITH DIFFERENT DEADLINES, THEY ARE WONDERFUL DIRECTED WAYS TO SAY WITH ALL YOUR GREAT IDEAS THERE'S SOME PRIORITIES WE HAVE HERE THAT WE'RE TRYING TO ENCOURAGE US. BUT THE INFORMATION -- I TRAIN PEOPLE. I TRAIN PEOPLE ALL THE TIME. I'LL BE IN 15 CITIES IN THE NEXT TEN WEEKS TO UNDERSTAND HOW TO UNDERSTAND YOUR INFORMATION. IS THERE A WAY TO EXPLAIN IT BETTER, PROBABLY. >> PUT YOU OUT OF BUSINESS ON THIS. >> I DON'T THINK SO. I'M SURE THERE ARE WAYS IT BE BE EASIER, BETTER. SO YOUR CONFERENCE IS EVERY YEAR, THE NIHSBIR CONFERENCE IS ONE VERY GOOD MECHANISM. YOU CAN GET WHEN PEOPLE COME OUT WHEN -- I HOPE A LITTLE BIT OF EXTRA MONEY THAT YOU MIGHT GET TO RE-AUTHORIZATION TO DO MORE OUTREACH. I'VE BEEN VERY FORTUNATE TO GET NIH TO COME OUT TO COUPLE OF EVENTS THAT WE'VE PUT TOGETHER BUT IT'S VERY HARD. THE LAST COUPLE OF YEARS IT'S BEEN ALMOST IMPOSSIBLE TO GET ANY -- PROGRAM DIRECTORS TO COME OUT AND DO THE OUTREACH. CAN YOU MAKE THEM SIMPLER? IT'S NOT SIMPLE. THAT'S OKAY. EDUCATION AND OUTREACH CAN GO A LONG WAY I HOPE THAT MAYBE THE LITTLE BIT OF MONEY YOU CAN USE THROUGH RE-AUTHORIZATION WILL HELP TO DO MORE OUTREACH TO GET THAT MESSAGE ACROSS. >> WE AGREE WHOLE HEARTEDLY. THE THING I DISLIKE LATELY HAVING TO TURN DOWN OUTREACH BECAUSE WE DON'T -- HAVE THE TRAVEL FUNCTION OR THE TIME. WE WILL HAVE RESOURCES TO DO MORE OUTREACH. SOME OF THAT WILL HAVE TO BE TARGETED TO UNDERSERVED STATES AND UNDER SERVED GROUPS, BUT THERE WILL BE RESOURCES TO DO MORE IN PERSON AND WEB-BASED OUTREACH IN ALL TYPES OF AREAS. TO ADDRESS FEW EARLIER QUESTIONS, PROBABLY AROUND THE TABLE WHO ASKED SOMETHING IN THE PAST TEN MINUTES ARE9 SOLICITATION AS YOU KNOW IS VERY LARGE INVEST GAY OR INITIATED SOLICITATION THAT DOES COME ALONG WITH IT, LAST YEAR IN OUR 140 PAGE TOPICS DOCUMENT THAT HAS ALL 24. IT WAS 200 THE YEAR BEFORE. I WORKED HARD ON THE ICs TO GET THEM TO COME DOWN TO MORE CONCISE POINTS. WE HAVE 24 INSTITUTE CENTERS WITH THE ADDITION OF THE OFFICE OF THE DIRECTOR. EACH INSTITUTE AT THIS TIME OF YEAR THE CALL IS OUT FOR NEXT YEAR'S OMNIBUS PUTS TOGETHER LIST OF PRIORITIES THAT THEY -- BEYOND THAT AS WAS SAID WE ISSUE 20-ISH TO 30 TARGETED FUNDING OPPORTUNITIES THROUGHOUT THE YEAR FROM ONE OR MORE INSTITUTES AS WELL. WE HAVE A LOT OF OPPORTUNITIES OUT THERE FINDING THEM, THEY'RE ALL IN ONE PLACE BUT EDUCATING THEM WHERE THEY ARE HOW TO READ THEM AND FIND THEM IS CHALLENGING. WE ARE IN THE MIDDLE OF THE PROCESS OF COMPLETELY REDOING THE NIH SBIR WEBSITE TO BRING IT TO THIS CENTURY. IN TERMS OF HOW IT LOOKS ON EASE WHICH WE CAN FIND SOLICITATIONS. ALSO WE'LL BE WORKING TO BE COMPLIANT TO PUT ALL OF OUR SOLICITATION AND TOPIC IN THE SBA CENTRAL DATABASE CALLED SBIR.GOV WHERE APPLICANTS CAN GO AND TYPE IN A KEY WORD HOPEFULLY NOT JUST FIND AN NIH SOLICITATION BUT FIND DOD SOLICITATION THAT MIGHT BE IN THE SAME TOPIC AREA, NSF, ET CETERA. THAT'S THEORETICALLY TO BE ONE STOP SHOP THEN LINKS BACK TO THE AGENCY TO GET THE ACTUAL SOLICITATION. >> NO WHERE IN THIS DISCUSSION FROM ANY PANEL TODAY DID I HEAR ABOUT USE OF THE WEB. ONE OF THE EXCITING THINGS FOR START-UPS, DEVICE ORIENTED IF YOU WILL RATHER THAN LIFE SCIENCES ARE WEBSITES LIKE KICKSTARTER AND VARIETY OF OTHER WEBSITES WHICH ARE GROWING MORE AND MORE. COULD SOMEONE TALK ABOUT WHAT YOU SEE AS WHAT'S AVAILABLE AND PROJECT FORWARD A YEAR OR TWO. THIS IS GOING TO HAPPEN, NO REASON THAT THE LIFE SCIENCES SHOULDN'T BE PART OF IT IN FACT IS EVERY REASON THAT THE LIFE SCIENCES SHOULD BE DOMINATING BECAUSE MOST PEOPLE WANT TO KNOW ABOUT BETTER HEALTH. >> MAYBE I CAN TALK ABOUT IT A LITTLE BIT. IN FACT THE JOBS ACT WHICH GOT PASSED IN CONGRESS DOES HAVE FUNDING AS PART OF THE WHOLE THING. PREVIOUSLY YOU COULDN'T RAISE MONEY AS EQUITY, YOU CAN'T RAISE MONEY AS EQUITY UNLESS YOU HAVE A QUALIFIED INVESTOR. THE NEW THINKING THAT YOU CAN RAISE LESS THAN A FEW THOUSAND DOLLARS FROM EACH PERSON AND GET A LOT OF PEOPLE TO FUND. SO COMMUNITIES CAN COME TOGETHER AND ACTUALLY FUND COMPANIES AND SO ON. THE SEC IS NOW COMMENTING ON THAT RULE. I THINK IT SHOULD BECOME HOPEFULLY BECOME PART OF THE FUNDING PROCESS FOR START UPS. TODAY IT DOES HAPPEN, BUT HAPPENS MORE AS EITHER A CHARITY OR BUYING A PRODUCT UP FRONT. WHAT HAPPENS TO THAT COMPANY, I HAVE THIS NEW WATCH OR MIGHT BE BLOOD PRESSURE PEOPLE SAY, I'LL BUY ONE OF THOSE. THEN A MEL I DON'T KNOW PEOPLE BUY THOSE. BUT I THINK WITH THE NEW ACT YOU WILL BE ABLE TO RAISE MONEY AS EQUITY FROM A -- >> THANK YOU. >> I COULD ADD ONE THING. ITSELF ON TWO PANELS LAST WEEK AT UNIVERSITY OF VIRGINIA AND VIRGINIA TECH AND WOMAN VERY ACTIVE GAVE WHOLE PRESENTATION ON CROWD SOURCING SAID IT WILL BE THE FUTURE OF FUNDING LIFE SCIENCE COMPANIES. I DON'T KNOW MUCH ABOUT I MYSELF BUT GAVE VERY INTERESTING AND COMPELLING PRESENTATION. OF COURSE I'M MIDDLE AGED I DON'T REMEMBER HER NAME. BUT IF YOU LIKE I WILL FIND YOU HER NAME. IF YOU DO HAVE AN INTEREST SHE WAS EXTREMELY PASSIONATE ABOUT USING CROWD SOURCING AS WAY TO FUND LIFE SCIENCE COMPANIES IN THE FUTURE. >> PERSONALLY I WASN'T INTERESTED BUT I AM CONCERNED THAT THIS NEEDS TO BE GIVEN A LOT OF THOUGHT, CLEARLY AT THE SENIOR GOVERNMENT LEVEL IT'S HAPPENING. THINGS HAPPEN IN AMERICA, BOTTOMS UP, THERE ARE SOME COMPANIES IN L.A. THAT HAVE GOTTEN FUNDED A GOOD FRACTION OF A MILLION DOLLARS. AGAIN ALBEIT NOT THE EQUITY FUNDING. ON THE OTHER HAND SINCE EVERYONE WORRIES ABOUT THEIR HEALTH SINCE RAISING MONEY BENEFICIALLY TO HELP THIS IS AN INTERMEDIATE STEP AND I REALLY THINK THE SBIR PROGRAM WHEN COMBINED WITH THE WEB COULD BE A MULTIPLIER