Technology Transfers: Benefits of Cooperative R&D Agreements (Letter
Report, 12/16/94, GAO/RCED-95-52).

Technology transfer between federal laboratories and industry is
increasingly viewed as a significant factor in the economic growth and
well-being of the United States.  Cooperative Research and Development
Agreements (CRADA) define the terms and the conditions of collaboration
by federal laboratories and private industry on research and
development.  Although all CRADAs may not achieve the same level of
benefits, both the federal agencies and private firms GAO reviewed
benefited from the collaborations. The CRADAs offered opportunities for
federal laboratories and industry to collaborate on research while
meeting their missions. Technology from federal laboratories was
transferred to the private sector, resulting in commercial products.
Research and development programs were advanced.  The sharing of
resources helped federal laboratories and private companies accomplish
the CRADA's objectives.  In addition, some CRADAs showed long-term
potential to improve the U.S. economy, health, and environment.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-95-52
     TITLE:  Technology Transfers: Benefits of Cooperative R&D Agreements
      DATE:  12/16/94
   SUBJECT:  Technology transfer
             Research and development
             Cooperative agreements
             Laboratories
             Agency missions
             Economic development
             Research and development facilities
             Industry
             Non-government enterprises

             
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Cover
================================================================ COVER


Report to the Vice Chairman, Joint Economic Committee, U.S.  Congress

December 1994

TECHNOLOGY TRANSFERS - BENEFITS OF
COOPERATIVE R&D AGREEMENTS

GAO/RCED-95-52

Cooperative R&D Agreements


Abbreviations
=============================================================== ABBREV

  AIDS - Acquired Immune Deficiency Syndrome
  ARS - Agricultural Research Service
  CRADA - Cooperative Research and Development Agreement
  GAO - General Accounting Office
  GRASS - Geographic Resources Analysis Support System
  NIH - National Institutes of Health
  NIST - National Institute of Standards and Technology
  R&D - research and development
  WRAIR - Walter Reed Army Institute of Research

Letter
=============================================================== LETTER



B-253616

December 16, 1994

The Honorable Paul S.  Sarbanes
Vice Chairman, Joint
 Economic Committee
Congress of the United States

Dear Mr.  Vice Chairman: 

Technology transfer between federal laboratories and industry is
increasingly viewed as a significant factor in the economic growth
and well-being of the United States.  Cooperative Research and
Development Agreements (CRADAs) are one of several mechanisms whereby
federal laboratories and private industry collaborate on research and
development (R&D).  CRADAs define the terms and conditions of the
collaboration. 

You asked us to review the role of CRADAs in successfully
transferring technology to the private sector.  Subsequently, we
agreed with your office to develop a series of case studies that
highlight the benefits of engaging in such collaborations at the
Departments of Agriculture, Army, Commerce, and Health and Human
Services.  We did not attempt to assess the costs of these
collaborations. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

While all CRADAs may not achieve the same level of benefits, both the
federal agencies and private companies we reviewed benefited from the
collaborations.  Specifically, we identified the following: 

The CRADAs offered opportunities for federal laboratories and
industry to collaborate on research while meeting their missions. 

Technology from federal laboratories was transferred to the private
sector, resulting in commercial products. 

R&D programs were advanced. 

The sharing of resources aided federal laboratories and private
companies in accomplishing the CRADA's objectives. 

In addition, some of the CRADAs demonstrated a potential for
long-term improvements to our nation's economy, health, and
environment. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Beginning in 1980, the Congress enacted a series of laws to renew,
expand, and strengthen cooperation between federal laboratories and
private industry.  The Stevenson-Wydler Technology Innovation Act of
1980 (P.L.  96-480) made the transfer of federal technology a
national priority.  This act was amended by the Federal Technology
Transfer Act of 1986 (P.L.  99-502), which authorized
government-operated laboratories to enter into CRADAs with nonfederal
parties to conduct specific R&D.  The 1986 act authorized the use of
the laboratories' resources such as staff and equipment for CRADA
projects but specifically prohibited the transfer of federal funds to
a collaborator.  In addition, the technology transfer legislation
placed few limits on CRADA collaborations but did require that R&D
efforts be consistent with the laboratories' missions. 


   CRADAS HAVE MET AGENCIES' AND
   COMPANIES' MISSIONS
------------------------------------------------------------ Letter :3

For the 10 CRADAs that we reviewed, both the missions of federal
laboratories and the interests of private companies were being met
through cooperation on research of mutual interest. 

In 1988, the Agricultural Research Service (ARS) and W.R.  Grace and
Company, for example, entered into a CRADA that offered an
opportunity for government and industry to collaborate on research to
develop disease control measures in plants by using natural products
as alternatives to chemicals.  The mission of one of ARS'
laboratories is to perform basic and applied research to discover and
improve methods for biologically controlling plant diseases.  The
laboratory seeks alternatives or supplements to applying chemical
fungicides to soil to control these diseases because chemical
fungicides can cause environmental pollution.  W.R.  Grace, which
markets goods for producing bedding plants in greenhouses, had an
interest in obtaining the biological control technology developed by
ARS and adapting and converting the technology to a commercial
product.  The CRADA resulted in a granular formulation that when
added to soil or soilless mixes, will protect plants from diseases
causing seedling rot.  The laboratory and W.R.  Grace have renewed
the CRADA to develop additional supplements to chemical fungicides. 

