February 13, 2004 -- SSTI Weekly Digest

In the February 13, 2004 Issue:

Copyright State Science & Technology Institute 2004. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected.

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R&D at DHS Slated for 13.8% Increase
With Congressional approval, the Department of Homeland Security's principal research unit could receive a substantial increase in its fiscal year 2005 budget. The Administration's FY05 request for the Science and Technology Directorate is $1.039 billion -- 13.8 percent higher than the FY04 appropriation level of $913 million.

The agency's Budget in Brief, released on Monday, only highlights $77 million of the $119 million increase requested for the directorate's Research, Development, Acquisition and Operations line item.

The most significant item is the additional $65 million requested for the Bio-Surveillance Program Initiative. Currently, the program receives $53 million, much of which provides support for BioWatch, a bio-aerosol warning for most of the nation’s metropolitan areas. The new funds would support research and development (R&D) for an integrated, real-time, human-animal-plant surveillance system.

A portion of the directorate's increase also would support an acceleration of R&D on next-generation environmental monitoring systems. The Budget in Brief reports new classes of detectors, which can identify bio-agents in two minutes or less with significantly low false alarm rates, will make ‘detect-to-protect’ possible for key facilities.

Another new initiative proposed is an integrated attack warning and assessment system known as BWICS (BioWarning and Incident Characterization System). The BWICS pilot will integrate real-time bio-surveillance and environmental monitoring data with plume hazard predictions, epidemiological forecasts, population and critical infrastructure databases, and other available resources in two of the highest threatened cities.

A $12.9 million increase is proposed for the $20 million Plum Island Animal Disease Center. According to the Budget in Brief, the new funds would be used to address the "highest priority deficiencies" on the island as outlined in the GAO's report, Combating Terrorism – Actions Needed to Improve Security at Plum Island Animal Disease Center; Report Number GAO-03-847.

The DHS Budget in Brief is available at: http://www.dhs.gov/interweb/assetlibrary/FY_2005_BIB_4.pdf

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VC Picks Up in Q4 2003
Venture capital (VC) investments in the U.S. continued to surge in the fourth quarter of 2003, two independent reports show. Among highlights, investment in life sciences companies outpaced other industry sectors. The sector's $4.89 billion total for the full year 2003 is the highest proportion directed to the life sciences in the last 12 years, according to the PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association MoneyTree™ Survey.

As a convenience to Digest subscribers, SSTI has compiled a state-by-state listing of the MoneyTree™ Survey results for all of 2003. Data is presented for each state's number of deals, total amount invested and ranking, as reported in past editions of the Digest. The table is available at: <http://www.ssti.org/Digest/Tables/021304t.htm> [Note: The table includes the latest data available for Q4 2003, but not for previous quarters. Only those states securing investment are listed. Because the data are continuously updated, Q4 2003 figures also differ from the data currently available at pwcmoneytree.com. Thanks to Joshua Radler of Thomas Venture Economics for his help in preparing the table.]

With VC activity in the U.S. ending on an increasing trend during Q4 2003, venture capital dealings in Europe also picked up, increasing 7 percent over the prior quarter. Overall, euro 855 million were invested in 249 financings in the fourth quarter, based on a VentureOne/Ernst & Young European Venture Capital Report. Activity in venture-backed healthcare companies experienced a 21 percent increase in deal flow, with euro 321 million invested. Biopharmaceuticals alone garnered euro 257 million in investment via 46 deals.

MoneyTree™ Survey
Venture capital ended the year on an up note in Q4 2003 with investments totaling $5.1 billion in 698 companies, MoneyTree™ Survey data show. This figure is up from $4.4 billion in Q3 2003 and is the highest amount invested since the second quarter of 2002, when the total reached $6 billion.

For all of 2003, investments totaled $18.2 billion in 2,715 companies. The 15 percent decline from 2002’s $21.4 billion is small compared to decreases over the last three years, a trend that indicates VC is settling at a sustainable level, according to the MoneyTree™ Survey. The relatively consistent levels of quarterly investing throughout 2003 further support this assessment.

Biotech saw its momentum continue in Q4 2003 with $1.1 billion of investment. For the second consecutive quarter and only the second time in the past eight years, biotech led all other industry categories. Software, which accounted for $978 million in the quarter, was second.