AND I JUST THINK IT'S WORTHY OF SOME THOUGHT. >> THIS IS A NATURAL FOR THE MATCHING CRITERION JUST MENTIONED. >> I THINK IT'S A GREAT IDEA. WHAT PEOPLE ARE WORRIED ABOUT. WORRIED THAT SOME GRANDMA WILL LOSE MONEY THEN WHOLE THING WILL GO SOUTH. MAKING SURE THERE IS ENOUGH CONSUMER PROTECTION I THINK IS WHERE THE THINGS ARE GETTING. >> WE TALKED ABOUT FAILURE THIS MORNING. >> ONE OF THE THINGS THAT'S COME UP PERIODICALLY DURING THE DAY WAS THE LONG TIME IT TAKES TO GET DECISIONS MADE FROM NIH. WE'LL BE TALKING, OUR COMMITTEE WILL BE WITH THE FOLKS AT NIH ABOUT KIND OF A TIMELINE FOR DECISION MAKING. BUT DO YOU HAVE ANY OBSERVATIONS ON WHERE SOME OF THAT TIME IS NOT WELL SPENT OR WHERE IT MIGHT BE SHORT, A GENERAL QUESTION TO THE PANEL. >> YOU HAVE A DIFFERENT SYSTEM THAN ANY OF THE OTHER AGENCIES IN THAT WITH OMNIBUS SOLICITATION WITH THREE REVIEW CYCLES YOU HAVE THE FLEXIBILITY TO RECEIVE -- SCORE THEM, YOU USE SELECTIVE FUNDING IN MANY OF YOUR INSTITUTES WHICH IS GREAT THERE'S NOT A HARD AND FAST CUT OFF IN MOST OF THEM FOR SBIR YOU DON'T SAY, EVERYTHING BELOW 27 IS FUNDED. MANY CAN SELECTIVELY FUND WHICH IS VERY GOOD AND I WOULD THINK VERY GOOD FOR THE INSTITUTES TO BE ABLE TO MATCH WELL RECEIVED PROPOSALS WITH THEIR PRIORITIES. BUT YOU ALSO, I SPECULATE FROM THE OUTSIDE TRY TO HEDGE BETS AND HOLD ON TO THINGS UNTIL YOU SEE WHAT ELSE COMES IN BECAUSE YOU HAVE THE FLEXIBILITY TO ROLL THINGS OVER UNTIL THE NEXT CYCLE. AT AN AGENCY THE PROPOSAL GOES IN IT IS REVIEWED YOU'RE NOTIFIED IN SIX MONTHS LIKE CLOCKWORK AND IN MONTH SEVEN YOU HAVE YOUR MONEY. IF YOU THE SMALL BUSINESS CAN'T MEET COMPLIANCE REQUEST IN THE MONTH THEY WILL GIVE IT TO SOMEONE ELSE. IT'S VERY TIMELY, AND AS SMALL BUSINESS YOU CAN PREDICT IN SIX MONTHS I WILL KNOW WHETHER OR NOT I'M FUNDED IN MONTH SEVEN I'LL HAVE MY MONEY. AND I HAVE COMPANIES NOW THAT HAVE BEEN FUNDED WHERE THE REVIEW -- PROGRAM STAFF HAS SAID, WE WANT TO FUND YOU, HOLD OFF. WE'LL ROLL IT TO NEXT CYCLE, HOLD OFF. RECOMMENDATION IS MADE 12 MONTHS LATER. THEN YOU HAVE TO GO THROUGH GRANTS MANAGEMENT WHICH CAN BE A CHALLENGING PROCESS, SOMETIMES THE COMPANY'S FAULT OFTENTIMES GRANTS MANAGEMENT CAN PROCESS QUICKLY. IT CAN BE TWO OR THREE OR FOUR MONTHS FROM THE TIME YOU GET TOLD YOU'RE GOING TO BE FUNDED OR NOTICE OF GRANT AWARD THEN GO TO THE DEPARTMENT OF -- IF YOU HAVE NOT BEEN THROUGH ANY OF THESE SYSTEMS, YOU HAVE TO GET SET UP WITH THE DEPARTMENT OF PAYMENT MANAGEMENT TO BE ABLE TO DRAW DOWN YOUR MONEY. THERE IS A NUMBER OF PLACES INCLUDING THE ABILITY TO ROLL OVER NOT MAKE DECISIONS YEA OR ANYWAY EACH REVIEW CYCLE THEN PASS OFF TO GRANTS MANAGEMENT GETTING THROUGH THAT WHOLE PROCESS. IT'S VERY CHALLENGING FOR SMALL COMPANIES TO BE IN LIMBO FOR EIGHT, TEN, 12 MONTHS. OR MORE. YOUR PROCESS SAYS NINE, IT'S RARELY NINE. >> TONY, CAN YOU MAKE YOUR WAY THE MICROPHONE. >> I WOULD ECHO THAT. BUT PLEASE BEAR IN MIND THAT COMPANIES WOULD PREFER TO GET MONEY IN 12 MONTHS RATHER THAN NO ANSWER IN SIX. THE 12 MONTHS IS NOT GOOD, BUT IT'S BETTER THAN THE ANSWER, NO. JUST MAKE SURE THAT EVERYBODY IS ON BOARD WITH THAT. >> THAT'S RIGHT. THERE'S ALSO PRACTICE WHICH IS OVERRIDING FOR THE RESEARCH PROJECTS AWARDS, TOO. OF HAVING TO SUBMIT, LEARN AND RESUBMIT. WHEN YOU'RE ON THE APPLICANT SIDE IT ALL MERGES TOGETHER. HERE IT'S WHENEVER NEW SUBMISSION BUT IN A PROCESS THAT REQUIRES TWO SUBMISSIONS MOST OF THE TIME. >> THAT'S OKAY. THERE'S NOTHING REGION WITH THE TWO-SUBMISSION PROCESS. YOU DON'T GET FUNDED THE FIRST TIME. IF I KNOW IN TIMELY FASHION I CAN GO IN FOR RESUBMISSION FOR THAT I SHOULD ALSO BE ABLE TO GET SOME KIND OF ANSWER IN IT. >> BUT IN GENERAL THE SPEED AT WHICH THIS IS EXTREMELY IMPORTANT FOR SMALL COMPANIES. NOT GETTING YES OR NO IN SIX MONTHS IS WORSE THAN GETTING MONEY IN 12 MONTHS BECAUSE IN THE NEXT 12 MONTHS IF YOU GO BANKRUPT IF SOMEBODY SAYS, YOU GOT THE MONEY. FOR EXAMPLE, THE GOVERNMENT WHEN SMALL COMPANIES DO BUSINESS WITH THE GOVERNMENT THE GOVERNMENT WOULD TAKE A LONG TIME TO MAKE THE PAYMENT. ONE OF THE RECOMMENDATIONS WE DID AT THE VERY BEGINNING. WITHIN 90 DAYS PROMISING THAT THEY WILL BRING IT DOWN TO 30 DAYS BECAUSE RECEIVEABLES FROM GOVERNMENT IS NOT WHAT YOU CAN TAKE TO THE BANK. THE GOVERNMENT DID THAT, PATENT OFFICE CAME UP WITH FAST TRACK NOW ACTUALLY GUARANTEE THAT THEY WILL GET YOU PATENT OUT IN 12 MONTHS. ANYTHING WE CAN DO TO ACTUALLY FORCE A YES OR NO AND SPEED UP THE PROCESS I THINK IS HUGE VALUE TO THE ECONOMY. >> CAN YOU SAY FEW MORE WORDS ABOUT THAT TRACK OF 12 MONTHS. >> THE HEAD OF THE PATENT OFFICE, THERE IS A BIG BACKLOG OF ALL THE PATENTS. THINKS THINKING WAS SIMPLE F. THERE IS AN ECONOMIC VALUE TO GETTING A PATENT OUT QUICKLY THEY CHARGE YOU ANOTHER FIVE OR SIX THOUSAND DOLLARS HE'S ABLE TO HIRE MORE PEOPLE AND FAST TRACK THE THINGS BECAUSE HE SAYS, IF THERE IS ECONOMIC VALUE I'LL GET IT DONE FOR YOU. ACTUALLY IMPLEMENTED IT AND IT'S WORKING WELL. [ NOT AUDIBLE ] THERE'S FAST TRACK CHARGE FOR THAT PART OF IT. >> THERE IS A TRADE WITH THAT, THOUGH. BECAUSE THERE'S A LOT OF THINGS THAT YOU CAN'T DO TO GET A GOOD VALUABLE PATENT. YOU HAVE A PATENT BUT YOU CAN'T ARGUE ALL OF THE THINGS THAT YOU REALLY NEED TO MAKE SURE THAT THE PATENT IS AS BROAD AS POSSIBLE BECAUSE THEY FORCE TO YOU GIVE UP A LOT OF THINGS. THERE'S A HUGE TRADE IN THAT DECISION OF, DO I HAVE A PIECE OF PAPER THAT THAT SAYS I HAVE A PATENT THAT I CAN GO OUT GET SOME FUNDING VERSUS I HAVE SOMETHING THAT'S GOING TO BE REALLY VALUABLE FIVE, TEN, 15 YEARS FROM NOW. YOU DON'T MIND I'D LIKE TO GO BACK ON COUPLE