[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                    IMPROVING TECHNOLOGY TRANSFER AT
                   UNIVERSITIES, RESEARCH INSTITUTES,
                       AND NATIONAL LABORATORIES

=======================================================================

                                HEARING

                               BEFORE THE

                SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                        WEDNESDAY, JULY 24, 2013

                               __________

                           Serial No. 113-43

                               __________

 Printed for the use of the Committee on Science, Space, and Technology


       Available via the World Wide Web: http://science.house.gov




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              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                   HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California         EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas                 ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR.,         DANIEL LIPINSKI, Illinois
    Wisconsin                        DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma             FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas              SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas             ERIC SWALWELL, California
PAUL C. BROUN, Georgia               DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi       ALAN GRAYSON, Florida
MO BROOKS, Alabama                   JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois             SCOTT PETERS, California
LARRY BUCSHON, Indiana               DEREK KILMER, Washington
STEVE STOCKMAN, Texas                AMI BERA, California
BILL POSEY, Florida                  ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming              MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona            JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky              MARK TAKANO, California
KEVIN CRAMER, North Dakota           ROBIN KELLY, Illinois
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS STEWART, Utah
VACANCY
                                 ------                                

                Subcommittee on Research and Technology

                   HON. LARRY BUCSHON, Indiana, Chair
STEVEN M. PALAZZO, Mississippi       DANIEL LIPINSKI, Illinois
MO BROOKS, Alabama                   FEDERICA WILSON, Florida
RANDY HULTGREN, Illinois             ZOE LOFGREN, California
STEVE STOCKMAN, Texas                SCOTT PETERS, California
CYNTHIA LUMMIS, Wyoming              AMI BERA, California
DAVID SCHWEIKERT, Arizona            DEREK KILMER, Washington
THOMAS MASSIE, Kentucky              ELIZABETH ESTY, Connecticut
JIM BRIDENSTINE, Oklahoma            ROBIN KELLY, Illinois
LAMAR S. SMITH, Texas                EDDIE BERNICE JOHNSON, Texas


                            C O N T E N T S

                        Wednesday, July 24, 2013

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Larry Bucshon, Chairman, Subcommittee 
  on Research and Technology, Committee on Science, Space, and 
  Technology, U.S. House of Representatives......................     7
    Written Statement............................................     8

Statement by Representative Daniel Lipinski, Ranking Minority 
  Member, Subcommittee on Research and Technology, Committee on 
  Science, Space, and Technology, U.S. House of Representatives..     8
    Written Statement............................................    10

Statement by Representative Eddie Bernice Johnson, Ranking 
  Member, Committee on Science, Space, and Technology, U.S. House 
  of Representatives.............................................    11
    Written Statement............................................    12

                               Witnesses:

Dr. Brian R. Wamhoff, Vice President of Research & Development, 
  Co-founder, HemoShear, LLC
    Oral Statement...............................................    14
    Written Statement............................................    17

Dr. Elizabeth Hart-Wells, Assistant Vice President for Research, 
  Associate Director of the Burton D. Morgan Center for 
  Entrepreneurship, Purdue University
    Oral Statement...............................................    21
    Written Statement............................................    23

Dr. Erik Lium, Assistant Vice Chancellor, Office of Innovation, 
  Technology & Alliances, University of California, San Francisco
    Oral Statement...............................................    36
    Written Statement............................................    38

Discussion.......................................................    47

             Appendix I: Additional Material for the Record

Submitted statement by Representative Lamar Smith, Chairman, 
  Committee on Science, Space, and Technology, U.S. House of 
  Representatives................................................    58


                    IMPROVING TECHNOLOGY TRANSFER AT
                   UNIVERSITIES, RESEARCH INSTITUTES,
                       AND NATIONAL LABORATORIES

                              ----------                              


                        WEDNESDAY, JULY 24, 2013

                  House of Representatives,
                    Subcommittee on Research and Technology
               Committee on Science, Space, and Technology,
                                                   Washington, D.C.

    The Subcommittee met, pursuant to call, at 3:08 p.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Larry 
Bucshon [Chairman of the Subcommittee] presiding.

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[GRAPHIC] [TIFF OMITTED] T2222.002

[GRAPHIC] [TIFF OMITTED] T2222.003

[GRAPHIC] [TIFF OMITTED] T2222.004

[GRAPHIC] [TIFF OMITTED] T2222.005

    Chairman Bucshon. The Subcommittee on Research and 
Technology will come to order.
    Good afternoon. Welcome to today's hearing entitled, 
``Improving Technology Transfer at Universities, Research 
Institutes, and National Laboratories.'' In front of you are 
packets containing the written testimony, biographies, and 
truth in testimony disclosures for today's witnesses.
    I now recognize myself for five minutes for an opening 
statement.
    Today's hearing is being held to review innovative 
approaches to technology transfer at universities, research 
institutes, and national laboratories, and to examine a 
discussion draft of legislation titled, ``The Innovative 
Approaches to Technology Transfer Act of 2013.''
    In 2012, the Federal Government funded more than $131 
billion in research and development activities. More than half 
of all basic research conducted at our Nation's colleges and 
universities is funded by the Federal Government.
    According to the Association of University Technology 
Managers, technology transfer is the process by which 
universities and research institutes transfer scientific 
findings from one organization to another for the purpose of 
further development or commercialization.
    The Bayh-Dole Act, passed in 1980, changed the incentive 
structure for universities and research institutes to work with 
commercial entities, including small businesses, to license and 
patent technologies. The Small Business Technology Transfer or 
STTR Program was created to provide Federal R&D funding for 
proposals that are developed and executed jointly between small 
business and a researcher in a nonprofit research organization. 
My own State of Indiana has seen 99 STTR awards totaling more 
than $26 million. Both Bayh-Dole and the STTR Program have 
helped to create jobs and translate new technologies into the 
marketplace.
    However, while the rate of technology transfer at our 
Nation's universities, research institutes, and national 
laboratories has increased since the passage of the Bayh-Dole 
Act and the creation of the STTR Program, I believe we can do 
even better.
    The draft legislation, which is being developed under the 
leadership of my colleague from New York, Mr. Collins, will 
create a program to incentivize research institutions to 
implement innovative approaches to technology transfer to 
achieve better outcomes. The legislation would dedicate a 
portion of STTR Program funding to provide grants to research 
institutions to help facilitate and accelerate the transfer of 
federally funded research and technology into the marketplace.
    We will be hearing today from the co-founder of a growing 
biotechnology business based in Charlottesville, Virginia, that 
was developed out of federally funded R&D, with the assistance 
of private foundation technology transfer grant funding. We 
will also hear from the Assistant Vice President for Research 
and Associate Director of the Burton D. Morgan Center for 
Entrepreneurship at Purdue University in my home State of 
Indiana and from the Assistant Vice Chancellor for the Office 
of Innovation, Technology, and Alliances at the University of 
California, San Francisco. Our witnesses have first-hand 
experience in technology transfer and can provide insight into 
how the proposed grant program could help facilitate better 
technology transfer outcomes.
    I am looking forward to hearing from our witnesses on their 
thoughts about the proposed legislation, including any 
recommendations they have for improvements.
    I would like to thank all of our witnesses for being here 
today, and we look forward to your testimony.
    [The prepared statement of Mr. Bucshon follows:]

Prepared Statement of Subcommittee on Research and Technology Chairman 
                             Larry Bucshon