The life sciences sector, which includes biotech and medical devices, attracted $4.89 billion in 2003, or 27 percent of all dollars invested. This represented the highest proportion directed to the life sciences in the last 12 years. The largest single-industry category was software, capturing $3.6 billion over the full year. That figure amounted to 20 percent of all investing, which is in line with historical norms for the category.

Biotech followed closely behind software for the full year, closing with $3.4 billion in venture deals, the survey data reveal. The other two major industry categories both slipped slightly in 2003. Telecommunications fell to $2 billion, or 11 percent of all investing, and networking dropped to $1.7 billion or 9 percent of the 2003 total.

Detailed information for the fourth quarter of 2003 is available by region, industry and stage of finance at http://www.pwcmoneytree.com. Historical data dating back to 1995 also are available for the U.S. and selected regions.

Growthink Research
The Growthink Private Equity Funding Reports, which profile only private, U.S.-based companies that receive equity investments of $300,000 or more, found more than $5.5 billion of venture capital was invested in 502 private companies in Q4 2003. This represents the first quarter-to-quarter increase in funding in two years and the largest increase since early 2000.

Funding for the healthcare sector surpassed $2 billion with 138 total ventures, Growthink reports. Of the healthcare total, 73 biotech and pharmaceutical companies secured $1.1 billion in venture capital deals. More than 30 percent of the total dollars invested still went to 147 companies in the connectivity sector, however. Overall, more than $5.5 billion of venture capital was invested in 502 private companies in Q4 2003.

Among major metropolitan areas, the San Francisco Bay Area continued to lead the nation with $1.5 billion in investments, or 27.4 percent of the nation's total, and 139 companies securing deals. Boston was next with $663 million (11.9 percent) and 61 deals. New York City remained in the third position with $596 million (10.7 percent).

Washington, D.C., Chicago, San Diego, Austin, Orange County (Calif.), Los Angeles and Atlanta rounded out the top 10 metro areas, which accounted for 74.1 percent of the nation's total fourth quarter VC activity. Philadelphia, Denver/Boulder and Minneapolis/St. Paul fell from the top 10.

Growthink figures also differ from the Moneytree™ Survey in that Growthink does not collect information on venture capital investments in public companies, debt financing or other areas. The fourth quarter survey, with data arranged by geographic region, state, metro area and industrial sector, is available in individual sections or in its entirety at: http://www.growthinkresearch.com

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UC Tops List of Universities Receiving Patents in 2003
The United States Patent and Trademark Office (USPTO) has announced the top 10 U.S. universities receiving the most patents during calendar year 2003. The University of California tops the list for the tenth consecutive year.

While the first seven places went to the same research institutions as 2002, with some rearrangement of order, the 8-10 places were improvements. Cornell rose 11 places from its 2002 finish to join the 2003 list tied for the 10th spot with the University of Florida.

The top 10 and the number of patents were:

1. University of California (439)
2. California Institute of Technology (139)
3. Massachusetts Institute of Technology (127)
4. University of Texas (96)
5. Stanford University (85)
6. University of Wisconsin (84)
7. Johns Hopkins University (70)
8. University of Michigan (63)
9. Columbia University (61)
10. Cornell University (59)
10. University of Florida (59)

The USPTO reports the primary counts are preliminary and final figures will not be available until December 2004.

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Investment in Higher Ed Key to Economic Growth in Mississippi
As the nation's economy shifts to knowledge- and technology-based industries, Mississippi's colleges and universities must provide expertise and leadership to attract new jobs and build a stable state economy, members of a special committee told the state House of Representatives last week.

The state must quickly commit substantial resources to higher education to achieve the goal of making Mississippi competitive in the New Economy, the chairs of the McCoy Working Group said. The group – organized by state Reps. Billy McCoy, Steve Holland and Charles Young – was created by the Mississippi Legislature last spring to develop a 20-year strategy for investment in higher education. The group is co-chaired by University of Mississippi Chancellor Robert Khayat, Commissioner of Agriculture Lester Spell and Hinds Community College President Clyde Muse.