OF OTHER ITEMS. ONE IS COMMERCIALIZATION. THE COMMERCIALIZATION I WAS TALKING ABOUT IS SIGNIFICANTLY DIFFERENT FROM WHAT THE UNIVERSITY PEOPLE WE'RE TALKING ABOUT NOW. I WANT TO MAKE SURE THAT THAT DISTINCTION IS CLEAR IN YOUR MIND. THEIR PROCESS IS EXTREMELY VALUABLE FOR TAKING SOMETHING OUT OF THE UNIVERSITY AND HAVING SOMEBODY DO SOMETHING WITH IT. THIS IS WHAT I WAS TALKING ABOUT THE BASIC RESOURCE THAT'S WEEPING, SEEPING AND SPILLING YOU WANT TO BE ABLE TO CAPTURE SOME OF THAT GET GRADUATE STUDENT COMBINED WITH AN ENTREPRENEUR AND PROFESSOR TO BE ABLE TO GET SOMETHING GOING SOMEWHERE WITH THAT. IT'S KIND OF PRE-SBIR STAGE. IT'S YOUR MEASURE OF SUCCESS. THE COMMERCIALIZATION I WAS TALKING ABOUT WAS WELL BEYOND THAT IN THE PRODUCT DEVELOPMENT CYCLE WHERE YOU'VE GOTTEN THE SBIR YOU HAVE A PHASE ONE, YOU HAVE A PHASE TWO, YOU MAY HAVE HAD TWO OR THREE OR FOUR OF THEM BECAUSE TO GET PRODUCT TO MARKET, $10 MILLION IS A MINIMUM THING. YOU'RE NOT GOING TO GET IN TO THE MARKETPLACE WITH ONE PHASE TWO SBIR IT WILL BE EXTREMELY RARE TO BE ABLE TO GET THERE WITH THAT. YOU NEED TEN MILLION BUCKS. IF YOU TAKE A NUMBER OF PHASE ONES AND PHASE TWOs AND BIGGY BACK THEM TOGETHER OR THING I ALWAYS USE AS MY EXAMPLE OF ICE CREAM. MY FIRST PROPOSAL IS VANILLA ICE CREAM, SECOND IS CHERRY-VANILLA. THIRD PROPOSAL IS BUTTER BRICKLE OR SOMETHING. SO EACH TIME I'M PERFECTING MY VANILLA BASE THEN ADDING FEW MORE NUTS AND PIECES OF FRUIT TO BE ABLE TO GET SOMETHING THAT I CAN PUT ENOUGH OF THOSE TOGETHER. US IN THE FLY OVER STATES WHERE VENTURE CAPITAL IS NOT AN OPTION BECAUSE THEY'RE JUST NOT GOING TO COME THERE NO MATTER HOW MUCH WE THINK THEY ARE. YOU LOOK AT THIS, STUFF THAT I WAS TALKING ABOUT IS HOW DO I, RATHER THAN HAVING THREE OR FOUR OR FIVE PHASE TWOs PUT TOGETHER, JUST SAY LOOK, LET'S CAN HONEST. WE NEED CLINICAL STUDIES AND SIGNIFICANT CLINICAL STUDY THAT WORKS THROUGH WITH THE FDA AND THAT'S WHERE I THINK NIH CAN PROVIDE A LOT OF VALUE BY APPOINTING FEW OFFICERS TO WORK WITH THE FDA TO BE ABLE TO SAY, LOOK, THESE ARE FIVE OR TEN OR 50 PROJECTS THAT WE'VE GOT THIS YEAR THAT WE WANT TO MAKE SURE THEY HAD COUPLE OF PHASE 2s, THEY ARE VALUABLE THINGS WE WANT TO MAKE SURE WE CAN GET THE FDA TO BE ABLE TO SAY, THIS IS WHAT WE NEED AND YOU'RE NOT GOING TO CHANGE. ONE PROJECT FOR OUR ANESTHESIA MONITOR, $2 MILLION FOR FOUR YEARS LATER, I'M STILL GETTING THIS FROM THE FDA. I CAN'T TELL WHICH WAY TO GO. I CAN SAVE LIVES IN EUROPE BUT NOT SAVE THEM HERE IN AMERICA. >> THIS IS FUNDAMENTAL ASSUMPTION THAT RESEARCH IN A ENSEE SHOULD FUND THE ENTIRE PROCESS. >> NOT THE ENTIRE PROJECT, BELIEVE ME. I'M GETTING TO THE POINT WHERE I CAN GO TO THE FDA SO THAT WOULD BE ABOUT FIRST 25% OF THE PROJECT. I GOT 75% LATER TO BE ABLE TO GET THROUGH CMS TO, GET REIMBURSEMENT THEN WHOLE COMMERCIALIZATION PROCESS WHICH IS LAST HALF OF THE MONEY. LOOKING TO SAY HOW DO WE GET THROUGH THAT STAGES TWO, B,C, D. THAT IS SIGNIFICANTLY DIFFERENT PROJECT MY PROPOSAL IS IF YOU GOT $800,000 IN SBIR THERE'S ANOTHER 800,000 WHICH COMES OUT OF THE TYPICAL POT OF DOING BASIC RESEARCH TO SAY, NO WE'RE GOING TO SHIFT THAT LATER ON TO BE ABLE TO PUSH TECHNOLOGY OUT IN TO THE MARKETPLACE. THAT'S OBVIOUSLY THE TRADE. >> I WANT TO GO BACK TO HEAR A LITTLE BIT MORE ABOUT THE WAY IN WHICH THE ENTREPRENEUR PROGRAMS AND ACADEMIA ARE WORKING, ASK KEVIN WITH THE STANFORD PROGRAM YOU SAID YOU HAD COUPLE OF INPUTS TO THIS, ONE BEING TECH TRANSFER FOLKS TELLING YOU WHO SUBMITTED SOME INVENTION, ANOTHER BEING THAT YOU BASICALLY SEND OUT SOLICITATION SAYING WE'VE GOT GREAT IDEA THAT MIGHT WANT TO BE PART OF THIS SPARK PROGRAM. WHICH OF THOSE INPUTS ACTUALLY SEEM TO BE MORE SUCCESSFUL. I'D ALSO LIKE TO KNOW WHAT IS DEMOGRAPHICS OF THE INDIVIDUALS YOU END UP SUPPORTING. >> THAT'S A GREAT QUESTION. THE QUALITY OF THE PROPOSALS IS ACTUALLY QUITE EXCELLENT, IT'S NOT JUST FACULTY. GRADUATES, IT'S OPEN TO GRADUATE STUDENTS, POST DOCTORAL FELLOWS AND WE WILL TAKE ANY OF THOSE IN TO SPARK. OVERALL, THE QUALITY OF THE PROPOSALS -- WILL TAKE HIGH PROCEDURE PORTION IN TO SPARK. INTERESTINGLY YOUNGER AND MIDDLE CAREER INVESTIGATORS ARE OFTEN MUCH MORE EFFICIENT THAN SENIOR FACULTY. >> HOW ABOUT GENDER AND OTHER KINDS OF DIVERSITY, WHAT HAPPENS IN THIS KIND OF COMPETITION? >> THE GENDER I THINK REFLECTS THE GENDER UNDERLYING THE UNIVERSITY IS ABOUT 50-50. OF FOLKS WHO ARE COME IN, PARTICULARLY SINCE WE DO TEND TO TAKE A HIGHER PERCENTAGE OF JUNIOR FACULTY POSTDOCS, GRADUATE STUDENTS IT'S HALF AND HALF IN TERMS OF MALE AND FEMALE. [ NOT AUDIBLE ] >> OTHERWISE DIVERSITY REFLECTS THE UNIVERSITY'S UNDERLYING DEMOGRAPHICS. >> ON DIVERSITY ISSUE WE HAVE OUT OF THE 110 PROJECTS THAT WE HAVE FUNDED, HAVE LIKE TWO FEMALES THAT HAVE GONE THROUGH THIS PROCESS. WE STARTED WONDERING WHY. ESPECIALLY NOW FOCUS MORE ON STUDENTS, THAT'S WHY IN ONE -- REALLY WAS DESIGNED FOR MENTORING PROGRAM FOR STUDENTS IN MINORITIES AND FEMALES TO REALLY HELP THEM WITH THAT PROCESS. WE FORMED FOCUS GROUPS, WE ASKED THE QUESTIONS IN SOME CASES IT WAS REALLY ISSUE OF MENTORING AND ACCESS AND BEING OKAY TO REALLY ALLOW TO COMPETE. WE WERE CONCERNED ABOUT THAT. THAT'S WHY WE STARTED. WE WERE FUNDING TO DO THIS TWO-YEAR PROGRAM. >> AS REGARDS TIME DELAY BETWEEN SBIR OF PHASE ONE AND TWO WHICH WAS MENTIONED BY LISA AND OTHERS THERE IS AN OPTION TO SHORTEN THAT THE PROGRAM HAS. >> SURE, COUPLE COMMENTS. WE'VE HAD FOR MANY YEARS A FAST TRACK PROGRAM WHICH IS -- WE DON'T PRESCRIBE HOW THE MONEY GOES IN THERE IN TERMS OF PERCENTAGES. BUT COMBINED PHASE ONE-TWO