    Good afternoon, I'd like to welcome everyone to today's hearing, 
which is being held to review innovative approaches to technology 
transfer at universities, research institutes and National 
Laboratories, and to examine a discussion draft of legislation, titled 
the ``Innovative Approaches to Technology Transfer Act of 2013.''
    In 2012, the Federal Government funded more than $131 billion in 
research and development activities. More than half of all basic 
research conducted at our nation's colleges and universities is funded 
by the Federal Government.
    According to the Association of University Technology Managers, 
technology transfer is the process by which universities and research 
institutes transfer scientific findings from one organization to 
another for the purpose of further development or commercialization.
    The Bayh-Dole Act, passed in 1980, changed the incentive structure 
for universities and research institutes to work with commercial 
entities, including small businesses, to license and patent 
technologies. The Small Business Technology Transfer or STTR program 
was created to provide federal R&D funding for proposals that are 
developed and executed jointly between a small business and a 
researcher in a nonprofit research organization. My own state of 
Indiana has seen 99 STTR awards totaling more than $26 million. Both 
Bayh-Dole and the STTR program have helped to create jobs and translate 
new technologies into the marketplace.
    However, while the rate of technology transfer at our nation's 
universities, research institutes and national laboratories has 
increased since the passage of the Bayh-Dole Act and the creation of 
the STTR program, I believe we can do even better.
    The draft legislation, which is being developed under the 
leadership of my colleague from New York, Mr. Collins, will create a 
program to incentivize research institutions to implement innovative 
approaches to technology transfer to achieve better outcomes. The 
legislation would dedicate a portion of STTR program funding to provide 
grants to research institutions to help facilitate and accelerate the 
transfer of federally funded research and technology into the 
marketplace.
    We will be hearing today from the co-founder of a growing 
biotechnology business based in Charlottesville, Virginia that was 
developed out of federally funded R&D, with the assistance of private 
foundation technology transfer grant funding. We will also hear from 
the Assistant Vice President for Research and Associate Director of the 
Burton D. Morgan Center for Entrepreneurship at Purdue University in my 
home state of Indiana. And from the Assistant Vice Chancellor for the 
Office of Innovation, Technology, and Alliances at the University of 
California, San Francisco. Our witnesses have first-hand experience in 
technology transfer and can provide insight into how the proposed grant 
program could help facilitate better technology transfer outcomes.
    I'm looking forward to hearing from our witnesses on their thoughts 
about the proposed legislation, including any recommendations they have 
for improvements.We thank our witnesses for being here today and we 
look forward to your testimony.

    Chairman Bucshon. I will now recognize the Ranking Member, 
the gentleman from Illinois, Mr. Lipinski, for an opening 
statement.
    Mr. Lipinski. Thank you, Mr. Chairman. Thank you for 
holding this hearing, and thank each of our witnesses for being 
here to share your thoughts on this topic and the draft 
legislation we are considering today.
    Today concerned Americans continue to ask the question, 
``What is the future of American jobs?'' A big part of our 
future competitiveness depends on our ability to move new and 
emerging technologies out of the lab and into the mainstream of 
commerce.
    Accelerating technology transfer from our universities and 
national labs is one of my highest priorities since I have come 
to Congress. I believe the potential for job creation emanating 
from research being performed at these institutions is immense. 
We must capitalize on these opportunities and get the best 
possible return in our investments in research through the 
creation of new projects, new companies, and new American jobs.
    Let me make one point clear. Our competitors have noticed 
how well our innovation system works and many are trying to 
imitate it. Countries like China and members of the European 
Union are now investing heavily in their own R&D programs. 
Combined business and government spending in R&D in China, for 
instance, has been increasing by almost 20 percent a year over 
the past decade, and China has already overtaken Japan as the 
number two publishers of scientific articles. They are 
determined to move up the value chain into higher-tech, higher-
paying jobs. We need sustained investments and smart policies 
if we want to remain the world leader in science and 
technology.
    However, the path from the lab to a successful business is 
anything but straightforward. It depends on an integrated 
network of private companies, scientists and engineers, 
universities, venture capitalists, startups, and entrepreneurs. 
It also depends on the entrepreneurial environment, timing, and 
luck.
    Some universities have had more success in technology 
transfer than others. Some scientists are better prepared or 
more inclined to be entrepreneurial, and some parts of the 
country have cultivated networks of entrepreneurials and 
venture capitalists who have vast experience turning ideas into 
products that can transform our everyday lives.
    This draft legislation attempts to increase the successful 
transition to thriving startup by supporting innovative 
approaches to technology transfer. The draft bill language is 
similar to an amendment I sponsored two years ago to the 
Creating Jobs Through Small Business Innovation Act of 2011. My 
amendment was incorporated into SBIR/STTR Reauthorization with 
bipartisan support and allowed for a Proof of Concept Pilot 
Program at the National Institutes of Health. That amendment, 
similar to the legislation being discussed today, did not spend 
any new money.
    Instead, it allowed NIH to use money from their STTR fund 
to set up a grant program to support translational research and 
entrepreneurial education activities at universities across the 
Nation.
    At a time when we struggle with job creation in a fast-
changing global economy, we need to be looking more closely at 
how best we can help our universities and national labs, filled 
with the world's best researchers, be even better economic 
engines that power America's future. When technologies have 
been developed with Federal taxpayer resources, we should 
explore whether there is a role for the government to play in 
aiding potential commercialization. Most venture capitalists 
are unwilling to take on the risk in the early-stages of the 
innovation ecosystem, and in fact, their investments are moving 
farther and farther downstream.
    I believe this legislation has the potential to improve our 
return on investment and research, and I am interested in our 
witnesses' recommendations on a draft bill.
    In particular, I am interested in hearing their comments on 
using funds from the STTR Program to support technology 
transfer activities, as well as their thoughts on the reporting 
obligations of the draft bill and whether this information is 
readily available or would be overly burdensome to collect. I 
know that alleviating bureaucratic burdens on universities has 
rightfully been the focus of this Subcommittee.
    I also hope the witnesses will provide us with some 
information on best practices, model programs, or policies that 
can improve the technology transfer process, and appropriate 
role of the Federal Government in supporting such efforts.
    The draft legislation as written gives agencies discretion 
on what types of programs to fund with these grants. I would 
like to understand the most useful places for the Federal 
Government to be involved and the major gaps or barriers that 
our resources can help overcome.
    I look forward to working to advance legislation on this 
important topic. We need to do all we can to help turn American 
discoveries into American jobs, and as I said, I very much like 
this--the draft legislation we have out there, maybe because I 
believe Mr. Collins is a mechanical engineer, the most 
brilliant people that there are, but I think that we have--
there is a lot that we can learn from the witnesses today about 
how best to take the draft legislation and put it into a final 
bill.
    But I appreciate the opportunity to hear from our witnesses 
today.
    Thank you.
    [The prepared statement of Mr. Lipinski follows:]

     Prepared Statement of Subcommittee on Research and Technology
                Ranking Minority Member Daniel Lipinski