To spur economic development, the group outlines 17 recommendations across three broad areas ­ individuals, ideas and infrastructure. Technology-based industries rely on a dependable, flexible infrastructure for support, the group argues. Moreover, the creation of new jobs requires educated and talented individuals, they say, and a culture of ideas spawns new businesses and innovations.

"Mississippians have carved out a notable niche in high-technology fields, such as precision agriculture, polymers, telecommunications, pharmaceuticals and remote sensing," Muse said. "We are doing great in these areas because of the infrastructure built with legislative support and our own creativity and hard work. But we can do better."

Among other recommendations, the group suggests Mississippi cultivate a talented workforce by funding scholarships and education programs in critical areas of need. Scholarship recipients would be required to work in-state after graduation and could be placed where they are needed most.

Higher education already provides a huge boost to Mississippi's economy, employing more than 28,000 people and providing a payroll of $1.1 billion. Additionally, faculty members have started more than 20 new companies in the state during the past five years, and university research programs have helped attract several businesses to Mississippi.

Besides educating the workforce, policymakers in Mississippi can encourage the creation of new ideas by funding research programs and establishing regional research parks that foster partnerships between universities and private businesses, Khayat added. The changing demands of technology, the group concludes, will require a considerable investment in computers and other equipment for the state's colleges and universities. The group also urges educational institutions to forge stronger partnerships with industry to focus on limited resources in critical areas.

To obtain a copy of the report with the McCoy Working Group's recommendations, contact the University of Mississippi at 662-915-7236 or publicre@olemiss.edu.

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Tech Talkin Govs IV
In SSTI's final look at the 2004 State of the State and Budget addresses, the importance of building tech-based economies continues to be emphasized by governors across the country. Below are excerpts from speeches given in Alabama, Maryland, Minnesota, Oklahoma, Pennsylvania and Rhode Island.

Alabama
Gov. Bob Riley, State of the State Address, Feb. 3, 2004
"Recently President Bush announced his plan to send Americans back to the moon and then on to Mars. We must unite as a state to ensure that Alabama is the first stop on that journey. Tonight I am proud to announce the Alabama Space Exploration Initiative which will create a partnership between state government, Marshall Space Center, our colleges and research universities, and industry to strengthen our capabilities in support of our nation’s new space policy. By working together we will continue to expand the economic potential of the space industry in Alabama."

Maryland
Gov. Robert Erlich, State of the State Address, Jan. 29, 2004 [not available online]
"...we must help our State achieve its full potential as a haven for high tech firms and businesses on the technological edge. I believe we have the resources needed to become the technology capital of the nation... I want our record in this area to be one not of success, but dominance. To achieve that vision, we need to do more."

Minnesota
Gov. Tim Pawlenty, State of the State Address, Feb. 5, 2004
"We need to leverage our strategic advantage in the emerging bioscience economy. I am asking you to fund, through the bonding bill, the historic new research partnership between the Mayo Clinic and the University of Minnesota. I also ask your support to enhance the bioscience zones we created last year. This is a huge opportunity and we can compete and win in this area..."

Oklahoma
Gov. Brad Henry, State of the State Address, Feb. 2, 2004
"Our commitment to public education does not end with 12th grade. Oklahoma must produce more college graduates, both for economic development as well as for the enrichment that comes with higher learning. I propose full funding for the Oklahoma Higher Learning Access Program, which ensures college scholarships for eligible students.

"Our colleges and universities warrant our full attention. As recommended by the EDGE [Economic Development Generating Excellence] action plan, my budget provides needed funding to eliminate the sizable backlog of endowed chairs...

"Our state also deserves to capitalize on its bold pioneering spirit. Oklahomans have long distinguished themselves as forward-thinking innovators. Indeed, the spirit of the Land Run is alive and well in our scientists, researchers and entrepreneurs - the pioneers of today. That quest for improvement and invention must be afforded room to grow. Let's transform Oklahoma into a hub of research and development.

"The EDGE action plan calls for a $1 billion endowment to fuel private and public research and development. I call on you to join me in working toward that goal. This session, let's determine how to structure this visionary proposal.

"Our tax system should also be designed to create good jobs and stimulate investment in our state. I propose eliminating the capital gains tax on all Oklahoma property held for five years or longer."