APPLICATION. THIS REALLY ELIMINATES PHASE ONE-TWO GAP. IT'S SLIGHTLY MORE COMPETITIVE THAN SBIR PROGRAM WHICH ARE EXTREMELY COMPETITIVE THEY DO PHASE ONE, AWARDED PHASE ONE SEND PROGRESS REPORT TO THE PROGRAM OFFICER AND ADMINISTRATIVE STAFF GOES TO PHASE TWO WHICH HAPPENS -- CAN HAPPEN IN MATTER OF FEW WEEKS. THAT REALLY ELIMINATES THE GAP. ALSO WANTED TO ADDRESS SOME OF THE THINGS THAT LISA SAID AND OTHERS ABOUT TIMING OF AWARDS. CERTAINLY GOING TO BE LOOKING AT ALL THREE PHASES OF OUR AWARD CYCLE, THE PEER REVIEW, COUNCIL AND GRANTS MANAGEMENT PREAWARD PHASE AND FUND TIME IN ALL OF THOSE AREAS TO SHORTEN THE AWARD. WHAT I'VE ALWAYS LIKED TO SAY WE HAVE THREE CYCLES PER YEAR, WE HAVE 40 TO 50 TO 60 ACTIVE SOLICITATIONS. SOME OF WHICH HAVE SPECIAL DATES IT'S VERY CONFUSING. LOTS OF WAYS FOR PEOPLE TO COME IN TO APPLY THEY CAN REVISE AND RESUBMIT. THAT WHAT WE CONSIDER FLEXIBLE AND VERY UNIQUE TO NIH. MOST AGENCIES IT'S ONCE A YEAR AND IF YOU DON'T GET FUNDED YOU COME BACK NEXT YEAR. I THINK CERTAINLY OUR COMPANIES WOULD PREFER GIVEN CHOICE TO HAVE OPPORTUNITY TO COME IN EVERY THREE OR FOUR MONTHS AS OPPOSED TO WAITING WHOLE YEAR INCLUDING WITH THE REI CAN. IN TO THE OTHER POINT IN TERMS OF HOLDING APPLICATIONS WHICH SOMETIMES HAPPENS FROM EARLY ROUNDS THIS IS ALSO PART OF OUR FLEXIBILITY BUT PART OF OUR DAM NATION IN THE SENSE THAT MOST OF THESE DECISIONS TO HOLD APPLICATIONS ARE DUE TO THE BUDGET. WE HAVE CONTINUING RESOLUTION NOW FOR SIX MONTHS WE DON'T ACTUALLY HAVE BUDGET QUITE YET. INSTITUTES WILL FUND IN CYCLE ONE OR EARLY PART OF THE FISCAL YEAR, APPLICATIONS THEY KNOW THEY WOULD FUND NO MATTER HOW POOR THE BUDGET WILL BE NOT INCLUDING THIS PARTICULAR YEAR WHICH MAKES DRASTIC. THEY HOLD APPLICATIONS WHAT WE CALL THE GRAY ZONE THEY'RE NOT TYPICALLY GOING TO HOLD THEM TO SEE IF SOMETHING BETTER COMES ALONG. THERE ARE -- HEAVY IN THE LAST HALF OF THE YEAR ESPECIALLY QUARTER FOUR WITH MAKING AWARDS. THAT FLEXIBILITY WE HAVE WILL GO AWAY FROM THE -- BECAUSE OF THE STATUTE, REAUTHORIZATION REQUIRES US TO MAKE DECISIONS WITHIN 12 MONTHS FROM RECEIPT. WE MIGHT HAVE AN APRIL RECEIPT DATE FOR STANDARD DATE, GRAY MIGHT BE GET LONGER BECAUSE WE HONESTLY DON'T KNOW IF WE CAN FUND THEM. WITH WHATEVER -- HAVE TO MAKE SOME GO-NO GO DECISIONS A LITTLE BIT SOONER. WE WILL BE GIVING COMPANIES DECISIONS ON NO. WHAT WE WILL LOSE IS FLEXIBILITY I THINK REQUIREMENTS OF REAUTHORIZATION TO GO BACK AT THE END OF THE FISCAL YEAR PICK THEM UP AS WE DO FREQUENTLY. WE'RE GOING TO BE STATUTORILY REQUIRED TO MAKE SOME DECISIONS AND ELIMINATE A PORTION THAT HAVE FLEXIBILITY. WE ARE GOING TO LOOK WHOLESALE FROM SOUP TO NUTS ON OUR SBIR CYCLE. >> THANK YOU, THANK THE PANEL. TAKE COUPLE MINUTES TO SORT OF SUMMARIZE WHAT I THINK I HEARD IN TERMS OF THE STRATEGIC KEYS FOR ACHIEVING COMMERCIALIZATION. TARGETING AN UNMET NEED. PROBLEM DRIVEN RESEARCH AND COLORADO I THINK DESH CALLED IT A BURNING PROBLEM, NOT JUST A PROBLEM, BUT A BURNING PROBLEM. SENSINGMENT SIZE OF THE MARKET, ONE MIGHT REPHRASE THIS AS I THINK -- IF IT SUCCEEDS WILL IT PAY THE RENT, SO TO SPEAK. IS THE APPROACH NOVEL. HAVING A DEVELOPMENT PATHWAY IN COMMERCIALIZATION PLAN BEFORE YOU ACTUALLY EMBARK UPON THIS PROCESS. MATCHING DOLLARS TO -- IMPORTANCE OF EDUCATION THROUGHOUT THE PROCESS WITH THE SCIENCE AND INVENTOR COMMUNITY BEING BATHED IN THIS SERIES OF INTER-ACTIONS AND TEACH THEM HOW TO COMMERCIALIZE. MENTORSHIP, FORGING RELATIONSHIPS WITH SUCCESSFUL MENTORS IS IMPORTANT ON NUMBER OF LEVELS. FROM NOT ONLY LEARNING HOW TO STRATEGIZE AND ANSWERING SPECIFIC TECHNICAL QUESTIONS. AND CONNECTING INVENTORS WITH INVESTORS IS AN IMPORTANT ELEMENT. DOES ANYONE WANT TO ADD ANYTHING? WITH THAT SUMMARY I'D LIKE TO THANK THE PANEL AND THE PARTICIPANTS AND I'LL TURN THE MICROPHONE AND GAVEL OVER TO GAIL. [APPLAUSE] >> AGAIN, THANK YOU TO ALL OF THE PANELISTS TODAY, YOU'VE GIVEN US A LOT TO THINK ABOUT. IN ADDITION TO WHAT WE HAVE JUST HEARD IN TERMS OF A SUMMARY I THINK THAT THE OTHER MODERATORS HAVE GIVEN US A GOOD SUMMARY OF EACH SESSION BUT, DAN, YOU WANTED TO WAIT UNTIL LATER PERHAPS TO MAKE SOME SUMMARY COMMENTS OUT OF THE INVESTOR SESSION THAT WE HEARD FROM, I DON'T KNOW IF YOU STILL WOULD LIKE TO DO THAT. >> ONE OF THE KEY ELEMENTS IN THE INVESTMENT -- I FELT THERE HAVE BEEN A LOT OF COMMON ELEMENTS BUT THE INVESTOR PANEL REALLY FOCUSED ON BRINGING MENTORS TOGETHER WITH THE INVENTORS AND THIS IS LACKING IN MANY, MANY PROPOSALS THAT DON'T CONNECT THEM UP WITH THE REAL WORLD. THE OTHER ELEMENT THAT WAS BROUGHT OUT IN THIS SESSION WAS THE NECESSITY TO HAVE A COMMERCIALIZATION PLAN FROM DAY ONE. TAKE THAT COMMERCIALIZATION PLAN ALL THE WAY THROUGH. BECAUSE THIS IS THE BUSINESS WAY OF THINKING NOT THE GOOD RESEARCH THAT MAKES YOU HAPPY. AND THIRD POINT WAS, YOU NEED TO KNOW WHERE YOU'RE GOING TO MAKE A HUGE DIFFERENCE IN THE WORLD. THOSE ARE THE THREE FOCUSED MESSAGES THAT I GOT REPEATED ALL THE WAY THROUGH THE DAY. I THINK THOSE ARE THE MOST IMPORTANT. >> I AGREE, FOR ME DESH SUMMARIZED IT I THINK MAYBE BEST. THAT WAS YOU HAD THREE PRINCIPLES, THE WALK-AWAY MESSAGE WE DO GOOD JOB OF SELECTING, ALLAN REMINDED US THAT THE LARGEST NUMBER OF FAILURES ARE NOT DUE TO THE FAILURE OF THE -- OR SELECT GOOD IDEA BUT RATHER FAILURE OF NOT PAYING ENOUGH ATTENTION TO THE TEAM, PARTICULARLY THE MANAGEMENT TEAM AND THE COMMERCIALIZATION PIECE. CERTAINLY WHAT WE'VE HEARD FROM YOU ALL IS THE IMPORTANCE OF MENTORING. I THINK THAT THIS IS AN AREA THAT WE SHOULD LOOK AT TO SEE HOW WE CAN IMPROVE THE MENTORING, THE COMMERCIALIZATION