    Mr. Chairman, thank you for holding this hearing and thank you to 
our witnesses for being here to share your thoughts on the topic and 
the draft legislation we are considering today.
    Today, concerned Americans continue to ask, ``What is the future of 
American jobs?'' A big part of our future competitiveness depends on 
our ability to move new and emerging technologies out of the lab and 
into the mainstream of commerce. Accelerating technology transfer from 
our universities and national labs has been one of my highest 
priorities since coming to Congress. I believe the potential for job 
creation emanating from research being performed at these institutions 
is immense. We must capitalize on these opportunities and get the best 
possible return on our investments in research through the creation of 
new products, new companies, and new American jobs.
    Let me make one point clear: Our competitors have noticed how well 
our innovation system works, and many are trying to imitate it. 
Countries like China and members of the European Union are now 
investing heavily in their own R&D programs. Combined business and 
government spending on R&D in China, for instance, has been increasing 
by almost 20% a year over the past decade, and China has already 
overtaken Japan as the number two publisher of scientific articles. 
They are determined to move up the value chain into higher tech, higher 
paying jobs. We need sustained investments and smart policies if we 
want to remain the world leader in science and technology.
    However, the path from the lab to a successful business is anything 
but straightforward. It depends on an integrated network of private 
companies, scientists and engineers, universities, venture capitalists, 
startups, and entrepreneurs. It also depends on the entrepreneurial 
environment, timing, and luck.
    Some universities have had more success in technology transfer than 
others. Some scientists are better prepared or more inclined to be 
entrepreneurial. And some parts of the country have cultivated networks 
of entrepreneurs and venture capitalists who have vast experience 
turning ideas into products that can transform our everyday lives.
    The draft legislation attempts to increase the successful 
transition to thriving startup by supporting ``innovative approaches to 
technology transfer.'' In fact, the draft bill language is similar to 
an amendment I sponsored two years ago to the Creating Jobs Through 
Small Business Innovation Act of 2011. My amendment was incorporated 
into the SBIR/STTR reauthorization with bipartisan support and allowed 
for a Proof of Concept Pilot Program at the National Institutes of 
Health. That amendment, similar to the legislation being discussed 
today, did not spend any new money. Instead, it allowed NIH to use 
money from their STTR fund to set up a grant program to support 
translational research and entrepreneurial education activities at 
universities across the nation.
    At a time when we struggle with job creation and a fast-changing 
global economy, we need to be looking more closely at how we can best 
help our universities and national labs--filled with the world's best 
researchers--be even better economic engines that power America's 
future.
    When technologies have been developed with Federal taxpayer 
resources, we should explore whether there is a role for the government 
to play in aiding potential commercialization. Most venture capitalists 
are unwilling to take on the risk in the early-stages of the innovation 
ecosystem, and in fact their investments are moving farther and farther 
downstream.
    I believe this legislation has the potential to improve our return 
on investment in research, and I am interested in our witnesses' 
recommendations on the draft bill. In particular, I am interested in 
hearing their comments on using funds from the STTR program to support 
technology transfer activities, as well as their thoughts on the 
reporting obligations in the draft bill and whether this information is 
readily available or would be overly burdensome to collect. I know that 
alleviating bureaucratic burdens on universities has rightfully been a 
focus of this Subcommittee.
    I also hope the witnesses will provide us with some information on 
best practices, model programs, or policies that can improve the 
technology transfer process, and the appropriate role of the federal 
government in supporting such efforts.
    The draft legislation, as written, gives agencies discretion on 
what types of programs to fund with these grants. I'd like to 
understand the most useful places for the federal government to be 
involved and the major gaps or barriers federal resources can help 
overcome. I look forward to working with you to advance legislation on 
this important topic. We need to do all we can to help turn American 
discoveries into American jobs.
    Thank you Mr. Chairman. I yield back the balance of my time.

    Chairman Bucshon. Thank you very much.
    I am now going to recognize the Ranking Member of the full 
Committee, Ms. Johnson, for an opening statement.
    Ms. Johnson. Thank you very much, Mr. Chairman, and thank 
you for calling the hearing today on this draft legislation, 
Innovative Approaches to Technology Transfer Act of 2013. I am 
glad that this Subcommittee is taking a serious look at the 
issue of facilitating the creation of successful, profitable, 
and sustainable small businesses from the discoveries of our 
research and development enterprise.
    The topic today is so critical to our Nation's economic and 
national security. As we continue our efforts to keep our 
economy on the path of recovery, it is more important than ever 
that we recommit ourselves to innovation in the United States. 
As the President remarked two years ago in his State of the 
Union Address, we need to out-innovate, out-educate, and out-
build the rest of the world. Our universities and Federal labs 
are the foundation that America's future will be built upon.
    We have world-class scientists and engineers engaged in 
cutting-edge research that can change the world. We must 
examine how to translate and transition this research out of 
the lab into the marketplace. Our innovation model has been the 
gold standard for many years, and nations around the world have 
been adopting it.
    However, we are all very aware that our competitors are 
multiplying their investments in not only R&D and STEM 
education but also in commercialization activities. The United 
States cannot afford to be left behind. The ideas from our 
researchers and entrepreneurs with the most commercial 
potential deserve our best efforts.
    In contemplating the next steps for advancing technology 
transfer, our ultimate goal is to promote the creation of 
innovation ecosystems that sustain long-term and mutually-
beneficial collaborations. Many of today's most beneficial 
technologies do not emerge out of the straight-line process but 
rather they involve the interactions of a network of various 
public and private-sector elements. While we understand that 
university culture and business culture are separate and unique 
entities, we need to learn more about innovative approaches and 
collaborations that can accelerate technology transfer of 
federally funded research.
    I believe there is not a clear and distinct line in the 
innovation process at which the public role ends and the 
private role begins. The next development or discovery is built 
on a shifting platform where the line between research, 
development, and a final product in the marketplace are 
blurred. The feedback is critical and cannot continue without 
consistent support of the people and the institutions that make 
up the innovation ecosystems.
    The Federal Government has a great stake in the Nation 
getting a return on the investments we make, and we need to 
know what we can do that would be helpful to the academic 
community and startups in improving technology transfer.
    The draft legislation we are considering this afternoon has 
the potential to improve technology transfer, and I hope that 
the final version can reflect good ideas from both sides of the 
aisle.
    I would like to add my thanks to the witnesses for being 
here today and for providing us with their recommendations on 
how to make this bill better. I am looking forward to working 
with my colleagues to move legislation that addresses this 
important issue.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    [The prepared statement of Ms. Johnson follows:]

    Prepared Statement of Committee on Science, Space and Technology
                  Ranking Member Eddie Bernice Johnson

    Thank you Mr. Chairman for calling this hearing today on the draft 
legislation, Innovative Approaches to Technology Transfer Act of 2013. 
I am glad that this Subcommittee is taking a serious look at the issue 
of facilitating the creation of successful, profitable, and sustainable 
small businesses from the discoveries of our research and development 
enterprise.
    The topic today is so critical to our nation's economic and 
national security. As we continue our efforts to keep our economy on 
the path to recovery, it is more important than ever that we recommit 
ourselves to innovation in the United States.
    As the President remarked two years ago in his State of the Union 
address, ``we need to out-innovate, out-educate, and out-build the rest 
of the world.''
    Our universities and federal labs are the foundation that America's 
future will be built on. We have world class scientists and engineers 
engaged in cutting-edge research that can change the world. We must 
examine how to translate and transition this research out of the lab 
and into the marketplace.
    Our innovation model has been the gold standard for many years, and 
nations around the world have been adopting it.
    However, we are all very aware that our competitors are multiplying 
their investments in not only R&D and STEM education, but also in 
commercialization activities. The United States cannot afford to be 
left behind. The ideas from our researchers and entrepreneurs with the 
most commercial potential deserve our best efforts.
    In contemplating the next steps for advancing technology transfer, 
our ultimate goal is to promote the creation of innovation ecosystems 
that sustain long-term and mutually beneficial collaborations.
    Many of today's most beneficial technologies did not emerge out of 
a straight-line process, but rather they involved the interactions of a 
network of various public and private sector elements.
    While we understand that university culture and business culture 
are separate and unique entities, we need to learn more about 
innovative approaches and collaborations that can accelerate technology 
transfer of federally funded research.
    I believe there is not a clear and distinct line in the innovation 
process at which the public role ends and the private role begins.
    The next development or discovery is built on a shifting platform 
where the lines between research, development, and a final product in 
the marketplace are blurred.
    This feedback is critical and cannot continue without consistent 
support for the people and the institutions that make up the innovation 
ecosystem.
    The federal government has a great stake in the nation getting a 
return on the investments we make, and we need to know what we can do 
that would be helpful to the academic community and start-ups in 
improving technology transfer. The draft legislation we are considering 
this afternoon has the potential to improve technology transfer, and I 
hope that the final version can reflect good ideas from both sides of 
the aisle.
    I'd like to add my thanks to the witnesses for being here today and 
for providing us with their recommendations on how to make the bill 
better.
    I am looking forward working with my colleagues to move legislation 
that addresses this important issue.
    Thank you Mr. Chairman, I yield back the balance of my time.

