RD232 - Commonwealth Research Commercialization Fund: Advancing Technology and Economic Development in Virginia by Investing in Priority Research and Commercialization Activities Annual Report July 1, 2012 – June 30, 2013

Executive Summary:
In accordance with Code of Virginia Sections 2.2-2233.1 G and 2.2-2221 (18), and on behalf of the Innovation and Entrepreneurship Investment Authority (IEIA), the Center for Innovative Technology (CIT) respectfully submits this report regarding the performance of the Commonwealth Research Commercialization Fund (CRCF) in FY2013. The CRCF accelerates innovation and company formation in the Commonwealth, while solving important state, national, and international problems through technology research, development, and commercialization.

During the 2012 session of the General Assembly, $4.8 million was appropriated to CRCF for FY2013 for the purpose of advancing science- and technology-based research, development, and commercialization to drive economic growth in Virginia. CIT issued one FY2013 solicitation resulting in 42 awarded projects. (*1) These projects are performed by companies, universities, and research institutes across the state and advance technology commercialization aligned with Virginia’s key strategic technology priorities as outlined in the Commonwealth Research and Technology Strategic Roadmap. CRCF leveraged the Commonwealth’s $3 million investment with approximately $5.7 million in matching funds; FY2013 carryover funds were designated for a fall FY2014 solicitation.

CRCF awards are selected by the CIT Board of Directors following a multi-step review process that includes funding recommendations made by the Research and Technology Investment Advisory Committee (RTIAC). The RTIAC is a ten-member, legislation-appointed body comprised of representatives from higher education, economic development, research institutes, venture capital firms, and technology corporations. The RTIAC also supports the development of the Roadmap.

FY2013 CRCF awards, along with awards made in FY2012, tackle major challenges in sectors from life sciences to cyber security to advanced manufacturing, among others. For example, CRCF invested in projects developing groundbreaking diagnostics and treatment options for some of the deadliest and most challenging cancers, including brain cancer, pancreatic cancer, and renal cancer, and parasitic diseases that are pervasive and difficult to treat. The FY2013 solicitation resulted in several awards, focused on research to treat and prevent diabetes; according to a 2011 report released by the Virginia Department of Health, the prevalence of diabetes in Virginia has increased steadily between 1996 and 2009 and at present, 13.8% of adults in Virginia have either diagnosed or undiagnosed diabetes. (*2) Cyber security, a growing threat in the Commonwealth and worldwide, is addressed through several CRCF projects developing solutions to prevent data breaches and hacking. The work the Commonwealth organizations are doing, with CRCF support, have the potential to have a profound and lasting benefit to society through job, intellectual property, and company creation in Virginia.

CIT tracks projects during and for five years after their period of performance, as economic and technological outcomes are often realized a few years or more after a project is completed. As initial CRCF awards were made in FY2012, most projects remain underway or were recently completed. However, examples of the Fund’s effectiveness in contributing to the economic, technological, and wellbeing of the Commonwealth follow.

• CRCF funds helped Virginia-based organizations secure private and public funding. For example, as a result of their CRCF award, Parabon NanoLabs of Northern Virginia developed relationships with two large companies – Janssen Pharmaceuticals and Johnson & Johnson – for its work to treat brain tumors; as of this writing, Parabon NanoLabs and Janssen Pharmaceuticals are moving toward a formal co-development partnership. These relationships led to additional funding and studies by the National Institutes of Health (NIH) and the Nanotechnology Characterization Laboratory (NCL) and, in the case of NCL, Parabon was accepted into NCL’s highly sought-after testing program. In December 2012, Huffington Post named Parabon’s Essemblix “drag and drop” drug-making platform one of the seven best inventions of 2012. Similarly, the CRCF award to Phthisis Diagnostics, a small business in Charlottesville, was crucial to $260,000 in private investment.

• CIT supported Innovative Marine Products and Solutions (IMPS), a small Virginia start-up company associated with intellectual property developed at the Virginia Institute of Marine Science (VIMS), William & Mary’s graduate school in marine science. IMPS’ products, biodegradable panels for blue crab, stone crab, and lobster fishing pots, are designed to reduce “ghost” fishing, in which lost or abandoned pots capture animals and result in environmental losses, as well as depleted resources for commercial and recreational harvest. CRCF funding facilitated product development and production; IMPS’ products are available for purchase through a web-based retail store, with wide distribution expected in the near future. Validating the importance of such work in marine products, Virginia Governor Bob McDonnell endorsed the use of biodegradable components in fishing gear in his June 2013 Proclamation “Marine Debris Reduction Month”.