In another example, the Walter Reed Army Institute of Research
(WRAIR) entered into a CRADA with OraVax, Incorporated, to
collaborate on R&D of encapsulated oral vaccines against certain
infectious diseases.  WRAIR has extensive experience in encapsulation
technologies\1 and attempts to find ways of protecting soldiers. 
OraVax develops and manufactures oral vaccines and has experience in
a specialized field of immunity that detects disease-causing
microorganisms.  As a result of the CRADA, WRAIR and OraVax developed
an encapsulated vaccine against a bacterium that causes diarrhea, one
of the most debilitating diseases confronting soldiers.  Soon, WRAIR
and OraVax will sign an amendment to the CRADA to expand the
collaboration to develop vaccines against other diseases. 


--------------------
\1 Encapsulation is a process whereby vaccine proteins are wrapped in
a biodegradable material.  The vaccine is ingested.  After a period
of time, the coating dissolves and the proteins are released,
initiating the immunity to the disease. 


   CRADAS HAVE RESULTED IN
   COMMERCIAL PRODUCTS
------------------------------------------------------------ Letter :4

Some proponents of technology transfer argue that many technologies
generated in the federal laboratory system could have commercial
value if further developed by private industry.  Among the CRADAs we
reviewed, we found examples in which private companies were
manufacturing and selling products that directly resulted from
federal research. 

In the early 1980s, for example, the Forest Service's Forest Products
Laboratory developed and patented a structural product called
"spaceboard," a strong yet lightweight molded-fiber panel made from
waste wood that had potential use in commercial and residential
construction and packaging applications.  After learning about the
technology, Gridcore Systems International entered into a CRADA with
the laboratory to design processes, materials, components, and
systems for the best use of recycled and other fiber products in the
construction and furniture industries.  Today, Gridcore markets
panels, curves, and columns by using the spaceboard technology. 
According to the company, potential uses of the product include
furniture, stage sets, doors, ceiling tiles, and partitions. 


   R&D PROGRAMS HAVE BEEN ADVANCED
------------------------------------------------------------ Letter :5

Collaborating on research by federal agencies and private companies
can advance R&D programs.  An effort between the National Institutes
of Health (NIH) and Genetic Therapy, Incorporated, illustrates that
advances in research are being made because of CRADAs. 

In 1987, NIH scientists believed that an aspect of recombinant
genetic engineering\2 that they had been studying was almost ready
for clinical trials on human beings.  However, NIH did not have the
laboratory facilities or staff to produce the amount and quality of
cells necessary to conduct human clinical trials.  Recognizing the
potential of NIH's gene therapy research, Genetic Therapy entered
into a CRADA with NIH to develop genetically engineered products
based on the research.  Both collaborators told us that the CRADA has
advanced the R&D program to the point where the technology has been
successfully demonstrated in human clinical trials. 


--------------------
\2 Recombinant genetic engineering is a range of techniques that
rebuild or manipulate genetic material from organisms. 


   SHARING OF RESOURCES AIDED
   FEDERAL LABORATORIES AND
   COMPANIES IN ACCOMPLISHING
   CRADA'S OBJECTIVES
------------------------------------------------------------ Letter :6

The following examples demonstrate a variety of ways that the
laboratories and companies we reviewed exchanged their resources to
accomplish the CRADA's research objectives: 

Expertise:  Often, one collaborator contributed specific knowledge
and experience that the other collaborator did not have for the
success of the CRADA.  For example, ARS scientists developed a plant
cell culture system for producing small, or research-scale, amounts
of an anticancer drug.  Scientists from Phyton, Incorporated, had the
expertise--engineering and business training and skills--to develop a
system capable of producing commercial quantities of the drug. 

Personnel:  Government and industry personnel were often exchanged
between facilities to perform research functions.  Such personnel
included scientists, technicians, and support staff.  For example,
OraVax assigned several of its staff to work full-time at the WRAIR
to perform research on the CRADA involving oral vaccines as well as
other laboratory projects. 

Facilities and materials:  For some of the CRADAs we reviewed,
federal and private researchers shared an assortment of facilities
and materials to meet the objectives of the research.  Such items
included laboratories, production facilities, test equipment, and
research samples.  For example, NIH provided its clinical center to
Genetic Therapy for conducting clinical trials involving gene
therapy. 