    Chairman Bucshon. Thank you very much.
    If there are Members who wish to submit additional opening 
statements, your statements will be added to the record at this 
point.
    At this time I am going to introduce our witnesses. Our 
first witness is Dr. Brian Wamhoff, Vice President of Research 
and Development and Co-Founder of HemoShear, LLC. Dr. Wamhoff 
has expertise in small and large animal models of vascular 
disease, molecular biology, cell-based systems, toxicology, and 
interventional vascular device development. Dr. Wamhoff 
obtained a B.S. in biology with a minor in business 
administration from Rhodes College and received his Ph.D. in 
medical physiology from the University of Missouri in 2001.
    Our second witness is Dr. Elizabeth Hart-Wells, Assistant 
Vice President for Research and Associate Director of the 
Burton D. Morgan Center for Entrepreneurship at Purdue 
University. Dr. Hart-Wells is responsible for managing the 
commercialization of Purdue's intellectual property assets, 
which includes responsibility of evaluating innovations, 
developing commercialization strategies, memorializing 
commercialization agreements, promoting discovery with 
delivery, forming startup companies, and overseeing compliance 
with Federal technology regulations. I don't know how she has 
time to do all that, but she does. She earned a doctorate in 
chemistry from Rice University where she was a Turner 
outstanding graduate student in organic chemistry and a Harry 
B. Weiser Research Scholar, and Robert A. Welch Foundation 
Fellow. She earned a Bachelor's Degree in chemistry from 
Indiana University. She is a member of the American Chemical 
Society, the American Association for the Advancement of 
Science, and the U.S. Patent Bar.
    Our third witness is Dr. Erik Lium, Assistant Vice 
Chancellor, Office of Innovation, Technology, and Alliances at 
the University of California at San Francisco. He has held 
prior positions at UCSF of Vice Chancellor of Research, 
Director of the Industry Contracts Division, and Interim 
Director of the Contracts and Grants Division of the Office of 
Sponsored Research, and Director of Business Development for 
the Diabetes Center and Immune Tolerance Network. He served as 
a post-doctoral research scientist at UCSF, earned a Ph.D. from 
the Integrated Program in Cellular, Molecular, and Biophysical 
Studies at Columbia University and a B.S. in biology from 
Gonzaga.
    Thanks again to our witnesses for being here this 
afternoon. As the witnesses should know, spoken testimony is 
limited to five minutes after which the Members of the 
Committee will have five minutes each to ask questions.
    I now recognize Dr. Wamhoff for five minutes to present his 
testimony.

               TESTIMONY OF DR. BRIAN R. WAMHOFF,

           VICE PRESIDENT OF RESEARCH & DEVELOPMENT,

                   CO-FOUNDER, HEMOSHEAR, LLC

    Dr. Wamhoff. Thank you. Dear Mr. Chairman and distinguished 
Members of this very important Committee, as an entrepreneur 
and scientific executive of a startup company, I can state 
categorically that the American economy and its 300 plus 
million consumers of healthcare products and services have 
benefited profoundly from Federal programs that fund early-
stage research in the medical sciences, particularly the SBIR 
mechanism. Thank you.
    I have been invited to address three questions. I want to 
tell you a story first.
    By way of background, I was an Associate Professor at the 
University of Virginia's Department of Medicine in the 
Cardiovascular Division from 2006, until 2012. Through 
collaboration with Dr. Brett Blackman, who, Mr. Collins is also 
a mechanical engineer, in the Department of Biomedical 
Engineering, we developed a technology at the university that 
became the foundation of a very successful biotechnology 
research company, HemoShear. We co-founded the company in 2008.
    I now serve as Vice President of Research and Development, 
and Brett serves as Chief Scientific Officer. We are literally 
changing the decades-old global drug discovery and development 
paradigm. The old methods are inefficient, time-consuming, and 
more than 92 percent of drugs that go into humans today fail. 
They either fail because they don't work, or they fail because 
they are not safe. We see it every week in the news.
    The adverse financial impact of these failures, in 
combination with patent expirations, has driven consolidation 
of the industry in recent years. Our technology, which is 
developed out of the University of Virginia, through mechanisms 
that we are talking about today, has enabled the industry to 
transform its drug discovery paradigm while significantly 
improving its return on investment capital. This is because 
HemoShear can measure and predict the response of a drug before 
it ever enters the human body.
    HemoShear is a successful American company. We are creating 
high-value, STEM-related jobs right here in Central Virginia, 
while positioning itself to become a world leader in drug 
development. The SBIR mechanism has been critical in this 
process.
    So how has proof-of-concept funding been used to launch 
HemoShear? The development of the technology at the University 
of Virginia was funded by two seed grants, rather than the 
traditional NIH funding mechanism that my lab and Brett's lab 
was being driven by. The two funding mechanisms were the 
University of Virginia Heart Board Partners' Fund and the 
University of Virginia Wallace H. Coulter Foundation RoPE Fund.
    Without these seed funding mechanisms, it is doubtful that 
HemoShear would exist as it does today and very doubtful that I 
would be sitting here right now. Equally important to funding 
the critical R&D to launch this technology was the exposure 
that we were getting to very successful board members from both 
organizations, the endless advice, hands-on help towards 
translating an academic technology to a business model for 
commercialization, going from academia to a commercial 
endeavor. It is a huge gap.
    It is important to note that at the time this was not 
common at the University of Virginia, and by example of that 
success this mechanism has become a core of the university's 
technology transfer ecosystem and philosophy.
    Now, at HemoShear we have also been privileged to secure 
funding through the NIH Small Business Innovation Research 
Program, the SBIR mechanism. It has been instrumental in the 
technological growth of HemoShear, allowing us to further 
advance our technologies for drug development in cardiovascular 
disease, diabetes, liver toxicity, and cancer. We have proven 
that the SBIR mechanism provides a great return on investment 
for the U.S. taxpayer.
    Thank you for continuing to support that program.
    What are my thoughts on today's issue? I feel that it would 
be beneficial to dedicate a portion of the STTR Program to 
proof-of-concept and other technology transfer programs at 
universities, research institutions, and national laboratories. 
Having run a large NIH-funded academic laboratory and co-
founded a rapidly-growing biotechnology company, I have lived 
in both worlds. It is very challenging, and the investigator 
often finds himself, herself in conflict. The old adage that it 
is hard to have two bosses couldn't be any more real in that 
scenario, and often your bosses are diametrically opposed; 
bosses from the commercial side and bosses from the academic 
side.
    As I stated in question one, if it were not for the 
exposure to the board members of the Heart Board and the 
Coulter Foundation it is highly unlikely that we would have had 
the foresight or wherewithal to commercialize a very important 
technology for human health. The failure to commercialize 
academic research is not for the lack of entrepreneurial 
faculty wanting to do so. There are many. Rather, it is due in 
part to the lack of institutional support to assist faculty in 
these endeavors and sometimes creating barriers. Filling this 
gap is going to be the greatest need for technology transfers 
in universities.
    My last thoughts or recommendations regarding the draft of 
this proposal, I have read the draft and fully support the 
award criteria. As it relates to the proposed funding 
mechanism, I think it is really important to establish hands-on 
oversight committees or boards to monitor the accountability of 
the funded institutions. An excellent model for this is the 
Wallace H. Coulter Foundation and how they monitor initial 
investments in translational research at U.S. academic 
institutions. These investments ultimately led to larger 
endowments for the research institution but also spun out many 
companies at the University of Virginia, including HemoShear.
    With that I thank you for your time on this very important 
matter.
    [The prepared statement of Dr. Wamhoff follows:]

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    Chairman Bucshon. Thank you. Now I will recognize Dr. Hart-
Wells for five minutes to present her testimony.