PIECE. WE'VE HEARD THE DIFFERENCE BETWEEN THE TWO DEFINITIONS OF COMMERCIALIZATION BOTH FROM THE UNIVERSITY STANDPOINT BUT ALSO FROM THE COMPANY STANDPOINT. I THINK IT IS INTERESTING THAT WHEN WE HEARD FROM STAFF AT OUR LAST MEETING THAT WE DIDN'T HEAR ABOUT THE ICORE PROGRAM BUT MORE ABOUT -- SEEMS LIKE SOME REALLY ATTRACTIVE FEATURES OF THE ICOR PROGRAM THAT WE CAN LOOK AT MORE CLOSELY TO SEE IF THERE WERE ADAPTATIONS THAT MIGHT BE USE USEFUL. THE OTHER THING THAT HAS IMPRESSED ME AGAIN TODAY IS THE SPECTRUM OF INVESTIGATION, P.I. AND IDEAS THAT ARE FUNDED BY THE SBIR PROGRAM. PRETTY FANTASTIC WHEN YOU THINK ABOUT EVERYTHING WE'VE HEARD TODAY AND THE IMPACT OF THOSE PROGRAMS AND IMPACT THAT THEY'RE LIKELY TO HAVE. WOULD NOT HAVE NECESSARILY MADE IT THROUGH THE RO1 PEER REVIEW PROCESS PERHAPS BUT NEVERTHELESS THEY HAVE HUGE IMPACT. WHEN WE THINK ABOUT THE VALUE IT GOES BACK TO THE VIDEOS THAT WE SAW. I THINK THE COMBINATION OF THE INSPIRATION FALL RESEARCH BUT NOW FOCUSING MORE ON THE RELEVANCE AND COMMERCIALIZATION AND ACTUALLY AS PAUL LIKES TO SAY, YOU KNOW, MEDICINES DON'T MATTER UNLESS YOU GET THE MEDICINES TO THE PATIENT. THE IDEAS DON'T MATTER UNLESS WE CAN TRANSLATE THEM GET THEM TO THE PATIENT THAT MEANS IN MOST CASES PRODUCT DEVELOPMENT. WITH THAT, I THINK WE'VE HAD A GOOD DAY, GOOD INPUT AND I GUESS WE NEED TO BE SURE THERE'S NO PUBLIC COMMENT WITH RESPECT TO THIS LAST SESSION THEN I TURN IT OVER TO YOU. >> GAIL, THANK YOU VERY MUCH FOR YOUR HOSTING THIS ACTIVITY. SPECIAL THANKS AGAIN TO ALL THREE PANELS IT HAS BEEN VERY INFORMATIVE TIME. I COME AWAY WITH NUMBER OF REACTIONS THAT STAND OUT IN MY MIND, ONE IS THE IMPORTANCE OF TRULY BASED ON RESEARCH, DAN, YOU REFER TO AS INSPIRED RESEARCH OR SOMETHING. WE DON'T LOSE SIGHT OF THE NEED FOR THAT. AT THE SAME TIME IF WE'RE TO IMPROV PEOPLE'S HEALTH WE CAN'T WRITE PAPERS WE HAVE TO DO SOMETHING WITH THEY WILL. I DON'T MEAN TO DEMEAN TECHNICAL PAPERS, BUT IT'S VERY DELICATE BALANCE THAT WE DON'T UNDO ONE OR THE OTHER. I THINK WE HAVE TO BE MINDFUL OF THAT AS WE GO AHEAD. SECOND THING THAT I GUESS COMES TO MY MIND NOT TO RAISE IT AGAIN BUT I WILL. THAT IS TO ME HUGE DISCONNECT BETWEEN THE PACE AT WHICH GOVERNMENT IN GENERAL, I'M NOT TALKING ABOUT NIH IN PARTICULAR, MOVES ON PACE WHICH THE BUSINESS WORLD MOVES TODAY. IF WE'RE TO BRING TWO TOGETHER SOMEHOW GET THEIR CLOCKS SYNCHRONIZED A LITTLE BIT BETTER. THERE IS PLENTY OF BLAME ON BOTH SIDES. I'M FRUSTRATED WITH THE BUSINESS WORLD THAT EVERYTHING IS THE NEXT QUARTER, WE TRADE EVERY MILLISECOND SO ON. THAT JUST CAN'T BE GOOD. BY THE SAME TOKEN THESE LONG TIMES TO GET DECISIONS I'M ON BOARD RIGHT NOW OF A LITTLE COMPANY, SPEND HALF YOUR TIME TRYING TO FIGURE OUT HOW TO MAKE NEXT MONTH'S PAYROLL.YRc„ SOMETHING CALLED SLIDE RULE IT'S AMAZING WHAT YOU CAN DO. I REMEMBER WHAT WE WERE SET OUT TO BUY THE GENERAL ELECTRIC COMPANY AEROSPACE BUSINESS IT WAS 27 DAYS FROM THE DAY WE FIRST RAISED THE IDEA WITH THEM UNTIL WE HAD ALL LEGAL DOCUMENTS, THE FINANCIAL DOCUMENTS WE ANNOUNCED IT TO THE PUBLIC. REASON WE COULD DO THAT OF COURSE BECAUSE IF WE DIDN'T SOMEBODY ELSE WAS GOING TO. TRY TO DO HARDER IS FORMULA FOR FAILURE. YOU GOT TO DO THINGS DIFFERENTLY. WITH THOSE PHILOSOPHICAL THOUGHTS LET ME -- I NOTE WE'VE NOT HAD ANY REQUESTS FROM THE PUBLIC TO MAKE COMMENTS. I WOULD SAY AGAIN TO THE PUBLIC THOSE IN THE ROOM AND THOSE LISTENING IN CYBERSPACE THAT WE WOULD CERTAINLY WELCOME COMMENTS GIVEN THAT CHANGE IN SCHEDULE COMMAND WE CAN EITHER CONTINUE AND FINISH PROBABLY IN THE NEXT NOT TOO LONG TIME OR TAKE THE SCHEDULED BREAK. I WOULD PROPOSE WE CONTINUE UNLESS THERE'S SOMEONE IN THE ROOM WHO WOULD -- SOMEBODY WANTS TO TAKE A BREAK, WE'LL USE INITIATIVE HERE. WITH THAT AGREEMENT WE'LL CONTINUE. WE'LL COME BACK, GAIL TO YOU AT THIS POINT WHAT WE WANT TO DO CHANGE GEARS A BIT AND TALK A LITTLE BIT ABOUT THE VALUE OF BIOMEDICAL RESEARCH WORKING GROUP THAT IS JUST GETTING UNDERWAY. THIS IS A TREMENDOUS PANEL WE HAVE HERE BECAUSE WE WERE ALMOST OVERSUBSCRIBED WITH VOLUNTEERS. WE HAD LOT OF PEOPLE WANTED TO GET INVOLVED IN THIS. I THINK IT COULD BE AWFULLY IMPORTANT UNDERTAKING IF WE CAN COME UP WITH ANYTHING HALF AS COMPELLING AS THE TEN-MINUTE VIDEO WE SAW WE WILL REALLY HAVE DONE SOMETHING. ANYTHING YOU NEED FROM THE GROUP AS A WHOLE. >> WE'VE NOT YET SCHEDULED TO HAVE OUR SCHEDULED PHONE CALL. WE HAVE GOOD GROUP TO GET TO WORK. FROM MY ONLY PERSONAL THOUGHTS ABOUT THIS IS NUMBER ONE, AS ALREADY SAID PROBABLY NOTHING MORE IMPORTANT GIVEN THE CURRENT FINANCIAL CLIMATE. ESPECIALLY ALSO GIVEN WHAT DESH TOLD US THAT INNOVATION AND ENTREPRENEURS WERE GOOD THING TO HAVE IN THE PAST BUT IN THE FUTURE. IT'S A MUST HAVE. WE HAVE TO AGAIN COME BACK TO THE BALANCING ACT. ALSO I THINK TO BE ABLE TO EXPLAIN THAT TO THE PUBLIC AND TO THE POLICY MAKERS BUT GETTING BACK TO HOW YOU CLOSED THIS SESSION EARLIER IS, I THINK WE HAVE TO DO SOMETHING DIFFERENT. THERE ARE LOT OF REPORTS THAT HAVE SUMMARIZED THE VALUE OF NIH RESEARCH IN TERMS OF LIVES LOST OR SAVED AND ALSO ECONOMICALLY TURN ON THOSE INVESTMENTS. I THINK WHAT I WOULD LIKE MOST TO HAVE PEOPLE DO TO THINK ABOUT WHAT CAN WE DO THAT'S DIFFERENT IN TERMS OF LOOKING AT VALUE THEN EARRING ABLE TO TRANSLATE THAT IN TO COMMUNICATION STRATEGY. I KNOW THAT GILL HAS HAD A LOT OF THOUGHT ABOUT THIS HAS AGREED TO SERVE ON COMMITTEE I'D ASK HIM TO SHARE SOME OF HIS THOUGHTS THAT HE HAS ABOUT MAYBE THINGS THAT WE MIGHT DO DIFFERENTLY. JUST IN GENERAL LIKE TO ASK THOSE PARTICULARLY THESE INDIVIDUALS SERVED ON THE INVESTORS