   CONCLUSIONS
------------------------------------------------------------ Letter :7

Our observations of the 10 CRADAs that we reviewed suggest that
collaborative R&D agreements can be a valuable asset in the
government's portfolio of technology transfer programs.  As we stated
earlier, these CRADAs have provided opportunities for laboratories
and companies to share expertise and resources, advance R&D programs,
and transfer technology resulting in commercial products.  While we
did not attempt to measure the overall benefits to the economy, we
believe that government-industry collaboration can have a positive
impact on certain economic, health, and environmental needs of the
United States. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

We discussed the factual information in this report with technology
transfer and laboratory officials from the Army, ARS, Forest Service,
NIH, and the National Institute of Standards and Technology and with
the industry collaborators involved in the CRADAs we reviewed.  They
agreed with the accuracy of the facts.  However, as agreed with your
office, we did not obtain written agency comments on a draft of this
report. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :9

We developed a series of case studies that highlight CRADAs'
benefits.  We asked agency officials to select several CRADAs that
have led to a commercially useful technology, an improvement to a
process, or an advancement in an R&D program.  From this group, we
selected 10 CRADAs that represent a range of technologies and
laboratories.  The CRADAs, federal laboratories, and private
companies that we reviewed are identified in appendix I of this
report.  During our review, we visited the federal laboratories and
private companies involved in these CRADAs, reviewed documents and
materials related to the CRADAs, and interviewed federal laboratory
personnel, industry officials, and financial analysts specializing in
technology-based industries to determine what benefits were produced
as a result of these collaborations.  Because these CRADAs were
judgmentally selected, they are not necessarily representative of all
CRADAs.  The 10 case studies are presented in appendix II.  We
conducted our review from March through October 1994 in accordance
with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :9.1

We are sending copies of this letter to the Secretaries of
Agriculture, Commerce, Defense, and Health and Human Services and to
the Director, Office of Management and Budget.  We will also make
copies available to others on request. 

Please contact me at (202) 512-3841 if you or your staff have any
questions.  Major contributors to this report are listed in appendix
III. 

Sincerely yours,

Victor S.  Rezendes
Director, Energy and Science Issues


CRADAS THAT GAO REVIEWED
=========================================================== Appendix I

CRADA                      Federal laboratory         Collaborator
-------------------------  -------------------------  --------------------------
Retroviral mediated gene   National Cancer            Genetic Therapy, Inc.,
therapy                    Institute,                 Gaithersburg, Md.
                           Rockville, Md.\a

Manufacturing information  Manufacturing Engineering  PDES, Inc., North
                           Laboratory, Gaithersburg,  Charleston, S.C.
                           Md.\b

Microheating element       Semiconductor Electronics  Optical ETC, Huntsville,
manufacture                Division Laboratory,       Ala.
                           Gaithersburg, Md.\b

Anticancer drug            National Cancer            Bristol-Myers Squibb Co.,
                           Institute, Rockville,      Princeton, N.J.
                           Md.\a

Plant cell culture         Plant, Soil, and           Phyton, Inc., Ithaca, N.Y.
technology                 Nutrition Research
                           Laboratory, Ithaca,
                           N.Y.\c

Chemical fungicide         Biocontrol of Plant        W.R. Grace and Co.,
                           Diseases Laboratory,       Columbia, Md.
                           Beltsville, Md.\c

Oral vaccine               Walter Reed Army           OraVax, Inc., Cambridge,
                           Institute of Research,     Mass.
                           Silver Spring, Md.\d

Geographic information     Construction Engineering   Open GIS Foundation,
system                     Research Laboratories,     Cambridge, Mass.
                           Champaign, Ill.\d

Wood fire retardant/       Forest Products            Northwest Independent
preservative               Laboratory, Madison,       Forest Manufacturers,
                           Wis.\e                     Beaver, Wash.

Recycled materials         Forest Products            Gridcore Systems
                           Laboratory, Madison,       International, Carlsbad,
                           Wis.\e                     Calif.
--------------------------------------------------------------------------------
Legend

CRADA = Cooperative Research and Development Agreement. 

\a National Institutes of Health. 

\b National Institute of Standards and Technology. 

\c Agricultural Research Service. 

\d U.S.  Army. 

\e Forest Service. 


CASE STUDIES OF 10 CRADAS THAT GAO
REVIEWED
========================================================== Appendix II

This appendix summarizes the following for each Cooperative Research
and Development Agreement (CRADA) that we reviewed:  (1) the
technical objectives, (2) the collaborators' roles and contributions
of resources, and (3) the emanating results, including the direct
benefits and broader impacts. 


   RETROVIRAL MEDIATED GENE
   THERAPY, NATIONAL INSTITUTES OF
   HEALTH/GENETIC THERAPY, INC. 
-------------------------------------------------------- Appendix II:1

Shortly after birth, doctors found that Ashanthi and Cynthia suffered
from a rare and usually fatal genetic birth defect that affects the
immune system.  At about the same time, several National Institutes
of Health (NIH) scientists were ready to begin human clinical trials
with retroviral mediated gene therapy.  This therapy uses
reconstructed genetic material from an animal virus to replace
missing or defective genes responsible for illnesses in humans. 
Although NIH was well equipped to produce small quantities of this
new material for research, NIH's laboratory facilities and personnel
were not equipped or prepared to produce quality cells in the volume
needed for the clinical trials.  Recognizing the potential of this
new technology to help those afflicted with genetic and acquired
diseases, a private-sector scientist opened the doors of Genetic
Therapy, Incorporated, on July 1, 1987.  Shortly thereafter, NIH and
this company began a CRADA collaboration to conduct trials using
retroviral mediated gene therapy. 