             TESTIMONY OF DR. ELIZABETH HART-WELLS,

             ASSISTANT VICE PRESIDENT FOR RESEARCH,

           ASSOCIATE DIRECTOR OF THE BURTON D. MORGAN

                  CENTER FOR ENTREPRENEURSHIP,

                       PURDUE UNIVERSITY

    Dr. Hart-Wells. Thank you. I wish to thank the Committee, 
Chairman Bucshon, Ranking Member Lipinski, and the entire 
Subcommittee for the opportunity to participate in today's 
hearing. It is an honor to be provided this opportunity to 
discuss the draft legislation.
    As mentioned, I am Elizabeth Hart-Wells, and I am the 
Assistant Vice President for Research at Purdue University and 
Associate Director of the Burton D. Morgan Center for 
Entrepreneurship. Further, in my spare time, I lead a team of 
dedicated Housiers to manage the Office of Technology 
Commercialization that is housed within the Purdue Research 
Foundation. To quantify the scope of our operation is submitted 
in the written testimony, so I won't comment on that in my 
oral.
    Founded in 1869, West Lafayette, Indiana, Purdue University 
serves the people of the State of Indiana, the Nation, and the 
world through education, research, and engagement. Purdue 
educates over 75,000 students statewide each year and is home 
to a very robust research enterprise of over $650 million in 
research expenditures, primarily originating from the U.S. 
taxpayers through such programs as the SBIR and STTR.
    The Committee is both aware and respectful of the critical 
role the American research enterprise plays in our Nation's 
competitiveness. Universities engage in fundamental research to 
grow our knowledge base, to advance understanding, and to 
encourage thinking without constraint or restraint in our next 
generations. Inherent to exploration in uncharted areas of 
inquiry, however, is discovery. Discovery can and should lead 
to delivery, however, gaps in the path that connects discovery 
to delivery do exist.
    In my reading of its current draft of legislation, it is 
the filling of this gap that is the subject of the proposed 
draft.
    Specifically, the Committee requested comment on innovative 
practices employed by Purdue University to develop federally 
funded research projects. The Purdue Trask Innovation Fund and 
the Emerging Innovations Fund are two of such programs. While 
there are details in the written testimony and I look forward 
to discussing those relevant aspects of the programs as the 
Committee wishes, I will highlight one output data of those 
proof-of-concept fund that we call the Trask Innovation Fund.
    First I will say at the outset this fund is entirely funded 
with private dollars and not taxpayer dollars. Purdue, in 1973, 
identified this need of a gap between research results and 
commercial exploitation of those results and set out to fill 
that gap themselves. And as a result in the last five years 48 
Purdue technologies have been competitively awarded development 
funding, and of those, 35 percent of those technologies were 
sponsored by the U.S. taxpayers.
    Over the roughly 35 year history of the Trask Venture Fund 
support of filling the gap, federally funded Purdue 
technologies that were supplemented with these awards 
experienced about a 40 percent increased licensing rate than 
those federally funded Purdue technologies that were not 
supplemented with those awards.
    In addition and with brevity I would like to highlight a 
few other innovative practices that Purdue University has 
undertaken in the last several months.
    The Office of Technology Commercialization has unveiled new 
procedures and policy implementations to accelerate technology 
transfer out of the university, whether Purdue University owns 
the technology or not. Students who create inventions in the 
performance of their coursework, such as a design project in an 
engineering course, own their inventions. Purdue inventors who 
have contributed Purdue-owned intellectual property may elect 
an, ``as is,'' license contract to establish a new venture 
based on those inventions to which she or he contributed.
    Of particular pertinence to this authorizing body, Purdue 
now offers recipients of SBIR and STTR grants aimed at 
developing a Purdue technology, a cash-free first option to 
license the Purdue technology. This express first option allows 
these recipients to competitively leverage Purdue technology, 
provides a mechanism to support the commercialization of 
taxpayer-funded technologies, and supports speed and 
transparency of the licensing of the same.
    Accordingly, it should be of no surprise that Purdue 
University strongly supports and encourages the Committee's 
sincere consideration of the draft legislation. It would 
strengthen and promote partnerships between universities and 
small businesses to achieve the STTR's stated goals. Proposed 
legislation superimposes on its predecessor and emphasizes the 
benefits to the Nation of technology innovation and the 
proficiency of small businesses to translate federally funded 
research results into new products and services.
    The proposed legislation offers synergy to these 
relationships between the university and small businesses 
towards translation and commercialization. So maybe one plus 
one can indeed equal three.
    I am going to defer the rest of my comments until the Q&A, 
and in close I just wish to express my grateful thanks to the 
Committee for the opportunity to participate today and for your 
leadership, commitment, and partnership on this important topic 
of technology transfer.
    Thank you.
    [The prepared statement of Dr. Hart-Wells follows:]

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    Chairman Bucshon. Thank you very much.
    I now recognize Dr. Lium for five minutes to present his 
testimony.

                  TESTIMONY OF DR. ERIK LIUM,

                   ASSISTANT VICE CHANCELLOR,

         OFFICE OF INNOVATION, TECHNOLOGY & ALLIANCES,

            UNIVERSITY OF CALIFORNIA, SAN FRANCISCO

    Dr. Lium. Mr. Chairman, Ranking Member Lipinski, and 
Members of this Subcommittee, the University of California, San 
Francisco is widely recognized as a leader in the health 
sciences and as the birthplace of biotechnology. I am here 
today to testify on my own behalf and would like to thank you 
for the opportunity to appear before you to discuss the 
important issue of commercializing federally funded research. I 
am a molecular biologist by training and as a prior co-founder 
of a venture-backed software company, an entrepreneur.
    At UCSF I lead a team responsible for streamlining the 
creation of public-private research partnerships, licensing 
technologies for commercialization, and education of budding 
life science entrepreneurs.
    Federal funding, the lifeblood of basic research, is 
essential for the development of groundbreaking discoveries. 
The challenge is commercializing these discoveries for public 
benefit, especially in capital-intensive fields such as the 
life sciences.
    My testimony today on expanding the use of STTR funds to 
support innovative approaches to increase the commercialization 
of federally funded research is focused on three points 
specifically related to life science discoveries.
    First, venture capital, one of the historical mainstays for 
advancing life science discoveries through proof-of-concept has 
fallen sharply as investors have shifted capital to lower-risk 
opportunities. Early-stage life science ventures are struggling 
to fund proof-of-concept, which is a critical value inflection 
point required to attract investment today.
    Some estimates suggest that the number of venture firms 
investing in life sciences has fallen as much as 2/3 in the 
last five years. In essence, a shortage of early-stage pre-
proof-of-concept funding is impeding the commercialization of 
federally funded research.
    My second point. It is reasonable and appropriate for the 
Federal Government to play a role in funding proof-of-concept 
research at universities, research institutes, and national 
labs given the requirement today for proof-of-concept to 
attract investment. The gap between development of an 
intriguing, yet unproven discovery and the investment to 
commercialize that discovery is characterized as the Valley of 
Death. The virtual disappearance of pre-proof-of-concept 
venture financing and the lack of sufficient programs to fund 
proof-of-concept research make crossing the Valley virtually 
impossible for countless technologies.
    Take, for example, a team of investigators from UCSF, the 
Cleveland Clinic, Vanderbilt University, and the University of 
Michigan, who invented an implantable artificial kidney device 
with the potential to improve the health and wellbeing of 
individuals suffering from kidney failure and to reduce the 
estimated $41 billion spent annually in the U.S. on this 
disease. Despite receiving numerous awards based on promising 
results, having substantial interest from potential corporate 
partners, and being selected by the FDA as one of three 
projects for a pilot program to fast track the development of 
breakthrough medical devices, investors have been reluctant to 
provide funding without proof-of-concept in large animals.
    Simply stated, a new model to attract private investments 
to once again fuel the commercialization of early-stage 
discoveries is required. The Federal Government could play a 
role in this model. It could help bridge the gap.
    Finally, I would like to enthusiastically express support 
for the draft legislation to expand the use of STTR funds to 
support innovative approaches that increase the 
commercialization of federally funded research. Grant programs 
created under the Act could address the crucial need for proof-
of-concept funding as well as the need for experiential 
training in commercialization.
    For example, I would welcome expansion of the NSF 
Innovation Corps Program to additional agencies and the 
inclusion of phased proof-of-concept funding programs 
administered by universities, research institutes, and national 
labs to validate and advance a broader array of federally 
funded discoveries.
    I support including requirements for the collection and 
analysis of programmatic data to identify best practices. 
Though steps should be taken to ensure that such requirements 
are not an impediment to participation.
    Thank you, Mr. Chairman, Ranking Member Lipinski, and 
Members of this Subcommittee for the opportunity to discuss 
this important issue. I look forward to answering your 
questions.
    [The prepared statement of Dr. Lium follows:]

