Dwindling research funds a threat to innovation

In October, the Science Coalition published a study that identified 100 U.S. companies that trace their roots to federally funded university research and highlighted their role in strengthening innovation and bolstering the economy.
All but one of the firms – an education company in Pittsford, N.Y., derived their success from research-based, technological innovation. Two of the companies featured in the report were Nabsys Inc. and Tivorsan Pharmaceuticals, both biotech firms based in Providence and founded by researchers at Brown University whose research received federal funding.
Nabsys in particular serves as a textbook example of how federal funding – which has been dwindling and faces even more cuts in the coming years due to sequestration – can grow a company into a local economic driver.
Founded in 2004 by Xinsheng Sean Ling, a professor of physics at Brown University, Nabsys has developed a high-speed platform for nanopore-based DNA sequencing that combines solid-state nanodetectors with innovations in chemistry to reveal both the location and identity of DNA sequences over long distances.
Ling’s initial research and development was undertaken at Brown with a $1.5 million grant from the National Science Foundation, and since then Nabsys – led by President and CEO Dr. Barrett Bready – has grown into a private company employing about 60 people and has raised $41 million in venture financing since 2009.
“The biotech industry and the two companies in Rhode Island profiled in the report are great examples, but it goes beyond biotech,” said Jon Pyatt, president of the Science Coalition. “Federally funded research has led to things like the laser, GPS, the MRI, the World Wide Web. It has literally changed the way we communicate, the way we conduct business, and it’s improved the health of the country.”
Yet federal funding for basic scientific research was at a historic low in 2013 as a percentage of the federal budget, according to the October study, and sequestration is expected to cut as much as $95 billion from research and development budgets through 2021. United for Medical Research, an advocacy group of scientific research institutions, published a report in 2012 that attempted to quantify the state-by-state impact of reduced grant funding from the National Institutes of Health. In Rhode Island, where in 2011 $152.8 million in NIH grants had supported approximately 2,148 in-state jobs, UMR projected that 117 of those jobs would be lost due to sequestration.
UMR and organizations such as the Federation of American Societies for Experimental Biology and Science Works for U.S. have pegged the total annual sequestration-related reduction in NIH funding for Rhode Island at between $7 million and $10 million.
Nationally, NIH investment supported 432,094 jobs in 2011 and generated more than $62 billion in economic activity, according to the UMR study. President Barack Obama in his State of the Union address last week warned of a different casualty of sequestration, however – one harder to measure in dollars and jobs that reaches to the heart of American innovation and global competitiveness.
“We know that the nation that goes all-in on innovation today will own the global economy tomorrow,” Obama said. “This is an edge America cannot surrender.”
Since its inception in 1997, the state-backed Slater Technology Fund has invested $22 million in more than 110 technology ventures in Rhode Island, which have gone on to raise more than $356 million in external financing. However, while venture capital plays a critical role in shepherding innovations through development, said Richard Horan, senior managing director of the fund, the basic research behind tech innovation is built on the backbone of federal funding.
“With the development of the research enterprise at Brown and at Lifespan, within Care New England, through the Brown medical school, and more recently through the University of Rhode Island, we have seen develop a research enterprise that commands some $200 million or more a year in federal funding,” said Horan. “We’re arguably at a critical mass in research enterprise, but our translational research capacity is relatively underdeveloped.” Translational research – the process by which scientific discoveries are translated into practical applications for clinical and commercial development – has become a priority of federal funding agencies the last 10 years, Horan said.
He advocates the creation of a consortium of state academic and industry leaders to push for a 21st-century version of the Highway Trust Fund – an “Innovation Trust Fund” – that would boost the number of research projects able to progress into clinical and commercial development, as well as the number of successful research companies creating jobs and driving economic growth.
Currently, the R.I. Science and Technology Advisory Council offers a grant program aimed at supporting companies performing translational research under federal Small Business Innovation Research or Small Business Technology Transfer grants.
The Innovate Rhode Island Small Business Fund, created by the General Assembly last year with the allocation of $500,000, awards grants to defray the cost of applying for the innovation and technology-transfer awards, to match existing awards or to help the companies hire interns.
Since the inception of the small-business innovation and technology-transfer program in 1983, Rhode Island companies have received 450 Phase I and Phase II awards totaling more than $124 million. In the long term, STAC says, bringing more, rather than less, federal funding to Rhode Island will create jobs and support high-growth businesses in the state. •

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