Pennsylvania
Gov. Edward G. Rendell, Budget Address 2004-2005, Feb. 3. 2004
"While we look toward the industries of the future, we must also apply the tools of technology to restore the traditional backbone of our economy - our manufacturing sector. Based on the compelling findings from research conducted by Team PA, I am proposing an increase of $5 million for our Industrial Resource Centers to help infuse our manufacturing plants with technology and innovation. Our stimulus plan dramatically expands the Manufacturing Equipment Loan Fund program, allowing manufacturers to obtain new technology to improve productivity and increase competitiveness. We are also planning to hold a manufacturing summit in the coming months to solicit and refine strategies designed to take manufacturing in this state to the next level...

"In a global economy increasingly reliant on technology, the most modern telecommunications system possible is absolutely essential. Eight of the 10 fastest-growing occupations are in professions that depend on high-speed communications. We have no choice but to accelerate the introduction of broadband services across the Commonwealth - well before the 2015 deadline established under Chapter 30. We can do this by providing incentives to local telephone companies and financial assistance to municipalities and entrepreneurs.

"Every school in Pennsylvania must have high-speed Internet service at affordable rates within the next 18 months...

"If we are to remain economically competitive, we must modernize and diversify our energy portfolio. Today, we are too dependent on just a few sources of fuel. We now have an opportunity to develop new technologies that only a few years ago might not have been cost-competitive, such as waste coal, wind, biomass, solar and fuel cells. Today, I am proposing a series of initiatives that will move Pennsylvania to the forefront of energy innovation. I am revitalizing the Pennsylvania Energy Development Authority. We will expand the successful Energy Harvest Initiative so we will have the financial tools to build energy projects. These efforts will enable us to invest new capital in alternative energy technologies so that Pennsylvania can gain ground in this dynamic economic sector...

"Having already doubled Pennsylvania's use of green energy, I am directing state agencies to redouble that effort so that fully 20 percent of the Commonwealth's needs are met by state-of-the-art energy technologies.  To expand this effort across the state and into the private sector, I am also proposing an Advanced Energy Portfolio Standard so that in 10 years, 10 percent of all energy generated in our state will come from clean, efficient sources of power."

Rhode Island
Gov. Donald L. Carcieri, State of the State Message, Feb. 3, 2004
"Last year, with the support of this General Assembly, we implemented a jobs package to support my goal to create 20,000 net new jobs over 4 years... Building on this success, our strategy emphasizes the life sciences and biotechnology.

"This year, we are proposing two new initiatives to accelerate this plan. The first is a collaborative effort between public and private universities to attract millions of dollars from the National Science Foundation to create a world class research capacity here in Providence.

"The second initiative will be the creation of a Marine Life Sciences Park at Quonset Point. This park will pursue new business opportunities in technologies for the rapidly growing aquaculture industry. Joint venture discussions are underway with a number of interested parties... I am proposing a major investment in Quonset Point: $48 million to transform it from a decayed military base to a modern technology park, superior to any other in the region. There are exciting things happening at Quonset, and we need to prepare it to become a major job generator...

"I believe there is a direct connection between economic development and the vibrancy of higher education. Private institutions have been investing and prospering, while the state has been under-investing. Although we will continue to support RIC [Rhode Island College] and CCRI [Community College of Rhode Island], URI [the University of Rhode Island] is uniquely positioned in the biosciences, pharmacology, engineering and marine sciences. It's time to invest in these sciences for the jobs of the 21st century.

"I have asked the Commissioner of Higher Education to work with URI in the development of a five year investment plan to substantially upgrade our scientific capability, especially in the area of graduate research.

"As a first installment, I am moving forward with the new $50 million Bioscience Building. I am asking the General Assembly to put a bond referendum on the ballot in November and I encourage all Rhode Islanders to support it.

"Additionally, I ask the General Assembly to eliminate personnel restrictions for independently-funded research. This is critical to building our scientific expertise… and does not involve state taxpayer money."

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Colwell Leaving NSF
National Science Foundation (NSF) Director Rita Colwell has announced her retirement from the foundation, effective Feb. 21, 2004. Dr. Colwell took office at NSF in August of 1998. With five-and-a-half years as NSF's leader, Dr. Colwell is the third longest-serving director in the Foundation's 54-year history.