NIH's mission is to improve the health of the American people.  To do
this, the agency conducts and supports biomedical research into the
causes, prevention, and cure of diseases; develops research
resources; and uses modern methods to communicate biomedical
information.  For the CRADA collaboration, NIH supported about six
laboratory researchers so that they could perform preclinical animal
and human studies, developed the original idea of using recombinant
viruses as genetic therapeutic agents, and provided the resources of
its clinical center, including the efforts of its attending
physicians.  Genetic Therapy obtained venture capital and
manufacturing facilities and materials; supported about 30
researchers in the company's own laboratory and 4 researchers at NIH;
completed 2 years worth of laboratory testing; and secured the
required approval from the Food and Drug Administration.  NIH and
Genetic Therapy worked together to obtain the approvals from an NIH
committee overseeing recombinant genetic research.\1 . 

The president of Genetic Therapy said that this CRADA put his company
in business.  The CRADA affirmed the use of gene therapy, and the
company was able to raise money in equity markets and to reduce the
liability associated with conducting clinical trials on human
patients.  The company also benefited because NIH bore the cost of
treating the patients at the Institutes' clinical center.  For NIH,
this collaboration provided the resources for needed laboratory
improvements and expansion.  For the children, the treatment that
they received as a result of this CRADA brought a greatly improved
quality of life.  Other treatments for this deficiency, involving the
use of an animal product, are typically not long lasting and are
extremely expensive.  In contrast, because gene therapy corrects the
body's own cells to produce what is missing, it is anticipated that
mediated gene therapy should provide full restoration of function for
the patient's lifetime. 

This company, which employees about 150 highly skilled scientific
specialists, and about 30 other new firms that were founded on this
CRADA-developed technology are researching many new applications,
such as treating brain tumors, Acquired Immune Deficiency Syndrome
(AIDS), cystic fibrosis, melanoma (a deadly form of skin cancer),
kidney disease, and ovarian, breast, and colon cancer.  Several
financial analysts that we contacted said that today, these 30
companies spend or add between $20 million and $30 million a month to
the economy.  These analysts estimated that if gene therapy fulfills
its promise and gene transplants replace pills and surgery, the
impact on the economy will be substantial.  If this fundamental
technology supporting gene therapy proves that it can cure a few of
the above diseases, including cancer, the contribution will be even
greater. 



(See figure in printed edition.)Figure II.1:  Ashanthi and Cynthia

Source:  March of Dimes Birth Defects Foundation. 


--------------------
\1 The NIH Recombinant DNA Advisory Committee was created to monitor
genetic research including the review and approval of human-gene
therapy. 


   THE STANDARDIZATION OF
   MANUFACTURING INFORMATION,
   NATIONAL INSTITUTE OF STANDARDS
   AND TECHNOLOGY/
   PDES, INC. 
-------------------------------------------------------- Appendix II:2

The success of U.S.-manufactured products in competitive
international markets depends, in large measure, on the time and cost
of getting a product to market.  Unfortunately, many companies and
departments that work together continue to use different standards
and technical languages to design and describe identical products or
processes.  As a result, when engineers, product managers, and
service personnel need to exchange manufacturing information,
additional time and money are required to translate one language to
another.  In any one product's life, multiple translations are not
unusual and are frequently accompanied by some inadvertent loss of
data.  This inability to demonstrate a product's capabilities by
providing clear, uniform, and error-free information is cause for
concern, especially with the continuing emphasis on making
improvements in U.S.  manufacturing.  In 1988, the National Institute
of Standards and Technology (NIST) used a CRADA to join PDES, Inc., a
group of six companies that has since grown to become an
international consortia of 25 corporations and 3 government agencies. 
The CRADA requires the cooperation of manufacturing companies, who
are major competitors in some cases, to develop and implement a set
of international standards for the exchange of product data.  The
standards will provide a complete, unambiguous, computer
interpretable definition of the physical and functional
characteristics of a product throughout the different stages of the
product's life.\2

NIST was established to assist industry in the development of
technology needed to improve products' quality and reliability,
modernize manufacturing, and facilitate commercialization.  NIST and
two other government consortia members contribute the use of
laboratory facilities and two full time-engineers including
associated expenses for training and travel.  NIST's contribution is
valued at between $800,000 and $900,000 a year.  The private sector
consortia members each contribute $50,000 or $100,000 and one or two
engineers each year.  Without leaving their own corporate locations,
this CRADA organizes its technical expertise together with an on-line
network system and frequent conference calls and meetings in what has
been described as a "virtual" company.  The CRADA is managed by an
official of the South Carolina Research Authority (Charleston, South
Carolina), who estimated that the members' contributions to the
consortia are valued at about $10 million a year, about $7 million of
which is contributed from industry and almost $3 million from the
federal government. 