PANEL ALSO THIS LAST SESSION TO HELP US THINK THROUGH WHAT MIGHT BE AN INNOVATIVE WAY, IF YOU WILL, OF SUMMARIZING THE VALUE OF INVEST INVESTMENT IN BOTH INNINGS PER RATIONAL RESEARCH. >> ANY QUESTIONS? HEARING NONE. – THANK YOU VERY MUCH GAIL FOR TAKING THIS ADDITIONAL TASK ON. IT'S APPRECIATED. ONE ADMINISTRATIVE ITEM BEFORE WE GO AROUND THE ROOM IS NEXT BOARD MEETING WILL BE HELD JANUARY 14TH I HOPE THAT'S ON YOUR CALENDAR. WE WILL HAVE REPORTS OF BOTH ACTIVE WORKING GROUPS, MUCH OF THE AGENDA DEVOTED TO THE GROUP WE JUST HEARD ABOUT THAT GAIL WOULD BE LEADING. WE'LL BE DISCUSSING ADDITIONAL PLANS FOR WORKGROUPS BEYOND THAT GIVEN THE -- I COMPLAIN ABOUT LEAD TIME. WE ARE REQUIRED BY LAW TO MEET FIVE TIMES ON EVERY SUBJECT. WE HAVE TO KEEP THE PIPELINE ALIVE, SO TO SPEAK. THAT'S RIGHT. WE'RE VERY POOR EXAMPLE IN ANY EVENT THAT'S WAY THE WORLD IS FOR US. I WOULD LIKE TO AS ALWAYS GO AROUND THE ROOM GIVE EVERYBODY CHANCE TO HAVE ANY LAST OBSERVATIONS OR CONCERNS OR SUGGESTIONS OR ANYTHING THIS GIVE EVERYBODY CHANCE TO RAISE THEM. DAN, LET'S START WITH YOU IF WE WILL GO AROUND THE TABLE. >> I'D LIKE TO TEE OFF WHAT YOU SAID ABOUT DISPARITY BETWEEN TWO TYPES OF TIME. TALKING ABOUT THE IMPORTANCE OF BIOMEDICAL RESEARCH LOOKING FORWARD ON THE ONE HAND THE PAIN AND SUFFERING OF DISEASE SCREAMS OUT. I GOT TO HAVE SOLUTION. WHEN THOSE SOLUTIONS DON'T IMMEDIATELY PRESENT THEMSELVES THERE'S ALMOST A FRUSTRATION IN THE NEGATIVE FEEDBACK. ON OTHER EXTREME PROBLEMS THAT ARE SO DIFFICULT MAKES ONE'S HEAD HURT THAT REQUIRE INSPIRATION FALL RESEARCH THAT I WAS TALKING ABOUT.@"n BY THE ENTREPRENEURS THAT WILL CONVERT THIS INSPIRATION FALL RESEARCH TO REAL THINGS THAT WILL HELP PEOPLE. I BELIEVE MOST IMPORTANT THING WE CAN DO WHEN WE TALK ABOUT THE IMPORTANCE OF BIOMEDICAL PRESEARCH IS HELP THE PUBLIC THE CONGRESS AND NATIONAL LEADERSHIP UNDERSTAND THIS BROAD RANGE OF TIME SCALES FROM IMMEDIATE RELIEF OF PAIN AND SUFFERING TO WHAT IT TAKES TO MAKE HUGE CHANGE HAPPEN THAT IS WHAT I SEE. >> WITH THAT, I JUST HAVE FEW COMMENTS AND OBSERVATIONS, ONE TODAY WAS VERY ENLIGHTENING TO ME I FEEL THAT THE SBIR AND TTR PROGRAMS ARE VERY IMPORTANT AND VERY IMPORTANT FOR THAT TRANSLATION FALL. OF COURSE NOT NOR GETTING BASIC SCIENCE. ONE OF THE THINGS DID I HEAR ABOUT TODAY I JUST WONDER IF THAT NO LONGER AN AREA OF FOCUS OR OF INTEREST IS UNIVERSITIES THAT HOUSE INCUBATORS AND THEY INVOLVED INANES SPECT AND THOSE FREQUENTLY PARTNER WITH GRADUATE STUDENTS, POSTDOCS, UNDERGRADUATE STUDENTS THEY DO PUT IN SBIR I DON'T KNOW IF THEY'RE MORE SUCCESSFUL, LESS SUCCESSFUL THAN THESE OTHER VENTURES THAT YOU'VE BEEN TALKING ABOUT. THAT'S SOMETHING ON MY MIND. THANK YOU. >> TRY TO COME BACK TO THESE THINGS AS WE GO. GAIL? >> LET OTHERS CHIME IN. >> COUPLE OF THINGS. ON INCUBATORS THERE IS AN ACTIVE SUBJECT AT THE UNIVERSITY OF WASHINGTON, THERE'S VERY ACTIVE ACCELERATOR SOUTH LAKE UNION COMPLEX YOU KNOW WELL. UNIVERSITY OF MICHIGAN, WE RECENTLY PURCHASED ENORMOUS SITE, FORMER PFIZER PARK DAVIS PROPERTY ORIGINALLY -- SOLD OFF FOR DEVELOPMENT WORK. THE SPARK AT STANFORD, ONE IN ANN ARBOR, THIS CONCEPT IS ALIVE. REALLY QUITE A LOT IN THIS. LOT OF RESEARCH AND TAKE ALL THE WAY TO PRODUCT CANDIDATE THEN 15% FOR FDA, 15% FOR REIMBURSEMENT, 50% FOR MARKETING THINK THAT WORK DONE WHEN THEY HAVE DONE THAT. I HAVE SOME RECOLLECTIONS OF THE EARLIEST DAYS CONGRESSIONAL PRESSURE TO CREATE THESE SBIR PROGRAMS TIME WHEN BUDGETS WERE TIGHT SEEMED LIKE THIS IS A SLICE TAKEN AWAY FROM A PRIMARY RESEARCH MISSION OF THE R&D AGENCIES AND YET THERE WAS POLITICAL RUSH NOW WHICH PROVED IMPORTANT AND I THINK THIS PROGRAM HELPED TO GENERATE THE NATIONAL STEPS OF SUPPORT FOR INVESTMENT BIOMEDICAL AND OTHER RESEARCH. AND OTHER RESEARCH IN LIFE SCIENCES DOCUMENTED BY RESEARCH AMERICA POLLS. PEOPLE ARE LOOKING FOR SOLUTIONS FOR HEALTH PROBLEMS AND OTHER NEEDS AND ACTUALLY I WOULD SAY PUBLIC STUNNINGLY PATIENT. SORT OF DEEP UNDERSTANDING THESE ARE HARD PROBLEMS YOU CAN'T JUST BUY ANSWERS. MAYBE THE INTERESTED PUBLIC MORE SO THAN LOT OF US OURSELVES. EVERYBODY WOULD LIKE TO HAVE ACCELERATION AND WE'RE ALL TRYING TO DO THAT AS PART OF THE MISSION. AS FAR AS NEW PROJECT I THINK WE CAN HOLD THAT UNTIL WE'VE HAD OUR CONVERSATIONS BUT WE HAVE A TOPIC REALLY REQUIRES IMAGINATIVE AND THOUGHTFUL FRAMING BECAUSE THERE'S QUITE A LOT WRITTEN ABOUT VALUE OF RESEARCH AND ORGANIZATION OF RESEARCH, CONTRIBUTION OF RESEARCH TO THE ECONOMIC STATUS. ECONOMIC DATA. YET NOT WELL-KNOWN. THE SPONSORED FOR INDEPENDENT ECONOMIST AT UNIVERSITY OF CHICAGO AND ELSEWHERE 20 YEARS AGO ESTIMATED HUMONGOUS PAY OFF FROM BIG ADVANCES IN BIOMEDICAL RESEARCH LIKE $57 HILL I DON'T KNOW BENEFIT. PEOPLE CAN'T GRASP THAT. WE LIKE MORE OF IT. THE QUESTION ITSELF WE PROBABLY OUGHT TO CAREFULLY PARSE WHAT WE SAW OF THE CHARGE BECAUSE VALUE OF BIOMEDICAL RESEARCH IS NOT THE SAME AS VALUE OF MARGINAL INVESTMENTS IN BIOMEDICAL RESEARCH OR HOW DO YOU INCREASE THE PAYOFF, BANG FOR THE BUCK, WHOLE SET OF QUESTIONS WHICH ARE VERY APPROPRIATE ALSO. SOME SERIOUS EFFORT UP FRONT FRAMING THE TOPIC TRYING TO FIND SOME WAYS THAT ARE FRESH ESPECIALLY CONSTRUCTIVE IN OUR TIMES. I THINK WOULD BE TIME AND EFFORT WELL REWARDED. I'M LOOKING FORWARD TO IT. THANK YOU. >> CLYDE? >> MY FIRST COMMENT THIS HAS BEEN FASCINATING. I BEGIN MY EARLY TEN TOUR AS SCIENTIFIC MANAGEMENT REVIEW BOARD. I'VE SPENT THE DAY AS A STUDENT UNDERSTANDING THE PROCESS AND ABSORBING THE INFORMATION. I DON'T KNOW THAT I HAVE A CONCERN BUT I GUESS I HAVE SOME OBSERVATIONS AND MAY BE OUT GROWTH OF