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    Chairman Bucshon. Thank you very much for your testimony.
    Because of the delayed start Chairman Smith will not be 
able to attend but he asks now that, with unanimous consent to 
submit his statement for the record. Without objection.
    [The prepared statement appears in Appendix I]
    Chairman Bucshon. I would like to thank the witnesses for 
their testimony and remind Members of the Committee that 
questioning is limited to five minutes.
    The Chair will now recognize himself for five minutes for 
the first round of questioning.
    Dr. Hart-Wells, thanks for coming from Purdue. We 
appreciate that.
    Dr. Hart-Wells. My pleasure.
    Chairman Bucshon. In your testimony you state that 
federally funded Purdue technologies that were supplemented by 
proof-of-concept awards had about a 40 percent increase in 
licensing rate compared with other federally funded programs 
not supplemented by proof-of-concept awards.
    Can you explain what the reasons are for that, and how 
might the proposed grant program we are considering improve 
that?
    Dr. Hart-Wells. Certainly. Thank you for the question.
    Yes. That data is 35 to 40 years of data that, granted this 
Trask Venture Fund has evolved over time. Very recently in the 
last three to four years the program is run very similar to an 
early pre-proof-of-concept and proof-of-concept type with 
business executives and local business community 
representatives, as well as university leadership or an 
advisory council. The funding is targeted through their 
advisement towards answering questions that de-risk a 
technology for transfer to a private sector partner.
    So the goal of the fund has been focused on experiments 
that fill the gap. That was part of the fund when it was 
established in '73, many moons ago, before even the Bayh-Dole 
legislation that created technology transfer offices in 
universities. And I believe based on our experience and having 
done the analytics of the program over the years that the 
targeted deployment with a goal to transfer research results 
for commercial products and services made the focus of the 
decision making in such a way that it produced the kinds of 
outputs that it did, which is the university to transfer out 
the technology. Get it into the hands of a partner like Dr. 
Wamhoff, HemoShear, whether you are creating a new company or 
you are partnering through licensing. But to get it out of the 
university so that it has an opportunity to be developed 
further into products and services that can benefit those folks 
that paid for it.
    And that is the number that we can use and put our finger 
on in a reliable way to say that we were able to get going in 
that right direction. So I believe it is the targeted, the 
metrics and what you are measuring will determine how these 
programs perform, and I believe that was part of this program 
from the beginning and helped inform its outcomes.
    Chairman Bucshon. Thank you. Dr. Wamhoff, I have to ask 
you, what do you see as the strengths and weaknesses of the 
STTR Program?
    Dr. Wamhoff. I think one of the strengths is that it gives 
investigators critical seed money to do proof-of-concept 
studies, check off a go, no-go box for a technology you are 
trying to commercialize. I think one of the challenges is 
putting a mechanism in place to let them know what is the go, 
no-go box on that technology. Scientists--no one loves their 
science more than the scientist that is developing it, and 
there is a lot of emotional attachment to it, and there comes a 
point for every technology when it is going to move out of 
academia, does it really have legs, and getting exposure to 
non-scientists, people from the industry, advisors that can 
help you make that decision to fail fast and move on is really 
important and a critical gap that needs to be filled.
    Chairman Bucshon. Thank you very much. That is all I have. 
I will yield now to the Ranking Member, Mr. Lipinski, for five 
minutes.
    Mr. Lipinski. Thank you, Mr. Chairman. I thank everyone for 
their testimony.
    As I noted in my opening statement the draft legislation 
doesn't specify the types of activity that should be supported, 
so I wanted to get a little bit more into that. Certainly we 
heard from I think all of you about proof-of-concept, the 
importance there, and as I said, something I support for NIH. 
It is just NIH because that was the opportunity we had. I 
certainly think that is critical. Entrepreneurial education is 
something I also am very supportive of. Dr. Lium mentioned I-
Corps, which I have mentioned countless times in this 
Committee, my support for I-Corps, I think that is an 
entrepreneurial education program that has worked very well and 
should be expanded to other agencies.
    What other areas, are there other areas, you know, maybe 
this is what we should be limiting this bill to, but are there 
other areas that you think may fit into this bill to help us 
accelerate commercialization of federally funded research?
    Start with Dr. Lium. If there is nothing else, you don't 
have to make up something else just to answer the question. I 
just want to see if there were other things that you wanted to 
add.
    Dr. Lium. My impression is that the bill provides 
significant flexibility on what programs can be developed by 
agencies. We have already touched on a number of issues that 
are relevant from experiential entrepreneurial education, 
mentorship, and resources within the university to provide a 
strong infrastructure for technology transfer. I think all of 
those issues are very important.
    Again, based on the draft legislation it appears to me that 
those types of programs could be developed.
    Mr. Lipinski. Dr. Hart-Wells.
    Dr. Hart-Wells. Yes. I would like to add the critical 
component in coincident with technology development is 
cultivation of business experiential learning, kind of on-the-
job. There is student entrepreneurialship programs I think at 
all of the--a lot of universities including Purdue, but perhaps 
these are opportunities that the faculty researcher or staff or 
students who are participating in the development of the 
technology would also perhaps benefit from business support 
services.
    I would agree that my reading of the draft allows that 
degree of freedom. I refer to a creative license, the way that 
I read the draft so that it can be customized to the 
appropriate geographic regions and what those needs are.
    But I would add that one of the support mechanisms that 
could accelerate the translation and transfer of federally 
funded research results is business support services or 
mentoring and counseling, along those lines, just generally of 
how to write a business plan. These are things that are not 
taught to you in graduate school as you well know when you get 
an advanced degree.
    Thank you.
    Dr. Wamhoff. I remember when I wrote my first business plan 
actually. I had no idea what I was doing, and I was six years 
into tenure. But I agree with you, Dr. Hart-Wells, that 
bringing the private sector into this in any way possible I 
think is a great idea. At the end of the day they are the 
consumer of this technology before it goes into the general 
public. They are the ones licensing it out of the university, 
they are the ones that are further developing it, putting more 
capital into it to make it available to the taxpayer, and I 
don't think there is enough of that. I know at Purdue you have 
recently changed your boards around where you have a lot of 
influence, advisors from the private sector. It is not just an 
academic setting, and having that leeway to do that I think 
would be really important.
    Mr. Lipinski. Thank you. I want to quickly ask Dr. Lium, 
you talked about UCSF's entrepreneurial education activities. 
You are certainly strong in the focus on life sciences.
    Are there any steps that you are taking to adapt 
entrepreneurial education courses like I-Corps to life 
sciences? Are there any other special hurdles that you face in 
tech transfer from the life sciences that other disciplines do 
not face?
    Dr. Lium. Sure. I think I will start with the hurdles of 
transferring life science technologies into the commercial 
sector first. Life science technologies have a particularly 
long timeframe for development. They are very high risk in 
general. There are technical risks, regulatory risks--will the 
product be approved by the FDA?--reimbursement risks. So the--
and then the comments that I have made regarding proof-of-
concept funding. So there are significant risks related to the 
investment in the life sciences that are not present in all 
other fields.
    In regards to the Innovation Corps, the UCSF is fortunate 
to participate in the program. The University of California 
Berkeley, UCSF, and Stanford are--formed the Bay Area 
Innovation Corps Node. UCSF in particular is developing life-
science-specific curriculum for the Innovation Corps Program in 
the fields of drugs, devices, diagnostics, and digital health. 
And I would be happy to answer any questions about that.
    Mr. Lipinski. Thank you. I yield back.
    Chairman Bucshon. Thank you. I now recognize Mr. Collins 
for five minutes.
    Mr. Collins. Thank you, Mr. Chairman. I want to thank both 
you and Chairman Smith for assisting me and us in putting this 
forth. My background, yes, I am a mechanical engineer from 
North Carolina State. Even though I know you have a background 
from Duke, we won't talk about Duke. But I also have a 
biotechnology company with two level three plus space labs 
involved in virus production and the like and also a phase 2B 
multiple sclerosis secondary progressive MS drug trial ongoing 
right now in Australia and New Zealand. So I live the life 
sciences world a lot, at least before I came here.
    But I agree with you on the Valley of Death and you know, 
the scientists who do really love their science, but when you 