• AFrame Digital, Inc., a small company located in Reston, addresses the need for long-term care of the world’s aging population and in 2013 was selected as the preferred patient telemonitoring solution for Virginia’s hospitals and health systems by the Virginia Hospital and Healthcare Association (VHHA). AFrame Digital’s two CRCF awards advanced its work to create mobile health monitoring devices that detect impacts from fall-related events, respond to panic button presses, quickly locate patients and/or residents, and discretely observe the wearer’s health and habits over time. Ultimately, its system provides a “safety net” for seniors and other people managing chronic conditions as they go about their activities of daily living. AFrame Digital is the recipient of multiple industry awards, including the 2011 CTIA Emerging Technology Award for Health and Wellness Solutions (Enterprise Class) and the Northern Virginia Technology Council’s 2012 Destination Innovation Award for Small Business.

• CRCF’s investment in SpydrSafe Mobile Security, Inc. accelerated the McLean-headquartered small business’ successful launch of products that prevent enterprise data loss due to the intentional or inadvertent misuse of mobile applications deployed on smartphones and tablets. Associated with the CRCF award, SpydrSafe launched two versions of its SpydrSafe Mobile Security application for iOS and released a data loss prevention and app control agent for Google’s Android mobile device platform. . As the threat of cyber security breaches become a great concern to individuals and businesses, work of companies such as SpydrSafe are becoming increasingly crucial to the preservation and security of mobile data.

• CRCF funds helped bring leading researchers to the Commonwealth. With support from Virginia Tech’s Eminent Researcher Recruitment award in fall 2011, the Virginia Tech Carilion Research Institute (VTCRI) successfully recruited Dr. Robert Gourdie, a top scholar in the U.S. in heart regeneration and wound healing research. Dr. Gourdie has a national reputation in cardiovascular and regenerative medicine research. Since arriving in Virginia, he has brought several million dollars in federal funding for research into the Commonwealth, recruited and employed eight additional researchers, and provided a promising opportunity to relocate at least one start-up company to Virginia.

• Commercializing products is a key goal of the CRCF program, and that of its predecessor, the Commonwealth Technology Research Fund (CTRF). A 2008 CTRF award recipient, SpermCheck®, a spinout company from the University of Virginia, received approval in 2013 from Health Canada for the over-the-counter sale of the first and only FDA-approved at-home sperm test, SpermCheck® Fertility. The product became readily available in U.S. pharmacies in 2012, following online sales at select pharmacies since late 2010. Approval from Health Canada was a crucial step in the Charlottesville, Virginia-based company’s continued success. SpermCheck Fertility has also received European Union (EU) clearance and will be rolled out in more than 2000 Boots pharmacies in England on October 21, 2013.

The FY2013 solicitation included five programs: Commercialization, Facilities Enhancement Loan, Matching Funds, SBIR Matching Funds, and STTR Matching Funds. The FY2012 Budget Bill provided for an expenditure of up to $1.5 million for the two latter programs, combined. Per legislative direction, awards made for CRCF projects must support technology sectors identified in the Commonwealth Research and Technology Strategic Roadmap. The Roadmap, a comprehensive planning tool Virginia leaders use to help determine research areas worthy of economic development and institutional focus, identifies technology sectors with the most commercial promise and that will drive economic growth throughout the state. Technology sectors eligible for funding in FY2013 were program-specific; the Commercialization and SBIR and STTR Matching Funds Programs limited submissions to four high-priority sectors, while the Facilities Enhancement Loan and Matching Funds Programs were open to submissions in the 11 technology areas identified in the Roadmap as strategic opportunities for the Commonwealth.

In FY2013, 104 proposals were submitted from seven of the ten technology regions in the Commonwealth and in all 11 industry sectors identified in the Roadmap as priorities eligible for CRCF funding; this resulted in 42 funded projects representing six of the ten regions and ten (*3) of the 11 industry sectors. Since the inception of the CRCF program in 2011 legislation, 285 eligible proposals were submitted from all of the Commonwealth’s ten technology regions and from these submissions, 89 projects have been awarded CRCF funding. Funded projects cover all 11 technology sectors.

In addition to overseeing the FY2013 solicitation, CIT submitted the FY2012 Annual Report in October 2012. This report provided CRCF highlights, profiled FY2012 awarded projects, and discussed FY2013 plans. There are currently 11 FY2012 projects still underway. CIT also leverages its programs to facilitate company creation and growth. For example, CRCF applicants are among candidates for and recipients of CIT GAP Fund investments.

The Administration and General Assembly continue to support the CRCF, appropriating $4.8 million for the Fund for FY2014. Planning for the FY2014 opportunities began in late FY2013.
(*1) 43 projects were selected for funding; one organization declined its award
(*2) Diabetes in Virginia: Diabetes Prevention and Control Project. Virginia Department of Health. Updated 7/2011.
(*3) Includes both primary and secondary industry sectors