The CRADA has enabled several collaborators who are software
manufacturers to market new products on the basis of common
data-exchange standards developed under the CRADA.  In addition, the
CRADA is currently conducting several pilot programs.  Under one
pilot program, a major airplane manufacturer is requiring that three
of its engine suppliers use the CRADA-developed standards to assemble
its new plane.  This pilot program will mark the first time that one
of the engine manufacturers develops the engine without relying on
traditional physical models.  A consortia company official said that
within 1 year, this CRADA would be responsible for reducing the cost
and time to manufacture the company's product.  When this
standardization is fully integrated in normal manufacturing
operations and eliminates the need for design language translations,
the official's company could save tens of millions of dollars.  The
CRADA manager for PDES, Inc., estimated that as the manufacturing
industry moved from physical models used during the 1800s to
engineering drawings and blueprints and to individual computer-aided
design programs, the productivity in the manufacturing industry
increased about sixfold.  In addition, with full implementation of
standards for the exchange of product data, the CRADA manager
estimated that the productivity of U.S.  industries' would increase
another three to six times.  He said that because U.S.  products
would be of high quality and would reach international markets
sooner, U.S.  companies would be able to sell more than their
international competition. 


--------------------
\2 In manufacturing, a product's life is defined by different
stages--concept, design, fabrication, assembly, test/delivery, and
support. 


   MICROHEATING ELEMENT
   MANUFACTURE, NATIONAL INSTITUTE
   OF STANDARDS AND
   TECHNOLOGY/OPTICAL ETC
-------------------------------------------------------- Appendix II:3

"Smart bombs" are only as smart as the reliability of the computer
chips that guide them to their targets.  However, the generation of
guidance hardware currently in use does not test the operation of the
missile's imaging system before the missile is launched.  In 1992, a
NIST engineer and a former professor of electrical engineering
formalized their professional discussions by establishing a CRADA to
develop and test their ideas for a new technique to manufacture
microheating elements on standard silicon chips.  The microheating
elements, which resemble thousands of miniaturized hot plates,
display, in real time, heat patterns (temperature variations) emitted
from moving objects, like people.  These patterns are used to test
and calibrate a missile's guidance system. 

The Semiconductor Electronics Division Laboratory at NIST develops
state-of-the-art measurement procedures and materials for the
microelectronics manufacturing industry.  Five NIST researchers
worked on projects related to this CRADA and used about $250,000
worth of laboratory equipment.  Optical ETC contributed between 2 and
3 years worth of technical effort, $10,000 to $15,000, and use of the
company's equipment to conduct the company's part of the CRADA work. 

Optical ETC officials credit the CRADA for the company's growth from
three to nine employees and enhancing the company's worth by about $1
million.  Researchers at NIST said the CRADA collaboration provided
their research program with the optical component of the sensor
technology, which further expanded the technology's potential field
of applications and provided NIST with a mechanism for making and
selling this technology in commercial markets. 

The Department of Defense is interested in this technology because it
represents a cheaper and less risky means of testing military
equipment and less training time for the soldiers who will operate
the equipment.  Commercially, work from this CRADA-developed
technology is being applied to sense the presence of air pollutants
and to trigger air-bags during the rapid deceleration preceding a car
crash. 


   ANTICANCER DRUG
   COMMERCIALIZATION, NATIONAL
   INSTITUTES OF
   HEALTH/BRISTOL-MYERS SQUIBB CO. 
-------------------------------------------------------- Appendix II:4

Research in the 1960s demonstrated that paclitaxel,\3 a natural
product found in extremely small quantities in the bark of the
Pacific Yew tree, is a highly effective treatment for cancerous
tumors.  However, 25 years later, little progress had been made in
developing a useful drug.  The development of such an anticancer drug
was complicated by two problems--obtaining enough paclitaxel for all
the patients who might eventually need treatment and finding a
company to commercialize the drug.  To address these problems, NIH
solicited a number of CRADA proposals from different companies. 
After a series of reviews, NIH selected the Bristol-Myers Squibb
Company, a large pharmaceutical company with experience in anticancer
drug development and natural products research. 

The Division of Cancer Treatment in the National Cancer Institute at
NIH is devoted to identifying new anticancer agents, evaluating their
antitumor activity, and supporting any clinical trials necessary to
make a promising compound available to the American public.  For the
collaboration, NIH provided the data from preclinical animal studies,
the clinical data from its national clinical trial's network,
research expertise in the development of different anticancer agents,
and enough isolated paclitaxel and yew tree bark to continue the
clinical trials until Bristol-Myers Squibb was able to supply the
agent.  To complete the large number of remaining clinical trials and
provide adequate drug supplies, a Bristol-Myers Squibb official said
her company (1) improved procedures to increase the amount of
paclitaxel that could be extracted from existing bark supplies and
developed additional sources; (2) supported research for commercially
feasible and naturally renewable sources of paclitaxel such as a
partially synthetic process that begins with material extracted from
the yew tree needle trimmings and a new technology called plant cell
culture, which was developed under a separate CRADA between ARS and
Phyton, Inc.;\4 (3) obtained the Food and Drug Administration's
approval by conducting, in addition to NIH's trials, the company's
own clinical trials to provide necessary additional data; (4)
conducted research to enhance the method of administering the drug to
cancer patients; and (5) made Taxol\R available for other NIH
programs.  A company official estimated that through June 1994, the
company's actual expenditures had exceeded $300 million.  She also
estimated that personnel efforts had gone beyond the 125-person-years
specified in the CRADA agreement. 