talk to them and say, all right, now how are we going to get it 
to market, what is the market, how are we going to price it, 
and, again, what is the fail safe point, they usually give you 
the deer in the headlights look.
    But one question I know we are going to get is we are going 
to take money that is already in the STTR Program, and so we 
want to designate a small piece of it for this new Valley of 
Death, proof-of-concept.
    Would you speak to what you would say the return on 
investment to the taxpayers and taking this small piece and 
addressing the Valley of Death versus not doing that and having 
that money instead go to the traditional programs, in other 
words, speak to the importance of creating this and what I 
would hope would be a very high return on investment or your 
opinion on that for the taxpayers.
    Start with Dr. Wamhoff.
    Dr. Wamhoff. Sure. I don't know the metrics on the success 
of the STTR mechanism, but I can tell you that any time you can 
decrease the gap in the Valley of Death, it is a good return on 
any investment, whether it is advice or seed funding on a go, 
no-go decision, you can end a $2 million venture with $100,000 
of seed funding very quickly and say, you know what? This is 
great science, but it is not going to translate out. Take it 
back into the lab and do what you need to do, publish in your 
academic career.
    So I am fully for it. I think that it is a real event that 
happens to a lot of academic investigators. They just get lost.
    Mr. Collins. Thank you. Dr. Hart-Wells.
    Dr. Hart-Wells. Yes. Thank you. I think the--it is--metrics 
in this space are always tough. This is difficult. There is a 
lot of good momentum in discussing and deliberating what are 
appropriate metrics. I would note in my written testimony at 
Purdue we also have a pre-seed evergreen fund for new ventures. 
Most of the applicants to these programs, as well as the proof-
of-concept, are in the life sciences. There is some data 
following funds in the universities, and the biggest consumer 
of these funds are in the life sciences, and that is not 
surprising given the high risk associated with those 
technologies.
    My belief is--and live this every day is that if 
universities can incubate a little longer some of these 
technologies and de-risk them, there are opportunities that 
are--that will be delivered to the private sector, in 
particular small businesses, which is our preference. They are 
statistically proven to generate more jobs. We are responsible 
to helping those technologies along as much as we can, and a 
lot of universities are doing that at their own expense, and it 
is only the Federal Government that can step in and have broad 
impact across the board. And I see that embraced in the spirit 
of this legislation.
    So I actually see synergy and improvements in the starting 
point from which a small business would pick a technology, 
perhaps what Dr. Wamhoff articulated wouldn't have to be the 
norm anymore.
    Mr. Collins. Thank you. We are running a little out of 
time, so not to skip Dr. Lium, but I would like to ask each of 
you, right now there is a $150,000 limit on the phase 1 STTR 
funding. We haven't addressed a particular number here, and I 
wonder if you could offer a quick opinion on what you might 
think would be an appropriate dollar limit for this Valley of 
Death funding.
    Dr. Wamhoff. Oh, for the Valley of Death funding? So you 
are talking about pre-STTR money essentially.
    Mr. Collins. Yes. You have got the 150,000 phase 1, the 
million dollar phase----
    Dr. Wamhoff. I can tell you that with the Coulter 
Foundation at the University of Virginia you could do a lot 
with 25,000, $50,000. I believe you have a specific number.
    Dr. Hart-Wells. Our data suggests an average of $48,000.
    Mr. Collins. So $50,000 would be a good number for both of 
you.
    Dr. Lium?
    Dr. Lium. We have a small program at the University of 
California San Francisco that averages between 50 and $75,000. 
One comment that I would also make is that I believe that the 
award size should reflect the technology and the market and the 
next milestone that--or inflection point of value that one 
wants to achieve.
    Mr. Collins. Good. Thank you all for your testimony. I 
yield back.
    Chairman Bucshon. Thank you. I now recognize Ms. Esty for 
five minutes.
    Ms. Esty. Thank you, and I want to thank Mr. Collins for 
asking several of my questions, but to follow up on that and 
really to sort of point out the question you asked about 
diversion of funds from existing programs, I believe, Dr. Lium, 
you mentioned how the current structure, because presumably 
because it does not fund the Valley of Death, ends up then with 
premature formation of startups, which then fail.
    So could you discuss a little bit whether you think this 
focus on permitting grants to be used in relative, we are 
talking small amounts of grants, $50,000, $75,000, can you 
explain if you think that really would help better deployment 
and leverage of those resources?
    Dr. Lium. The simple answer to the question is yes. I 
believe that conducting proof-of-concept research within the 
university where the discovery was made can be done much, much 
less expensively than in the context of a company. Creating a 
company and the cost of a company and the complications of a 
company and the distraction that the company represents for a 
faculty member relative to being able to raise a small amount 
of proof-of-concept funding, do the research within the 
university, using the same individuals that likely made the 
invention is actually--would be a very, a significant 
advantage. And ultimately in the long run would be a better 
utilization of capital.
    Ms. Esty. I represent northwest Connecticut, so we have 
Farmington U-Conn Medical Center with the Jackson Labs coming 
in and synergies with Yale as well and attempting to do this 
licensing better.
    Can any of you discuss, this is a great concern in my 
state, things that we might be able to do as we look at this 
issue about aiding universities that are already very focused 
on this? What can we do to aid that process on the tech 
transfer? We have got big centers, both of them working a lot 
of life sciences. Are there other things we haven't flagged in 
this bill or related issues that we should put on their radar?
    Dr. Lium. I think many of the comments that have been made 
today related to having external boards and mentorship are very 
important in the context of licensing as well. We recently were 
negotiating a license with a small company and reached out to 
neutral parties in the field--neutral venture capitalists--to 
determine what the cost or what the value of the technology was 
to provide us some comfort in the level of--in the financial 
terms that we were negotiating. We were actually, by doing that 
kind of homework able to complete the financial negotiations 
within one hour.
    So I think that engaging the commercial community to help 
in the technology transfer process is essential.
    Ms. Esty. And a final quick question. There has been some 
discussion, certainly looked at--at Commerce looking at 
regional clustering for say excellence in manufacturing. Is 
this something we could also be looking, at say in the life 
sciences? Again, that is an area where they are looking at 
public-private partnerships to address in part these 
entrepreneurial outside advice to help make that transition. We 
have been attempting to do this with the investing at the state 
level in Connecticut, but obviously the resources get quite 
limited, and there is criticism that we are picking winners and 
losers.
    So can you help us, you know, how do we avoid that picking 
winners and losers problem but nevertheless provide the 
resources for these startups? The outside advice. Do you have 
thoughts on how we could structure that, what the Federal 
Government's role should be or whether that is just advisory to 
suggest that they do this?
    Dr. Lium. I think advice has to be tailored very 
specifically to the technology that one is examining at any 
particular time. We have a program within the Clinical 
Translational Science Institute at the University of California 
San Francisco that utilizes mentors with very specific 
expertise to advise faculty with early-stage technologies.
    So, again, I am very supportive of these structures. That 
program is structured in such a way where there is a call for 
proposals twice a year from faculty. They are evaluated by 
boards of mentors, individuals are selected and mentored for a 
period of months, and then there is a report out at the 
culmination, and a number of the projects then receive a small 
amount of funding. I think there is an opportunity to use those 
types of external boards to help make these types of decisions.
    Ms. Esty. Thank you very much, and thank you, Mr. Chairman.
    Chairman Bucshon. You are welcome. I now recognize Dr. Bera 
for five minutes.
    Mr. Bera. Thank you, Mr. Chairman, and I am not a 
mechanical engineer, but a physician, and I will give a shout 
out to the University of California system where I did my 
training and was on faculty.
    I think this is fascinating, and, again, I am glad that we 
are addressing the issue of technology transfer. When you talk 
about this Valley of Death, you know, going through the three 
stages from basic research to proof-of-concept to 
commercialization, I know when we are in the lab, you know, in 
the academic center we just like to think of ideas, and we like 
to, you know, and the academic center is very well situated for 
this exchange of ideas where--which is what we are trained to 
do, but we are not thinking about how to take product to 
market.
    And it has always occurred to me that if we could take the 
entrepreneur and actually partner them very early on, so while 
we are formulating our ideas and so forth, they are also 
thinking about and providing input into how to bring that 
product to market.