Dr. Colwell will assume the position of Chairman of Canon U.S. Life Sciences, Inc., a newly created, Washington-based subsidiary of Canon U.S.A., Inc. that serves to identify and develop life science solutions with potential applications in diagnostics and medical instrumentation.

A microbiologist and internationally recognized expert on cholera and other infectious diseases, Dr. Colwell also will serve as Distinguished University Professor at the University of Maryland, College Park, and on the faculty of The John Hopkins Bloomberg School of Public Health. At Johns Hopkins, she will help develop a new international center for the study of infectious diseases, water and health in conjunction with scientific colleagues from Sweden, Norway, Japan and Bangladesh.

The White House has announced Arden Bement, director of the Commerce Department's National Institute of Standards and Technology (NIST) since 2001, would become NSF's acting director.

The National Journal's Technology Daily wrote on Tuesday, "Bement has high respect from scientists and technologists who know him but has a low profile in Washington and nationally... Bement came to NIST in December 2001 from Purdue University, where he joined the faculty in 1992 after a 39-year career in industry, government and academia. He previously held senior positions at the Defense Department."

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People

Ohio State University has appointed Vicki Butland to serve as interim president and chief executive officer for the Science and Technology Campus Corp.

Eric Cromwell has been appointed to serve as Director of Technology for the Tennessee Department of Economic & Community Development.

After 11 years as president of the Biotechnology Industry Organization (BIO), Carl Feldman has announced he will resign at the end of the year.

Robert Geolas, director of the Centennial Campus at North Carolina State, is resigning to become director of the new International Center for Automotive Research at the Clemson University.

Victor Hwang has been promoted to the position of president at Larta.

With Randall Olson's resignation, Pat Dillon has become the executive director for Minnesota Project Innovation.

BioCrossroads, the Central Indiana life sciences network, announced Chuck Schalliol is the organization's new chief executive officer and president.

William Tew has resigned as director of the Office of Licensing and Technology Development for Johns Hopkins University.

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SSTI Catches Virus; Digest Schedule Revision
It wasn't Asian bird flu, west nile or monkey virus. So far, that's about all a team of the country's top doctors has been able to determine regarding the virus SSTI contracted last week.

Each time the patient, SSTI's computer network, inched toward recovery, there was a relapse. Occasionally in-boxes with up to 200-plus new messages disappeared forever. Sometimes incoming e-mail simply doesn't arrive. Sometimes things just lock up altogether.

We've all been around people when they are sick to know there are good patients and there are bad patients. SSTI's computer system falls into the second category, unfortunately. It's one of those whiny, constantly-demanding-your-full attention types. Your desire to provide sympathetic nursing with this type can be truly tested.

In our case, during the patient's most feverish episodes on Day Two while we were trying to get the 17-page federal budget issue of the Digest written, SSTI's staff discussed their newfound respect for why waiting periods for gun purchases may actually lead to decreases in the number of emotion-charged violent crimes -- even against machines.

By Day Three of the crisis, live flowers sent by folks wishing our network a speedy recovery were put in vases filled to the brim with water and strategically placed so the slightest tremor would tip them into the patient's vital electrical systems. Alas, no such seismic activity was recorded in the area.

On Day Five, during the darkest hours, SSTI staff voices lowered to respectful whispers in the patient's presence as conversation turned to euthanasia. "Should we pull the plug?" was asked. A survivors support group was organized in preparation for the fateful day.

And then things got better. Sort of.

If, during the past two weeks, you sent an e-mail that didn't receive a reply - but should have - to Ruth Carr, Heidi Findley, Mark Kish, Mark Skinner, digest@ssti.org or ssti@ssti.org, please try again. Do not, however, send anything to ssti@ssti.org. That email address is a casualty of the war on the virus, at least temporarily.

Note too, that with the patient on the mend, its nursemaids are recognizing their fatigue. Actually, they're exhausted. As a result, there will be no issue of the SSTI Weekly Digest published next week as we try to rebuild some of our resources.

Our sympathies to all of the other past and future victims.

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