An NIH official said that the results of this CRADA provided NIH
scientists with the basis for pursuing three other promising
antitumor compounds that had no pharmaceutical sponsor.  A
Bristol-Myers Squibb official said that the CRADA was responsible for
adding an important new product to the company's existing line of
anticancer drugs.  Both NIH and company officials said that this
CRADA demonstrates how cooperation in research and development (R&D)
can overcome major supply limitations for a promising anticancer drug
without depleting our natural resources.  Figure II.2 shows the plans
that Bristol-Myers Squibb has for developing nonyew tree bark
alternatives for making Taxol\R . 

   Figure II.2:  Plans for
   Alternative Sources of Taxol

   (See figure in printed
   edition.)

Source:  Adapted from information obtained from Bristol-Myers Squibb
Company. 


--------------------
\3 Paclitaxel is the active drug substance in Bristol-Myers Squibb's
anticancer drug Taxol\R . 

\4 See the next case summary on p.  16 for the CRADA involving
ARS/Phyton, Inc. 


   PLANT CELL CULTURE TECHNOLOGY,
   AGRICULTURAL RESEARCH
   SERVICE/PHYTON, INC. 
-------------------------------------------------------- Appendix II:5

Sometimes, the amount of natural product found in plants is so small,
as is the case with paclitaxel, that there is little doubt that
alternatives to the traditional ways of making new medicines must be
found.  On the basis of nature's ability for plant cells to reproduce
themselves indefinitely, Agricultural Research Service (ARS)
scientists developed a plant cell culture system for making
paclitaxel.  The process removes cells from the original plant and,
under scientifically controlled conditions, manipulates the cell's
reproduction and metabolism.  Recognizing a commercial opportunity to
apply plant cell culture technology to drug supply problems and
commercialize other valuable plant-derived compounds, three graduate
students started Phyton, Inc.  In 1990, ARS signed a CRADA and gave
Phyton an exclusive license to adapt laboratory-scale procedures into
a plant cell culture process that was able to produce commercial
quantities of Taxol\R . 

ARS supports research in animal and plant protection.  One aspect of
this work is the development of different microbiological plant
technologies that convert low-value agricultural products into
high-value technology-based products.  The anticipated results of
this kind of work allow U.S.  industry to rely on renewable resources
for the supply of raw materials and to move away from the use of
limited and, therefore, presumably expensive and possibly
environmentally damaging sources of supply.  During the CRADA
collaboration, ARS provided research personnel, some equipment and
materials, and different cell culture samples and developed and
catalogued various factors for the maximum drug yield.  During the
3-year span of the CRADA, Phyton's activities were almost completely
focused on the drug's development.  A company official said he would
estimate that Phyton contributed the efforts of seven people and
between 10 and 30 percent of the company's resources to work out the
CRADA-identified problems associated with increasing the production
of Taxol\R . 

Collaborating on the CRADA enhanced ARS' basic research efforts by
allowing ARS' laboratory to research a new technology and has
encouraged other ARS researchers to undertake more high-risk,
long-term endeavors.  The CRADA enabled Phyton to broaden the scope
of its R&D program to include other active plant cell culture
products, enhanced the company's technical credibility, and resulted
in greater leverage for the company's financing, such as the
subsequent contract that Phyton won to make Taxol\R for Bristol-Myers
Squibb.  Phyton, which began with 3 people, now employs 61.  Both ARS
and Phyton officials said this CRADA proved that the potential exists
for plant cell culture technology to create drugs cheaply, quickly,
and in commercial-sized quantities with no negative impact on the
environment.  An official of a major pharmaceutical company said that
from the results to date, she anticipated that plant cell culture
technology will generate drug-processing improvements and cost
savings similar to those that drug companies experienced when they
adopted tissue fermentation to manufacture antibiotics. 


   CHEMICAL FUNGICIDE REDUCTION,
   AGRICULTURAL RESEARCH
   SERVICE/W.R.  GRACE AND COMPANY
-------------------------------------------------------- Appendix II:6

Diseases causing seedling rot are commonly found in commercial
greenhouses and have caused extensive losses in the bedding plant
industry.  Applying chemical fungicides to soil has been an accepted
method of controlling the pathogenic fungi that cause such diseases. 
However, chemical fungicides are not the most desirable means of
disease control because, among other things, they can cause
environmental pollution.  In 1988, ARS entered into a CRADA with W.R. 
Grace and Company to develop disease control measures using natural
products as alternatives or adjuncts to chemicals. 

The CRADA offered an opportunity for government and industry research
personnel to interact to develop a product useful to agricultural
production.  Both ARS and W.R.  Grace benefited from the CRADA
because they had a mutual interest in developing biological control
technologies for bedding plants. 