    So, again, creating a context that allows that to happen at 
an early-stage as opposed to a later stage certainly is 
something that we should be working on, and I would be 
interested in hearing your thoughts on how we best go about, 
you know, getting that at that earlier stage.
    The other question is--I was down at the University of 
California San Diego this past weekend meeting with Chancellor 
Khosla and some of his faculty, and I knew this hearing was 
coming up, so I actually posed to them the question of what 
could we do to better help technology transfer obviously at one 
of our major research institutions, and the answer they gave me 
surprised me. What he said was look at tax-exempt bonds, and I 
tested this with my home institution at U.C. Davis, and they 
talked about how the Federal Tax Reform Act really limits their 
ability to provide research space. They said, you know, 
industry is knocking on their door. They want to partner, they 
want to come in and, you know, work side by side in these lab 
spaces, but our tax code currently limits their ability, you 
know, because these are tax-exempt bonds, to allow the 
entrepreneur to come in, and I would ask you guys to comment on 
that and, you know, provide perspective.
    Dr. Hart-Wells.
    Dr. Hart-Wells. I will take that first. While I am not a 
tax attorney or a mechanical engineer for that matter, we run 
into this, and we have this conversation, actually more 
vigorous conversations more recently, what you are referring to 
is what is referred to as private use and bonded facilities. 
And there is a prohibition on basically for-profit activities 
in those spaces.
    So that is actually an input in the analysis that is often 
not considered inside the university in the dialogue on the 
outside but is a critical go, no-go of whether a university can 
even undertake a partnership, whether it wishes to or not. It 
would be a very, I think appropriate in the context of all of 
the conversations about realizing the value of federally funded 
research through products and services where appropriate, to 
consider and take up the question of private use and its 
impact, positive and negative, on this whole ecosystem.
    Mr. Bera. So it would be possible actually in this body to 
perhaps amend the Tax Reform Act to allow at an earlier stage 
those entrepreneurs to come into the lab, work side by side.
    Dr. Lium. Yes.
    Dr. Lium. Yes. I think that would be true. We do have 
relationships with corporations that allow for their personnel 
to come onto campus and work closely with our investigators but 
on a limited basis. One example of a close relationship that 
the University of California San Francisco has is the Center 
for Therapeutic Innovation with Pfizer. In this particular case 
they have established a laboratory across the street from the 
campus.
    We do believe very strongly that collaborative research 
between industry and academics is essential to translating 
academic inventions into the commercial sector.
    I can also take, if you would like, I can also comment on 
your first question related to in essence, if I understood you 
correctly, early intervention. I think a very good model for 
this, again, is the National Science Foundation Innovation 
Corps Program. This is a program that takes teams, small teams 
at the very earliest stages that apply to participate. It is 
highly experiential. The teams go through a process of meeting 
with a very large number of customers and stakeholders from 
whatever particular market is appropriate for the technology 
that they have over a relatively short period of time to 
establish beyond proof-of-concept around the technology itself, 
but actually they understand what the market is, what the 
product should be, what they would be able to charge for it. So 
really getting a much, much deeper understanding. That is a 
short, intensive program. The goal is to help individuals or to 
help teams fail early and then also to identify those that have 
a successful concept and take those forward.
    Mr. Bera. Okay. Thank you.
    Chairman Bucshon. Thank you. I now recognize Mr. Kilmer for 
five minutes.
    Mr. Kilmer. Thank you, Mr. Chair, and thank you all for 
your testimony. You have shared with us, I think, some 
interesting ideas around a number of themes; financing, 
mentorship, partnerships. We talked about some challenges 
including prohibitions on for-profit activities, and that is 
something we have grappled with in my state, the State of 
Washington, where we had to update our ethics laws as we dealt 
with commercialization of research.
    Can you touch on, you know, as you look both in the areas 
where you work and other states, have you seen any other best 
practices that as we noodle on these issues we ought to be 
thinking about, we ought to be looking at? And that we ought to 
think about scaling up at the Federal level.
    Dr. Hart-Wells. I will comment that I believe there are a 
number of practices undertaken across the country now as you 
start to see folks inside the university change over into 
individuals with industrial experience or experience in 
technology transfer. For example, Dr. Wamhoff, the Coulter, I 
will say the Wallace H. Coulter Foundation in my opinion is a 
best practice that is scalable and is embedded in a number of 
universities throughout the country, a small number. It is not 
dissimilar to how we implement our proof-of-concept awards. But 
the business advisement component that has been mentioned as 
critical is a requirement, I believe. Business advisors who 
compensated for their time and knowhow and expertise, and then 
done so in a way that conflicts of interests and tax bonds, all 
these types of very critical considerations are done, with the 
goal in mind, which is not dissimilar to your proposed 
legislation.
    I would offer up that program as a best practice.
    Mr. Kilmer. Thank you.
    Dr. Wamhoff. Yeah. I would like to echo what Libby said. 
The Coulter Foundation, that mechanism is extremely effective. 
What they were able to do with a $1 million seed grant at the 
University of Virginia in partialing out $25,000, $50,000, 
$75,000 seed grants and the number of companies that launched 
off of that simply because of the fact there was an oversight 
board of university faculty but more importantly outside 
members in the community as well as other industries helping 
academics make very critical go, no-go decisions. It is either 
going to work when you do this study, or it is not going to 
work, and at the end of the day you are going to know whether 
to turn left, right, or keep going forward or abandon it, and 
that is a mechanism that is now, I think, being implemented not 
just in the original nine universities, but they have now 
branched it out probably closer to 20 universities.
    So it is in place, and it is a great structure.
    Dr. Lium. I think that we have touched on a number of 
themes today that are repeated in many programs across the 
Nation from proof-of-concept funding, fail early, experiential 
learning for entrepreneurship, bringing mentors, actually true 
commercial mentorship to the table. One thing that hasn't been 
mentioned is incubator space. I think it is important to have 
space that this type of work can be done in, particularly when 
it is time to create a company, have space that a small company 
can take a very small amount of space and move forward. Really 
it is about creating the ecosystem, and so if we can create an 
ecosystem that supports entrepreneurship and commercialization 
within the academic environment without actually fundamentally 
changing the academic mission of an institution, I think we 
would be very successful.
    The educational issues that we face are significant. I 
think we have all mentioned or referred to them in terms of 
individuals understanding truly what does it take to take a 
basic discovery into the commercial marketplace. It is a very 
complex process. The mentorship alone can be very time 
consuming, but, again, these are the kind of things and 
ultimately what the goal is to create that entrepreneurial 
supportive environment that cultivates this.
    Mr. Kilmer. Thanks, Mr. Chair.
    Chairman Bucshon. Thank you very much.
    At this point I would like to thank the witnesses for their 
valuable and very fascinating testimony and the Members for 
their questions.
    The record will remain open for two weeks for additional 
comments and written questions from Members.
    The witnesses are excused, and the hearing is adjourned.
    [Whereupon, at 4:13 p.m., the Subcommittee was adjourned.]


                               Appendix I

                              ----------                              


                   Additional Material for the Record

              Submitted statement by Chairman Lamar Smith,
              Committee on Science, Space, and Technology

    Thank you, Chairman Bucshon, for yielding me time. And I thank our 
newest member of the Science Committee, Chris Collins, for bringing his 
small business experience and leadership position on the Small Business 
Committee to bear in developing the discussion draft of ``The 
Innovative Approaches to Technology Transfer Act of 2013.''
    The research and development conducted at our nation's 
universities, research institutes and national laboratories have served 
as the basis for many technology breakthroughs that have driven 
American innovation and our economic growth.
    It is our job as policymakers to help create a healthy, pro-
business environment that brings new inventions to the market.
    Today's hearing will provide a focused discussion on how to improve 
technology transfer at our nation's research universities and 
laboratories in order to promote American competitiveness.
    I look forward to hearing from our witnesses and I yield back the 
balance of my time.

                                 
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