JUST MY NAIVETY. I SHOULD DEFINE THE PRISM THAT I BRING TO THIS TABLE, SOMEONE WHO AUTHORS CLINICAL PRACTICE GUIDELINES SITS AT THE TABLE WITH THE FDA REVIEWING THE SAFETY OF DEVICES AS THEY'RE INTRODUCED TO THE PUBLIC. I THINK ACCELERATION THAT WE ARE SEEKING, ALL BE FOR OBVIOUS GREATER GOOD MUST NOT COME WITHOUT A LOSS OF THE PRECISION THAT'S NEEDED TO DO THIS CORRECTLY. I POINT OUT SPECIFICALLY HOW DIFFERENTLY ISSUES OF CONFLICT OF ISSUES BECOME AS WE HAVE CLOSER ALIGNMENT OF ENTREPRENEURS AND INVESTIGATORS. I POINT OUT HOW NECESSARY IT IS TO REALLY DEFINE WHO CAPTURES THE GAME COMMERCIALLY WHEN A PRODUCT DOES MAKE IT TO MARKET AND HOW ARE THOSE PROCEEDS DIVIDED BETWEEN INSTITUTIONS, INVESTIGATORS, BETWEEN THE PUBLIC TRUST. WE TALK MEDICINE QUITE A BIT ON CLINICAL SIDE ABOUT INCENTIVES. THIS YIELDS YET ANOTHER DOMAIN IN THAT WHOLE AREA. IT HAS TO BE MANAGED AND MANAGED CAREFULLY. IT LOOKS TO ME AS IF THE ORGANIZATION, I USE THAT TERM LOOSELY, MAY BE THE COLLECTION OF VENTURE CAPITAL FIRMS INTERESTED IN THIS SPACE PARTICULARLY ANGEL ENTITIES INTERESTED IN THIS SPACE IS FAIRLY ORGANIC. AGAIN USING THE PRISM THAT WE HOLD OURSELVES TO ON OVERT CLINICAL SIDE, AT SOME POINT IN TIME WE NEED TO UNDERSTAND WHAT ARE THE QUALIFICATIONS, CHARACTERISTICS, WHAT ARE THE I TRIBUTES WHAT ARE DESCRIPTORS OF THESE BECAUSE WHENEVER WE INITIATE NEW DEVICE OR DRUG IN THE PUBLIC CLINICAL SPECTER THERE IS A DIFFERENT AUDIENCE TO WHICH HELD ACCOUNTABLE. WE HAVE TO BE CERTAIN THAT THESE ARE NOT LEFT BY THE WAYSIDE F. THIS HAS BEEN CONSIDERED IN YOUR PREVIOUS DELIBERATION I BEG YOUR APOLOGY. BUT I ALSO THINK THAT THERE IS ONE OTHER ISSUE THAT I'VE MADE NOTE OF DURING THE DAY. AGAIN IT COULD BE BECAUSE OF MY NAIVETY. BUT FRANCIS KNOWS THAT WE BROKE FORWARD OVER A YEAR AGO TO TRY TO UNDERSTAND THE ISSUES OF DIVERSITY WITHIN BIOMEDICAL RESEARCH SPACE AND MY FEAR AS I PAY ATTENTION TO WHAT I'VE SEEN THAT WE'RE GETTING FURTHER AWAY FROM THE GOAL RATHER THAN CLOSER. SENSITIVITIES CANNOT BE ALLOWED TO LANGUISH BECAUSE AGAIN0>v OUR DESIRE TO BE SPEEDY AND TO BRING THESE ISSUES TO MARKET. WE'VE ALREADY ESTABLISHED THERE'S VALUE. THAT SHOULD NOT BE DISMISSED IN THE ENTHUSIASM OF BRINGING THINGS TO MARKET. OVERALL IT'S BEEN FASCINATING DAY I'M EXCITED TO SEE WHERE WE ARE BUT I THINK IMPORTANT LESSONS WE'VE LEARNED FROM THE PRAGMATIC SIDE OF INTRODUCING NEW IDEAS IN TO THE CLINICAL SPACE THAT SHOULD NOT BE LOST. >> THANK YOU FOR THOSE IMPORTANT POINTS. AMY, DO YOU HAVE ANYTHING YOU'D LIKE TO SAY? >> I JUST WANTED TO THANK CLYDE FOR HIS REMARKS AND I WILL ASK HIM AT THE END OF HIS TENURE WHETHER HE FELT THAT THE COMMITTEE HAS ADDRESSED SOME OF THOSE ISSUES MAY HAVE BEEN TOO SUBTLE A POINT TALKING ABOUT THE OVERARCHING FRAMEWORK THAT THIS BOARD HAS ARTICULATED FOR HOW IT WANTS TO CONSIDER WHETHER OR NOT ORGANIZATION FALL CHANGE IS NEEDED. BUT OVERARCHING FRAMEWORK HAS ISOPHAN OCCASIONAL PRINCIPLES ISSUES OF TRANSPARENCY, ACCOUNTABILITY TO THE PUBLIC, TO THE PATIENTS, COMMUNICATION VERY PARTICIPATORY PROCESS. I JUST WANTED TO PUT THAT OUT THERE. ALSO SAY THAT SOMETHING THAT WE NEED TO BE CONTINUALLY REMINDED OF. I HOPE AT THE END OF YOUR TENURE GET GOOD REPORT BUT THAT REMAINS TO BE SEEN. >> THANK YOU, AMY. RICHARD? >> I JUST WANTED TO EXPRESS MY APPRECIATION TO THE THREE GROUPS OF PANELISTS, I THINK THEY WERE VERY INFORMATIVE IN ADDITION TO MY OTHER RESPONSIBILITIES I'M PART OF THE TEMPORARY TRANSITION TEAM WORRYING ABOUT THE CTST A PROGRAM. THAT HAS VERY SUBSTANTIAL INVESTMENT IN SOME OF THE AREAS THAT WERE BEING TALKED ABOUT HERE. BUT THE IDEA WE WERE HEARING TODAY I FOUND VERY PROVOCATIVE AND HELPFUL. IN THINKING ABOUT WAYS WE CAN FURTHER STRENGTHEN THAT. PARTICULARLY PERHAPS INVESTMENT IN MENTORING AND MAKING SURE THE RIGHT KIND OF MENTORING BRIDGES ARE BEING BUILT. A KNEW INSIGHT WAS IMPORTANT ROLE POSTDOCS HAVE IN MOVING IDEAS OUT OF THE ACADEMIC SPACE. I THANK THE PANLS FOR VERY HELPFUL DISCUSSION. >> THANK YOU. >> I'D LIKE TO ECHO THE THANKS TO THE PANELISTS THEY WERE TERRIFIC DISCUSSIONS. ALSO LIKE TO GIVE BRIEF UPDATE AT THE LAST MEETING JODY BLACK WHO IS IN THE BACK HAD UPDATED YOU ON OUR ACCELERATED INNOVATION CENTER SHE WAS GONE FOR AWHILE BECAUSE SHE WAS IN CONFERENCE CALL WITH THE APPLICANTS. THIS IS FREE-SBIR. BEFORE IT'S AT THE SBIR SPACE TO MOVE FORWARD. BUT AS THIS MOVES IN TO THE SPACE WE'LL CREATE WITH OR THREE CENTERS AND THEY'RE MODELED HEAVILY ON THE OTHER CENTERS TO TAKE ADVANTAGE OF THE KNOWLEDGE THAT'S BEEN GAINED ALREADY. WE'LL BE HAPPY TO KEEP YOU POSTED HOW THAT GOES. BUSINESS OF BUILDING PUBLIC-PRIVATE PARTNERSHIPS GETTING CO-INVESTMENT IS SIGNIFICANT PART OF THE CENTERS. FINALLY JUST LIKE TO THANK NORM FOR YOUR LEADERSHIP AND REST OF THE GROUP BECAUSE THIS IS MY LAST MEETING. >> THANKS, GREAT DAY, GREAT PANELISTS, VERY INFORMATIVE. DISCUSSIONS REALLY VALIDATED MY PREJUDICES THAT I'VE DEVELOPED IN 27 YEARS ON THE SIDE OF TECHNOLOGY IN LOT OF WAYS. WHAT I MEAN BY THAT IS THAT THE IMPORTANCE OF SCIENTIFIC RIGOR, CRITICAL IMPORTANCE OF THE PEOPLE WHO ARE THE ENTREPRENEURS AS WELL AS SCIENTISTS BEHIND THIS REALLY CAN'T BE OVERSTATED, THAT'S REALLY VERY CRITICAL. I'M HAPPY TO SEE THAT THIS PROGRAM HAS BEEN SUCH AN IMPORTANT PART OF INNOVATION OVER THE YEARS BECAUSE OF THAT. ALTHOUGH THERE IS, I THINK VERY GOOD CASE TO BE MADE FOR TRYING TO ACCELERATE AND EXPAND THE WAY AND PROCESS USED FOR DECISION MAKING CAN BE A LITTLE FASTER NOT THROWING THE BABY OUT WITH THE BATH WATER WHICH IS VERY IMPORTANT. WE NEED MORE GOOD TECHNOLOGY, WE DON'T NEED JUST MORE