STATUS REPORT
NUMBER 1

NIST SPECIAL PUBLICATION 950-1

William F. Long
Business Performance Research Associates, Inc.
Bethesda, Maryland 20814

March 1999

CONTENTS

Acknowledgements
Executive Summary
Introduction

CHAPTER 1 - Overview of Completed Projects

Characteristics of the Projects
Timeline of Expected ATP Project
    Activities and Impacts
Gains in Technical Knowledge
Dissemination of New Knowledge
Commercialization of the New Technology
Broad-Based Economic Benefits

CHAPTER 2 - Biotechnology

Aastrom Biosciences, Inc.
Aphios Corporation
Molecular Simulations, Inc.
Thermo Trilogy Corporation
Tissue Engineering, Inc.

CHAPTER 3 - Chemicals and Chemical Processing

BioTraces, Inc.

Return to Main Page.

Timeline of Expected ATP Project Activities and Impacts

The following activities and impacts are related mainly to the award recipients: forming the initial idea; establishing collaborative research relationships; developing a research agenda; applying to the ATP for an award; carrying out the research; publishing results, filing for patents, and licensing the technology to others; conducting further post-ATP project research; attracting other sources of funding; conducting marketing studies and other precommercialization activities; forming new alliances for commercialization; developing products and processes that use the new technology; producing, selling and distributing the new goods or services; generating revenue; and building the business. ⁽⁴⁾

Activities and Impacts in the Broader Economy

Activities and impacts that occur in the broader economy - outside the immediate influence of ATP award recipients - include receipt of benefits by purchasers of the new products or users of the new processes ⁽⁵⁾ in the course of their business operations, receipt of benefits by other companies that are able to imitate the technology or benefit in other ways from knowledge derived from the technology, and receipt of benefits by ultimate consumers of goods and services embodying the technologies.

Timing of Activities and Impacts - A Conceptual Picture

Technology area, market conditions and the regulatory environment vary significantly across ATP-funded projects, and these differences can substantially affect the time path for the activities listed above. Hence, the time required for technology development, commercialization and diffusion varies greatly among the projects, even when they stay on track.

Figure 2 illustrates in concept how the time path of a successful project might unfold, starting with the announcement of a competition by the ATP. ⁽⁶⁾ On this conceptual chart, economic impacts are depicted on the vertical scale, and time on the horizontal scale. The lower of the two curves, rising from left to right, shows returns to the project innovators increasing over time as they commercialize it. The upper curve shows returns to the economy at large increasing as the technology diffuses into wider use. The difference between the two curves reflects benefits that "spill over" to those outside the project.

Figure 2: Conceptual timeline of ATP's Expected Impacts

The chart is annotated with events that may lead, or contribute, to the generation of economic benefits during three time periods designated by the shading. Upon announcement of a competition by ATP, companies begin to prepare their proposal, form collaborative relationships, and identify resources. If they receive an ATP award, they tend to increase R&D spending, expand goals, accelerate research, hire scientists and engineers, and make technical progress. ⁽⁷⁾ These developments occur in the short-term, shown here as extending through to the approximate average project length of three years.

As a successful ATP project ends, the pace of commercialization activity surrounding the technology generally will pick up as depicted in the "mid-term" stage. Then, in the longer-term, wider diffusion of the technology - within the initially targeted industry and, for multi-use technologies, across industry sectors - is expected to occur as it is incorporated into new products and processes.

Two Specific Timelines - Differences and Similarities

Figure 3, on the next two pages, illustrates the specific time paths for two of the 38 projects. One project does not yet have a product or process on the market, the other does. One requires regulatory approval, the other does not. One company is publicly traded, the other is privately held. One is in biotechnology, the other is in computer software. Still, as shown in Figure 3, many activities appear in both timelines - but at very different times.

Medical Technology Requiring FDA Approval - Aastrom Biosciences

Growing out of research done by three faculty members at the University of Michigan in Ann Arbor, the idea of a bioreactor to grow human stem cells outside the body began to take shape in the mid-1980s. In 1988, the professors founded Aastrom Biosciences (while continuing their university research) and later brought in a partner with business experience. In 1991, with four employees, the company applied for an ATP award. Significant events for this project are shown in the top panel of Figure 3 on the following page.

After two years of research, Aastrom met the technical goals of its ATP project. Along the way the company invested heavily in protecting its discoveries by filing for numerous patents. It also submitted a substantial number of technical papers documenting its progress to professional societies and journals.

The technology for growing stem cells was embodied in the AastromReplicell(tm) Cell Production System (System). Because it will be used for human medical purposes, the System must be approved by the Food and Drug Administration (FDA), but only after successful completion of clinical trials and other tests. Several tests using human subjects have been conducted since the ATP project ended, with each test producing favorable results. If that success continues, the device will likely be approved and available for sale in the next one to three years.

The need for FDA approval creates a lag of several years between the start of commercialization efforts and the ultimate sale of the product. In this case, the effort is now in its 11th year, and the total time from concept to first commercial sale of the Aastrom System will likely be 12 to 14 years. Nevertheless, there are factors - including test results from cancer patients and the positive response of investors to Aastrom's stock offerings - which suggest that the technology has a very bright future.

Parallel Processor Computer Technology With Immediate Applications - Torrent Systems

The idea for this project came from the work and conversations of two computer programmers who formed a company in 1993 and applied the same year for ATP funding for a project which started the following year. The project made rapid progress in developing parallel processing technology, and it began to receive inquiries from potential customers about using the technology in new software applications. Torrent requested that the project be shortened so that the company could move quickly to commercialize products incorporating the new technology. Significant events for this project are shown in the bottom panel of Figure 3.

Unlike developers of medical devices, computer software vendors are not required to have any kind of approval to sell their products. Thus, Torrent was able to enter into licensing agreements with other companies a mere 18 months after starting its ATP project.

The huge difference in development times for these two technologies is illustrated in Figure 3, where key events are graphed against the same time scale. The first event for Aastrom's System was 12 years in the past, and broad economic benefits still lie a few years in the future. The first event for Torrent's new parallel processing technology was the company's founding in 1993, and customers were already using the product and receiving its benefits in 1996. Yet both projects stayed essentially on track and have largely continued to meet ATP's expectations.

ATP Awards - Part of a Larger Funding Picture

For some projects, such as Torrent's, funding from the ATP constitutes a substantial portion of the total capital used to support research and development and, indeed, a substantial share of the overall costs. For most projects, including Aastrom's, ATP funds are a relatively small percentage of the total amounts that will ultimately be spent to bring the technology into use. Commercialization costs typically dwarf research costs. Nonetheless, ATP funding - targeted at a critical stage where technical risks tend to inhibit private investors - may be essential for ultimate success, as was the case for the Torrent and Aastrom projects.

Funding by the ATP has been shown by another study ⁽⁸⁾ to address two types of timing issues: overcoming an inability to start a project and speeding up progress needed to address a critical window of opportunity. Thus, even though ATP funds will in most cases amount to a relatively small share of the total costs expended to bring a technology to fruition, they can be a key factor in making it happen.

Of course, from an evaluation standpoint, multiple funding sources make the task of assigning cause and effect relationships more problematic. Which funding dollars caused what effect? One aspect of this study, therefore, has been to try to identify the role that the ATP has played in the developments to date.

Go to other sections of Chapter 1: Overview of Completed Projects
  Characterstics of the Projects
  Timeline of Expected ATP Project Activities and Impacts
  Gains in Technical Knowledge
  Dissemination of New Knowledge
  Commercialization of the New Technology
  Broad-Based Economic Benefits

Date created: March 1999
Last updated: April 12, 2005