ARS' interest is to perform basic and applied research to discover
and improve methods for biologically controlling plant diseases.  ARS
has extensive experience in performing biological control research
and has expertise in bedding plant production.  For example, ARS
identified fungi that control diseases causing seedling rot.  For the
CRADA, ARS supplied strains of the fungi for small-scale studies and
provided personnel, laboratories, and related equipment and supplies. 

W.R.  Grace is a specialty chemicals and health care company that
markets goods for production in bedding plants in greenhouses.  The
company's interest was to obtain the biological control technology
provided by ARS and then adapt and convert it to a commercial
product.  For the CRADA, W.R.  Grace provided facilities and
expertise to produce large quantities of biological control
formulations developed by ARS for laboratory and field tests.  W.R. 
Grace also provided funds to ARS to support laboratory staff, field
testing, and operating expenses. 

The CRADA resulted in a granular formulation that when added into
soil or soilless mixes, will protect noninfected plants from seedling
rot.  Today, W.R.  Grace produces limited amounts of GlioGard\R and
sells the product to a commercial fertilizer company.  W.R.  Grace
and ARS renewed the CRADA in 1993 to continue to develop biological
control additives and supplements to soil and soilless mixes to
replace, in total or in part, chemical fungicides currently used in
commercial greenhouse nurseries. 



(See figure in printed edition.)Figure II.3:  Effects of Formulation
Developed by ARS on Cucumber Plants

Legend

A = Untreated soil. 

B = Treated soil. 

Source:  W.R.  Grace and Company. 


   ORAL VACCINE DEVELOPMENT,
   ARMY/ORAVAX, INC. 
-------------------------------------------------------- Appendix II:7

One of the most debilitating diseases confronting soldiers is the
diarrhea caused by a number of different microorganisms including
enterotoxigenic Escherichia coli (E.  coli).  This bacterium results
in an estimated 650,000,000 cases of diarrheal disease annually in
developing countries and leads to 500,000 deaths worldwide, mostly in
children.  In 1992, the Walter Reed Army Institute of Research
(WRAIR) signed a CRADA with OraVax, Incorporated, to collaborate in
the research and development of encapsulated oral vaccines against
infectious diseases, including disease caused by E.  coli. 
Encapsulation offers the potential of eliminating the need for
multiple injections of a vaccine, protecting vaccines against high
temperatures, and stimulating better immunity against disease. 

The Army and OraVax have a joint interest in developing oral
vaccines.  WRAIR, which has extensive experience in encapsulation
technologies, attempts to find ways of protecting soldiers against
infectious diseases.  On the other hand, OraVax seeks to develop and
manufacture oral vaccines.  OraVax has experience in regulatory
approval and commercialization procedures for vaccines as well as
expertise in a specialized field of immunity that detects
disease-causing microorganisms. 

For the CRADA, the Army provided its bioprocessing facility and staff
at Silver Spring, Maryland, where it conducts R&D and produces and
tests vaccines.  The facility was designed to manufacture vaccines
that meet federal requirements for products that are intended for
human use.  OraVax contributed expertise, support personnel, and
funds to conduct preclinical trials.  For example, OraVax paid about
$100,000 to validate the Army's laboratory equipment.  Validation is
a process to ensure that equipment is operating according to
specifications and will perform its function over time. 

The CRADA resulted in an encapsulated oral vaccine for E.  coli that
is intended for future human clinical trials.  Also, an amendment to
the original CRADA will expand the collaboration to develop vaccines
against diseases such as gastritis, ulcers, dysentery, and colitis. 


   GEOGRAPHIC INFORMATION SYSTEM,
   ARMY/OPEN GIS FOUNDATION
-------------------------------------------------------- Appendix II:8

Developing new applications for existing computer software offers the
potential to greatly reduce the time, cost, and effort needed to
develop and maintain high-quality software.  In the early 1980s, the
Army Construction Engineering Research Laboratories created a
computer-based geographic information software system, called the
Geographic Resources Analysis Support System (GRASS), to help manage
its training areas.  GRASS allowed training range managers to develop
digital map overlays displaying land characteristics, such as the
location of water, soil types, and archeological sites. 
Subsequently, an interagency working group was formed to promote and
coordinate other uses for GRASS such as law enforcement and public
safety applications after federal agencies, academic institutions,
and the private sector developed additional uses for the system. 

The Construction Engineering Research Laboratories have been largely
responsible for the support and development of the GRASS user
community.  However, the Army decided to divest itself from all
GRASS-related activities that were not mission-related.  Therefore,
the laboratories entered into a CRADA with the Open GIS Foundation. 
The Open GIS Foundation is a not-for-profit corporation, which was
organized in 1992 to complement the functions of the interagency
working group.  The ongoing CRADA provides the framework for sharing
resources and technical expertise between the Army and the private
sector.  For example, the Army is responsible for transferring
technical information such as software specifications, architecture,
and coding techniques to the foundation on a continuing basis so that
it can implement and maintain a technical support program for
commercial, university, and government distributors of GRASS.  In
turn, the Open GIS Foundation assumed the laboratory's GRASS business
affairs, including managing a newsletter; conducting an annual user's
conference; publishing and selling GRASS manuals; and selling and
distributing a GRASS mailing list. 