TECHNOLOGY WE NEED MORE SUCCESSFUL COMPANIES. THE OTHER POINT THAT ISN'T LOST ON ANY OF US IS THE FACT THAT WHAT THE PUBLIC REALLY ARE LOOKING TO THE NIH TO DO TO ENFIRE ECOSYSTEM TO DO TO PROVIDE SOLUTIONS TO THEIR PROBLEMS WHAT THEY WANT MORE THAN ACCESS TO AFFORDABLE HEALTHCARE IS CURES. NO QUESTION ABOUT THAT. WE'RE SUPPOSED TO DELIVER THAT. I HAD A LITTLE BIT OF ARGUMENT WITH ONE OF MY COLLEAGUES WHO IS STILL HEAD OF ARE R&D HE WAS CITING IMPERICAL EVIDENCE THAT IF YOU LOOK BACK TO THE TIME BETWEEN DISCOVERY IN THE 25TH CENTURY TIME THE PRODUCT HITS THE MARKET IT'S 20 TO 40 YEARS IT HASN'T CHANGED OVER THOSE DECADES. POINT HE WAS TRYING TO MAKE THAT THERE'S NO WAY YOU CAN ACCELERATE. I DON'T DISPUTE THE EVIDENCE THAT YOU CITE BUT I DON'T ACCEPT THAT WE CAN'T CHANGE THAT. IT IS COMPLETELY UNACCEPTABLE THAT WE SHOULD THINK THAT THE PEOPLE WHO DEPEND ON US FOR THIS WOULD HAVE TO WAIT 20 TO 40 YEARS. THERE ARE WAYS OF DOING THAT. WE DIDN'T COVER -- I SUPPOSE OVER COURSE OF THE NEXT SEVERAL YEARS WE MAY HAVE AN OPPORTUNITY TO TALK ABOUT ALL OF THE THINGS THAT YOU'RE GETTING. THE SPEED WITH WHICH DECISIONS ARE MADE ON THIS PROGRAM ISN'T THE ONLY THING THAT IS GETTING IN THE WAY, CERTAINLY NOT BIGGEST THING. I BELIEVE WE NEED TO THINK ABOUT THAT, SEE WHAT WE CAN DO HELP TO REMOVE OBSTACLES WHICH ARE NOT REALLY ADDING VALUE MAYBE SUBTRACTING VALUE FROM THIS ENTERPRISE SEE WHETHER WE CAN SHORT THEN TIME. WITHOUT COMPROMISING. >> I FOUND IT TO BE VERY INFORMATIVE DAY. CONSTRUCT OF THE DAY IN FRONT OF THREE CRITICAL SECTORS DIRECTLY FROM PERSONS INVOLVED IN THOSE THREE CRITICAL ELEMENTS WAS PARTICULARLY USEFUL. >> AS ALWAYS YOU GET THE LAST WORD. >> CERTAINLY WANT TO ECHO WHAT OTHERS HAVE SAID ABOUT THE REMARKABLE CONTENT THAT WAS PUT FORWARD BY OUR PANELISTS AND RICHNESS OF THE DISCUSSION. I THINK MY UNDERSTANDING OF THIS LANDSCAPE CERTAINLY BEEN GREATLY BENEFITED BY THOSE THOUGHTFUL STATEMENTS AND REFLECTIONS BY PEOPLE WHO ARE IN THE MIDDLE OF THIS. THAT WILL HELP US GREATLY. I ALSO WAS GRATIFIED ALTHOUGH NOT BEING COMPLETELY COMPLACENT BY COMMENTS THAT INDICATED THAT WHILE THERE ARE THINGS THAT CAN BE DONE TO IMPROVE OUR SBIR PROGRAM THERE IS ALSO SENSE THAT NIH RUNS THIS PROGRAM ALREADY IN A FASHION THAT HAS REAL POSITIVE FEATURES AGAIN REFLECTIONS ON THAT, THANKS FOR THAT SHOULD BE MENTIONED IN TERMS OF THE FOLKS THAT HAVE BEEN CONTINUE WALLLY TRYING TO REINVENT THIS. WE DID LEARN A LOT FROM INPUT REVITALIZE, IMPROVE THE SUCCESS OF IT. I ALSO WAS STRUCK BY FACT THAT THERE ARE NUMBER OF REALLY DRAMATIC SUCCESS STORIES IN THE PAST FROM SBIRs I DON'T KNOW THAT WE DO VERY GOOD JOB OF POINTING TO KNOWS. I DIDN'T KNOW THAT THE ELECTRIC TOOTHBRUSH WAS FOUNDED ON SBIR GRANT. THAT WAS NEWS. THERE ARE IT MIGHT BE BAD BAD IDEA TO SELECT THOSE IN SOME PLACES IN THE JUST USE THEM FOR ADVERTISING BUT ALSO TO SAY, THESE ARE GOOD CASE STUDIES. UPLOOK AT OTHERS THAT WERE THOUGHT TO BE TERRIBLY PROMISING BUT NEVER LED TO COMMERCIALIZATION. HAVE WE DONE EVERYTHING WE COULD TO LEARN FROM OUR OWN HISTORY. PERHAPS BIT MORE WE CAN DO IN THAT REGARD. I'M LOOKING FORWARD TO THE NEXT STUDY THAT THIS REMARKABLE GROUP IS GOING TO DO, THANK YOU, GAIL. THANK YOU ALL THOSE WHO SIGNED UP, AS HAS BEEN SAID MORE IMPORTANT ISSUE THAN WHAT IS VALUEw;v OF BIOMEDICAL RESEARCH HOW DO WE MAKE SURE THAT WE HAVE COLLECTED THE KIND OF RIGOROUS ANALYSES THAT CAN STAND UP TO CRITICISM. THERE WILL BE CRITIC, NO DOUBT OF ANY OF THOSE CONCLUSIONS ONE WANTS TO BE SURE IT'S BEEN DONE IN THE BEST WAY. THESE ARE ALL HARD PROBLEMS. THAT WE HAVEN'T GIVEN YOU ANY EASY ONES TO CHEW ON HERE. I DON'T EXPECT WE WILL BECAUSE YOUR TALENTS ARE MUCH TOO WELL DEFINED AND REFINED TO WEIGHT THEM ON SOMETHING THAT WOULD BE TRIVIAL OR EVEN SOMETHING FAIRLY EASY. WE'LL KEEP CHALLENGING YOU. I GUESS YOU HAVE PROVEN THAT THAT IS NOT SOMETHING YOU'RE SCARED OF. I'M WITH GARY IN TERMS OF THE IMPATIENCE HOW PEOPLE WOULD SAY THAT'S JUST THE WAY IT'S GOING TO BE. A WONDERFUL FRANCISCAN BLESSING THAT MAY YOU BE BLESSED WITH ENOUGH FOOLISHNESS TO BELIEVE THAT YOU CAN MAKE DIFFERENCE IN THIS WORLD SO THAT YOU CAN DO WHAT OTHER CLAIMS CANNOT BE DONE. MAY WE ALL BE BLESSED WITH THAT KIND OF FOOLISHNESS. I DIDN'T REALIZE UNTIL I HEARD THAT THAT FOOLISHNESS WAS AN ASSET. PERHAPS IT IS. THIS BODY HAS PROVEN ITSELF WILLING TO GO OUT ON THAT FOOLISH LIMB FROM TIME TO TIME. THANK ALL OF YOU, ESPECIALLY NORM. >> FRANCIS, WE APPRECIATE ALL YOU DO TO MAKE THIS SUCH A REWARDING EXPERIENCE FOR THOSE OF US WHO ARE AT FAULT WE THANK YOU FOR THAT. WE ALL OWE SPECIAL THANKS TO AMY AND TO ALL FOLKS THAT WORK WITH HER THAT PUT THIS AGENDA TOGETHER, GOT SUCH GREAT SPEAKERS TO TAKE TIME AWAY FROM THEIR OTHER RESPONSIBILITIES TO TALK WITH THIS AND SO, AMY, THANKS TO YOU AND YOUR WHOLE TEAM. YOU'RE A PLEASURE TO WORK WITH. [APPLAUSE] REQUEST IF I MIGHT, ITFULS STATED THAT THE WEBSITE FOR THE MIL CONSIDERINGEN INSTITUTE HAS VIDEO THAT WE SAW, POSSIBLE TO SEND COORDINATES TO THAT SITE OR THAT PARTICULAR VIDEO TO US BY E-MAIL I THINK MEMBERS OF THE GROUP HERE WOULD VERY MUCH LIKE TO HAVE THAT. >> WE'LL DO THAT. >> THAT WOULD BE GREAT. >> IT IS ON NIH WEBSITE BUT NOT NECESSARILY EASY TO FIND. WE'RE WORKING TRYING TO MAKE IT MUCH MORE OBVIOUS. >> GREAT. THEN LAST VERY IMPORTANTLY, DR. SHURN AND GREEN ARE RETIRING FROM OUR GROUP TODAY. IT'S BEEN TRUE PLEASURE TO BE ABLE TO WORK WITH YOU OVER THIS PERIOD OF TIME. I'M VERY HAPPY THAT WE'RE GOING TO CONTINUE TO WORK WITH YOU ON SOME OF OUR PROJECTS. WE THANK YOU, A HAND TO OUR RETIREES. [APPLAUSE]