According to the Construction Engineering Research Laboratories'
staff, the CRADA is the vehicle that allowed GRASS to get out to the
public, and the CRADA has allowed the laboratory to continue its
tradition of interacting with the private sector.  On the other hand,
the Open GIS Foundation's Executive Director told us that the CRADA
gave the foundation the ability to begin operations and provided the
linkage that gave the foundation credibility among its users. 


   FIRE RETARDANT/PRESERVATIVE FOR
   WOOD, FOREST SERVICE/NORTHWEST
   INDEPENDENT FOREST
   MANUFACTURERS
-------------------------------------------------------- Appendix II:9

Every year, homes in the western United States are subjected to fires
that result in extensive damage to property and the environment as
well as injury and death to local residents and fire fighters.  At
the same time, many homeowners in these same areas consider wood
shakes and shingles an attractive and high-value option for roofing
material.  Red cedar, the wood generally used for roofing material on
these homes, is naturally resistant to decay but requires the
application of a retardant to resist damage from fires.  The
increasing foreign demand for and environmental concern about the
overharvesting of mature red cedar trees in the United States led the
Forest Service and the Northwest Independent Forest Manufacturers to
sign a CRADA in December 1988.  The CRADA's objective was to develop
a fire retardant and preservation treatment for wood products that
would be a low-cost alternative to western red cedar shakes and
shingles. 

The Forest Service, an agency within the Department of Agriculture,
was established, in part, to develop and make available the
technology that would advance the management, use, and protection of
the nation's forest resources.  For the CRADA, the Department's
Forest Products Laboratory studied different approaches to imparting
both fire retardant properties and decay resistance to products from
other soft wood species, such as alder, grand and white fir, hemlock,
and ponderosa pine trees.  The Laboratory's development and testing
of a one-step process for pressure impregnation of both the fire
retardant and preservative was valued at about $75,000 a year and
covered materials, chemicals, supplies of additional power, and the
time of some research personnel.  Northwest Independent Forest
Manufacturers, an association of shake and shingle mills, contributed
about $300,000 in cash for the almost 5 years worth of R&D efforts,
contributed milled wood products for testing, and provided reports on
the progress of the technology's development. 

Officials at the laboratory said that engaging in the CRADA broadened
their technical expertise to other applications beyond treatments for
wood shakes and shingles.  Because of the success of the CRADA's R&D,
the association was able to acquire further funding from the state of
Washington to continue commercial development. 



(See figure in printed edition.)Figure II.4:  Fire Retardant Testing

Left:  Untreated wood shingles that were fire tested.  Notice flame
and wide area of damage.  Right:  Fire-retardant-treated wood
shingles that were fire tested. 

Source:  The Forest Products Laboratory. 


   RECYCLED MATERIALS, FOREST
   PRODUCTS LABORATORY/GRIDCORE
   SYSTEMS INTERNATIONAL
------------------------------------------------------- Appendix II:10

A significant environmental challenge facing the United States is
finding disposal and recycling methods for an enormous and
ever-increasing accumulation of waste products.  Nearly one-half of
the municipal solid waste stream is made up of wood waste and
wastepaper.  In 1992, the Department of Agriculture's Forest Products
Laboratory signed a CRADA with Gridcore Systems International to
design processes, materials, components, and systems for using
recycled paper and other wood fiber in products in the construction
and furniture industries.  The joint research was based on the
creation of a structural product developed and patented by Forest
Product Laboratory researchers.  The product is called "spaceboard,"
a strong yet lightweight molded-fiber panel made from waste wood. 

The Forest Products Laboratory and Gridcore both benefited from the
cooperative agreement.  In this case, a federal laboratory, whose
research goal is to enhance the competitive position of U.S.  forest
products in the global economy, developed a technology that has
potential for use in commercial and residential construction and
packaging applications.  Through a CRADA, the laboratory made its
personnel and facilities in Madison, Wisconsin, available to Gridcore
to develop molding techniques for new applications of the spaceboard
technology.  Gridcore, in turn, paid some of the expenses of the
Forest Service researchers and support personnel who work in the
cooperative relationship. 

Today, Gridcore uses the molded fiber technology developed by the
Forest Products Laboratory to produce and market panels, curves, and
columns under the name GRIDCORE\TM .  The company manufactures the
product from a variety of recycled materials such as corrugated
containers, mixed office waste, and agricultural fibers.  Potential
uses of the product include furniture, stage sets, and interior
building products such as doors, ceiling tiles, and partitions. 
According to the company, using GRIDCORE\TM products in place of
solid wood products will contribute toward slowing deforestation,
provide a range of nontoxic building products, and establish markets
for recycled materials. 



(See figure in printed edition.)Figure II.5:  Child's Table Made From
GRIDCORE

Source:  Gridcore Systems International. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

RESOURCE, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Jim Wells, Associate Director
Robin M.  Nazzaro, Assistant Director
John E.  Bagnulo, Senior Evaluator
Amy L.  Manheim, Evaluator

